Why Rick Caruso's Palisades Village Stood While Two Manhattans Burned

Elad Gil records on the afternoon of January 27, 2025, while the Los Angeles fires are still unfolding. His guest is Rick Caruso, founder of the real estate firm behind The Grove, the Rosewood Miramar resort, and Palisades Village — which, in the Palisades fire, was among the only structures in town left standing. Caruso was the runner-up in the 2022 LA mayoral race, former president of the police commission, and a member of the Board of Water and Power. He has served under three mayors and knows both city hall and Sacramento.

He started as a lawyer at a large New York firm. After about six years the firm imploded, which forced a business decision. He had always liked business. He bought a duplex, fixed it up, rented it out, and built the company from there. What he realized he loved was being around people and creating spaces they enjoy. Retail was the way to do that: small centers first, then The Grove, Americana at Brand, and Palisades Village, with a team he calls smart and innovative.

Public service started at 26, when Mayor Tom Bradley put him on the Department of Water and Power board. He became president, then Mayor Richard Riordan asked him back; he spent about 13 years at DWP. Mayor Jim Hahn later asked him to head the police commission because crime was rising and officers were leaving — a situation he says looks a lot like today. He brought in Bill Bratton as chief, and they got crime down to levels not seen since 1950. He ran for mayor because he had seen what could be done if a leader is not beholden to reelection and just focuses on doing the right thing.

Gil asks what is behind fires of historical proportion — worse, in this case, than the 1961 Bel Air fire, catastrophic on both the human and financial levels. Climate change, policy, decaying infrastructure, negligence: which is it? Caruso says all of the above. The impact of climate is a given. But the Palisades fire was fueled by 40 years of unmanaged brush in the hills behind the community. When the winds came up, the city was not prepared and the fire department was not properly deployed.

"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." A whole reservoir had been drained because they wanted to make repairs. Malibu, ten minutes from the Palisades, had a fire three weeks earlier, which he treats as an obvious signal to get ready, and the winds were already in the forecast. He calls it borderline negligence, bad planning, and bad leadership. Maybe the fire could not have been prevented. He is completely convinced it could have been substantially mitigated. The land lost, he says, is the equivalent of two Manhattans.

What struck people on the news was a ring of devastation around buildings Caruso's firm had built and protected. He says the lesson starts with design. They knew they were building in a fire-prone area, so they used no combustible materials. Even what looks like wood is concrete formed to look like wood. That is the first level of defense.

The second is a rapid-deployment team with off-the-shelf protocols for any natural disaster. For fires they immediately bring in companies that pour retardant on the buildings, backup water systems, and a private firefighting department. They had been through this about six years earlier while building the Rosewood Miramar Beach hotel during the Montecito fires. As a commercial owner, they do not want to take resources away from protecting homes, so they bring as much of their own private system as possible. Same playbook this time: eight homes in the village saved, some adjacent buildings saved, and thousands of jobs because businesses can reopen.

It is also, he says, an example of how much better the city could have been prepared. The city did not even have enough equipment. The fire department has been underfunded for so long, and Mayor Karen Bass cut even more in the last budget cycle, leaving apparatus mothballed in parking lots. To him that is a sin, and people have paid a dear price for the bad planning.

Gil has heard the theory that houses burned, pipes opened, and water leaked out, which is why pressure failed. Caruso has just gotten off the phone with a member of Congress finding every excuse why it was nobody's fault. Elected officials, he says, have a PhD in that. A senior member of his rapid-response team was embedded with command staff. A little after 10 or 10:30 he got the call: the hydrants are empty, we are not getting water. It had nothing to do with broken pipes. Everything up there is gravity flow from the reservoirs into the hydrants. Protocols should have kept those reservoirs full. The largest one was empty. That was the problem.

Secondary fires, some of them apparently arson, made the picture worse. Caruso calls it a sickness and says the people responsible need to be held accountable. Twenty-eight lives were lost; in his opinion those arsonists should spend the rest of their lives in prison. Afterward there was fire along Sepulveda in Brentwood, where he was at home, that seemed to be arson, and thinking of two or three other fires at Griffith Park. Looting ran alongside the flames, and some people suspected arson was being used as cover.

Crime in Los Angeles, as in other big cities, has been a real problem: laws not enforced, officers pulled back from proactive work. He is not talking about anything illegal, unconstitutional, or immoral. He means prevention, married to holding serial criminals accountable. California has just changed the theft line between felony and misdemeanor, and Los Angeles has a new district attorney, Nathan Hochman, with a similar change in San Francisco. The city is still badly understaffed. Officers who do not feel they can be effective leave for other agencies. The culture has to change, hiring has to restart, and the city needs what he and Bratton brought in 20 years ago: senior lead officers, more people on the street, walking beats, knowing communities, staying preventative — and a path for people who want a second chance.

All of it is fixable, he says, if the right leadership is brought in with the courage to protect the public. That is where this administration and the last one, under Eric Garcetti, failed. The number one job is to protect the public and their livelihood, and the city budget does not reflect that when it cuts fire and police. Billions have gone to homelessness with no avail; the number of people on the street is still growing. Drugs are sold in the open. The most active fire station in the United States, he says, is around MacArthur Park, because of how many people are dying of overdoses. That tells you everything. A new chief, Jim McDonnell, plus the new DA, is where he hopes progress starts. Asked how much is unenforced law versus law that needed changing, he says one big law needed changing and got changed. Many of the rest are simply not being enforced.

An area the size of two Manhattans has been devastated. Official talk is of years. Caruso spent most of the morning on the phone with elected officials arguing the opposite. If you approach this thinking like a government, it will take years. If you approach it thinking like a business person, with the only thing that matters being getting residents back in, you run a schedule on parallel paths: break the area into quadrants, bring in different contractors for cleanup and infrastructure, and incentivize them on a success timeline for speed at the quality expected. The current approach is serial — cleanup, then this, then that, one master contractor. He is trying to break that apart. Greater Los Angeles has some of the greatest minds and contractors in the world, and everybody wants to lean in. Use them.

On permitting, the good news is that Governor Gavin Newsom suspended Coastal Commission requirements for pulling a permit, which Caruso calls a smart thing to do. Newsom has asked for more suggestions. Cleanup has to happen, but these are older communities — Altadena and Pacific Palisades — so the moment to underground the power lines, upgrade the water systems, and upgrade the hydrants and reservoirs is now. Design it now so that the minute cleanup is done, crews are in the street laying pipe. Why would you rebuild the same system in a known fire-hazard area? Some officials say there is no money. He calls that baloney. A disaster now estimated at a couple of hundred billion dollars makes whatever you spend on prevention the best investment you can make. It is basic business sense.

He tells people to stay engaged and push elected officials, because lives are at risk, thousands of people have lost their jobs, and they have nowhere to sleep tonight. It is the greatest human disaster he has ever seen. His demand, if he were king for a day, would be a program that lets people start building in a year: three or four months for hazardous cleanup, infrastructure right after, easy permits, fees suspended, supply-chain constraints dealt with in the open. Gil asks whether cleanup and infrastructure can run even more in parallel, maybe six months. Caruso likes the thinking. Once the toxic waste is out, a lot can happen at the same time. If a schedule showed six months, he would be all in.

Rebuild is also a chance to add things the old street grid could not. He was with a group that wants to rebuild the Palisades rec center; now it can be state of the art for kids, and maybe the park gets bigger. Study what the rest of the world is doing, including asphalt that charges a car as you drive. His village already collects irrigation water, contains it, and ships it to the park. Those systems can go in now without holding anyone up from building. That, again, is the parallel path.

Around 2020 and 2021, Gil notes, California ran a surplus of almost a hundred billion dollars. A few years later the state is in a big deficit, and it is unclear what happened to the money. Caruso has never heard a good explanation either. It just went somewhere. That is unfortunate, because the investment list is not mysterious. He sat on the governor's Covid committee and was amazed how many kids had no internet in the fifth-largest economy in the world. The power grid cannot meet demand. Vegetation overgrowth is a forest-fire problem. Water delivery needs fixing. Schools need upgrading. Organize the budget, he says, around what would make residents' lives better, more livable, safer, and more likely to prosper.

Gil's analogy is that California is a petrostate whose oil is Hollywood and tech, and that resource wealth often breeds waste and corruption. Norway put oil revenue into a sovereign wealth fund and used it as a piggy bank for infrastructure, education, and health. Caruso loves the idea. He has been to Norway with his family, found it a happy place with a great culture, and notes that the fund is one of the largest in the world — they cannot spend it fast enough because it grows so fast. The education, health, and employment systems there, he agrees, are remarkable.

Asked about the next chapter in public service, he says the chapter in front of him is this one: as a private citizen, doing as much as he can to support the city, the state, and the federal government through the lens of residents who want to get back in their homes. He has a history of public service and loves it. If an opportunity appears down the road, he will look at it. It is not on the plate now, because he does not want anything to change the perception of why he is doing this. This is not about politics. "The problems we have now are so much bigger than politics."