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

00:00For people 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, you want to bring your kids. Ideology did not save the palisades. Competency, whatever. 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 L.A. over the last decade is just tragic. It's sad to watch.

00:34Ladies and gentlemen, please welcome Rick Caruso. Thank you. This is, man. Great to see you, brother. Thank you for coming. Thank you very much. All right. Make my rounds.

00:55Thank you. Good to see you. Good seeing you. Hello, everybody. All right. Rick, we're nine months out from the tragic fires. So much has happened. So much has happened. Karen Bass, so incompetent, such a disgratziad. Disgratziad. Disgratziad. My Italian brother in here. But when you look at it in all seriousness, you know, you had some properties there. And you've always been an innovator. Everybody

01:28knows 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 watched this horrible incompetence. And yet you innovated and you had this incredible insight that when the fires were coming, you would get water in trucks and bring it to the Pacific Palisades and 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 when the fires were coming that Karen Bass didn't see well the first thing as it did is I stayed in town which I I think when you abandon the city I think when you want to be a leader you should probably be present but

02:24Good start. That's a good rule. Listen, we learned a lot when we were building our resort up in Montecito in Merrimar. We had fires there that were threatening the construction site. We were just under construction. And I had a very smart guy still deal on the team, name is Banyan. And he's the one that said, we can bring in private firefighters, we can bring in our own water trucks, we can bring in retardant. And listen, here's another rule that's really important when you're in the country.

02:54commercial side of the business. You want the firefighters that are working for the city or the county first and foremost to protect the homes. And we know that they should be doing that. So we want to have resources to protect our building so the resources aren't taken away from the residential areas. That's just, I think, being a good citizen. So fast forward to Palisades, we know we're in a fire zone. We built it with all non-combustible materials. We designed it so there was no open vents that an ember can get into. About 90% of the homes in the Palisades and Altadena burned from the inside out. So these wind warnings came, and I'm sure you all saw them, to the point that I didn't even believe that they could be true. Catastrophic, life-threatening

03:47wins. And our team rallied. We had... our firefighters or water or retardant stationed there two days before the fire and we were ready to go and i'm really proud of my team because they not only saved the village but we saved the whole block of properties and we were actually on the seventh loaning equipment to la fire department who was running short of equipment and we were actually loaning water because we were bringing in our water tanks when the water hydrants failed to work. Rick, it's been eight months, I guess, since these fires. How much of it is being rebuilt now?

04:28Not enough. I was out there last night. It's slower than it should be. And what is slowing it down? Slowing it down is an enormous amount of red tape. I mean, the previous speaker is 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. But let me just give you an example.

04:46since COVID we have still not we being the city has still not called back workers to City Hall so plan checkers in L.A. City

04:57are 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

05:10in 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.

05:21I don't know the answer. What's your, I've tried to call that number a number of times. What is your sense of the incentives there? What is driving that? Is it a union thing? Is it you're going to get unelected because this voting block wants to work from home? What is the incentive there? Incompetence?

05:39Because it makes no sense. I think this is what it is. I think there's a level of incompetence that's combined with literally a stagnation and there's no urgency to do anything. So there's no decision making. And all of us have been in situations in business or whatnot where you meet somebody that is just not well equipped.

06:03And so what happens when you're not well equipped to make decisions in either easy situations or complex situations, you sort of freeze up. So the kids run the class? Yeah. I'll throw out a theory and get your reaction. to it, which is California is a one-party state, and Karen Bass doesn't really need to serve the people because historically we haven't really had competitive elections. What's important is

06:25that she satisfies this political machine that keeps her in office. She wasn't a particularly distinguished candidate or anything like that. She'd just been around the block for a long time. And frankly, we had the best candidate to ever challenge Karen Bass, which was you, a successful businessman. Unbelievable. And the proof of that is, is that I love this crowd by the way this crowd is intelligent yeah yes they are and the proof of that was 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 because you would have made sure that there was water in the fire hydrants right David what's amazing to me is and we're waiting for this

07:03action after action report which is incredible we don't even have it yet but I am I was convinced nine months ago I'm more convinced today that fire was completely preventable And if you think I'm wrong and it wasn't completely preventable, the damage could have been significantly mitigated. The fire department was never pre-deployed. Where the fire started is the same exact place that there was a fire seven days before. I think what we're going to see is the fire department did not put that original fire out. It smoldered and reignited. When it reignited, the winds were not here yet.

07:42The smoke was going straight up. we had the largest reservoir not filled with water I mean I got the call at night the family was together your daughter's home is burning down and the firefighters their hoses have stopped there is no more water in the fire hydrants and I said how can that be with the second largest city in the country impossible but listen I think all of it is fixable

08:08so I'm an optimist and with the right kind of leadership and I'm not saying it's me. I'm just saying in general, in this state, in the city, and 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. And that's my hope for the... Why is this happening around the nation? When you look at Portland, Seattle, Chicago, New York, these cities around this country were seeing similar kind of systems of decay and degradation.

08:49But is it, no, but did you say? No, he said they're blue. But I want to, like, is that, is that really what's going on? Or is there a social thing that's going on or a societal thing that's going on that's causing people to say, let's let these cities kind of decay, let's stop doing our jobs, let's keep kind of ballooning the budgets but not delivering any results. What is it that's going on? I have a little bit different take.

09:11I have a different take that I think there's been a, a sense of apathy, I think people have not gotten engaged, not enough people vote and get involved, and we don't hold our elected officials accountable. People now that run for office 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. And now what we have is people just, they cycle through it. And what we need to do is get more people active. I don't care what your political persuasion is, get out and vote. But what we have seen, particularly are extremes that are very motivated to vote and they're moving these elected officials that

09:57are ideologues into positions. And 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? Have they seen enough? We're going to find out in about a year. What do the politicians mean, I think I've heard Karen Bass say this, I think I've heard Gavin Newsom say this, that they see that what happened in the palisades

10:24is an opportunity to reimagine. What are they imagining there? And how is that different than designating people rebuild their homes? I can't speak. I mean, I think they're talking about turning large parts of the palisades into low-income housing or something. something like that. Is there, I mean, should people be worried about this? I don't think so. I think there's probably fringe people who would like to see zoning changes. I don't believe

10:50that there should be zoning changes on the backs of people who have lost their homes and their businesses. If you want to do that, you want to have that discussion. Do it in an orderly fashion, but do everything you can to get people back into their communities, back into their homes. and I this city and government has got to have this culture that we've got your back we're here for you and we don't have that and you're not going to get people to reinvest in their own homes and their own community unless they think the city's going to be there with them how 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 you know to be honest but I also believe

11:34Meaning so is Gavin Newsome helpful? Has he done stuff to help? Like when all the people in LA who are still, you know, dispossessed and out of a home called him, is he able to apply pressure to the city of California or is it just city of LA, rather, or is it just chaos? I don't think it's chaos. I think actually Gavin has done some good things, waving Sequa, waving the Coastal Commission, those are really smart things that he's done. I'd like to see him do more for sure. What would you want him to do? What he could do is he could demand changes very quickly, and if not, he could exert independent California authority to make changes. These communities, Altadena and Malibu and Palisades, they need completely new infrastructure. They need all the power lines underground. They need 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.

12:32financially. And I think name calling probably is not 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. I really do. I think I think either one of them. But I think they have different, they obviously have different authorities and different powers. But I think either one of them. But I think either one can be very important you'd be great you'd be great in either one and um it'd be it'd be great to see thank you it'd be great it'd be great to get a to get an outsider someone you know into politics the thing i i i worry about is in california you've got ballot harvesting is legal and checking

13:22someone's voter ID is illegal and i just wonder if the combination of those two things makes it impossible for someone outside the political machine to get elected. What do you think? Well, you know, it may, David, but I may, I may give that a try. So we'll see, we'll see if it works. Rick, let me go the way it wanted to last time. Let me ask you a question. Hold on this one. I got a 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 eight minutes and 53 seconds left here.

13:59Can we get it done now? Can I get it done in eight minutes? All right, let's start. Mayor, clap. Who wants him to go for mayor? And now Governor. Governor. Wow. Whoa.

14:12Whoa. I just want to let you know right now, you have the full support of the all-in platform for whichever one you choose. I appreciate that very much. You and I have developed a bit of a friendship. We talk on text. and I, every time I go to one of your facilities and we talk about the detail, the detail that you have at the Grove,

14:33Pacific Palisades, this incredible Montecito property that I got to stay at recently. That attention to detail is what we need. He's angling for free nights. This is not what. He wants to do the room.

14:49This is not any attention to him. Oh, my God. I want you to talk about where did that, Where did this attention to detail, the understanding of customers and consumers in your private sector life, where did it come from? I love what I do. And if you go to the root of what we do as a company and you 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.

15:19It sounds corny. But if you do that, it gives you a plan. 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 you get to run a trolley through the middle of it. Is it really that simple? Like, 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? Are they... My competitors building an indoor mall with no trees or light and an escalator. And

15:54So 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, makes you happy, you see trees, you have water, you have flowers, there's nice music. Nobody's, nobody's, nobody's, nobody's, for a city or a stadium. So that's where that platform gives you this incredible power and authority to go do things. I mean, you look at the Rosewood Miramar, our resort, we have a full train running through it. everybody stayed away from that property and when I announced we're going to build a five-star hotel everybody said you're crazy you got a train running through it we made the train

16:32an amenity right we built a bar next to it with a bell that gets wrong when the train comes by and people celebrate it yeah so that's enriching lives I I just love watching people enjoy their life and that's what fuels my public service and it's what I really enjoyed when I worked for three mayor is when I worked for Tom Bradley and Dick Reardon and Jim Hahn, you can actually make changes in public service that makes 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. It's an amazing place. Governor Newsom is giving his state of the state

17:19tomorrow morning. If you were in that seat, what would you say at the state of the state of the state of California? What's your read on the state of the state of California? I think the state of California should lead the nation and everything that we do. I think the state of California should have the best housing. It should have the best school system, the lowest crime rate. We should not have homeless living on the streets. We should have opportunities for people to grow a business, raise their family, feel good about life, be enriched. And we should be in the top of every category that you want to measure quality of life. If you say we're the fourth largest economy in the world, which our elected officials say very often, then act like it

18:06and the people of California should be benefiting from being the fourth largest economy in the world. How would you deal with homeless? You've got these encampments. We're driving around here downtown L.A. Yeah. It had such a renaissance for a short period of time. It feels it's devolved again. It has. And it just seems to me that it just should be zero tolerance for camping on the street. Yet here we are again with encampments everywhere. What would be your approach? Well, my approach was simple when I ran is 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, build the housing that they need. We are spending

18:49in the city of Los Angeles, $900,000 per person that they're removing from the streets. $900,000 per year? Yeah. Oh, my God. There's billions and billions of dollars wasted. Redirect that to organizations that have incredible track records of being successful in Los Angeles, of housing people, giving them the services for mental health and drug addiction. And the first thing you do is you do not allow the sale of drugs on the street.

19:22Right now we do. I mean, 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 everything on, but he's taking a pretty

19:37hardline stance to the point at which he's activating the military. 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.

19:53I don't know how you can say I want to have a livable society, a quality of life, allow people to build a business, raise a family, and then at the same time you allow drug dealing to go on 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 that lives out in Encino is talking about the amount of encampments in a pulverda basin and what they have done now the homeless he's telling me is they've made these

20:22booby traps and connected homemade bombs to them oh my god so when the police of the fire department try to go in there this one firefighter was severely injured lost an ear because it hit a trip wire and 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 just got to do that. So one of the complications here is the Democrats don't seem to want to clean up these cities.

20:58The president has checkmated them by saying, if you don't clean it up, I'll clean it up. 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.

21:26The 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 sending in the National Guard in Washington, D.C. is a very different situation than sending the National Guard into L.A. or Chicago because Washington, D.C. is a federal territory. So that's different.

21:46What 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 in our life. 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 drug 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,

22:21very last resort. So I don't support that. I don't support it. But I do support a fully engaged leadership system that require that the laws be enforced and give police the opportunity and not only that demand that they enforce the law. Ladies and gentlemen, the next governor and or mayor. of California, Los Angeles. Rick Bruce. Thank you very much. That was fantastic. Thank you very much.

22:49That was great. Thank you very much. Thank you, David. My gosh. Appreciate you, brother. Thank you, brother.