L.A. fire loss estimated at $20 billion in early figures

As Los Angeles battles wildfires, Mayor Karen Bass is being criticized for the roughly $17 million in cuts made to the Los Angeles Fire Department’s budget.

Neither the mayor’s office, nor the city administrative office were available to comment this morning on the hit the city’s budget could take from fire suppression costs.

This year’s Santa Ana winds topping out at 100 miles an hour — triple what the city has experienced historically — made it difficult for water planes to suppress the fires.

Seemingly every mountain area surrounding the city — the Santa Monica mountains to the west, Angeles National Forest to the east and the Hollywood Hills in the city’s center — all were struck by uncontrollable blazes starting Tuesday morning.

City officials and ratings analysts said it’s too soon to gauge the impact to city finances or credits as firefighters are continuing efforts to suppress the fires, though the winds calmed Wednesday evening allowing water planes to operate.

“The fires moving through Los Angeles County highlight the intensifying risk that wildfires pose to significant areas of the state of California,” said Denise Rappmund, vice president-senior analyst at Moody’s Ratings. “It is too early to evaluate potential impacts to property valuations or other credit implications for individual local governments.”

Equity analysts from investment bank JP Morgan have now doubled their earlier loss estimate for the still-raging Los Angeles fires, now suggesting it could exceed $20 billion, according to news site Artemis.

The first fire struck Pacific Palisades and spread to more than 15,800 acres by Wednesday evening, according to the mayor’s office. That fire, which spread to Malibu, resulted in closure of stretches of the Pacific Coast Highway and Sunset Boulevard. Traffic bottlenecks occurred in all areas of the city as tens of thousands of residents were ordered to evacuate.

Heavy black smoke blanketed most of the city, making driving difficult. And some people fleeing the Palisades and Malibu fires abandoned their cars.

“Let me be clear — I am making sure that we leave no resource untapped,” Bass said during a Wednesday evening press conference. “Firefighters are now on scene across the state, and across the country.”

Bass was on the scene at the Palisades fire with state and government officials Wednesday surveying the fire damage.

“I spoke with the president and the governor earlier today and they assured me of full federal and state support,” Bass said.

Some homeowners in Malibu could be faced with rebuilding their homes for a third time, as a pattern of fires has decimated parts of the city over the past decade.

“These events will continue to have widespread, negative impacts for the state’s broader insurance market — increased recovery costs will likely drive up premiums and may reduce property insurance availability,” Rappmund said.

Bass, who was in Ghana when the fires struck on Tuesday, has also been taking reputational hits — though she immediately flew back when the Pacific Palisades fire blew up.

“L.A. will rise and I am confident we will rebuild,” Bass said. “Make no mistake, Los Angeles will rebuild stronger than ever.”