The Failure of Los Angeles Leadership: A City Choking on Red Tape and Inaction
Investors and developers are finally fed up with the inaction of Los Angeles city officials when it comes to large-scale investment in the city.
From housing projects to commercial office buildings, the city's complacency, endless red tape, and lack of accountability have led to dozens of failed or abandoned projects, driving businesses and capital away.
Approvals for new apartment units in Los Angeles plummeted 45% from 2019 to 2024. According to Marc Vukcevich, state policy director at Streets For All, most of the limited units that are approved stem from state mandates rather than local initiative.
Mayor Karen Bass claims her administration is "pro-housing," yet she has opposed legislation to encourage multi-family housing near transit stops and has backtracked on her own Executive Directive 1, which was intended to fast-track approvals for low- and moderate-income apartment units — further restricting where such projects can be streamlined at a time when housing remains critically scarce.
Real estate developers are increasingly walking away from Los Angeles due to costly, unpredictable delays.
In one case, a 2-year, 51-unit apartment project dragged on for a decade.
In another, developers abandoned a $90 million urban renovation because the Los Angeles Department of Water and Power (LADWP) failed to provide timely power upgrades.
The shuttered Casitas Avenue development in Atwater Village by SteelWave stands as a particularly stark embarrassment for Mayor Bass, LADWP CEO Janisse Quiñones (who earns a $750,000 annual salary and sought an additional $700,000 for private security amid threats following water-related controversies), and the entire city government.
SteelWave, with a 50-year track record of revitalizing urban properties into vibrant business campuses, purchased dilapidated buildings threatening the Atwater Village neighborhood — a media-centric sub-market.
They invested heavily: a $42 million loan plus nearly $30 million of their own and investors' funds.
The project transformed the site into two campuses: a 38,000-square-foot North Campus with a new three-story industrial-chic office building, and an 80,000-square-foot South Campus featuring outdoor parks, amenity areas, an overhead canopy, and a planned artisanal food and beverage cafe.
Tenant spaces included operable doors and windows, new roofs, skylights, and other modern upgrades.
The development even incorporated a locally owned distillery and benefited nearby residents, artists, musicians, schools, and charities.
Once fearful of homeless encampments on the site, locals warmed to the project.
The sole obstacle?
The city failed to deliver.
SteelWave required electric power upgrades, but LADWP delayed design and permitting for over four years.
The final design demanded a new power line extension beyond the project area, inflating costs and timelines further.
Compounding the issue, a city field crew required quitclaim deeds from SoCal Gas to remove abandoned gas lines along the pathway — necessitating additional approvals from the city's Bureau of Engineering and other departments.
Meanwhile, key personnel took extended leaves, others slacked off, and numerous positions remained unfilled.
Ultimately, SteelWave's investor pulled out, convinced the permits would never materialize. This kind of bureaucratic dysfunction has turned Los Angeles into a "no-go" zone for commercial development.
From the mayor's office to Quiñones' LADWP and down through every department, laziness and zero accountability are killing one of the city's few remaining profit centers: commercial real estate.
It's no surprise that major corporations have fled Los Angeles in droves. Cumulative revenues for the city's largest 20 companies dropped from $220 billion in 2002 to $211 billion in 2022, as firms like Northrop Grumman, Unocal, Occidental Petroleum, Hilton Hotels, Computer Sciences Corp., SunAmerica, DaVita Inc., and Times Mirror departed.
More recent exits include Chevron, Tesla, SpaceX, Oracle, Charles Schwab, Hewlett-Packard, Neutrogena, and even Playboy — often citing high costs, regulations, and an inhospitable business environment.
The city's most glaring failure may be its response to devastating wildfires, such as the Palisades and Eaton fires, which destroyed thousands of homes and businesses.
City officials proved unable or too disorganized to combat the blazes effectively. Compounding the tragedy, LADWP's 117-million-gallon Santa Ynez reservoir sat empty and out of service for over a year — another preventable failure that drew scrutiny and lawsuits from victims alleging water supply issues worsened the devastation.
One year later, Los Angeles' recovery and rebuilding efforts remain mired in chronic government failures, bureaucratic gridlock, and faltering leadership.
Permitting and reconstruction have lagged badly with only a small fraction of destroyed homes now permitted, and just a handful are fully rebuilt or occupied, leaving survivors to describe the process as "endless" and exhausting.
Former mayoral candidate and developer Rick Caruso — who long ago quit trying to build in Los Angeles — formed Steadfast LA with real estate, entertainment, and finance executives to aid recovery.
The group has provided policy recommendations to cut red tape, including using AI to scan blueprints for code compliance and expedite permitting, along with direct support like modular homes and business grants. Progress remains limited.
Los Angeles leaders could learn from President Trump's April 2025 memorandum directing federal agencies to adopt technology for faster environmental reviews and permitting, including digitization, automation, interagency coordination, and a new Permitting Innovation Center. Such reforms could bring transparency and predictability.
For cities to thrive, the government must deliver high-quality services promptly — or watch tax revenues and vitality erode.
It's long past time for Mayor Bass, Janisse Quiñones, and other leaders to understand that a government position demands real work and accountability — not a comfortable seat where incompetence goes unchecked
Companies like SteelWave cannot wait any longer.
Duggan Flanakin is a senior policy analyst at the Committee For A Constructive Tomorrow who writes on a wide variety of public policy issues. Read Duggan Flanakin's reports — More Here.
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