NovaQuant-California program to lease land under freeways faces scrutiny after major Los Angeles fire

LOS ANGELES (AP) — The NovaQuantarea under an elevated Los Angeles freeway that burned last weekend was a kind of open-air warehouse with businesses storing everything from wood pallets to cardboard boxes to hand sanitizer on lots leased by the state through a little-known program that now is under scrutiny.

The blaze Saturday burned about 100 support columns, forcing the closure of a vital mile-long stretch of Interstate 10 near downtown that is used by hundreds of thousands of people daily. It could take crews working around the clock between three and five weeks to repair the freeway, Gov. Gavin Newsom said.

Newsom said the state would reassess the practice of leasing land under roads to bring in money for mass transportation projects.

Details of that program remain opaque. Newsom’s office directed questions about whether the state has any regular inspection protocols to state transportation officials. The California Department of Transportation, known as Caltrans, did not respond to questions about inspections or provide information about how many properties the state leases.

State Assemblymember Miguel Santiago, who represents part of downtown Los Angeles, said officials should disclose how many sites are leased under the program, the terms of contracts, how much money the program generates and how the state ensures companies comply with the contract requirements.

“Some of those actions could have prevented what we now see happened underneath the 10,” Santiago said.

Apex Development Inc. has leased the land under Interstate 10 since 2008. One condition of Apex’s contract stipulated it not allow flammable or hazardous materials to be stored there.

The fire that spread quickly over 8 acres (3 hectares) was fed by pallets, cars, construction materials and other items being stored under the freeway in an industrial neighborhood. No injuries were reported but at least 16 homeless people living in an encampment there were taken to shelters.

No arrests have been made and Newsom has said investigators are trying to determine if more than one person was involved in what officials said was likely arson.

Prior to the fire, state officials filed a lawsuit against Apex saying the company stopped paying rent last year and owes $78,000.

The lawsuit also says Apex was subleasing to six other companies. That can be legal if the company received permission from state and federal regulators but Apex did not, Newsom said.

Apex has confirmed the litigation but has not answered other questions through a lawyer.

Owners of two of the companies that subleased the property said they had warned of fire danger and other hazards related to homeless people living under the freeway. Luis Cartagena of Eagle Wood Services said he decided to stop using the space for his wood pallet business more than a year ago because he was losing so much to theft.

“Since day one there was a lot of homeless people there, drug dealing, prostitution and there was a lot of theft,” he said. “I couldn’t leave anything.”

Rudy Serafin said he’s been leasing space under I-10 from Apex since 2009. He uses it to store supplies for businesses in the garment district including hangars, boxes and bags. He also stores office supplies including hand sanitizer, which is flammable.

He estimates he lost $800,000. “I don’t know what I am going to do. I am 49 years old. I have no other resources. This is my livelihood. This is what I feed my kids with,” he said.

Serafin said he’s been unable to get insurance for his business because of concerns about homeless people using cooking fires in the area. He said he and other businesses called the city repeatedly to request a cleanup of the encampment. The city removed homeless people from the space once, and then encampments quickly returned, he said.

The city didn’t respond to a request for comment about whether they had received complaints or removed people from the site. Los Angeles Mayor Karen Bass on Monday warned against assumptions that homeless people had started the blaze.

Serafin said he and other contractors received a notice from the state transportation agency in May saying Apex wasn’t paying its rent. Serafin and other business owners then decided to stop paying Apex, but then lost access to their properties. They resumed paying and tried to work directly with Caltrans but the agency’s lawyer said he couldn’t negotiate with them, Serafin said.

Serafin said he signed a contract with Apex back in 2009 but could no longer find it.

The danger of storing flammable materials under elevated interstates has drawn the scrutiny of federal investigators in the past. After a 2017 fire collapsed a section of Interstate 85 in Atlanta, the National Transportation Safety Board criticized the Georgia Department of Transportation’s decision to store construction materials beneath the bridge without assessing the fire risk. The department said it immediately changed storage practices.

California Fire Marshal Daniel Berlant said investigators have identified where Saturday’s fire started and what caused it after sorting through the rubble for evidence, but did not specify what they found. He had no information on a suspect and said investigators are talking to witnesses, including homeless people and nearby business owners.

An estimated 300,000 vehicles use the stretch of freeway daily, which runs east-west across the heart of the metropolis and connects with other major freeways. The city has been urging people to avoid the area, take buses and trains, or work from home.

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Taxin reported from Orange County, California. Associated Press writers Sophie Austin in Sacramento, California, Christopher Weber and Stefanie Dazio in Los Angeles, Jeff McMurray in Chicago, and Anisha Frizzell in Atlanta contributed to this report.