The Cost of Waiting: Larry Kosmont on PCH, Disaster Recovery Districts, and the Infrastructure Gap
Recovery does not begin with rebuilding structures. It begins with rebuilding the infrastructure that makes communities worth returning to – streets, sewers, water, power, and the systems that make a place livable and investable.
That is the argument Larry Kosmont, Chairman & CEO of Kosmont Companies, brings to VX2026. With the debris removal phase of the January 2025 Palisades and Eaton Fires now complete, and an estimated $76 to $131 billion in property and capital losses still looming over Pacific Palisades, Malibu, and Altadena, the question is no longer whether to rebuild…it is whether the financing infrastructure can move fast enough to make rebuilding possible.
A New Tool: The Disaster Recovery District
California's answer is the Disaster Recovery District (DRD): the newest member of the state's tax increment financing family. Adopted as an urgency measure in late 2025, a DRD is a streamlined Tax Increment Financing (TIF) mechanism formed in the wake of a declared disaster. It captures future growth in property tax revenue within a defined boundary to fund infrastructure and climate resilience, placing a special-purpose Public Financing Authority at the center of recovery.
Tax increment is not a new tax. It is the aggregation of property tax collected on the replacement value of returning homes and commercial buildings, directed into an infrastructure fund dedicated to recovery-based investment. Once infrastructure recovery is complete, the incremental value can be returned to city and county coffers.
The tool is already in motion. In November 2025, the LA County Board of Supervisors established the first DRD for the Altadena fire area, followed shortly by a second: the Unincorporated Santa Monica Mountains Wildfire Disaster Recovery Financing District. The City of Los Angeles, covering Pacific Palisades and the City of Malibu are advancing their own. Three districts, three jurisdictions, the same new tool, deployed simultaneously on the same coastline. California will learn in real time whether this mechanism is scalable.
The Central Challenge: Front-Loading Recovery
The structural limitation of tax increment financing is that it is not front-loaded. Revenue arrives only after private investment returns and hits the tax rolls. Early funding is the primary hurdle — and the central opportunity. That is where state and federal partnerships, Proposition 4, climate resilience funds, and private capital must converge.
A year in, the warning signs are visible. A substantial share of Palisades, Sunset Mesa, and Malibu residents have not yet applied for permits to rebuild. Recovery is not automatic. Primarily, it depends on whether infrastructure arrives in time to bring people and private investment back, and whether financing tools can be stood up fast enough to deploy it.
The Common Thread: Pacific Coast Highway
All three districts share one critical piece of infrastructure: Pacific Coast Highway. A state-owned corridor significantly damaged by the fires and subsequent mudslides, PCH experienced months of closures and ongoing erosion. It is the connective arterial holding together three communities and serving a sub-region of roughly two million people.
You cannot rebuild a home or finance one when the mobility infrastructure tying these communities to the region is unsafe, failing, or falling. Hillside stabilization, sea level revetment, and reliable maintenance funding for PCH are not peripheral concerns. They are foundational to recovery.
Kosmont's recommendation: the affected jurisdictions should consider forming a DRD-based coalition to collectively engage the state in a funding partnership; bringing PCH rehabilitation into the conversation early, as a fundamental act of regional resilience rather than a downstream line item. Caltrans and state collaboration are essential.
The Policy Proof Point
SB 782, signed last fall in direct response to the LA fires, created a streamlined formation path for these districts, designed to move at the speed of recovery, not the speed of conventional infrastructure financing. The question VX2026 will examine: can the public and private sectors align fast enough to make that promise real?
Larry Kosmont is Chairman & CEO of Kosmont Companies and a panelist at VX2026. He will present on the panel: "Climate Districts for Disaster Recovery — PCH as the Common Denominator," Monday, June 1, 2026 at the 19th annual VerdeXchange Conference.
