Palisades could rebuild with more affordable housing. But many in the wealthy area oppose the idea
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- The owner of a burned Shell gas station in the Pacific Palisades is proposing the neighborhood’s tallest apartment building with plans to include units for low-income residents.
- Pacific Palisades is one of the wealthiest communities in the country. Some homeowners and leaders in the rebuilding effort have expressed opposition, at times crudely, to new affordable housing.
- The fire destroyed 770 apartments covered by rent control. Landlords and tenants expect to struggle to return.
On the ashes of his family’s Shell gas station along Pacific Palisades’ main commercial corridor, Justin Kohanoff envisions one of the grandest apartment buildings in the neighborhood’s history. A Cape Cod style white-brick facade with awnings and a metal roof. Eight stories tall. And as many as 100 apartments, including some reserved for low-income residents.
It was always in Kohanoff’s long-term plans to redevelop the Sunset Boulevard gas station lot into housing. After the Palisades fire ripped through the community in January, long term became now.
“It’s gonna be beautiful,” Kohanoff said. “I can’t wait until it breaks ground and comes to fruition.”
Kohanoff knows it won’t happen without a fight.
Before the fire, the average home in Pacific Palisades cost $3.5 million, the median household earned $325,000 and the total number of rental units restricted as affordable housing was two. Some residents hope for even more exclusivity after the fires. One went so far as to propose in a community text message chain that a rebuilt Palisades should employ drones to track unfamiliar cars.
Kohanoff’s project represents a wild reimagining of housing in the Palisades, where the apartment buildings that lined Sunset topped out at a few stories, and stood out of the way of the ocean views in hillside mansions towering above.
While the devastation primarily affected the neighborhood’s wealthy, single-family-home enclaves, the Palisades lost more than 1,300 multifamily units and mobile homes in the disaster. Of those, 770 were in older buildings covered by the city’s rent control laws, and offered a modicum of affordability for longtime tenants that’s now disappeared.
The Palisades fire wiped out something rare in affluent, celebrity-studded Pacific Palisades: an affordable beachfront neighborhood.
Palisades homeowners and leaders of rebuilding efforts have expressed opposition, at times crudely, about the prospect of adding low-income housing. Even rebuilding the apartments that were there face challenges. Landlords expect to struggle through a morass of bureaucracy to bring back their buildings, and confusion over possible income or rent restrictions only adds to the unpredictability.
The combination of the resistance to low-income housing and destruction of rent-controlled apartments could spell the end of whatever income diversity existed in the Palisades prior to the fires, said Anthony Orlando, an associate professor at Cal Poly Pomona. His research has found natural disasters lead to higher rents for years.
“If you want people to live there who are not able to afford million-dollar or more properties, you have to have some sort of rent restriction in place,” Orlando said.
It was once possible for electricians, teachers and other middle- and upper-middle-class strivers to buy Palisades homes that over time became affordable only to the rich. Many of those older homeowners, bolstered by California laws that keep property taxes low despite escalating market values, stayed for decades prior to the fires.
Longtime renters who lived in rent-controlled apartments received similar benefits. Landlords with buildings constructed prior to October 1978 could charge new tenants the market rate when they moved in. But once tenants signed a lease, annual rent increases were limited.
Eighteen years ago, Guy Horton and his wife rented a two-bedroom townhome on Sunset. Soon after moving in, they had a daughter, then a second five years later.
“It’s the only home they’ve ever known,” Horton said.
His children grew up through recreation center ballet classes and attend Paul Revere Middle and Palisades High charter schools. Horton taught weekly tai chi classes on a bluff overlooking the Pacific Ocean.
The day of the fires, Horton, 56, grabbed a garden hose in a futile attempt to save the building. He was one of the last to leave the property. The family paid $2,800 a month in rent.
“It’s this myth that renters were more nomadic,” said Horton, who works as a strategist and researcher for a communications company. “Once you get a cheap apartment, you hold onto it for dear life.”
A Times analysis shows that half the homes destroyed in Pacific Palisades and Altadena were rentals, raising questions about the future of affordable housing in the communities.
Because of its wealth and high-quality amenities, Pacific Palisades fit the description of a community prioritized for affordable housing under state and local policies, with the potential for projects to receive financial and zoning incentives. That not only would include homes for middle-income earners, but also the army of lower-income gardeners, housekeepers and nannies that marched into the neighborhood every day to work.
Fear of a push for low-income housing fueled a conspiracy theory that Gov. Gavin Newsom was using the disaster to rezone the Palisades from single-family homes to apartments.
Political and community leaders have handled the affordable housing question delicately.
“Nothing is going to be done to the Palisades,” Mayor Karen Bass said when asked about rezoning on a walking tour of the neighborhood’s destruction in January. “What will happen will be done with the people.” A mayoral spokesperson reiterated to The Times that Bass is listening to community feedback on the issue.
Bass’ recovery czar, developer Steve Soboroff, said in an interview that he supported more apartments in the neighborhood, but that wasn’t the priority.
“We’re not rethinking,” Soboroff said. “We’re rebuilding.”
He said he’s encouraging commercial property owners to restore their buildings as they were before to take advantage of streamlined permitting rules, but also to build in ways that allow mixed-use apartments later.
Soboroff called the idea of blocking affordable housing in the Palisades “elitist.”
“In the deeds, it used to be, ‘No Jews and No Blacks’,” Soboroff said. “What are they going to put in the deeds now, ‘No Affordable Housing?’ That stuff doesn’t hold muster.”
Billionaire developer Rick Caruso, who lost the 2022 mayoral election to Bass and started a nonprofit foundation for wildfire recovery, has said that while he’s broadly supported affordable housing, the push to expand it in the Palisades is coming from “external interests” and would be detrimental to reconstruction efforts.
“Now is not the time for outside groups with no ties to the area to slow down the ability of people to rebuild their homes by trying to impose their agenda,” Caruso said.
A board member of Caruso’s wildfire foundation, Steadfast LA, went further. Joe Lonsdale, co-founder of data-mining company Palantir, has mocked the prospect of bringing affordable housing to the Palisades on social media platform X, posting a screenshot of a headline suggesting that the city may mandate it.
“Sorry guys, no rebuilding your fancy houses that burned down by the ocean in LA until there’s a new crack den installed right in the middle of the neighborhood,” Lonsdale wrote.
Any push for greater density would have to contend with risks of future fires and limited evacuation routes through the neighborhood’s winding hills and canyons. On Jan. 7, fleeing residents abandoned their cars on jam-packed Sunset Boulevard and escaped on foot with smoke billowing behind them. Bulldozers had to clear the road so emergency responders could enter the community.
Chris Spitz, who has lived in the Palisades for more than three decades, has been active in the neighborhood council for many years. She’s hoping to rebuild her own home and said the rent-controlled apartments that lined Sunset Boulevard allowed those who otherwise couldn’t afford the Palisades to raise their families there.
She’d like the buildings to return. But not new ones.
“We want to see the affordable housing,” Spitz said. “At the same time, we’re really against more density because of the impact on public safety.”
A mess of local and state laws lay out restrictions limiting tenants’ incomes and rents when destroyed apartments are rebuilt. These rules were written for voluntary demolitions and it’s unclear if they apply after wildfires.
A Newsom executive order from last month implies that all rent-controlled housing that burned down in the Palisades must be covered by rent control if it’s rebuilt. City legal officials have indicated the opposite through City Atty. Hydee Feldstein Soto’s sponsorship of new state legislation that, if signed into law, would apply rent-control rules to rebuilt apartments.
Landlords in the Palisades say they have many hurdles to clear before deciding what they’re going to do. Chief among the worries is removing debris from their properties and insurance, both for their current claims and prospects of future coverage.
With construction costs sky-high, some see too many challenges to come back.
“It’d be nice if we could rebuild, but we don’t see it happening,” said Larry Larson, general partner of Pacific Investment Co., which owned a 47-unit rent-controlled apartment building on Sunset that was destroyed.
L.A. developer Akhilesh Jha is pushing the envelope in proposing to tear down single-family homes and build apartments using new provisions in state law.
Kohanoff, the Shell station owner, is itching to move forward, and intends to submit a formal proposal within months. Though his building would soar above the city’s limit on building heights in the Palisades, he plans to file the project under state laws that limit the city’s ability to deny it.
To qualify for those laws, Kohanoff must restrict some of the apartments for low-income residents. A couple who earned less than $55,450 could rent a one-bedroom in one of those units for $929 a month, according to current regulations.
Kohanoff is prepared for a tussle.
“We have time on our hands so we can deal with the city and fight with them to build what we want to build,” he said. “We know they’re not going to give it to us on a silver platter.”
Horton, the former Palisades tenant, said it’s unlikely his family will return despite their attachment to the community.
They’ve come to that realization only recently. Soon after the fires were extinguished, they looked at Palisades rentals in buildings still standing.
The more they thought about it, the less coming back made sense. In the short term, they’d have to bring in safe drinking water. When they drove by, their daughters felt traumatized by the disaster’s rawness and the devastation around them.
Besides, the rent was more than double what they were paying before.
Times staff writers Sandhya Kambhampati and Doug Smith contributed to this report.
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