L.A. Faces Pressure From Wealthy Residents as the Pacific Palisades Rebuilds

The Pacific Palisades — the Los Angeles community where more than 6,800 structures were destroyed and nearly 1,000 were damaged in the California wildfires — is among the wealthiest enclaves in the United States.

The average household income is $375,000, three times the city average, and the typical home is worth $3.7 million. The community is home to Hollywood royalty, chief executives, political donors and hedge fund managers.

Its deep-pocketed, well-connected residents have access to power that few have: They can pick up the phone and call Gov. Gavin Newsom, Los Angeles Mayor Karen Bass or Steven Soboroff, whom the mayor appointed as the rebuilding czar. The sheer concentration of affluence — coupled with the frustration that the government’s response to one of the biggest American catastrophes in recent history has been inadequate — could greatly shape the future of the Palisades.

Past disasters have shown that in the aftermath, wealthier communities fare better than their poorer counterparts, and in its resurrection, the Palisades will be more expensive and more exclusive than it was before the fire tore through it last month, according to Max Besbris, a sociologist at the University of Wisconsin-Madison, who studies how climate change impacts real estate values, residential decision-making and inequality.

“I suspect that because these are pretty wealthy households with a lot of economic and also political power, they’re going to be able to dictate the terms of their own recovery,” Dr. Besbris said.

In Altadena, where 9,400 structures were destroyed and 1,000 damaged, the median household income is $130,000 a year. While Altadena’s rebuilding might be uneven, Dr. Besbris said, “recovery in the Palisades is going to be this really fast, big buildup back toward really valuable, very expensive properties.”

Some of the residents whose homes burned are calling for the neighborhood to incorporate as a separate city, similar to Beverly Hills, which has been an independent city within the county for a century and has its own mayor, City Council, fire department, police department and school district.

On Monday, the billionaire developer and onetime mayoral candidate, Rick Caruso, 66, announced a nonprofit to help expedite the rebuilding of the Palisades, Malibu and Altadena. And Patrick Soon-Shiong, the billionaire owner of The Los Angeles Times has created a leadership council of executives and lawyers to influence the cleanup effort.

“It’s about the Rolodex — who can I call in?” Dr. Soon-Shiong, 72, who was evacuated from his Brentwood home and is concerned about toxins in the debris, said in a telephone interview.

William Wyatt, 41, the founder of the Donerail Group, a merchant bank, joined Dr. Soon-Shiong’s council, upset about the destruction to the community and of his house in the Huntington neighborhood. Before the fires, he paid $1,000 for private security that patrolled his neighborhood because he felt that the police response was inadequate. To him, the fires revealed far deeper shortcomings.

“Our community deserves better,” Mr. Wyatt said. “As we build back, we must build back with a simple underlying refrain: what has been has not been good enough.”

According to estimates, the insured losses in the Palisades could range from $23 billion to $29 billion. As the community burned, fortunes often fell along property value lines, with some of the most coveted swaths, like the Riviera, with some homes valued at well over $30 million, largely spared, while the Alphabet streets, with smaller homes on postage stamp lots, were decimated. (Private firefighters have been credited, at least in part, with saving the most expensive properties.)

Mr. Caruso’s Palisades Village shopping center did not burn because he hired a private fire fighting company to defend the property.

In Mr. Caruso’s vision for the Palisades, the power lines will be buried, the water system and fire hydrants upgraded, and affordable housing will be limited. “Let’s not have social policies slowing down or impacting the ability for people to bring back the community that they’ve lost,” he said of the prospect of adding additional affordable housing, although state laws mandate that cities increase it.

Last week, grieving that his Pacific Palisades home had burned, Jason Finger, 52, a founder of the delivery app Seamless, fired off a message to one of the neighborhood WhatsApp groups. He wrote that low-income housing mandates would destroy property values and described a future where every car entering or exiting the Palisades would be tracked and unfamiliar ones followed by a drone — ones flagged as stolen would trigger an immediate call to the police; all new homes would be built to fire-resistant standards; next-generation infrastructure for water and energy, and all of it underground; controlled burns in the canyons and drones scanning for fires; and a free market for home insurance, or subsidized real estate taxes to offset high costs.

“This isn’t just about rebuilding homes; it’s about creating the community of the future, from scratch,” he wrote, adding later, “People move here for space, nature, the community, security — not urban density. This should be a model of sustainable, high-end, fireproof residential living, not a policy sandbox.”

The city of Los Angeles is already gently pushing back at the rogue rich.

Mr. Soboroff said that while he welcomes the input from the various constituencies, he’s focused on “getting people back to where they were” and does not want to waste time entertaining ideas that complicate the rebuilding process.

“I’m on the bus, to ‘yes.’ I got unlimited seating,” he said. “If they want to spend time on the bus to ‘no,’ I’m not interested.”

Some Palisades residents are also concerned that a richer Palisades would push out households with modest incomes. More than a third of the homes in the Palisades were bought in the 1990s or earlier, when property values were substantially lower, according to CoreLogic, a company that provides industry data and analytics.

Many of the homeowners, particularly the older ones, watched a lifetime of equity vanish into ash. Many households were underinsured, and some not insured at all. Already, some homeowners, particularly older ones, have been considering selling their lots.

Worried that the fabric of the community might fray as real estate changes hands, Dustin Bramell, 41, the founder of a tech startup, built a portal called Protectpali.com where residents looking to buy lots can connect with ones looking to sell. The idea, he said, is to keep investors out of the market.

He announced his new project on a neighborhood WhatsApp group a week after the fire. A few hundred people have added their information to the portal, most looking to buy. By creating profiles, a potential seller “can see if this person is actually not a part of the community,” Mr. Bramell said.

But local real estate agents say there are already signs that the Palisades will be rebuilt into a more luxurious community.

The Palisades “is probably going to be much more exclusive when we have the new infrastructure and every power line is buried and we have the sidewalks to walk to town and we are close to the beach and close to the mountains and everything is fresh and new,” said Laura Brau, 49, a real estate agent who lost her Palisades home in the fires, as did her parents.

Ms. Brau has heard from clients who want to buy a neighbor’s lot to double their own. She tells clients interested in selling to hold onto their lots for as long as possible, as she expects property values to soar. “There will be less lots to build on. Bigger properties, which means more money,” she said.

The city’s rebuilding plans may also reinforce disparities. Under Mayor Bass’s executive order, homeowners can rebuild 110 percent of their original square footage. So larger homes stand to get significantly bigger than the smaller ones. For example, a 10,000 square foot home could add an additional 1,000 square feet of living space to its footprint, while a 1,000 square foot house would grow only by 100 square feet, roughly the size of an extra bathroom.

After the Oakland Hills fire destroyed about 3,500 homes in 1991, the affluent community built back a new neighborhood with brand-new infrastructure, including buried power lines, and bigger homes built closer together, increasing the fire risk. Yet home values rose faster than in areas outside the burn zone, according to Gregory Simon, a geography professor at University of Colorado, Denver, who has studied the aftermath of the fire.

In the Palisades, residents are intensely focused on rebuilding a community where the farmers market was a weekly social hour and the annual Fourth of July parade was a who’s who of everyone in town.

“Everybody wants that dearness back, it was a slice of Norman Rockwell,” Mr. Caruso said.