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

Speaker 1 Hi listeners and welcome to New 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.

Speaker 1 This is recorded on the afternoon of January 27th as everything is still changing.

Speaker 1 Rick is the founder and former CEO of Caruso, a real estate company that has developed properties around Southern California like the Grove, the Mirmar Resort, and Palisades Village, which was the only structures in the town left standing in the wake of the Palisades fire.

Speaker 1 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.

Speaker 1 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.

Speaker 1 Rick, thank you for joining us on No Priors today.

Speaker 2 Well, thank you for having me. Good to be here.

Speaker 1 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 city of California.

Speaker 1 Could you just 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?

Speaker 2 Sure. Well, I actually started out as a lawyer and I practiced law for a number of years.
And interestingly, it was with a large law firm out of New York.

Speaker 2 And I say it was a large law firm for the reason that after about six years of being there, the law firm imploded

Speaker 2 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.

Speaker 2 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.

Speaker 2 building very small retail centers. And one by one, we built the Grove.
We built the Americano brand, Palisades Village. And I've got an incredible team of people and they're smart and innovative.

Speaker 2 And we've been able to accomplish some really good things.

Speaker 1 That'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 LA over time.

Speaker 1 You were the runner-up in the 2022 LA mayoral race.

Speaker 1 You were 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?

Speaker 2 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.

Speaker 2 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.

Speaker 2 After that, Dick Reardon asked me to go back on the board. So I was at DWP for about 13 years.

Speaker 2 And then after that, Jim Hahn, the mayor at the time, asked me to head up the police commission because LA

Speaker 2 back then was having really rising crime. We were losing a lot of police officers, very similar to what's happening today.

Speaker 2 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

Speaker 2 I've 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.

Speaker 2 especially if you're not beholden to worry about getting reelected, if you're just focused on doing the right thing, it becomes a very

Speaker 2 powerful mindset to have.

Speaker 1 Something I'd love to delve into in a couple of minutes as we get into all this, and in particular, some of your thoughts on crime and

Speaker 1 what can be done today. I think one of the main topics we were going to talk about was also just the fact that

Speaker 1 LA has now been hit by a number of really

Speaker 1 terrible and significant fires of sort of historical proportion. And,

Speaker 1 you know, there have been 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.

Speaker 1 What is behind this trend? Are wildfires getting worse due to climate change? Is it other factors like policy, deteriorating infrastructure, negligence? Like, what do you think are the causes here?

Speaker 1 All the above.

Speaker 2 I mean, listen, I don't think you can doubt that there's an impact to climate change. So let's just say that's a given.

Speaker 1 But

Speaker 2 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,

Speaker 2 the city was not prepared adequately to deal with it. The fire department was not.
properly deployed to deal with it.

Speaker 2 To be in the second largest city in the United States and to run out of water and and have fire hydrants empty is completely insane.

Speaker 2 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.

Speaker 2 There'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.

Speaker 2 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.

Speaker 2 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.

Speaker 2 We've lost the equivalent of two Manhattans in terms of land sizes. It's an unthinkable amount of devastation that's out there.

Speaker 1 Yeah, no, it seems like there was a lot of things that really went wrong.

Speaker 1 And I think one of the things that was striking that, and that a lot of people saw on the news or on Axe or other places was that the buildings that you were responsible for, Palisades Village, actually survived the fire.

Speaker 1 And so you see these sort of ring of devastation, and then the buildings that you built and protected are intact.

Speaker 1 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?

Speaker 2 Yeah, no,

Speaker 2 it's a good lesson on being prepared, but it started with design. You know, knowing that we were building in an area that was prone to fires, we did not build with any combustible materials.

Speaker 2 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.

Speaker 2 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.

Speaker 2 And for fires, we immediately engaged with companies that can pour retardant on the building, which we had out there. We had backup water systems out there.

Speaker 2 And we had a private firefighting department out there because

Speaker 2 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

Speaker 2 as a 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.

Speaker 2 We use 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.

Speaker 2 We 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.

Speaker 2 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 and people have paid a dear price for the bad planning of it

Speaker 1 yeah and it's incredibly unfortunate and um to your point i think it's been pretty public that the firefighting budget, I think, was initially cupped under Amir Bass. And,

Speaker 1 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?

Speaker 1 Because I've heard arguments that, you know, the houses burned down and therefore there was

Speaker 1 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

Speaker 1 nope?

Speaker 2 You know, I just got off the phone with an elected official in Congress that was finding every excuse in the world

Speaker 2 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 no, listen, I was on the phone with my team.

Speaker 2 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 10:30, I get the call.

Speaker 2 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.

Speaker 2 So those reservoirs draining or coming into the hydrants, and there's protocols should be in place that's keeping those reservoirs full, but the largest reservoir was empty.

Speaker 2 And that's, that was a huge problem.

Speaker 1 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.

Speaker 1 How much of a role do you think arson played in the broader set of fires as well as in the Palisades fire?

Speaker 2 It appears to be pretty significant. I mean, that's a real sickness.
And these people need to be held accountable.

Speaker 2 And in my opinion, losing 28 lives, you know, they need to spend time in a prison for the rest of their life.

Speaker 2 But I know we had it

Speaker 2 afterwards here in Brentwood. I'm at my home in Brentwood along Sepulveda.
It seems to be arson. There's some thinking there was two or three other fires up at Griffith Park, I think it was arson.

Speaker 2 So it's a real, it's a real problem.

Speaker 1 and there's been a real problem with crime more generally uh not only in um 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 uh 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 as a cover to go loot or you know other sort of criminal activities i just love to get your your thoughts on crime and what can be done in Los Angeles and the state more broadly today.

Speaker 2 Well, you know, crime in Los Angeles, like a lot of major cities, has been a real problem.

Speaker 2 And there was a lot of decisions made by people that were not enforcing the laws.

Speaker 2 There has been a lot of decision made that have pulled back the ability of officers to engage and be more proactive.

Speaker 2 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.

Speaker 2 And you do have to marry that with holding especially serial criminals accountable. Now, fortunately, we just changed the law in California on the misdemeanors and whatnot.

Speaker 2 Fortunately, we just changed our district attorney here, Nathan Hockman. I think he's going to do a very good job, just like they changed in San Francisco.

Speaker 2 So those kind of things are going to be very helpful. But

Speaker 2 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.

Speaker 2 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.

Speaker 2 Senior lead officers, more officers on the street, more officers walking beats, understanding communities, engaging, and be very preventative.

Speaker 2 And then we also need to help people get a path in life that gets them away from criminal conduct.

Speaker 2 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.

Speaker 2 But it's what I do want to say, though, it's all fixable.

Speaker 2 If the right leadership is brought in that has the courage to do the right things and protect the public.

Speaker 2 And I think that's where LA City and this administration failed and the last administration, Eric Garcetti,

Speaker 2 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.

Speaker 1 Where does a lot of the budget go instead, or where do you think the budget should be reallocated from?

Speaker 2 Well, we're spending billions of dollars to deal with the homeless situation that we have in LA to no avail.

Speaker 2 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. And

Speaker 2 we have to start fighting drugs on the streets. We have open sale of drugs on the streets.
Well, put it this way: the most active

Speaker 2 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.

Speaker 2 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.

Speaker 2 We've got to start going after the gangs that are selling drugs and being tough on them.

Speaker 2 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.

Speaker 2 How much of all this um 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 did which is the definition of a felony versus a misdemeanor in terms of theft

Speaker 2 many of the laws aren't being enforced or they're being put on hold on how officers can engage. And I think that is a problem.
It's absolutely a problem.

Speaker 1 Yeah.

Speaker 1 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.

Speaker 1 How do we rebuild this and how do we do it quickly? Because when you start hearing about different aspects of this,

Speaker 1 it could take years, you know, literally years and years and years. What do you think should be changed? What emergency power should be used?

Speaker 1 Like, how do we, what is the realistic timeframe to rebuild? And what are some of the things we should consider as we do that?

Speaker 2 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.

Speaker 2 If we approach this with all due respect, thinking like a government, it's going to take years.

Speaker 2 If we approach this thinking like a business person and putting it in business terms

Speaker 2 and have

Speaker 2 the only thing worth thinking about is what's in the best interest of these residents to get them back in,

Speaker 2 then you would quickly run a schedule along parallel paths,

Speaker 2 break down the area into different quadrants, bring in different contractors for cleanup and infrastructure, and incentivize them

Speaker 2 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.

Speaker 2 We're going to do cleanup and then we're going to do this and then we're going to do that and we're going to have one master contractor. I'm trying trying to break that, break that out.

Speaker 2 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.

Speaker 1 And you do it in parallel for sure. Yeah.
You have to.

Speaker 2 And,

Speaker 2 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.

Speaker 2 And

Speaker 2 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.

Speaker 2 And

Speaker 2 hopefully, and they've been pretty open to it. So I'm optimistic.

Speaker 1 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.

Speaker 1 And 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

Speaker 1 more the permitting and regulatory side of it?

Speaker 2 Well, the good news is, Annie, you're absolutely right. The good news is Gavin suspended Coastal Commission and whatnot in order to pull a permit.
So that's good.

Speaker 2 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.

Speaker 2 The cleanup has to happen, yes. But this community, whether it's Altadena or Pacific Palisades, these are older communities.
You got to go in now and underground the power lines.

Speaker 2 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.

Speaker 2 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.

Speaker 2 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.

Speaker 2 That's baloney. Of course, you have the money to do it.
And you just had a disaster that's cost, what, a couple hundred billion dollars is now the estimate.

Speaker 2 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.

Speaker 2 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

Speaker 2 suggest to people strongly stay engaged stay active and be pushing your elected officials to do the right thing here we've got people's lives at risk we got thousands of people who've lost their jobs they have nowhere to sleep tonight right this is a really a human disaster to great the greatest degree that i've ever seen

Speaker 1 How quickly do you think we could get into a place where we're starting to rebuild a year if we do the things that you say a year?

Speaker 2 shouldn't be past a year

Speaker 2 maybe the hazard is cleanup is three four months the infrastructure is going in right after that people

Speaker 2 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 um

Speaker 2 and then we start mobilizing is there going to be supply chain constraints yes

Speaker 2 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 i just wonder if to your point i'm parallelizing Could you parallelize certain aspects of infrastructure building with cleanup?

Speaker 1 Are there other ways to kind of move even faster than that?

Speaker 2 Maybe. I like the way you 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.

Speaker 2 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.

Speaker 1 Yeah. And then I guess since we rebelled, sometimes there's real opportunities to do new things, right? So we have a large area that now has been unfortunately decimated.
Right.

Speaker 1 To your point, there's environmental remediation that needs to happen.

Speaker 1 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.

Speaker 1 Is there anything you think we should put in place as we rebuild that we couldn't have had before?

Speaker 1 Because there's little environmental impact because there's no environment in some sense, at least for the time being.

Speaker 2 Should we build?

Speaker 1 large-scale public art or parks or anything else into this into some of these spaces that have been decimated?

Speaker 2 Yeah, no, and it's a great idea. And I was with a group the other day that wants to rebuild the Pally Rec Center, but now there's a wonderful opportunity.

Speaker 2 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.

Speaker 2 And maybe that park gets bigger.

Speaker 2 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.

Speaker 2 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, you're driving.
You know,

Speaker 2 I think you got to think big. To your point, you have this open pallet.

Speaker 2 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.

Speaker 2 We 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.

Speaker 2 You know, all of those kind of systems can be put in now and

Speaker 2 not holding anybody up from building. That goes back to the parallel path.

Speaker 1 Yeah. So in 2021, 2020, right around there, California ran a massive surplus of almost $100 billion.

Speaker 1 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.

Speaker 1 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?

Speaker 2 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.

Speaker 2 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?

Speaker 2 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.

Speaker 2 The water delivery problem, we need to go fix that. We need to upgrade our schools, our school system.

Speaker 2 Just, I think we get back to basic things of saying

Speaker 2 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.

Speaker 2 And we have to start prioritizing. But to your point,

Speaker 2 how did we blow so much money? I really don't know.

Speaker 2 I've never heard a good explanation.

Speaker 1 I don't know if you have a- Yeah, no, it's uh, it's just, it just somehow

Speaker 1 went somewhere. Yeah.

Speaker 1 Which is really unfortunate because if you look at

Speaker 1 the analogy that I've heard made is that basically

Speaker 1 California is almost like a petrol state, 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.

Speaker 1 It leads to corruption, misspending, et cetera.

Speaker 1 And so 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.

Speaker 1 It's used as almost like a piggy bank.

Speaker 1 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.

Speaker 1 And so now would be the perfect time to have a, have something like that available.

Speaker 2 I love that idea. That's a great idea.
And have you been to Norway?

Speaker 1 Yeah, it's a nice place. It's unbelievable.

Speaker 1 It's a very happy place. They've done a nice job.
They've done a great job.

Speaker 2 We went as a family.

Speaker 2 I loved it.

Speaker 2 And the people are just terrific.

Speaker 2 Great culture. But to your point, and that sovereign fund is, 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.

Speaker 2 But their education system, their health system, their employment system there

Speaker 2 is really remarkable.

Speaker 1 I agree with that. What are your future aspirations relative to public service? You obviously have huge depth of experience.

Speaker 1 You know, 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?

Speaker 2 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.

Speaker 2 Beyond that, I don't know. Listen, I obviously have a history of public service.
I love it.

Speaker 2 If there's an opportunity down the road, I'll take a look at it, but it's just not sort of on the plate in front of me right now because I don't want to do anything now

Speaker 2 that

Speaker 2 sort of hurts or changes the perception of why I'm doing this. This isn't about politics.

Speaker 2 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.

Speaker 1 Amazing. Well, thank you so much for the time today.
Really appreciate it. And thank you for sharing your insights.

Speaker 2 Great being with you. Thanks for your time.

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