Rebuilding Los Angeles with Guest Luke Melchior

[00:00:06] If you're a California conservative, a libertarian, a moderate Democrat, believe in common sense, or just the same person, this is the political podcast for you. It's the California Underground Podcast.

[00:00:27] What's going on, everybody? Thanks for tuning into another episode of the California Underground Podcast, the most trusted podcast for all things California politics. I'm your host, Phil. And as always with me, my trusted cohost, the best, the fastest, fastest researcher in the West, Camille. And tonight we have a very special guest, Luke Melchior. I think I got that name right.

[00:00:47] Luke has been posting and keeping us updated and informed on what is going on with the rebuilding in Palisades, in Los Angeles regarding the wildfires. Luke, welcome to the show. Luke Melchior, California Underground Podcasts Thank you for having me. Great to meet you guys. Luke Melchior, California Institute for the Dave Kuntz Absolutely. So why don't we just start right here and let your listeners know who you are, what you do, and we'll start there.

[00:01:12] Luke Melchior, California Department of Public Health Yeah. So I'm a general contractor here in the Los Angeles area and we've been boots on the ground since day one. Luke Melchior, California Department of Public Health So, I mean, the fires weren't even done burning yet. And we were figuring out how to mobilize, get up there based on past fires like in Santa Cruz, Paradise. You know, some of these places we even met with the mayors and city managers while the fires were still burning to try and get a game plan of exactly how to get into these communities.

[00:01:42] And help them get cleaned up quickly because that's that's the first big obstacle. Luke Melchior, California Department of Public Health So, I mean, the last 10 years, you know, it's Paradise, for example. It's been almost seven years and they're only 20% rebuilt. So there's definitely a lot to learn from those past fires.

[00:02:11] So you've been on the ground. I remember I think I saw like your first video probably a couple months back right after the fires and it kind of went viral. I'm not gonna lie. A lot of people shared your videos of like what's going on with like FEMA and EPA and like walk me through like first days after like when people were allowed to get back in and start looking at like how bad is the damage and what do we got to do here?

[00:02:40] Yeah. So Altadena was much easier to access right after the fires than Pacific Palisades. It opened up probably two weeks sooner. And even now, if you go into Pacific Palisades, they've got it heavily guarded with National Guard. You don't see that around Altadena at all. So just by virtue of the ease of access, that was the first place that we got into and just immediately started, you know, talking to homeowners,

[00:03:09] getting feedback from them on whether they were covered with insurance, what their plan was going to be if they wanted to try and rebuild. And fortunately in these communities, everybody wants to stick around. So being that Altadena was open, we started to see the mobilization effort. It was like within a week, they, Anvil, which is one of the big contractors under ECC who got the primary contract.

[00:03:38] They ended up setting a huge yard up. And that's the video that you're referencing. The first video that I made was, you know, basically documenting that Anvil had already rolled into town, and had taken over a big piece of what I assume is government property. And tons of equipment, tons of, you know, brand new rental trucks that they were eager to get their decals on. And basically getting mobilized for this big debris removal program.

[00:04:07] It was maybe two weeks later that Pacific Palisades opened up. And similar thing over there, it's a different, you know, they've got a couple other big contractors over there. But Anvil, at least in Altadena, is the big one and the one that I posted the video about. Okay. So did you run into, I mean, Richard Grinnell was on the ground.

[00:04:33] There are a lot of government officials taking press conferences, you know, and that's sort of one of the reasons why we want to have you on is because it was all like hands on deck right afterwards. And then they all got their photo ops. Everyone was seen walking through and then that's it. Like we haven't heard anything since then. So what was it like after the politicians were done getting their photo ops and like they left? Right.

[00:05:00] So I can tell you what's been going on from my perspective as a private contractor. And I'm in contact with, it seems like every other private contractor who's trying to work in these areas. And it has been nothing but a roadblock in order to get permits, in order to work. Even as recently today, harassment by like the contractor state license board.

[00:05:24] So there's been this huge effort as soon as these, these big government contractors have rolled into town. There's, you know, a multimillion dollar marketing campaign to get everybody to opt in to this, what they're calling a free debris removal program. But it's not free at all. You know, cost upwards of $180,000 per lot to clear through these, this government program.

[00:05:50] And how that money is distributed is FEMA basically funds the U.S. Army Corps of Engineers. There's the U.S. Army Corps of Engineers has a primary contract with ECC. And then from there, they, there's about four tiers of subcontractors. A couple of big ones, like I said, Anvil, I believe it's Shamik, a few really big players.

[00:06:14] But what's been going on is their huge marketing campaign to get everybody to opt in to their government program. And meanwhile, they're, you know, absolutely roadblocking the private sector as much as they can. Switching the permitting procedure on a regular basis. Issuing permits and then calling people and saying, well, hey, we issued you a permit, but actually you can't start performing the work just yet until you call us and get permission. And, you know, we're on the phone saying, well, that's what a permit is.

[00:06:44] A permit is permission to start work. So it's a daily battle to keep these permits active to, you know, dealing with the landfill. They're, they're basically trying to block us out of the landfills at different times. So it's a major change. Yeah. Oh, you just, you're screed away Blake for a second, but you're back. I apologize. Yeah, you're, you're lagging a little bit.

[00:07:10] If you want to log off and log back on that, let's see if we can get a better connection. Cause I want our listeners to make sure that we, we don't miss anything. Um, yeah, I was watching some of his videos prior to this episode and I, there was one where he like pointed out about the army army corps, like 12 of them standing around. And then he had like five guys and, um, there he is.

[00:07:41] Any better? So far. But yeah, that sounds a lot better. Okay. Yeah. I was just talking about, um, the, one of the videos I saw of you was regarding the, the army corps engineers who you, you were filming. And like one guy who like came out and was like, it's like, Oh, you, you can't film here. It's a public road or where, or, and you're like, it's a public road, man. I can film wherever I want. And you filmed like 12 army corps engineers, like standing around. And then you had a rebuttal of like, Hey, I got five guys behind me who are doing the work of 12 guys standing around.

[00:08:10] Um, so that's, you know, the goal of that's to expose what's going on here, which is just like we're seeing everywhere in the country. You know, doge is exposing a lot, but massive government waste. Um, you know, the government coming in here, over staffing these jobs, you know, two to three times the workforce that they need, you know, layers and layers of supervision. And these are all prevailing wage jobs. So huge cost to the taxpayer.

[00:08:40] And again, being advertised is free, which would say anything, but, um, so, so trying to shed the light on that. And the, the biggest problem, like I said, is blocking out the private sector who should be primarily responsible for this kind of a thing. Anyway, we've, we've got so many contractors directly in these areas that, you know, not to sound crass, but can, can benefit from this.

[00:09:03] And we'd like to keep some of that money in this rebuilding effort in those communities, rather than it's going to all these big contractors who are coming in from. Yeah, absolutely. You know? Yeah. We actually just, uh, on a podcast recently, we were discussing doing away with minimum wage, but we talked about if you, if you let private sectors compete, you're going to have more competent companies because they're going to be, they're going to, you know, the employees are going to want the better wages.

[00:09:31] The companies are going to want to be the top company and with the government. And you just stack all these people in there and they don't have to actually work for their wages. They just like you took a video. They're just standing around, but these are taxpayer dollars. They're going to want to be the top company. Hands in pockets, literally. I mean, it's like not even pretending to be working hard, um, standing around with their hands in their pockets, literally. I'm sorry.

[00:09:58] This is totally not the point of this podcast, but I just want to point out that in the state of California, at least you absolutely are allowed to film these things. Um, I had this event that I won't get into that happened though at the post office a few years back where, uh, I got into an argument with a guy who was just like freaking out on me inside of a post office. And, um, he started filming me. I wasn't even doing anything. He was going ballistic on me and he starts filming me and I ended up having to call the police on him. And the police were like, well, he's allowed to film you.

[00:10:27] Like there's, that's absolutely 100% legal. He can film like out in public, whatever. So just for anyone who's ever like in that sort of situation, you're allowed to film. Mm-hmm . So don't be intimidated. Absolutely. Maybe I'm going like way, way back, like even before all this. And were you always this outspoken or what like prompted you to be like, y'all like, I'm going to put this, I'm going to put this up on my Instagram.

[00:10:56] I'm going to talk about this. Um, were you worried about like blowback at all? Like for your company or something like that? Or are you just like, I'm going to do this because I think I need to speak out about this. Yeah. I'm getting blowback. Um, you know, having the contractor state license board, you know, filing whether it's other contractors or I, I suspect some of these government contractors issuing complaints to the contractor state license board against me that I've had to resolve.

[00:11:24] Um, suspensions of my license that I had to, you know, for things that were, you know, absolutely ridiculous, but took time and affect my reputation that I had to go in there and resolve. Today on one of our work sites had the contractor state license board show up and just looking for things to try and bust us on. So, yeah, it's, there's what I would consider to be retaliation for sure.

[00:11:53] They're, they're not stoked about the things that I'm, I'm posting. I've always been outspoken. Um, but I, I'd say this is one that I have a vested interest in. So. Is this a, I, I only just started perusing your Instagram yesterday and I, I really appreciate your videos because I think you're giving a lot of information to the residents who are affected by this and like the steps that they need to take. So we'll, we'll keep his Instagram handle at the end, but you guys should definitely check it out, especially if you are affected by these fires.

[00:12:22] Um, or if you live in California and have the possibility of being affected by a fire someday, he's definitely laying out the ground rules and steps to follow. So, um, very much appreciate that. But is this the first time you've really kind of gone after the government on Instagram or have you been kind of at this? Like, I mean, he, I know he asked that if you've been outspoken, but are there other times where you've done this or other fires that you've, you've been doing this or is this kind of. No, no, this is the first time I think. Okay.

[00:12:51] So like I said, when the fires were burning, I was up in paradise and I was interviewing residents who'd been through this, the mayor. Um, so, so doing my homework and the stuff that I heard there was alarming, you know, to the point where I'm like, I was already very suspicious of, you know, how this I called a, it's like a disaster response infrastructure works. Um, and how people profit off of it.

[00:13:18] So I w I was already on high alert and then come down here and, and once they opened it up, just, you know, seeing the things that I'd heard about it, I was, I was ready to post. Okay. Just wanted to get a little, little bit of background. Yeah. And so you're, Oh, go ahead. Well, I was gonna say at the beginning you cut out. And so I, I apologize for asking you to repeat yourself. You're a general contractor, but it looks like you're doing demolition as well. Yeah.

[00:13:48] So as a general contractor, you know, that's our normal course of businesses is we're lining up other trades to take care of different facets of jobs. Um, and this is multifaceted for sure. We're, we're going to be rebuilding homes too. Um, but yeah, we're, we're, we can't rebuild anything until we get these lots. Right. Absolutely. Massive demolition isn't generally your thing, but as a general contractor, you're obviously you're, you're just lining up all the pieces until the home is. Yeah.

[00:14:18] And I'll give, I'll give a plug to one of our, our awesome partners in this, which is American wrecking. Um, huge, probably one of, if not Southern California's biggest demolition contractor. And, um, you know, they've, they got ahold of me, saw some of the same videos that you guys did and they've been in the trenches with us figuring out this permitting process. We're on the phone every day with them. Um, so I've got permit texts in my office.

[00:14:45] They've got permit texts and we're just constantly working and navigate this together. Thank you. I just, I just wanted to clarify clarification because I was like looking, I was like, dang, he like has all this equipment and he rebuilds homes. Like I was just, so that's all. Okay. Uh, all right, let's, let's get nitty and gritty. Okay.

[00:15:06] Um, you, you've been on the ground, so I'm going to start grilling you on what you've been seeing because we, you asked me before we hopped on, how much do you know? Or what, what are you guys aware of? And I said, honestly, I don't know. And I was actually talking to some other people and I mentioned you were coming on the show and they were like, I actually don't know what's going on in LA.

[00:15:31] And a lot of it's like this epiphany of people just all of a sudden realize, actually, I haven't heard anything about the wildfires and rebuilding in like two months. Like what's going on? Um, what is it like, what's the attitude like on the ground? Are you, are you coming face to face with homeowners who are coming back and like seeing what they have to do and dealing with, um, you know, agencies that are out there? Like, give us, give us a sort of feel of what's going on.

[00:16:01] What's the ground like? What's the attitude on the ground up there? So homeowners are in and out, right? They're, some of them are still trying to sift through. You guys started lagging there. You still have a, still hearing me loud and clear. Yeah. Perfect. Okay. Um, yeah. So the, the homeowners are coming in and out, still trying to sift through some of their, their rubble, see if they can find anything like that.

[00:16:25] There's a few, um, nonprofits like Samaritan's Purse and they've been through helping out a lot of crews with the army corps, the U S army corps of engineers out there doing work, but a lot of vacant equipment. So they, they, I think they bought up every available large scale excavator from cat, uh, in the state. You know, I've, I've heard from many large demolition contractors who have, who have these accounts.

[00:16:54] So they bought up all of the equipment and most of it's just sitting there on the street. So they haven't fully mobilized. Hmm. Yeah. They've, they've probably got in Altadena for instance, maybe. And Pacific Palisades. There's, they probably have 10 crews running total. Um, so we're knocking out each job probably takes two to three days at a time. So if I were to estimate, they're probably finishing somewhere between five and 10 lots a week.

[00:17:19] Um, and you guys know, I think there's about 11,000 structures that burned down and they've estimated that they're going to clean this whole mess up within a year. And that just doesn't calculate at this rate. So it's moving very slowly. The LA County has been great. I just got off the phone with one of their head permit supervisors. They're doing everything that they can to help us. And the real pushback we're getting is contractor state license board is making it very difficult for people.

[00:17:49] Um, U S army Corps of engineers is making it very difficult for people because they're the ones basically regulating the whole procedure on how to clean these things up. Um, so one of the things you've probably heard about is Gavin Newsom, you know, heroically says, Oh, phase one has been completed in record two.

[00:18:09] And that's the EPA assessment that goes through and, and certifies that these homes don't have any household hazardous waste, but they didn't, you know, they didn't complete all these properties. What they did is complete about a quarter to a third of them and deferred the rest for reasons. Like they thought it was unsafe to enter the property because of structures that were still standing or things like that.

[00:18:34] So anyway, we, we basically claimed, or I should say Gavin Newsom and Karen Bass claimed victory on this phase one completion, but it wasn't done. It got deferred and none of these properties, you know, you couldn't do anything about them. If you were in the private sector, no place to dump your debris, a lot of restrictions. And this stuff is just starting to get cleared up as recently as it was like last week into last week, beginning of this week. So things are still moving super slow.

[00:19:03] Nobody's rebuilding yet. Nobody's going to be rebuilding for at least another month. I would say. If you go to the one stop shop as advertised, it's a one stop shop permitting center with the county. It's anything but that they are no help. You get on there and ask them questions and they'll, you know, send you to another department. Same thing with all of their various hotlines, the fire debris hotline, rebuilding hotline.

[00:19:32] They've subcontracted those call centers to out of state people who have no idea what's going on. And so you'll call and you just get, Oh, I don't know the answer to that. Let me transfer you here. And it will just be around Robin until you give up and go, Okay, I'm going to have to just figure this out or, or start working. And, you know, if I get corrected, I'll get corrected, but we're going to get working. We actually did it. Oh, sorry.

[00:19:59] We were, I was just going to say, we did a video and we had like shown that was one of our cringe moments. Wasn't it about Karen Bass bragging about her one stop shop. And we're like, this looks like, I have a feeling this is not going to be that efficient. And it looks great. They set up their little tables. Like it looks like a job fair, but I have a feeling that's not going to be completely efficient because you're trying to get all these offices around. The county, like in this one spot that don't have access to what they need all the time. So it seems kind of inefficient.

[00:20:28] But it looks good. Did you guys see the video of Kamala saying, you know, you can't just see the destruction, but you can smell it. Oh, that was a, that was a cringe moment. Yeah. Yeah. Yeah. We did that. You can smell it. There's smoke in the air. And it's like, yeah, Kamala, that's a, that's what happens when things were being used for the first time ever. Right. Things. No, I wanted, I, I, like I said, I was going through your Instagram, watching a lot of videos.

[00:20:53] And so now correct me if I'm wrong, but I thought you said this was kind of a catch 22 situation with the phase one cleanup where if like, let's say a chimney was still standing, then it wasn't safe necessarily for them to come in and remove hazardous material. But then they weren't allowed to remove the chimney because there was still hazardous material on the site. Was that, did I understand that correctly? In some cases. Yeah. So there was a, a lot of different reasons. Oh, go ahead.

[00:21:24] And then you couldn't demo a site. If there was still something going on next door or something like that, like you weren't allowed, there were certain things you couldn't do to the property. If the next door property hadn't been done, like just stuff like that. That's holding this up. Yeah. This is a great example of how there's mixed information. So spoke to the county. I was hearing all these rumors. A lot of what I go off of are the rumors that I'm hearing from the community.

[00:21:50] So residents will go into these permit centers or, you know, they've got various stations around town and they'll be talking to the L.A. County officials. And these are guys who got moved from totally different departments. Some of them are from, you know, the water department. Some of them are, are from, you know, waste management, what different departments.

[00:22:14] And they've basically been staffed at these fire debris community centers or permit centers. So they have no clue what's going on. And they're just regurgitating what they've been told. So a lot of rumors circulating. And so one homeowner asked me, you know, is it true that if the adjacent properties to me have not been cleared that I can't start rebuilding? I said, well, I don't know about that. You know, I'd have to find out for you. So called the county. Went through the whole rigmarole that I just told you about.

[00:22:43] Got transferred around four times. And finally, let me ask my supervisor. And they said, yeah, that is true. If the adjacent properties haven't been cleared, you can't start rebuilding. So I posted that having heard it from the county. And then people just flooded the comments. No, that's not accurate. I took spoke to the county today and they said that's not true. And I believe them. They probably were given different information by the county. So that's one example.

[00:23:09] I know for sure on the properties that were deferred that you just referenced that the reason is because they thought it was structurally unsafe to go on those properties. So that could be that all of the wood burned out from behind the stucco and the stucco is still standing in place. But it's not really being supported by anything structural. So, I mean, it's it is unsafe if you're an idiot. But if you know anything about construction, then, you know, you won't stand right underneath that.

[00:23:39] And you can still go in there and do your job. Well, isn't that sort of how government operates is that they always believe they're the smartest person in the room. And then, like, you guys can't figure this out, even though you may have been in construction and be an expert in this and done this your whole life. We still know better and we have to make the decisions for you. And that's sort of like the the private versus public issue.

[00:24:06] And I think it's interesting watching your videos talking about, like, how fast you as a private company is getting stuff done and how efficiently stuff is getting done compared to, like, the government and public. I mean, it's just so I am a big fan of the free market, as people know, on this show. And I always think the free market in private wins over public. It's kind of like the tortoise and the hare.

[00:24:30] But it's fascinating to me to see just how private companies are, like, lightning fast compared to the government who just take their sweet ass time to, like, get anything done for these projects. Well, we've got incentive, right? I mean, what incentive does does the government really have on a personal level or individual level? They have none. In fact, our incentives are inversely proportioned.

[00:24:54] If you look at how a private contractor approaches these jobs, we're doing everything we can to minimize the cost because we're trying to maximize our profits and be most efficient. So when it comes to removing debris, for instance, we want to excavate as little as possible because we pay by the ton that we dump. So every pound extra that we end up dumping is a cost to us.

[00:25:18] Every pound that we over-excavate is, or yard, I should say, is the proper metric, is a yard that the client has to backfill before they can rebuild. It's additional grading that they have to do. So we're very aware of the whole process from start to finish, and we're trying to keep the cost down. Whereas, like I said, the government contractors, the incentive is, you know, inverse of that. They get paid by the ton. They get time and material contracts.

[00:25:46] They actually profit off of the tonnage. So they're incentivized to over-excavate. You know, it's not going to be their problem. They're not the ones rebuilding it. So if they take out a ton of soil there that needs to be backfilled later, not their issue. So it's pretty unbelievable. Well, and to your point as well, you said that they, the RV corp was like, went up, they bought up every excavator that they could in the state. But not just anyone can operate an excavator.

[00:26:16] That takes proper training. And clearly, if they don't have anyone operating and they're just kind of sitting on the side of the road, then they don't have enough trained personnel to operate them. Whereas in the private sector, there are demolition companies that have the availability. And if the government would bring in these private companies, then there would be more people operating the excavators. You know, there is.

[00:26:42] Yeah. And what you see right now, too, I've spoken to many contractors. This has happened to me is they've got OSHA showing up at the jobs. Contractor state license board showing up the jobs. EdD showing up at the jobs. Basically trying to find things that the private sector is doing wrong so that they can shut the jobs down, impose fines, collect taxes. So really, it's the government working against the private sector to get the mess cleaned up.

[00:27:11] You don't have any of that oversight on, you know, the U.S. Army Corps of Engineers jobs there. They've been given free reign and they're just doing their thing. I've seen them doing things like tracking this. You know, some of this equipment is 30 to 40 metric tons. Extremely heavy equipment, steel tracks. The type of equipment we would never track down the middle of the street because it's going to cause damage that we would be liable for. Not them, you know, going right down the street with it.

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[00:28:37] they'll get that discount support the show. You can support stop box. And this is probably made in the good old U S of a. So go to stop box.com forward slash California underground for your discount. And let's get back to the show. Yeah. Um, there, there was another video that I thought was really interesting is going back to public and private. There is, it's coming up the end of this month.

[00:29:02] You said, if you want to sign up for public assistance or like the government to come in and clean, you have to do it by March 31st. And you can correct me if I'm wrong, but if you want to do private, it's by June. But you said there could be an, uh, like an assessment if like explain that to people. Cause I thought that was really interesting. Yeah. So the deadline to opt in is March 31st.

[00:29:28] Um, this is my understanding based on how it's worked, you know, with, with past fires. And I, I do understand it a little bit, obviously you can't leave your property and disrepair indefinitely. So that's any County that you go to anywhere. You're not allowed to just accumulate trash. And at a certain point, the County is going to come in, clean that up and they'll bill you for it personally or put a lien on the property. So public sidewalks, sorry.

[00:29:57] Not in LA, but I mean, that's pretty much standard, um, County administration, which I understand to an extent, but what they've done is they've advertised. And as part of a marketing campaign, I understand this as a person who's in business is a lot of times the hook or the close comes with some kind of urgency that you're providing the people.

[00:30:19] So when they're running this massive marketing campaign to get everybody to opt in and consolidate all of these contracts to the public contractors, they got to give some, some sense of urgency. And it's working, which is if you don't sign up by March 31st, at least the threat is you lose the opportunity to opt in. And my guess is they'll extend that, but at least what they've said is you have until March 31st.

[00:30:46] So what I can say based on, on, uh, past scenarios or typical county administration is what they'll do is if you haven't opted in by that point, or you haven't privately gotten your lot cleared by the June 30th deadline. That's if you're going to go privately, then the county is going to take on that responsibility. They can't let you have fire debris on your property indefinitely. So they'll come clear, clean it up. And like I said, that, that comes with about $180,000 or more price tag.

[00:31:16] So either the homeowner individually is going to get assessed with that, or more likely it's going to end up as a lien on their property. And for people who are already underinsured, you know, that's, that's it. You're, you're not coming back. You're going to be forced to sell your lot to close out those liens. Well, the thing about insurance too, it's not like behind my home is burning down and insurance is like, okay, we'll cut you a check. Like a lot of these people probably haven't even seen a dime from insurance yet.

[00:31:45] And they're being forced within a timeframe to somehow pay for things with money. They haven't yet been, you know, given, not that it's given, but you know what I mean? The payouts like they haven't even seen the payouts and yet they're being forced to somehow front money that they probably don't have for a fire. They weren't responsible for. Yeah.

[00:32:06] And part of the issue with how this affects people on and from an insurance standpoint is, again, it's, it's being misadvertised as a free program. It's, it's not free. When you opt into this government debris removal program, you sign a right of entry form and your opt in form, which you have to list your insurance policy. So they have all of your policy details. They, they know what your coverage is for debris removal.

[00:32:32] They know what your total coverage is and they have a claim to your insurance money to make up that $180,000 that ultimately will be billed for your lot. So not only can they come after your full debris removal program, I haven't seen a certain, a single homeowner who's got $180,000 in coverage yet. So it's going to be wiped out 100% for everybody who owns a home who burned down. But let's say that you do opt in.

[00:33:00] They have the right to assess you after this is all said and done. So basically what you're entitled to is to build back what you had, but they'll come back and assess you and say, well, you know, you added potentially 10% square footage on top of your house. Well, you didn't really have a right to that because you signed over part of your claim to us. So whatever that valuation was, you know, that you, or maybe you added a gate here, you added certain things.

[00:33:27] They can assess you after the fact, after you finished rebuilding. And if there's either any money left over in the policy, they have a claim to that. Or they can, you know, potentially audit you and say like, you overspent, you know, you, you didn't, you didn't build back like for like you exceeded that. And we had a claim to that money.

[00:33:45] So there's, and I've talked to people firsthand in paradise who went through exactly this, you know, it ended up being like three to five years later, they, they would find out they had a $90,000 bill with the county because of this exact thing that I'm talking about. We were, when we were first like talking about the wildfires, I was diving into this emergency order that Karen Bass had signed about permitting.

[00:34:12] And that was one thing that stood out to me was we'll expedite or we'll wave. And I'm probably getting the permit language all wrong, but basically it was, Oh, we'll, we'll expedite your permit to rebuild, but you have to rebuild basically exactly as you did before. Um, and so to your point, like if someone goes, well, if I'm going to rebuild, I'm going to do that one thing that I've always wanted to do on my house. I want to add a backyard or I want to do this, or I want to add a guest room or something like that.

[00:34:42] Um, they, they've made it. So it's like, well, we'll, we'll do this big favor for you. As long as you're within this like narrow range of requirements that we want you to do. Is that what it kind of, am I getting that right? Is that what it's like? You're right. That that's what they advertised at first. They've actually become more flexible on that. So they're good. They're going on a square footage basis.

[00:35:04] You can, they'll expedite your permits as long as you don't go, as long as you don't exceed 10% of what you had before, but they will allow you to change other things like, you know, maybe move your home from the back of the lot to the front of the lot or change the floor plan. As long as you don't exceed that square footage.

[00:35:23] And if she does it, I'll give her credit on one thing, which is she did say that she was going to put a pause on the mansion tax and Pacific Palisades, which is a huge drawback for anybody who wants to come in there and invest and develop some of these properties that burned down. A lot of the properties there fall within that over $5 million range, which qualifies as a mansion. And, you know, that's another four to 5% tax when you sell the property. So for a developer, that's going to kill your margin.

[00:35:55] I've never heard that. I'm just learning. I mean, I'm not shocked to hear there's such thing as a mansion tax in California. It has to like 2022 in LA County. Yeah. Oh, okay. Yeah. If you have a home that's worth over $5 million, you're going to pay, it's over 4% when you sell the property. It's a mansion tax. If it's over $10 million, it's over 5%, which is already tough.

[00:36:19] But when you're developing a property and, you know, you're taking out loans, possibly hard money loans to do that, paying high interest rates, trying to quickly turn around something to where you don't have the benefit of long-term capital gains, that's going to kill you. You know, 4% to 5% could ruin the project's profitability for you. Here's what I'm curious about, though, is because they're going to have obviously new fire standards to build to.

[00:36:46] And the insurance is kind of like, well, you have to build it back how you had it or how you just said there's some modifications that they'll allow. But then the state is also being like, well, we don't want you to build this way because you need to fireproof. And so now I wonder where the between the state and the insurance is going to come in with the like, well, no, we're only covering it if you build it exactly. And the state is like, well, you can't build it exactly because of X, Y, and Z.

[00:37:13] And so I can see there being issues between the two there. Yeah, there's certain things that the insurance will coverage that's standard. So there's something called law and ordinance coverage, which basically includes code upgrades. A lot of these houses were built anywhere from 1920 to 1960. So obviously you can't build those back like for like. You know, they they have to be built to the current codes.

[00:37:42] And so most insurance providers will have a provision in the insurance policy for those types of things. So, I mean, there's some room there. I was. Yeah. When you were explaining it to me about the mansion tax, I was like, yeah, that does make sense. Like, we love guests who educate me. I knew nothing about this. So I love when guests come on and educate me because I was like, oh, yeah, if you're developing a mansion, it's four to five percent.

[00:38:09] And then you got to sell that mansion as the developer. That does cut into your overall profit. And it doesn't cut into it four or five percent. I mean, that doesn't sound like a lot. It's a it's actually a huge multiple of four or five because you got to think, let's let's say I have a five million dollar property. You know, if I'm going to develop that property, there was one I was looking at just this week. Total cost to acquire the lot and rebuild it.

[00:38:36] But, you know, it's would probably be I'll use this one, for example, was about four point nine million to develop this property from start to finish. Hoping that I could then turn around and sell it for five point one or five point two. Well, that four to five percent, it's not on my million dollar profit margin or whatever it is. It's on the whole amount. It's on the five million dollars. So it's not that you're paying four to five percent.

[00:39:02] You're paying a huge multiple on whatever your profit margin is. So it totally de-incentivizes a developer. Wow. But I feel like I learned about the mansion tax from selling Sunset. That's one way to listen. That's the reason why I knew about it was because it was discussed on the show. And so that's where we all get our education on selling real estate in L.A. Anyway, there's a comment in the chat.

[00:39:33] Someone said, my friend's house has a neighbor who has been flagged for asbestos. I talked to Army Corps and they said all lots will need asbestos testing a huge delay because they'll all have it. All all properties do need an asbestos test in order to pull a permit. So that part is accurate. I've only had about five to ten percent of properties that we've tested come back positive for asbestos. So it's actually very low likelihood.

[00:40:02] And people have asked about, you know, is it likely that I could be cross contaminated from a property next door that had asbestos? I'd say almost impossible. So very low likelihood that people will have asbestos if they do. Again, another problem of working here in California.

[00:40:22] In L.A. County, we're regulated by AQMD, which is the South Coast Air Quality Management District, one of the most strict government bodies that there is. They've made it so it's you can't start work any sooner than 14 days once you've tested positive for asbestos. You have to submit what's called a procedure five plan that they need to review.

[00:40:48] And they'll offer corrections for of exactly how you plan to abate that asbestos. You can't use any equipment or electronically powered electronically or motorized machinery. So it all has to be done by hand, bagged up into clear three by three plastic bags. And it's actually cheaper to dump it in Yuma, Arizona than it is anywhere near here. So it drives up the cost about double to triple if you have asbestos.

[00:41:18] And then my understanding with that is wherever you do dump the asbestos, it's actually tied to your property taxes. So you pay a storing fee indefinitely than storing a hazardous material for you. So it's it's a big problem if you have asbestos. Wow. Yeah. Wow. You have to take care of it as best as you can. Oh, my gosh. Wow. You know, Luke, you're educating me, but also at the same time.

[00:41:47] I feel bad for these homeowners who are going through like who are going through this nightmare. This makes me just like want to go rent a home. And then if it burns down, I'm like, cool. I didn't own that anyway. I'll just go rent a different home. You know, well, I'm glad I rent my home. Not that I hope it burns down. I love them. But and with that, by the way, what we're telling people is if they're, you know, I've gotten a lot of heat for, you know, people saying, oh, I'm fear mongering.

[00:42:13] I'm trying to drive everybody away from the U.S. Army Corps of Engineers program. And I have a genuine gripe with them. But we do tell people, hey, if you tested positive for asbestos, it probably is in your best interest to stay with them because this is going to be too expensive for you to handle privately. And so in that case, just because, you know, AQMD has made it so difficult, we'll tell people, yeah, go ahead. You know, stay on the opt in. That's your best bet.

[00:42:42] There was another video you had about speaking of dumping, dumping load like actual debris. And there was an issue with like the EPA was preventing people from dumping. Like there was that kind of issue of the EPA stepping and be like, no, you can't dump here. What was going on there? Yeah. So what I think it was is that waste management was just really worried about getting hammered for some kind of, you know, environmental violation.

[00:43:09] And so what happened is we had that phase one, which was where the EPA goes through and removes all the household hazardous materials. The properties that they couldn't access for structural reasons, like we said, were deferred to phase two. So all these deferred to phase two properties were in limbo. And waste management didn't want to touch that because they were afraid of getting fined. Well, the EPA had basically said, we've gone through, we've done our complete assessment.

[00:43:39] We're done. We're washing our hands of this. They kicked it back to the U.S. Army Corps of Engineers, which I don't know what the delay was there. But we were on the phone with waste management on a daily basis checking in. They were having meetings with the EPA and the U.S. Army Corps of Engineers, basically just trying to get permission to accept that debris.

[00:44:01] And what's so ridiculous about this is they're requiring for the people who are handling the hazardous materials to have what's called a HAS certification. So they're already trained to deal with this kind of stuff. They know how to segregate those hazardous materials, dump them at the correct sites, which would not be a landfill, manifest it, and then the remainder of the fire debris at the landfill. So, I mean, it's just, it was ridiculous.

[00:44:31] They basically weren't letting the very class that they said was qualified to do the work as they'd been trained to do. Oh, wow. I think we had said before about these wildfires when we had our episode or discussed it several times.

[00:44:53] I think everything related to, like, regulations and bureaucracy in California and now specifically Los Angeles, like, this is going to reveal to a lot of people just, like, how bad it is, if that makes sense.

[00:45:11] Like, how burdensome it is to a lot of homeowners, it's going to become, it's becoming a real reality of, like, wow, I didn't realize how much red tape is in our government and what they have to deal with. I mean, you have to deal with it on a daily basis. You're working this and you're doing it yourself, right? Yep. And California is the absolute worst when it comes to this stuff.

[00:45:36] I mean, if there was a place for a disaster like this to be difficult to recover from, it's California. Another comment. Army Corps claims to have 65 crews working now, scaling up to 100 within the next month. Army Corps claim Phase 2 cleanup will be finished in Altadena by January of 2026. Cleanup will be finished. So what's the difference between Phase 1 and Phase 2? Maybe we should go back to that because.

[00:46:05] Yeah, Phase 1 is about a 10 to 30-minute assessment. They go on the property and they will spot things like propane cans or propane tanks and paint cans. They'll basically just stack those in a pile on the front of the lot for them to be picked up by somebody with a house license, somebody who can safely transport it to one of the locations for those hazardous materials. So that's Phase 1.

[00:46:34] It's extremely quick. Phase 2 is just your general fire debris. So the house that burned down, all the ash, things like that, that's Phase 2. Okay. So when you say these like Phase... What you're thinking of as demolition is Phase 2. So it's... Okay. Yeah. Got it. Okay. So when they fudged the numbers saying that we did this many...

[00:47:03] This many homes got out or this many properties got out of Phase 1 and got deferred to Phase 2, is that what you're referring to? They got past that first easy phase and now they're just in Phase 2? Right. And they didn't even really get through it. I mean, about a third or two-thirds of the properties were deferred. Wow. So... So that means they didn't even check those for Phase 1? They just deferred them or...? Right. They took a look from the street and said, Oh, I don't think that looks safe to go on to. I'm going to move on to the next one. Wow.

[00:47:33] I have a rhetorical question or just a comment in general based on the comment in the chat saying that right now the Army Corps is claiming to have 65 cleanup crews extending to 100 by the end of the month or whatever. I feel like that's like the answer in every government project. They're like, no, we have X amount of crews right now, but we'll be expanding that to such and such in the next week, month, year, decade, century.

[00:48:02] Like, I feel like it's never like, no, we actually have this many on the ground. They're always like, we're expanding. We're going to expand. Like, I don't know. I can tell you that's not true. Yeah, they don't have 65 crews going to help them. It's not true that they'll be expanding it or... No, I'm saying they don't have 65 crews running in Altadena. There's no chance. I think they probably have 10 to 12. They don't. Wow. They might have 65 pieces of equipment over there. You know, they don't have 65 crews going.

[00:48:33] Yeah, that's a huge exaggeration. And Avedusa will come in and say that he doubled. Yeah, for anybody who doubts me on that, it's a drop through the neighborhood. You know, take a look. There's not 65 crews operating there. Wow. All right. We have about 10 minutes left. Let's look forward. You know, we've been looking back a lot at what's going on and looking presently at what's going on.

[00:49:03] Let's look forward to the rest of 2025. Give me your assessment based on, at least for your company. Let's say private-wise, people who went with companies like yours, with private companies. What does the rest of the year look like for those people, those homeowners? So once they have their lots cleared and permits closed, which I know you said you want to look forward, but one more bit about what we're dealing with.

[00:49:32] We've called on inspections for multiple properties that we finished and no inspector showed up. So they scheduled a time for inspection and nobody showed up. So that's one other thing that we're dealing with. But if they do come and inspect these properties and they sign off and close the permits, that's what allows people to enter the next phase, which is they can submit building plans. You know, I won't bag on the county yet. They've said that they're going to process these within 30 days.

[00:50:01] You know, if they can do that, then people could be building hypothetically within, you know, about 45 days from now. A lot of the homes in Altadena, these aren't complicated builds. They're not hugely customized homes. Those homes could be put up in probably, you know, six to 12 months on average, I would say. So that community could bounce back pretty quickly. Pacific Palisades is a different story. Those are a lot more custom homes. Those take longer to build.

[00:50:29] We're definitely going to be experiencing inflation in all sectors of building materials, not just because of the demand increase, because so many people will be building, but also these tariffs for sure affect building materials. You guys hear a lot about lumber coming from Canada. A lot of building materials are petroleum products, not to mention just construction costs are hugely correlated with energy costs.

[00:50:59] You know, we've got to truck and transport materials all over the place. So we're going to for sure see some major inflation. And that's why it's, you know, behooves people to not wait around on the government. And if you want to rebuild your home and you don't want to sell it at a loss, you know, take responsibility as much as you can. Don't be waiting on the government to come and save you. They're not good at that. You know, do whatever you can to get your lot cleared.

[00:51:28] And even if it's going to cost you a few thousand, or I'd say even 20 or $30,000 more than your insurance covers to do it privately, you will pay for that in building costs a year from now. When a thousand or 5,000 other people are trying to build their homes at the same time, you know, that'll seem like a minuscule amount compared to what you could have saved by getting started earlier. Yeah. Yeah.

[00:51:54] So there's a premium on being first to the supply of the building supplies. Basically, like... It's a race. I mean, lumber has already gone up 15% in the local areas since the fire service. 15% and nobody's building yet. So, I mean, what do you think is going to happen a year from now? Well, they'll pass some bill for like a tax... I don't know. They'll pass some bailout or something for lumber or something. There is another question that just came through.

[00:52:25] How is the Army Corps going to tackle all the house build on hillsides that almost look impossible to clean up given the grade of the hillsides? I mean, they can do it. The way people will do those often is you either use what's called a long-arm excavator, which can reach quite a ways down the hillside. A lot of times they'll have actual, you know, men rappel down the side of the mountain and load up a bucket. So they'll get them done, but those are more complicated.

[00:52:54] And I think the Army Corps is definitely going to focus on the low-hanging fruit first, the properties that are densely together. So if you own one of those properties that's challenging to get to or if a lot of the homes around you are still standing, again, probably a good idea to start looking to go private because you could be waiting a while. Yeah, well, they might be getting that equipment and just letting it sit on the side of the road with no one to drive it anyway.

[00:53:24] You know, watching the SpaceX landing today, I feel like maybe just get Elon Musk in there because after seeing everything that went into that landing, there's a lot of genius that went into that. And maybe he could just invent something, you know, fly down and clean it up and fly it away. Massive drones. I heard he even coordinated a reception with a pot of dolphins there. Yeah, he released dolphins right at the same time. Yeah.

[00:53:55] He's learning how to do the big showmanship like from Trump. So we're March. When did it happen? January? Is that when the fires happened? Right in January? So we're January 7th. We're two months out, more than two months out from the fires. Give me a... And it's hard to say after two months. And you can decline. You don't have to put this, you know, out there. I have a feeling you're going to do a good job with your construction company

[00:54:23] based on what I've seen on your Instagram. Optimistically for the area as a whole, how optimistic are you that people are going to be back in their homes and we're going to see some sort of, not total normalcy, within the next year? Not at all. That's not likely. This is going to take, you know, 10 to 20 years to rebuild. Wow. Yeah, that's not going to happen. Wow. 10 to 20 years. Yeah.

[00:54:53] I mean, look, that's... Historically, that's what's happened. San Diego, the fires that they had, you know, that was a 20-year project. Not all of the homes were ever rebuilt. Paradise, like I said, it's been almost seven years. They're 20% rebuilt. Half the population left within six months. So now, yeah, it's going to be a long road to recovery. Congratulations. Congratulations to California, leading the way. Yeah, leading the way.

[00:55:22] How many people are going to be leading the way towards the exit from LA after this, do you think? You know, I don't know. One thing I can say that I'm optimistic about, and this is what I've heard over in Pacific Palisades, is everybody's been talking so much about how the insurance providers all left, and that caused a lot of the issue here is that people were uninsured or underinsured. But the pressure that the city and the county and the state are getting for their mismanagement

[00:55:51] of the forests and the fire department and all those things is actually putting a lot of pressure, and they're changing some things to where I'm hearing that insurance companies are saying, hey, if you guys take care of these things and you start managing your forests and that kind of thing, we're actually eager to come back in there and insure these properties. That would be a huge benefit. I think a lot of people want to stay. Yeah. Well,

[00:56:21] a lot of these insurance companies don't want to give up on the market that is California with the amount of money and people and stuff to insure. They don't want to, but if you make it increasingly expensive, you can't raise your rates, and then it doesn't make sense as an insurance company. I can see why they don't, but businesses want to come back and make money as insurance companies, so that's not surprising to hear. All right. We're coming up on the hour.

[00:56:51] Luke, great having you on. This was, I always say I love guys who educate me. I learned a lot tonight. I didn't know about mansion tax. I didn't know about a lot of this stuff regarding construction, so I learned a lot tonight. Any final thoughts before we sign off for the night? No. I really appreciate you guys having me on. Thanks for bringing some exposure to this. It doesn't only help the homeowners in the areas, but there's tons of businesses

[00:57:20] who are so eager to help, so any kind of exposure like this is helping the communities get rebuilt, so I really appreciate you guys having me on. Yeah. Well, we're trying to promote the privacy, all the private businesses that are out there working hard like yourself, but where can people find you on social media so they can follow you and then maybe get in touch with you if they have more questions? Yeah. Hit me up, Luke Melcher on Instagram. Really good about responding to DMs. If you have any questions,

[00:57:49] either as a contractor or as a homeowner, feel free to reach out. Our office phone number is listed there too, so get a hold of us. Awesome. And definitely go follow his account. He's been posting a lot of stuff that is very informative and I like following it because it gives me a firsthand account of what's going on. So with that said, I want to thank everybody who tuned in tonight. Make sure you like, share, subscribe, hit that notification bell. It helps with the algorithm, helps people find us.

[00:58:19] And the best thing you can do to support this show that is 100% free is share it with somebody who might be interested. And with that, we'll see you on the next one. Later. Thank you for listening to another episode of California Underground. If you like what you heard, remember to subscribe, like and review it

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