California recommends changes to leasing properties under freeways after major fire

Three months after an arson fire at a state-leased storage space shut down a major Los Angeles freeway, California transportation officials are recommending changes to the leasing program that would explicitly ban storage of hazardous materials like wood pallets and gasoline and provide more scrutiny of people who want to rent out the properties.

The state should require any individual who wants to lease one of the 600 available state-owned properties under roadways to attest they haven't entered into bankruptcy in the past 10 years and are not embroiled in legal actions related to other properties, the head of the California Department of Transportation, or Caltrans, said Tuesday in recommendations to Gov. Gavin Newsom.

The man who leased the property under Interstate 10 that caught fire had filed for bankruptcy twice since 2016 and was the target of several legal filings related to other sites he managed, Associated Press reporting found. The state is fighting to evict Ahmad Anthony Nowaid and scores of tenants subleasing through him in violation of his contracts with Caltrans, according to court records.

Nowaid and his attorney haven’t responded to multiple calls and emails seeking comment.

The Nov. 11 blaze quickly spread, fueled by wooden pallets, supplies of hand sanitizer and other flammable materials stored there in violation of the lease contract. Officials said it was a case of arson. No one has been arrested.

Caltrans director Tony Tavares wrote in a memo Tuesday that his agency had completed a review of all 600 properties around and under roadways that the state leases to firms and individuals. The agency recommended the state explicitly prohibit any storage of flammable or hazardous items and define more clearly what constitutes dangerous materials, he said.

The overhauls are meant to “ensure the lease agreements governing each property are up-to-date and reflective of potential risks, streamline enforcement of lease terms and allow Caltrans to more quickly address risks,” Tavares wrote.

The governor's office didn't immediately respond to an email Wednesday seeking comment on the changes Caltrans is proposing.

Since the fire, Caltrans has inspected 47 sites, most of which were identified as potentially high-risk and some that have more than one parcel. Of these parcels, more than three quarters failed their inspections. The reasons for failure ranged from the presence of combustible materials to faulty wiring and more.

Some inspections found “several issues presenting fire or safety risks” and other potential lease violations, Tuesday's memo said. One tenant was keeping propane tanks, others were storing vehicles and several more had improperly stored lumber or wooden pallets, inspectors found.

Among materials that should be prohibited: “Oil, gasoline, lumber, pallets, wood, wood chips, landscaping materials, non-operable vehicles, plastic piping/tubing, tires, paper/paper products, fabrics, batteries, and chemicals/cleaning supplies in industrial quantity,” Caltrans said.

Following the inferno, Newsom ordered a review of all the so-called “airspace” sites that Caltrans has leased around roadways. The program dates back to the 1960s and most of the properties have been used for parking lots, cellphone towers, open storage and warehouses. The lots range anywhere from a few hundred to thousands of square feet, and they are concentrated in Los Angeles and the San Francisco Bay area.

The airspace leases have brought in more than $170 million for public transportation over the past five years.

The agency said its review of airspace leases is ongoing and “will take into account both the benefits and risks of the program, as well as explore potential program improvements to mitigate risks.”

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Associated Press data reporter Kavish Harjai in Los Angeles contributed.