Why I Left California - Billionaire Rick Caruso Responds To Criticism, Homeless & CRAZY Home Prices

In this in-depth conversation, billionaire developer and philanthropist Rick Caruso shares his insights on a wide range of topics concerning business, real estate, politics, and social issues facing Los Angeles and California. Drawing from his experience running iconic LA developments and his 2022 mayoral campaign, Caruso addresses misconceptions about billionaires, California's housing crisis, the city's governance challenges, the homeless epidemic, and the often harsh realities of managing property and politics in one of America's most complex urban environments.

Running for Mayor and Political Experience

Rick Caruso explains his decision to run for mayor of Los Angeles as a response to perceived negligence in city leadership. Having worked under three previous mayors, he witnessed firsthand how effective management can significantly improve the city. He emphasizes that his campaign was driven by a desire to solve systemic problems, not by an appetite for political power, despite common accusations related to his billionaire status. Caruso acknowledges the harshness and cutthroat nature of politics but notes that his lack of political career ambitions allowed him to focus solely on doing what he believed was right for the city. He stresses that government should adopt more business-like principles such as goal-setting, KPIs, and accountability to better serve residents.

California's Housing Market and Real Estate Challenges

Caruso remains bullish on the long-term value of Los Angeles real estate despite the current downturn, attributing LA's appeal to its diversity, climate, and spirit of innovation. However, he warns that rent control and overregulation have made operating businesses and building housing significantly more complicated and expensive, driving investment away to surrounding cities like Culver City and Glendale. He highlights the California Environmental Quality Act (CEQA) as a major regulatory hurdle that delays projects with extensive environmental reviews and potential lawsuits, inflating costs by an estimated 30%. Caruso advocates for revising CEQA to strike a better balance between environmental protection and development feasibility. He also calls for revamping the California Coastal Commission's authority to localize decision-making along the shoreline.

Tenant Lawsuits and Tort Reform

The discussion touches on the growing incidence of tenant lawsuits in Los Angeles, which puts immense financial pressure on landlords. Caruso notes that such legal actions, supported by laws funded through taxes like the mansion tax, often incentivize frivolous or damaging claims. He underscores the need for tort reform in California to protect businesses and property owners from costly legal battles that discourage investment and hurt the local economy.

Property Management Philosophy

Caruso shares his unique approach to managing retail and mixed-use developments. Inspired by his collaboration with Disneyland's Imagineering team, he likens running his properties to creating a themed experience focused on enriching lives rather than just leasing space. This philosophy translates to meticulous attention to aesthetics, safety, customer experience, and even small gestures like giving away branded blankets, which he sees as marketing investments rather than expenses. His properties maintain extremely low vacancy rates by carefully selecting tenants who contribute to a synergistic environment, supporting high revenue growth.

The Fate of Dead Malls and Retail Real Estate

Asked about redesigning failing malls, Caruso is blunt in his assessment: many such properties, like the Santa Monica Place, are fundamentally flawed, particularly with multiple floors that discourage shopper interaction. He suggests demolition and repurposing, often for residential use, as the most viable path forward, reflecting the changing nature of retail and urban development.

Biggest Investment Success and Failure

Caruso considers his greatest investment success to be building a luxury boutique hotel in Montecito—the Rosewood Miramar—even though he entered hotel development without prior experience. He attributes this success to having a clear vision, surrounding himself with experts, and focusing on unique property attributes, such as embracing a train that runs through parts of the resort as a feature rather than a flaw. Conversely, his most significant loss was a $10 million project in Carlsbad, derailed by a successful referendum organized by a competing mall owner. He learned the importance of staying closely connected with community stakeholders and adhering to a proven playbook for project approval.

Reflections on Wealth and Misconceptions about Billionaires

Caruso confronts the widespread skepticism and negative stereotypes attached to billionaires, emphasizing that his success comes from hard work, integrity, and creating thousands of jobs over decades. He rejects the idea that wealth is a fixed pie that comes at others' expense, advocating instead the growth mindset that economic success can expand opportunity for everyone. He acknowledges the public's frustration with high living costs but attributes these problems largely to policy decisions and mismanagement rather than individual entrepreneurs.

Political Party Registration and California's Divided Politics

He recounts his own journey from Republican to independent and finally to Democrat for practical voting reasons tied to California's closed primary system, which restricts voters to choosing candidates only within their registered party. Caruso criticizes the polarized political climate and encourages a return to more centrist, common-ground approaches. He underscores the importance of attracting businesses back to California through welcoming policies and streamlined regulations to foster economic growth.

The Palisades Fire and Disaster Management

Reflecting on the catastrophic Palisades fire, Caruso condemns the official negligence that allowed a fire to reignite after being prematurely declared extinguished, citing pending investigations and cover-up attempts. He details how his own developments survived through proactive private firefighting efforts, fire-retardant materials, and pre-planning. Despite saving his properties and neighboring blocks, he reports no meaningful outreach or support from city officials afterward. He expresses concern for the broader community's slow recovery, lack of expedited permits, and inadequate financial assistance for affected residents and businesses.

California's Budget, Spending, and Accountability

Caruso critiques the state and city governments for budget mismanagement and lack of accountability, despite overseeing massive funds. He believes better prioritization and operational reforms akin to business efficiency could vastly improve outcomes. Referencing federal spending, he notes the vast amounts involved but laments the absence of transparent, effective use to directly benefit communities in need.

Homelessness and Solutions

Caruso discusses Los Angeles' homeless crisis as the worst in the nation but firmly believes it is solvable. He lauds organizations with demonstrated success in housing and rehabilitating the homeless by combining shelter with comprehensive services like mental health and addiction treatment. He sharply criticizes costly, ineffective city programs that merely place individuals in hotels without support. According to Caruso, large parcels of public land could be converted to affordable housing to accommodate displaced populations. He contrasts approaches in cities like Miami and Newport Beach, where homeless populations are dramatically reduced through combined enforcement of anti-camping laws and provision of housing resources.

Perspectives on Money, Work Ethic, and Gratitude

Caruso offers advice on building wealth, emphasizing that passion alone is insufficient; success requires playing to one's strengths, hard work, and integrity. He shares how surrounding oneself with smart collaborators is key to overcoming inexperience. Reflecting on his own upbringing by hardworking, humble grandparents, Caruso praises values of gratitude, humility, and generosity instilled in his children. He finds joy and "psychic income" in seeing the tangible human happiness his developments bring, such as festive gatherings at the Grove.

Final Thoughts on Leadership and Change

Throughout the conversation, Caruso underscores the necessity for sincere leadership committed to pragmatic solutions and community engagement. Whether through government or business, he argues for clear goals, data-driven accountability, and a higher purpose beyond personal gain. He remains passionate about improving Los Angeles and California, contemplating future runs for mayor or governor, hoping to be a catalyst for the "change the region badly needs."