With property damage from January’s Los Angeles and Ventura County wildfires estimated at upwards of $164 billion, California Gov. Gavin Newsom and LA Mayor Karen Bass each recently announced initiatives intended to expedite rebuilding. However, the sheer scale of the damage is not the only obstacle ahead. There are also regulatory issues along with the availability of materials and labor to complete hundreds of rebuilding projects. 

Connect CRE sounded out Alex DeGood, partner with real estate law firm Cox, Castle & Nicholson, on what the state and city initiatives seek to accomplish and the challenges that need to be surmounted. 

Q: Amid the LA/Ventura wildfires, Gov. Newsom and Los Angeles Mayor Bass announced measures intended to help accelerate the rebuilding process. What do these measures to seek to do, and what are their practical limitations? 

A: The measures seek to suspend laws that could impede rebuild and to expedite review of submitted rebuild plans. At the state level, the Executive orders: 

— Suspend CEQA and the Coastal Act for rebuilds up to 110% of the size of the previous structure, permitting such rebuilds by right 

— Permit construction of accessory dwelling units (ADUs) by right, including new ADUs 

— Make clear that local governments are the sole determiners of whether a structure qualifies to be rebuilt by right, and that any such determinations are not appealable to the Coastal Commission 

— Extends existing Coastal Development Permits for 3 years, and makes building permits issued for rebuilds or repairs good for 3 years (building permits usually expire after six months, but they are easy to extend – this simply makes them good for 3 years automatically) 

— In the City of Los Angeles, suspends requirements under state housing law that require replacement units in multifamily structures be reserved for low-income tenants if such units were previously occupied by such tenants or were presumed to be (state housing law presumes that, absent income documentation, a high percentage of units were occupied by low-income tenants if such units are demolished)

The City of LA has issued an order: 

— Creating 30-day expedited permitting review 

— Waiving any otherwise required discretionary review for rebuilds (such as compliance with adopted specific plans) 

— Eliminating the requirement to obtain a demolition permit 

— Waiving otherwise applicable all-electric requirements for new builds 

Q: How have city, county or state followed up on these initiatives in the weeks since the fires? Is there additional clarity now on the requirements at the property level for rebuilding?  

A: The state has clarified and added to its initial order, including clarifying to the Coastal Commission that suspension of the Coastal Act really means full suspension of the Act, and adding the elimination of low-income rebuild requirements, as detailed above. I would say there is more clarity than there was a few weeks ago. 

However, one major issue that remains relates to environmental contamination. The federal government is taking the lead in removing debris and scraping lots approximately 6 inches down (provided the individual property owner opted in to such action, as opposed to clearing the lot themselves). It is unclear whether this “blanket” debris removal/lot scraping will result in lots that are clean on which to build. And it is still unclear what the state or local governments will require, if anything, in the way of environmental testing before building permits are issued, or which agency will review and clear sites. 

Q: Is there a clearer sense of how long the rebuilding is going to take (months, years)? 

A: It will take years. Aside from the various regulatory issues (getting plans approved, clearing sites environmentally), there will likely be significant constraints due to a shortage of contractors and workers, in addition to supply chain issues (and inflation) for materials. 

Q: For clients who may have been affected by the wildfires, what advice are you providing at this time? 

A: My practice tends not to deal with single family home rebuild issues, which is the majority of what was destroyed. However, I anticipate I may have clients dealing with issues regarding commercial or multifamily properties. For those, I would advise getting all records you can as soon as possible – architectural, tenant rolls, etc. 

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