Property Leased by Caltrans Subject to More Scrutiny, Higher Insurance Coverage

Shortly after midnight on November 11, 2023, a fire broke out under the Interstate-10 freeway in downtown Los Angeles. The ensuing inferno damaged more than 100 support columns; at least nine of them severely enough for officials to close a two-mile stretch of the freeway, causing major disruption for the 300,000 motorists who use it daily.

In the immediate aftermath, the Governor’s Office declared a state of emergency. The Biden-Harris Administration provided $3 million for repairs.

Investigation into the fire quickly revealed a cascade of connected causes, including an encampment of unhoused people. Multiple safety violations were identified involving hazardous materials stored by Apex Development, the company leasing the property from the California Department of Transportation through the Airspace and Telecommunications Licensing Program.

Thanks to around-the-clock work by clean-up crews and engineers, a week later the span was declared safe for travel and re-opened. But the incident served as a wakeup call to state officials. The Governor’s Office ordered a review of all 601 sites leased under the Airspace program. 

In a memorandum issued on November 22, 2023, Caltrans said it’d determined that Apex Development was an outlier; only six percent of the sites – 38 total – presented risks that warranted further inspections. Two months later, a follow-up memo identified actions taken at specific sites to clear fire hazards and detailed further changes, such as better site inventory database maintenance, more vigorous inspection schedules, and tighter response times to safety violations.

Caltrans expanded that list of new measures in a November 8, 2024 memo, adding prohibitions against flammable materials at any site, and increasing the liability insurance coverage requirement from $5 million to $20 million.

“These changes were made to protect the safety of the traveling public and critical infrastructure,” said Christopher Clark, a Caltrans spokesperson.

Kevin J. Barry, a metalworks owner with a yard under the 280 freeway near 25th and Iowa, received what he said was an eviction notice in December. Since then, he’s gotten additional communications from Caltrans that seem to indicate he doesn’t need to vacate the lot if he obtains additional insurance coverage. Barry estimates his annual premium could increase by as much as $50,000. But he’s willing to pay it if it means he can stay on the property.

“No tenants have been evicted,” Clark said. “Tenants were given a letter of correction based on the new policy. In the city of San Francisco, 22 tenants have vacated Airspace properties as they were unable to comply with the new policy requirements.”

“We’ll comply,” said Donovan Lacy, Acting Executive Director of the Dogpatch & Northwest Potrero Hill Green Benefit District, which holds an Airspace lease for a storage lot near 23rd and Iowa. 

According to Lacy, Caltrans inspectors identified potentially flammable items in the lot and asked that they be removed, which the GBD did. 

“But upping our insurance means we’ll have less money to spend on greening the neighborhood and creating new parks like the Potrero Gateway, which we just cut the ribbon on.”

Former District 3 Supervisor Julie Christensen, who’s been helping Barry navigate his interactions with Caltrans, supports improving safety, but wants the spaces to be used in ways that benefits the surrounding community. Lacy worries that the new regulations aren’t nuanced enough. 

“Something occurred because of bad actors in a specific location,” he said, referring to the I-10 fire, “and instead of having a guided missile approach, they are basically nuking the program.”

Lacy and Christensen agree that it should be  a priority to keep the areas occupied, whether by responsible business owners such as Barry, or by the sort of spaces maintained by the GBD.

“If the goal is to make these Airspace areas safer,” Lacy added, “then making it difficult for folks to utilize them and to secure them and activate them makes them less safe.”

Christensen points to unoccupied properties that have quickly become weed-strewn dumping grounds full of hazards such as illegal encampments and abandoned vehicles.

“A good tenant like Kevin Barry supplants those bad uses with a good use,” Christensen said, calling him “a good neighbor” because he keeps his lot clean and fenced.

For how much longer, Barry won’t know until he meets with Caltrans to clarify exactly what he needs to do to maintain his lease.