Rick Caruso on California’s Collapse: Broken Leadership, LA Wildfire Failures & the Fix

For people who don't know who Rick Caruso is, he's a great developer. You walk into one of Caruso's places, and it's safe, it's clean, and you want to bring your kids.

Ideology did not save the Palisades. Competency would have. Running this city is running a business for the benefit of the residents. You've got to make good business decisions. It was predictable, Bill. What's predictable is preventable.

Rick Caruso now has a golden road in the governor's race if he wants it.

What's happened to Los Angeles over the last decade is just tragic. It's sad to watch.

Great to see you, brother. Thank you for coming.

Thank you very much. All right, I'll make my rounds. Thank you. Good to see you. Good seeing you. Hello, everybody. All right.

Rick, we're 9 months out from the tragic fires. So much has happened. Karen Bass is so incompetent, such a disgraziata.

Disgraziata, my Italian brother in here. But when you look at it in all seriousness, you had some properties there, and you've always been an innovator. Everybody knows the Grove. I spent so much time there with my beautiful daughter, Lotus, and my beautiful wife, Jade. Just what a gift you've given so many times over to this amazing city, and then you watch this horrible incompetence.

Yet you innovated and had this incredible insight that when the fires were coming, you would get water in trucks and bring it to the Pacific Palisades. Then you found this unique group of innovators called firefighters, and you also brought some of them. What did you see in this incredible moment of clarity that the fires were coming, that Karen Bass didn't see?

The first thing that I did was stay in town, which I think is important. When you abandon the city, I think when you want to be a leader, you should probably be present.

Listen, we learned a lot when we were building our resort up in Montecito, at the Miramar. We had fires there that were threatening the construction site. We were just under construction, and I had a very smart guy still leading the team. His name is Banyan, and he's the one who said, “We can bring in private firefighters. We can bring in our own water trucks. We can bring in retardant.”

Here's another rule that's really important when you're in the commercial side of the business: You want the firefighters who are working for the city or the county, first and foremost, to protect the homes. We know that they should be doing that, so we want to have resources to protect our buildings so the resources aren't taken away from the residential areas. That's just, I think, being a good citizen.

So fast-forward to the Palisades. We know we're in a fire zone. We built it with all noncombustible materials. We designed it so there were no open vents that an ember could get into. About 90% of the homes in the Palisades and Altadena burned from the inside out.

These wind warnings came, and I'm sure you all saw them, to the point that I didn't even believe they could be true: catastrophic, life-threatening winds. Our team rallied. We had our firefighters, our water, and our retardant stationed there 2 days before the fire, and we were ready to go.

I'm really proud of my team because they not only saved the village, but we saved the whole block of properties. We were actually, on the 7th, loaning equipment to the Los Angeles Fire Department, which was running short of equipment. We were also loaning water because we were bringing in our water tanks when the water hydrants failed to work.

Rick, it's been 8 months, I guess, since these fires. How much of it is being rebuilt now?

Not enough. I was out there last night. It's slower than it should be.

And what is slowing it down?

What's slowing it down is an enormous amount of red tape. The previous speaker was talking about red tape in the state of California. We have red tape in the city of Los Angeles and the county that's ridiculous.

Let me just give you an example. Since COVID, we, meaning the city, have still not called back workers to City Hall. Plan checkers in Los Angeles are working from home. You just lost 7,000 homes. You would think the first thing the mayor would do is say, “You 10 plan checkers are now out in the Palisades in a construction trailer where the people need you.” They're still working out of a home.

Why do the people—why? I want to know why.

Yeah, why?

That makes me angry.

You'll have to call 1-800-Karen-Bass.

I don't know the answer.

I've tried to call that number a number of times. What's your sense of the incentives there? What is driving that? Is it a union thing? Are you going to get unelected because this voting bloc wants to work from home? What is the incentive there?

Incompetence. It makes no sense. I think there's a level of incompetence that's combined with, literally, a stagnation. There's no urgency to do anything, so there's no decision-making.

All of us have been in situations in business or whatnot where you meet somebody who is just not well-equipped. What happens when you're not well-equipped to make decisions, either in easy situations or complex situations? You sort of freeze up.

I'll throw out a theory and get your reaction to it: California is a one-party state, and Karen Bass doesn't really need to serve the people because, historically, we haven't had competitive elections. What's important is that she satisfies this political machine that keeps her in office.

She wasn't a particularly distinguished candidate or anything like that. She's just been around the block for a long time. Frankly, we had the best candidate ever to challenge Karen Bass, which was you, a successful businessman.

Unbelievable. I love this crowd, by the way. This crowd is intelligent.

Yeah, yes, they are.

And the proof of that was in the fires, because I think it's pretty obvious that the Palisades wouldn't have burned to the ground if you had been the mayor. You would have made sure there was water in the fire hydrants.

Wait, David, what's amazing to me is that we're waiting for this after-action report, which is incredible. We don't even have it yet. But I was convinced 9 months ago, and I'm more convinced today, that the fire was completely preventable. If you think I'm wrong and it wasn't completely preventable, the damage could have been significantly mitigated.

The fire department was never predeployed. Where the fire started is the exact same place where there was a fire 7 days before. I think what we're going to see is that the fire department did not put that original fire out. It smoldered and reignited.

When it reignited, the winds were not here yet. The smoke was going straight up. We had the largest reservoir not filled with water. I got the call at night: The family was together, your daughter's home is burning down, and the firefighters' hoses had stopped. There was no more water in the fire hydrants.

I said, “How can that be? We're the second-largest city in the country.” Impossible.

But listen, I think all of it is fixable, so I'm an optimist. With the right kind of leadership—and I'm not saying it's me; I'm just saying in general—in this state, in this city, and in this country, with the right kind of leadership that is competent, eager, and willing to make decisions because they want to do what's best for the people they serve, and not worrying about getting reelected, great things can happen. That's my hope for the

Why is this happening around the nation? When you look at Portland, Seattle, Chicago, and New York, these cities around the country, we're seeing similar kinds of systems of decay.

They're blue.

Degradation. But is it—what did you say?

No, he said they're blue.

But I want to ask: Is that really what's going on, or is there a social or societal thing that's causing people to say, “Let's let these cities decay. Let's stop doing our jobs. Let's keep ballooning the budgets but not delivering any results”? What is it that's going on?

I have a little bit different take. I think there's been a sense of apathy. People have not gotten engaged. Not enough people vote and get involved, and we don't hold our elected officials accountable.

People who run for office now believe they have an office for life, and I think that's very dangerous. That was never the intent of our Founding Fathers. It was to serve and then go back to your private life.

That's right.

Now what we have is people who just cycle through it. What we need to do is get more people active. I don't care what your political persuasion is—get out and vote.

What we have seen, particularly, are extremes that are very motivated to vote, and they're moving these elected officials, these ideologues, into positions. This ideology, which may be well-intended, has not had good results.

Have the people of Los Angeles seen enough, do you think, to have the common sense to put competent leadership in?

I hope so.

Enough? We're going to find out in about a year.

What do the politicians mean when—I think I've heard Karen Bass say this, and I think I've heard Gavin Newsom say this—that they see what happened in the Palisades as an opportunity to reimagine? What are they imagining there, and how is that different from just letting people rebuild their homes?

I can't speak for that.

I don’t think so. I think there are probably fringe people who would like to see zoning changes. I don’t believe there should be zoning changes on the backs of people who have lost their homes and businesses. If you want to do that, have that discussion in an orderly fashion, but do everything you can to get people back into their communities and back in their homes.

This city and government have got to have this culture that says, “We’ve got your back. We’re here for you,” and we don’t have that. You’re not going to get people to reinvest in their own homes and their own communities unless they think the city is going to be there with them.

How much of the ineptitude of Los Angeles is derived from the ineptitude of the state of California?

Well, I think it’s part and parcel, to be honest, but I also believe that—

So is Gavin Newsom helpful? Has he done things to help? When all the people in LA who are still dispossessed and out of a home called him, is he able to apply pressure to the city of LA, or is it just chaos?

I don’t think it’s chaos. I think Gavin has actually done some good things: waiving CEQA and waiving the Coastal Commission. Those are really smart things that he’s done. I’d like to see him do more.

What would you want him to do?

What he could do is demand changes very quickly, and if not, he could exert independent California authority to make changes. These communities—Altadena, Malibu, and the Palisades—need completely new infrastructure. They need all the power lines underground and new water systems. All of that has to be done.

He’s got the power to really make that happen, and frankly, we’ve got to figure out a way to get the federal government to help financially. I think name-calling probably isn’t a good way to build a relationship to get billions of dollars into the state of California, so I’d like to see that stop.

Where can you be more effective: as mayor or governor of California?

I think they’re very different, but I think either one of them can be very effective. They obviously have different authorities and different powers, but I think either one can be very effective.

You’d be great in either one.

Thank you. I appreciate that. It’d be great to get an outsider into politics.

The thing I worry about is that in California, ballot harvesting is legal and checking someone’s voter ID is illegal. I just wonder if the combination of those 2 things makes it impossible for someone outside the political machine to get elected. What do you think?

Well, it may, David, but I may give that a try. We’ll see if it works. It didn’t go the way I wanted it to last time.

Hold on. I’ve got to follow up on this one. I know the people who have been having some of these conversations with you. There’s one camp that’s pushing you to governor, and the other camp is pushing you to mayor. How do you make that decision? When are you going to make that decision? We’ve got 8 minutes and 53 seconds left here. Can we get it done now?

Get it done in 8 minutes? All right, let’s start.

Mayor—clap. Who wants him to go for mayor? And now governor. Governor. Wow. Wow. Wow.

You have the full support of the All-In platform for whichever one you choose. You and I have developed a bit of a friendship. We talk on text, and every time I go to one of your facilities and we talk about the detail—the detail that you have at the Grove, Pacific Palisades, and this incredible Montecito property that I got to stay at recently—that attention to detail is what—

I love what I do. If you go to the root of what we do as a company and ask anybody in the company, “What is your business?” everybody in our company is going to say, “To bring joy and enrich people’s lives.”

It sounds corny, but if you do that, it gives you a platform in business that gives you permission to do things that your competitors are not allowing themselves to do. It gives you permission to build a place called the Grove, which you and I talk about, and run a trolley through the middle of it.

Is it really that simple? You’re building a business and you’re like, “I’m just going to enrich the lives of my customers and make them happy,” and your competitors literally don’t do that?

Well, my competitors are building an indoor mall with no trees or light and an escalator.

So you’re just shaking your head, like, “How is this even possible?”

Well, don’t you want to be in a place that feels good and makes you happy? You see trees, water, flowers, and there’s nice music. It feels like the perfect platform or stadium.

At Rosewood Miramar, our resort, we have a full train running through it. Everybody stayed away from that property, and when I announced we were going to build a 5-star hotel, everybody said, “You’re crazy. You’ve got a train running through it.” We made the train an amenity. We built a bar next to it with a bell that gets rung when the train comes by, and people celebrate it.

So that’s enriching lives. I just love watching people enjoy their lives, and that’s what fuels my public service. It’s what I really enjoyed when I worked for 3 mayors: Tom Bradley, Dick Riordan, and Jim Hahn. You can actually make changes in public service that make people’s lives better. How great is that?

That’s great. People don’t know this widely, but tomorrow is the 175th anniversary of the state of California. Governor Newsom, it's a great state and an amazing place. Governor Newsom is giving his State of the State tomorrow morning. If you were in that seat, what would you say at the State of the State tomorrow? What’s your read on the state of the state of California?

I think the state of California should lead the nation in everything that we do. I think the state of California should have the best housing, the best school system, and the lowest crime rate. We should not have homeless people living on the streets. We should have opportunities for people to grow a business, raise their family, feel good about life, and be enriched.

We should be at the top of every category that you want to measure quality of life. If you say we’re the 4th-largest economy in the world, which our elected officials say very often, then act like it. The people of California should be benefiting from being the 4th-largest economy in the world.

How would you deal with homelessness? You’ve got these encampments. We’re driving around downtown LA. It had such a renaissance for a short period of time, and it feels like it’s devolved again.

It has.

It just seems to me that it should be zero tolerance for camping on the street. Yet here we are again with encampments everywhere. What would be your approach?

My approach was simple when I ran: you can’t allow encampments on the street, but you’ve got to give people who are on the streets an opportunity to have a productive life. So give them the services they need and build the housing that they need.

We are spending $900,000 per person in the city of Los Angeles that they’re removing from the streets. $900,000.

Per year?

Yeah.

Oh my God.

There are billions and billions of dollars wasted. Redirect that to organizations that have incredible track records of being successful in Los Angeles—housing people and giving them services for mental health and drug addiction.

The first thing you do is not allow the sale of drugs on the street. Right now, we do. That’s a crime. It’s illegal. Don’t allow it.

It is a crime.

Yeah. I mean, if you look at fentanyl, it is just a different category of drug. We’ve seen the president, who you don’t agree with on everything, but he’s taking a pretty hard-line stance, to the point at which he’s activating the military. It’s pretty controversial. What’s your take on that?

I think we should actually have secure borders and shut down the drugs 100%. Absolutely.

So, in full agreement with the president.

Yeah. I don’t know how you can say, “I want to have a livable society, a quality of life, allow people to build a business and raise a family,” and then at the same time allow drug dealing to go on in the streets. You just can’t do it.

We have an area out here called the Sepulveda Basin. I got a call from a resident yesterday, and this poor resident who lives out in Encino was talking about the amount of encampments in the Sepulveda Basin. What they’ve done now, the homeless, he’s telling me, is made these booby traps and connected homemade bombs to them.

Oh my God.

When the police or the fire department try to go in there, one firefighter was severely injured and lost an ear because he hit a tripwire. He had called the mayor. The mayor said, “Well, it’s very complicated to try to figure out how to get in there to clean it up.”

It’s not complicated. You go in there and clean it up. Period. Full stop. Period. Full stop. We’ve just got to do that.

One of the complications here is that the Democrats don’t seem to want to clean up the cities. The president has checkmated them by saying, “If you don’t clean it up, I’ll clean it up.” It seems like a midterm-driven approach.

What's your take on the National Guard being sent into these cities? Because if Karen Bass won't clean it up, if J.B. Pritzker won't clean it up, is there an argument for the president to send the National Guard in? It seems like overreach in one way, but we're sitting here talking about absolute incompetence and a refusal to deal with this issue. The people who are affected by it are like, “Yes, send the National Guard in if that's what it takes.” What's your take?

Well, my take on it is that sending the National Guard into Washington, D.C., is a very different situation from sending the National Guard into L.A. or Chicago, because Washington, D.C., is a federal territory. So that's different.

What I think should be done is we should hold our elected officials accountable to have a police department that's fully engaged and given the authority to enforce the laws. And we're not doing that. They're not backing up the cops. The cops are not allowed to clean up the streets. The cops are not allowed to hold people accountable for selling drugs on the streets. There's a whole bunch of protocols in the city of Los Angeles that do not allow the cops to do their job.

Any kind of federal interference, I think, should be the very, very last resort. So I don't support that. I don't support it, but I do support a fully engaged leadership system that requires that the laws be enforced and gives police the opportunity—and not only that, demands that they enforce the law.

Ladies and gentlemen, the next governor and/or mayor of California or Los Angeles, Rick Caruso.

Thank you very much. That was fantastic. Great.

Thank you very much. That was great.

You got it, brother. Appreciate you, brother.