The company leasing the site where the fire started beneath the 10 Freeway hadn’t paid rent for a year, was illegally subletting the property to a dozen businesses and appears to have been in violation of safety standards designed to prevent such calamities.
Apex Development of Calabasas last paid rent in September 2022 and owed more than $600,000 to Caltrans, according to court records.
Apex and owner Ahmad Anthony Nowaid rented the property — and three others along the 10 — through California’s “airspace” leasing program, which rents out state land under and alongside freeways to fund mass transportation projects.
The 10 Freeway fire and the long-standing conditions that fueled the inferno have now raised concerns about the Department of Transportation’s ability to oversee such leases statewide.
“There needs to be an investigation,” Assemblymember Miguel Santiago said. “Caltrans should move at lightning speed to inspect all of these facilities and all our airspaces to ensure that they’re in compliance, to ensure public safety is upheld and to ensure that this doesn’t happen again.”
Gov. Gavin Newsom at a press conference Monday, Nov. 13, indicated the fire was likely intentionally set by an arsonist and noted the state would be reviewing other airspaces as a result. Four of the state’s leases with Nowaid are along the 10 Freeway, records showed. The leases allowed for the “parking of operable vehicles and open storage,” according to copies included in the eviction cases.
Caltrans did not require Nowaid to obtain fire insurance.
Several of the sites appeared to be in violation of their leases with piles of flammable materials and damaged cars visible from the street.
The original lease between Apex and Caltrans for the land at 1361 Lawrence St., where the freeway fire occurred, expired in 2015 and transitioned to a month-to-month agreement at the time, yet the state didn’t start the eviction process until August this year, records show. The following month, California filed a lawsuit against Nowaid, two of his companies and a slew of small businesses illegally subleasing that site and four other freeway properties, according to the court records.
Apex blatantly violated its lease at the Lawrence Street property for more than a decade, even before the company stopped paying rent. Images captured by Google Maps over the years show flammable materials stacked against freeway columns in nearly every year since 2009. Caltrans issued strict storage guidelines in 2018 requiring materials to be kept 20 feet from columns following a fire that collapsed a portion of Interstate 85 in Atlanta.
Nowaid allegedly crammed a dozen businesses onto the 49,000-square-foot site where stockpiles of wood pallets, cardboard and leftover hand sanitizer eventually ignited to shut down one of the busiest freeways in the country. More than 300,000 commuters use the 10 daily and officials estimate it could take three to five weeks to repair the damage.
Caltrans did not respond to a series of questions about its lease with Apex, its inspections, or the revenues earned from airspace leases in general.
Based on the past-due rent, Caltrans made about $600,000 per year from all five properties leased to Nowaid and his companies, according to court filings.
Squalid conditions
Interviews and the state’s eviction filings suggest Nowaid operated the state-owned land with little scrutiny, offering below-market rates to the handful of businesses willing to operate in sometimes squalid conditions. One of Nowaid’s tenants estimated he made $23,000 per month off of the Lawrence Street property where the fire originated, though Caltrans charged him $6,518 per month, or $78,000 per year, to rent it.
Rudy Serafin moved his business, Serafin Distribution, onto the property in 2009, just a year after Nowaid obtained his first lease from Caltrans. The lease prohibited subleases without Caltrans permission and required Nowaid to pay half of any extra rent from a sublease to the state. Neither seems to have happened.
A state employee came by about once or twice a year to inspect the property, but never raised any concerns about the flammable materials stacked next to freeway columns, Serafin said. The multiple businesses operating on site, including a mechanic, a recycler, and a pallet company, were obvious and the Caltrans employee seemed to be aware that Nowaid was subleasing, he said.
Both would have been clear violations of Apex’s lease and the state’s safety guidelines.
Drawn by low rent
Though the conditions could be problematic, Serafin said the $4,500 he paid in rent outweighed the negatives. A similarly sized building would have cost three times as much, something he couldn’t afford with the narrow margins he made. The low rent and the close proximity to the freeway and to his clients, particularly in the fashion district, made the location valuable for his business, he said.
“We’re the kind of people that really work to eat the next week,” Serafin said. “We don’t have a lot of savings, we don’t have a lot of money. I had it all in my business.”
Serafin buys hangars, boxes, tape, elastic and other in-demand supplies — such as hand sanitizer and masks during the pandemic — in bulk and then sells the pieces off, sometimes one at a time. He estimated he had about 50 to 100 bottles of hand sanitizer left when the fire hit early about 12:30 a.m. Saturday near East 14th and Alameda streets.
“That’s how we make our money, we buy 100 and we sell it one by one,” he said. “I wasn’t hoarding anything. I wish I could have sold it.”
Serafin estimates he lost $800,000 worth of product in the blaze. None of it was insured. No insurance company would offer him a policy, he said, because of the conditions in the surrounding community, where homeless encampments and smaller fires were frequent. The police rarely responded to calls about the problem, he said.
Conditions precarious
In the last two years, the conditions had become noticeably more precarious, he said.
Individuals from a homeless encampment roughly a block away regularly dumped buckets of feces into the drains outside of Serafin’s business. Hoards of rats swarmed at night and the smells, and flies, during warmer weather made it impossible to eat lunch on site during the summer, he said.
“The big businesses, they have their fence literally 20 feet away from the door, so if there’s a fire, it’s OK with them,” he said. “For us, we’re counting square feet, we’re trying to save money here, we’re trying to save money there. It’s our whole livelihood.”
Luis Cartagena of Eagle Wood Services, one of the companies named in Caltrans’ eviction lawsuit, told the Associated Press that he stopped using the property for his wood pallet business more than a year ago because he was losing so much to theft.
Serafin and others learned that Nowaid allegedly hadn’t paid rent since February 2020 from a Caltrans employee inspecting the property in May. The employee said Nowaid owed more than $2 million.
Caltrans did not respond to questions about the discrepancies in dates.
Nowaid, however, denied he was delinquent when Serafin and the other business owners reached out to him. It was some kind of mistake, he reportedly told them.
“We told him he needed to fix it, or we wouldn’t pay the rent,” Serafin said. “He came over with a bunch of guys, closed the doors, kicked people out — grabbed them and threw them out.
“Honestly, my livelihood was in there, so we just paid him,” he said.
The group continued to pay rent until they were each served with the Caltrans lawsuit in late October. When Nowaid sent someone to collect in November, Serafin told the man he had check stubs verifying that he’d been paying rent the entire time.
“A week-and-a-half later, our place was burned down,” he said.
Nowaid called Serafin the night of the fire to verify that it was the lot. Then Nowaid asked if there would be an investigation, Serafin said.
Serafin said yes. “He hung up,” he said.
Nowaid and Apex could not be reached at three different numbers listed for the business.
Serafin and the others weren’t allowed back on the property following the fire. He doesn’t know if his computer with Serfain Distribution’s accounting survived, but he isn’t getting it back either way, he said. He is now tallying up debts and outstanding bills from emails and other scraps of information, he said.
He always viewed the business as his retirement plan, he said. Now, he has to start all over again.
