Rick Caruso on LA’s Wildfires, Policy Failures, and the Path Forward

0:05Hi, listeners, and welcome to NoPriors. Today, we have special guest Rick Caruso on to help us understand the fires that have been devastating Los Angeles over the last couple of weeks. This is reported on the afternoon of January 27th, as everything is still changing. Rick is the founder and former CEO of Caruso, a real estate company that has developed properties around Southern California like The Grove, the Miramar Resort, and Palisades Village, which was the only structures in the town left standing in the wake of the Palisades Fire. He was also the runner-up in the 2022 LA mayoral race, the former president of LA's police Commission and a member of the Board of Water and Power Commission.

0:41Rick served under three different mayors and is very well attuned to both Los Angeles-related politics and policies, as well as the state of California more generally. Rick, thank you for joining us on No Priors today. Well, thank you for having me. Good to be here. So you were born and raised in Los Angeles. I know you're very prominent in the LA community and sort of more broadly in the state of California. Could you just give us a very a quick background on how you got your start in real estate development in the city and some of the things you've done relative to city government? Sure. Well, I actually started out as a lawyer and I practiced law for a number of years.

1:14And interestingly, it was with a large law firm out of New York. And I say it was a large law firm for the reason that after about six years of being there, the law firm imploded and it forced me to make a business decision. I always loved business. and I started out, you know, very small. I bought a duplex, I fixed it up, rented it out and then I built my company over time. And what I realized is what I really love doing is being around people and, you know, creating spaces that people enjoy. And the retail sector was the space that I could do that and began building very small retail centers and one by one, we built the Grove, we built the Americana brand, Palisades Village And I've got an incredible team of people and they're smart and innovative and we've been able to accomplish some really good things.

2:07That's great. Yeah. One of the I guess one of the other key threads of your life has really been public service. And I believe that you've served under three different mayors in L.A. over time. You were the runner up in the 2022 L.A. mayoral race. You were former president of L.A.'s Police Commission. You've had a variety of roles. Can you tell us a little bit about your public service engagements? Yeah, I appreciate it. I'm a big believer in public service. I enjoy it, and I just think it's an important thing to do. So at a very young age of 26, Tom Bradley tapped me to be on the board of the Department of Water and Power, and I then became president.

2:42After that, Dick Reardon asked me to go back on the board. So I was at DWP for about 13 years. And then after that, Jim Hahn, the mayor at the time, asked me to head up the police commission because L.A. back then was having really rising crime. We were losing a lot of police officers, very similar to what's happening today. And to come in and turn LAPD around. And I did. I brought in Bill Bratton as the chief of police at the time. And we were able to get crime down to levels not seen since 1950. So I had been very fortunate to have been involved in government service. And the reason I decided to eventually run for mayor was because I saw what could be done, especially if you're not beholding to worry about getting reelected if you're just focused on doing the right thing and becomes a very powerful powerful mindset to have something i'd love to delve into in a couple minutes as we as we get into all this and in particular some of your thoughts on crime and you know what what can be done today i think one of the main topics we're going to talk about was also just the fact that you know uh la has now been hit by a number of really terrible, insignificant fires of sort of historical proportion.

3:57And, you know, there have been historical precedents in terms of the Bel Air fire of 1961, but it looks like the severity and frequency of fires across the city and state have been escalating with this one really becoming one of the costs in history on multiple levels, the human level, as well as the financial level. What is behind this trend? Are wildfires getting worse due to climate change? Is it other factors like policy, deterring infrastructure, negligence. Like what do you think are the causes here? All the above. I mean, listen, I don't think you can doubt that there's an impact to climate change.

4:30So let's just say that's a given. But the Palisades fire was fueled by 40 years of brush that was never managed. And so you have an enormous amount of brush in those hills behind the Palisades. And when you had the winds coming up, the city was not prepared adequately to deal with it. The fire department was not properly deployed to deal with it. To be in the second largest city in the United States and to run out of water and have fire hydrants empty is completely insane. So there was a series of things, but it really starts with, frankly, incompetent leadership that wasn't prepared for something like this, like clearing brush, like making sure the reservoirs were full.

5:16There's a whole reservoir that was empty that was drained because they wanted to have repairs on it. Well, we had a fire in Malibu 10 minutes from the Palisades fire three weeks before. That's probably a pretty good sign that we needed to be prepared. And we knew the winds were coming. So unfortunately, I think it's border negligence. There's no doubt in my mind, but it's clearly bad planning, bad leadership. and maybe you couldn't have prevented the fire. I'm completely convinced you could have substantially mitigated the fire. We've lost the equivalent of two Manhattans in terms of land sizes.

5:53It's an unthinkable amount of devastation that's out there. Yeah, it seems like there was a lot of things that really went wrong. And I think one of the things that was striking and that a lot of people saw on the news or on Acts or other places was that the buildings that you're responsible for, Palisades Village actually survived the fire. And so you see this sort of ring of devastation, and then the buildings that you built and protected are intact. Could you tell us a little bit more about some of the basic things you all did to protect that structure and how that could have been generalized to the rest of Palisades?

6:26Yeah, no, it's a good lesson on being prepared, but it started with design. Knowing that we were building in an area that was prone to fires. We did not build with any combustible materials. There's no combustible materials. Even what looks like wood is concrete formed to look like wood. And so that's the first level of defense. The second level of defense was we have a team, this rapid deployment team. When there's any kind of natural disaster, we have protocols that come off the shelf. And for fires, we immediately engage with companies that can pour retardant on the building, which we had out there.

7:04We had backup water systems out there. And we had a private firefighting department out there because we had been through this about six years prior when we were building a Rosewood Miramar Beach Hotel with the fires up in Montecito. And what we do know is, as an owner of a commercial property, we don't want to be taking resources away from protecting homes. So we bring in as much of our own private systems as possible. We did that up in Montecito. We used that same playbook down here. It was very effective. And in addition, we were able to save some adjacent buildings. And in our village, there are eight homes.

7:45We saved the eight homes, saved thousands of jobs because businesses are going to be able to reopen and people are going to be able to come back to work. So it was clearly the right thing to do. And it's frankly a really good example of how much better the city could have been prepared. But the city didn't even have enough equipment because they've underfunded the fire department for so long. And Mayor Bass cut even more out this last budget cycle that they had equipment mothballed in parking lots. So, I mean, that's just, to me, it's a sin of what happened. And people have paid a dear price for the bad planning of it.

8:26Yeah, it's incredibly unfortunate. And to your point, I think it's been pretty public that the firefighting budget, I think, was initially cut under a mirror bass. And, you know, you talked a little bit about water availability in the reservoir. Can you tell us a little bit more about what happened there? Because I've heard arguments that, you know, the houses burned down and therefore there was open pipes and water was just leaking out. And that was a reason that there wasn't enough water. Do you think that's just? No. You know, I just got off the phone with an elected official in Congress that was finding every excuse in the world why it wasn't anybody's fault, which I think elected officials are really good at.

9:02I think they have a PhD in that. But no, listen, I was on the phone with my team. A senior member of the rapid response team that we have was up there and embedded in the command staff. and at about, I think it was a little bit after 10 o 'clock or 1030, I get the call. The hydrants are empty. We're not getting water. It had nothing to do with broken pipes. It had everything to do with the reservoirs not being filled. Everything up there is gravity flow. So those reservoirs draining are coming into the hydrants and there's protocols should be in place that's keeping those reservoirs full. But the largest reservoir was empty.

9:41And that was a huge problem. The other thing that seemed to happen coincident with all the fires was there was secondary fires that were started. In some cases, it seems due to arson. How much of a role do you think arson played in the broader set of fires as well as in the Palisades fire? It appears to be pretty significant. I mean, that's a real sickness. And these people need to be held accountable. And in my opinion, losing 28 lives, you know, they need to spend time in a prison for the rest of their life. But I know we had it afterwards here in Brentwood. I'm at my home in Brentwood along Sepulveda.

10:20Seems to be arson. There's some thinking there was two or three other fires up at Griffith Park, I think was arson. So it's a real problem. And there's been a real problem with crime more generally, not only in Los Angeles area, but also throughout the state. Could you tell us a little bit more about your experiences relative to LAPD and some of the things that you did there in the past and what you think can be done going forward? Because I think also during these fires, there's a lot of looting. There was a lot of other issues that came up throughout, but it seems like in some cases, it may even be causative in terms of the arson as a cover to go loot or other sort of criminal activity.

10:59So I just love to get your thoughts on crime and what can be done in Los Angeles and the state more broadly today. Well, you know, crime in Los Angeles, like a lot of major cities, has been a real problem. And there was a lot of decisions made by people that were not enforcing the laws. There has been a lot of decision made that have pulled back the ability of officers to engage and be more proactive. And I'm not talking about officers doing anything that's illegal, unconstitutional, immoral. That's never acceptable. I'm talking about proactive policing that prevents crime from happening. And you do have to marry that with holding especially serial criminals accountable.

11:44Now, fortunately, we just changed the law in California on the misdemeanors and whatnot. Fortunately, we just changed our district attorney here. Nathan Hockman, I think, is going to do a very good job, just like they changed in San Francisco. So those kinds of things are going to be very helpful. But we've lost a lot of police officers in LA City. We're very understaffed. Part of the frustration is they don't feel like they can be an effective police officer. So they go to other agencies. We need to change that culture. We need to start hiring. And then we need to bring in the things that Bill Brad and I brought in 20 years ago.

12:21So senior lead officers, more officers on the street, more officers walking beats, understanding communities, engaging and be very preventative. And then we also need to help people get a path in life that gets them away from criminal conduct. And, you know, there are people that will that want a second chance and we should give them a second chance. But there's a ton of things we could do. I could take the whole podcast up on it. But what I do want to say, though, it's all fixable if the right leadership is brought in that has the courage to do the right things and protect the public. And I think that's where L.A.

12:58City and this administration failed and the last administration, Eric Garcetti, is that the number one job is to protect the public and their livelihood. And when you look at the city budget, it doesn't reflect that when you start cutting fire and cutting police. Where does a lot of the budget go instead? Or where do you think the budget should be reallocated from? Well, we're spending billions of dollars to deal with the homeless situation we have in LA to no avail. We still have the same amount of people on the streets. That number is growing even after spending billions of dollars. So we're not spending money wisely.

13:40And we have to start fighting drugs on the streets. We have open sale of drugs on the streets. Well, I'll put it this way. The most active fire station in the United States is in an area around MacArthur Park in Los Angeles. It's the most active because of the amount of people dying on the streets from overdoses. that's that tells you everything and that is a disaster and it's sad at every human level we've got to get the drugs off the street we've got to start enforcing it we've got to start going after the gangs that are selling drugs and being tough on them and again hopefully with a new district attorney and we also have a new uh chief of police jimmy mcdonald we're going to start making progress in that regard.

14:29How much of all this is not enforcing laws that already exist versus laws that need to be changed? Well, there was one big law that needed to be changed, which is the definition of a felony versus a misdemeanor in terms of theft. Many of the laws aren't being enforced or they're being put on hold on how officers can engage. And And I think that is a problem. It's absolutely a problem. Yeah, I guess looking forward. So unfortunately, we have this area that's the size of two Manhattans that's been really devastated now by fire. How do we rebuild this and how do we do it quickly? Because when you start hearing about different aspects of this, it could take years, you know, literally years and years and years.

15:15What do you think should be changed? What emergency power should be used? What is the realistic timeframe to rebuild? and what are some of the things we should consider as we do that? Well, I really believe it shouldn't take years. And this is a conversation I've had most of the morning today with different elected officials. If we approach this with all due respect, thinking like a government, it's going to take years. If we approach this thinking like a business person and putting it in business terms and have the only thing worth thinking about is what's in the best interest of these residents to get them back in.

15:54Then you would quickly run a schedule along parallel paths, break down the area into different quadrants, bring in different contractors for cleanup and infrastructure and incentivize them on a success timeline that gives them a win for moving quickly at the level of quality that we expect. The way they're approaching it now is in a Syrian fashion. We're gonna do cleanup and then we're gonna do this and then we're gonna do that. And we're gonna have one master contractor. I'm trying to break that out. It just isn't the right way to do it. And you know, from your experience, seeing very successful businesses, you should run on multiple paths at the same time.

16:41You do it in parallel for sure. Yeah, you have to. And, you know, hopefully we'll break through with that thinking. But we've got some of the greatest minds in the world in the greater Los Angeles area. Bring them in. And and we got some of the greatest contractors and everybody wants to lean in and help. And let's take advantage of it. And so I'm trying to do as much of that as I can to move the elected officials along and hopefully, and they've been pretty open to it. So I'm optimistic. Yeah, because I guess there's one piece of it, which is the cleanup and sort of remediation. The second is actually the ability to build.

17:21And there are a lot of people run into the Coastal Commission or permitting or other issues like that. What do you think should be done relative to more the permitting and regulatory side of it? Well, the good news is, you're absolutely right. The good news is Gavin suspended coastal commission and whatnot in order to pull a permit. So that's good. Smart thing to do. We've got a list of things. He's asked for more suggestions that we're going to be getting him from our point of view on this. the cleanup has to happen, yes, but this community, whether it's Altadena or Pacific Palisades, these are older communities.

17:59You got to go in now and underground the power lines. You got to go in now and upgrade the water systems. You got to go in now. We know we have to go in now and upgrade the fire hydrants and the reservoir systems. All of that should be designed now so that the minute the cleanup is done, you're in the street laying new pipe and undergrounding the power. Why would you build the same system when you know you're in a fire hazard area? It doesn't make any sense. And what I'm hearing from some elected officials, well, we don't have the money to do that. That's baloney. Of course you have the money to do it.

18:32And you just had a disaster that's cost, what, a couple hundred billion dollars is now the estimate. Whatever you're going to spend on infrastructure to prevent this from happening in the future is the best investment you could make. This goes back to like what you do. It's just basic business sense. It's not complicated. So the more of us that can help our elected officials think through this in a different fashion is going to be really, really important. And I would really suggest to people strongly, stay engaged, stay active, and be pushing your elected officials to do the right thing here.

19:11We've got people's lives at risk. We've got thousands of people who've lost their jobs. They have nowhere to sleep tonight, right? This is really a human disaster to the greatest degree that I've ever seen. How quickly do you think we could get into a place where we're starting to rebuild? A year. If we do the things you say, a year. It shouldn't be past a year. Maybe the hazardous cleanup is three, four months. The infrastructure is going in right after that. People will end up spending maybe a year to redraw a house, blah, blah, blah. permits should all be very easy to get. All the costs should be suspended.

19:50And then we start mobilizing. Is there going to be supply chain constraints? Yes. All of those things are going to be, have to be dealt with, but there's a great opportunity here to have these communities literally come out of the ashes in a year. That would be my demand. If I was king for a day, put together a program that allows people to start building in a year. Could it be done faster? Could we get there in six months? Could we get there in three months? I just wonder if, to your point on parallelizing, could you parallelize certain aspects of infrastructure building with cleanup? Are there other ways to kind of move even faster than that?

20:28Maybe, I like the way you think. I think that's great. I think once you get all the toxic waste out of there, then you can start doing a lot of things at the same time. And it's about getting the toxic waste. But listen, if there was a schedule that showed six months, I'd be all in. I'd be all in. Yeah. And then I guess as we rebuild, sometimes there's real opportunities to do new things, right? So we have a large area that now has been unfortunately decimated. Right. To your point, there's environment remediation that needs to happen. And one of the things that seems to have been lost from society is things like public artworks or monuments or public centers of different sorts.

21:05Is there anything you think we should put in place as we rebuild that we couldn't have had before? Because there's little environmental impact because there's no environment. in some sense, at least for the time being. Should we build large-scale public art or parks or anything else into some of these spaces that have been decimated? Yeah, no, and it's a great idea. And I was with a group the other day that wants to rebuild the Pali Rec Center. But now there's a wonderful opportunity. Let's make it the state-of-the-art rec center, right? With all the things to support the kids and the surrounding area up there.

21:37And maybe that park gets bigger. You know, maybe there's an opportunity now that you can grow the size of that park, but certainly the infrastructure of that park, just the infrastructure of the whole town in terms of communication. There's things that are going on around the world that we should be studying. There's asphalt that gets laid down to help charge your cars, your driving. I think you gotta think big. To your point, you have this open palette. You have this once, hopefully, and multi-generation opportunity to do something to make this community as dear and as sweet and as wonderful as it was, but also a city of the 21st century in terms of sustainability.

22:18We should be recycling the water up there, using it on the park. Our village takes all the irrigation water, holds it, we contain it, and then we ship it to the park. All of those kinds of systems can be put in now and not holding anybody up from building. That goes back to the parallel path. Yeah. So in 2021, 2020, right around there, California ran a massive surplus of almost$100 billion. And that was just three, four years ago. And it's really unclear to me what actually happened to all that money. And now we're running a big deficit. Where do you think California more broadly should be investing in its own future?

23:03And what are the big things that should go fix right now? A lot of it goes back to infrastructure. I was on the governor's committee, the COVID committee and whatnot. I was amazed to learn how many kids did not have access to the internet. This is the fifth largest economy in the world. And we had kids that had to go home for school, but couldn't connect on the internet. How could that be? We've got demands on our power grid that are exceeding what we can supply. We need to go fix that. We certainly have a vegetation overgrowth problem with forest fires. We need to go fix that. The water delivery problem, we need to go fix that.

23:47We need to upgrade our schools, our school system. Just, I think we get back to basic things of saying, what would make residents of Los Angeles lives better and more livable and safer and give them an opportunity to prosper. And let's organize our budget dollars around that. And we have to start prioritizing. But to your point, how did we blow so much money? I really don't know. I've never heard a good explanation. I don't know if you don't know. It just somehow went somewhere. which is really unfortunate because if you look at the analogy that I've heard made is that basically California is almost like a petrol state, right?

24:33You have these countries and if they have huge natural resources, they often end up in a downward spiral because they have so much money, it leads to corruption, misspending, et cetera. And so some countries like Norway have set up a sovereign wealth fund where the wealth from their oil goes into that fund and that it's used to fund infrastructure projects over time. It's used as almost like a piggy bank for the country. And it seems like California could do something similar with sort of Hollywood and tech or their equivalent of oil and natural gas, you know. And so now would be the perfect time to have something like that available.

25:06I love that idea. That's a great idea. And have you been to Norway? Yeah, it's a nice place. It's unbelievable. It's a very happy place. They've done a nice job. They've done a great job. We went as a family. I loved it. And the people are just terrific. Great culture. But to your point, and that sovereign fund, as you know, is one of the largest sovereign funds in the world. They can't spend it quick enough because it grows so fast. But their education system, their health system, their employment system there is really remarkable. I agree with that. What are your future aspirations relative to public service?

25:46You obviously have huge depth of experience. You've shown extreme competence around all the things that you've done over time. I'm just sort of curious, what do you want to do next or how are you thinking about the next chapter? Well, the chapter I'm thinking about most is this one, as a private citizen doing as much as I can to support the city, the state, the federal government through the lens of all the residents that want to get back in their home. Beyond that, I don't know. Listen, I obviously have a history of public service. I love it. If there's an opportunity down the road, I'll take a look at it.

26:20But it's just not sort of on the plate in front of me right now, because I don't want to do anything now that sort of hurts or changes the perception of why I'm doing this. This isn't about politics. The problems we have now are so much bigger than politics. And that's why I just want to focus on helping out. And then down the road, we have a lot of time to figure things out. Amazing. Well, thank you so much for the time today. Really appreciate it. And thank you for sharing your insights. Great being with you. Thanks for your time. Find us on Twitter at NoPriorsPod. Subscribe to our YouTube channel if you want to see our faces.