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

Hi listeners, and welcome to No Priors. 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 recorded 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. Rick 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, more broadly, in the state of California. Could you give us a very 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. I actually started out as a lawyer, and I practiced law for a number of years. Interestingly, it was with a large law firm out of New York. I say it was a large law firm because, after about 6 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 very small. I bought a duplex, fixed it up, rented it out, and then built my company over time. What I realized is that what I really love doing is being around people and creating spaces that people enjoy. The retail sector was the space where I could do that, so I began building very small retail centers. One by one, we built The Grove, the Americana brand, and Palisades Village. I've got an incredible team of people who are smart and innovative, and we've been able to accomplish some really good things.

That's great. One of the other key threads of your life has really been public service, and I believe that you've served under 3 different mayors in LA over time. You were the runner-up in the 2022 LA mayoral race, and you were the former president of LA's Police Commission. You've had a variety of roles. Can you tell us a little bit about your public service engagements?

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. At the age of 26, Tom Bradley tapped me to be on the board of the Department of Water and Power, and I then became president. After that, Dick Riordan asked me to go back on the board, so I was at DWP for about 13 years.

After that, Jim Hahn, the mayor at the time, asked me to head up the Police Commission because LA was having rising crime and we were losing a lot of police officers, very similar to what's happening today. He asked me 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. I've been very fortunate to have been involved in government service, and the reason I eventually decided to run for mayor was because I saw what could be done, especially if you're not beholden to getting reelected and are just focused on doing the right thing. It becomes a very powerful mindset to have.

Something I'd love to delve into in a couple of minutes is your thoughts on crime and what can be done today. One of the main topics we were going to talk about was the fact that LA has now been hit by a number of really terrible and significant fires of historic proportions. There have been historical precedents, such as 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 becoming one of the costliest 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, deteriorating infrastructure, or negligence? What do you think are the causes here?

All of the above. I don't think you can doubt that there's an impact of climate change, so let's just say that's a given. But the Palisades fire was fueled by 40 years of brush that was never managed. You had 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 run out of water, with fire hydrants empty, is completely insane.

There was a series of things, but it really starts with, frankly, incompetent leadership that wasn't prepared for something like this: clearing brush and making sure the reservoirs were full. There's a whole reservoir that was empty because it was drained for repairs. We had a fire in Malibu, 10 minutes from the Palisades fire, 3 weeks before. That's probably a pretty good sign that we needed to be prepared, and we knew the winds were coming. Unfortunately, I think it's borderline negligence. There's no doubt in my mind. It's clearly bad planning and bad leadership, and maybe you couldn't have prevented the fire, but I'm completely convinced you could have substantially mitigated it. We've lost the equivalent of 2 Manhattans in terms of land size. It's an unthinkable amount of devastation that's out there.

It seems like a lot of things really went wrong. One of the things that was striking, and that a lot of people saw on the news, on X, or elsewhere, was that the buildings you're responsible for, Palisades Village, actually survived the fire. You see this 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 did to protect that structure and how that could have been generalized to the rest of the Palisades?

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, so that's the first level of defense.

The second level of defense was that we have a rapid-deployment team. When there's any kind of natural disaster, we have protocols that come off the shelf. For fires, we immediately engage with companies that can pour retardant on the building, which we had out there. We had backup water systems out there, and we had a private firefighting department out there because we had been through this about 6 years prior, when we were building the Rosewood Miramar Beach Hotel and there were fires up in Montecito.

What we do know is that, as an owner of a commercial property, we don't want to take resources away from protecting homes. We bring in as many of our own private systems as possible. We did that up in Montecito and used that same playbook down here. It was very effective. In addition, we were able to save some adjacent buildings. In our village, there are 8 homes, and we saved those 8 homes. We 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 of this last budget cycle. They had equipment mothballed in parking lots. To me, it's a sin, what happened, and people have paid a dear price for the bad planning.

It's incredibly unfortunate. To your point, I think it's been pretty public that the firefighting budget was initially cut under Mayor Bass. You talked a little bit about water availability in the reservoir. Can you tell us a little bit more about what happened there? I've heard arguments that the houses burned down, and therefore there were open pipes and water was just leaking out, and that was the reason there wasn't enough water. Do you think that's just—

No.

Yeah.

I just got off the phone with an elected official in Congress who was finding every excuse in the world for why it wasn't anybody's fault, which I think elected officials are really good at. I think they have a PhD in that. But I was on the phone with my team, and a senior member of the rapid-response team we have was up there and embedded in the command staff. At about, I think, a little after 10:00 or 10:30, I got 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 are protocols that should be in place to keep those reservoirs full. But the largest reservoir was empty, and that was a huge problem.

The other thing that seemed to happen coincident with other fires was that there were 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. That's a real sickness, and these people need to be held accountable. In my opinion, for losing 28 lives, they need to spend time in prison for the rest of their life.

I know we had it afterward here in Brentwood. I'm at my home in Brentwood along Sepulveda, and it seems to be arson. There's some thinking that 2 or 3 other fires up at Griffith Park were arson. So it's a real problem.

There has been a real problem with crime more generally, not only in the Los Angeles area but also throughout the state. Could you tell us a little bit more about your experiences relative to LAPD, some of the things that you did there in the past, and what you think could be done going forward?

I think that during these fires there was a lot of looting. There were 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 engage in other criminal activity. I'd just love to get your thoughts on crime and what can be done in Los Angeles and the state more broadly today.

Crime in Los Angeles, like a lot of major cities, has been a real problem. There were a lot of decisions made by people who were not enforcing the laws. There have been a lot of decisions made that have pulled back the ability of officers to engage and be more proactive. I'm not talking about officers doing anything that's illegal, unconstitutional, or 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.

Fortunately, we just changed the law in California on misdemeanors and whatnot. Fortunately, we just changed our district attorney here. Nathan Hochman, I think, is going to do a very good job, just like they changed in San Francisco. 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 that they don't feel like they can be effective police officers, so they go to other agencies. We need to change that culture, start hiring, and bring in the things that Bill Bratton and I brought in 20 years ago: senior lead officers, more officers on the street, more officers walking beats, understanding communities, engaging, and being very preventative.

We also need to help people get a path in life that gets them away from criminal conduct. There are people who want a second chance, and we should give them a second chance. There are a ton of things we could do. I could take up the whole podcast talking about it, but it's all fixable if the right leadership is brought in that has the courage to do the right things and protect the public.

I think that's where LA City and this administration failed, and where the last administration, Eric Garcetti, failed: the number one job is to protect the public and their livelihood. 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?

We're spending billions of dollars to deal with the homeless situation that 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.

We have to start fighting drugs on the streets. We have open sales of drugs on the streets. Let me 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 number of people dying on the streets from overdoses. That tells you everything, and that is a disaster. It's sad at every human level.

We've got to get the drugs off the street. We've got to start enforcing the law. We've got to start going after the gangs that are selling drugs and being tough on them. Hopefully, with a new district attorney, and with a new chief of police, Jimmy McDonald, we're going to start making progress in that regard.

How much of all this is not enforcing laws that already exist versus laws that need to be changed?

There was one big law that needed to be changed, which was the definition of a felony versus a misdemeanor in terms of theft. Many of the laws aren't being enforced, or limits are being placed on how officers can engage, and I think that is a problem. It's absolutely a problem.

Looking forward, unfortunately, we have this area that's the size of 2 Manhattans that's been really devastated by fire. How do we rebuild this, and how do we do it quickly? When you start hearing about different aspects of this, it could take years—literally years and years and years. What do you think should be changed? What emergency powers should be used? How do we do this? What is the realistic timeframe to rebuild, and what are some of the things we should consider as we do that?

I really believe it shouldn't take years. 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 businessperson and put it in business terms, and make the only thing worth thinking about what's in the best interest of these residents to get them back in, then you would quickly run a schedule along parallel paths. You would 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 serial fashion: we're going to do cleanup, and then we're going to do this, and then we're going to do that. We're going to have 1 master contractor. I'm trying to break that out. It just isn't the right way to do it. You know from your experience seeing very successful businesses that you should run on multiple paths at the same time.

And you do it in parallel, for sure.

You have to.

Yeah. Mm-hmm.

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. We've got some of the greatest contractors, and everybody wants to lean in and help, so let's take advantage of it.

I'm trying to do as much of that as I can to move the elected officials along, and hopefully they've been pretty open to it. I'm optimistic.

Yeah, because I guess there's 1 piece of it, which is the cleanup and remediation. The second is actually the ability to build, and a lot of people run into the Coastal Commission, permitting, or other issues like that. What do you think should be done relative to more of the permitting and regulatory side of it?

Well, you're absolutely right. The good news is Gavin suspended the Coastal Commission and whatnot in order to pull a permit. That's good—a smart thing to do. We've got a list of things. He's asked for more suggestions that we're going to be giving him from our point of view on this.

The cleanup has to happen, yes. But these communities, whether it's Altadena or Pacific Palisades, are older communities. You've got to go in now and underground the power lines. You've got to go in now and upgrade the water systems. You've got 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.

What I'm hearing from some elected officials is, “We don't have the money to do that.” That's baloney. Of course you have the money to do it. You just had a disaster that's cost, what, a couple hundred billion dollars—that's 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 what you do. It's just basic business sense. It's not complicated. It's going to be really, really important for more of us to help our elected officials think through this in a different fashion. I would strongly suggest to people: stay engaged, stay active, and push your elected officials to do the right thing here.

We'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.

Mm-hmm.

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.

A year? Yeah.

It shouldn't be past a year.

Mm-hmm.

Maybe the hazardous cleanup is 3–4 months. The infrastructure can go in right after that. People will end up spending maybe a year to rebuild a house. Permits should all be very easy to get, and all the costs should be suspended.

Then we start mobilizing. Are there going to be supply chain constraints? Yes. All of those things are going to 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 were 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 6 months? Could we get there in 3 months? I just wonder if, to your point on parallelizing, you could parallelize certain aspects of infrastructure building with cleanup. Are there other ways to move even faster than that?

Maybe. I like the way you think. I think that's great. Once you get all the toxic waste out of there, you can start doing a lot of things at the same time.

Mm-hmm.

It's about getting the toxic waste. But listen, if there were a schedule that showed 6 months, I'd be all in.

Mm-hmm.

I'd be all in.

Yeah. And then I guess as we rebuild, sometimes there are real opportunities to do new things, right? We have a large area that has now been unfortunately decimated.

Right.

To your point, there's environmental remediation that needs to happen, and one of the things that seems to have been lost from society is public artworks, monuments, or public centers of different sorts. Is there anything you think we should put in place as we rebuild that we couldn't have had before? There's little environmental impact because there's no environment left, 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. It's a great idea. I was with a group the other day that wants to rebuild the Pali Rec Center. Now there's a wonderful opportunity: Let's make it a state-of-the-art rec center with all the things to support the kids in the surrounding area up there. Maybe that park gets bigger. Maybe there's an opportunity now to grow the size of that park.

Certainly, the infrastructure of that park—and the infrastructure of the whole town in terms of communication—should be upgraded. There are things going on around the world that we should be studying. There's asphalt that gets laid down to help charge your car as you're driving. I think you've got to think big.

To your point, you have this open palette. You have this once-in-a-multigeneration opportunity to do something to make this community as dear, sweet, and wonderful as it was, but also a city of the 21st century in terms of sustainability. We should be recycling the water up there and using it on the park. Our village takes all the irrigation water, holds it, contains it, and then ships it to the park. All of those kinds of systems can be put in now without 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. That was just 3 or 4 years ago, and it's really unclear to me what actually happened to all that money. Now we're running a big deficit. Where do you think California more broadly should be investing in its own future, and what are the big things it should go fix right now?

A lot of it goes back to infrastructure. I was on the governor's COVID committee and whatnot. I was amazed to learn how many kids did not have access to the internet. This is the 5th-largest economy in the world, and we had kids who had to go home for school but couldn't connect to 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. We need to upgrade our schools and our school system.

I think we get back to basic things: What would make residents of Los Angeles' lives better, more livable, and safer, and give them an opportunity to prosper? Let's organize our budget dollars around that. 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've got one.

Yeah, no. It just somehow went somewhere.

Yeah. In the papers.

Which is really unfortunate because the analogy that I've heard made is that California is almost like a petrostate, right? You have these countries, and if they have huge natural resources, they often end up in a downward spiral because they have so much money that it leads to corruption, misspending, et cetera.

Some countries, like Norway, have set up a sovereign wealth fund where the wealth from their oil goes into that fund, and then it's used to fund infrastructure projects over time. It's used almost like a piggy bank for the country. It seems like California could do something similar, with Hollywood and tech as their equivalent of oil and natural gas.

It's a great idea.

You know?

It's a great—

And so now would be the perfect time to have something like that available.

I love that idea. That's a great idea.

Yeah.

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.

Yeah, absolutely.

We went as a family. I loved it. The people are just terrific. Great culture. But to your point, that sovereign fund is, as you know, one of the largest sovereign funds in the world. They can't spend it quickly enough because it grows so fast.

Their education system, their health system, and their employment system there are really remarkable. I agree with that.

What are your future aspirations relative to public service? You obviously have tremendous depth of experience. You've shown extreme competence around all the things that you've done over time. I'm curious: What do you want to do next, or how are you thinking about the next chapter?

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, and the federal government through the lens of all the residents who want to get back in their homes.

Beyond that, I don't know. I obviously have a history of public service, and I love it. If there's an opportunity down the road, I'll take a look at it, but it's just not on the plate in front of me right now because I don't want to do anything that 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. Down the road, we have a lot of time to figure things out.

Mm-hmm. Amazing. Well, thank you so much for the time today. I really appreciate it, and thank you for sharing your insights.

Great being with you. Thanks for your time.