In the Next Disaster, Does Malibu Deserve a Bailout? : Aid: Residents defend right to keep rebuilding with tax funds. Critics call it unfair subsidy of trouble-prone area.

In 1993, after Mississippi River floods had ravaged Valmeyer, Ill., for the fourth time in 50 years, residents of the tiny town decided enough was enough. They called a special election and a majority of the 900 townspeople voted to move their community to higher ground.

Some say Valmeyer’s solution should be an object lesson for Malibu, where fires, floods and mudslides have left the coastal community of 19,000 in a seemingly constant--and costly--state of crisis.

In the past three years, Malibu has been declared a federal disaster area five times because of fire, flooding or mudslides. That has stuck federal and state taxpayers with about $63 million in actual and projected costs for firefighting and for cleanup and repair of public property. An additional $4 million in federal funds has been spent to reimburse owners of private property for damages and emergency housing.

Residents, disaster relief officials and politicians say Malibu has as much right to such assistance as other cities hit by natural calamities. But some believe that communities such as Malibu, where the well-heeled risk flames, floods and slides to live amid breathtaking beauty, should not be allowed to turn endlessly to taxpayers to bail them out when disaster strikes.

“Damn the blackguards and let them hold a carwash for their next fire,” says Leonora Holder, a writer from Long Beach. “You should be allowed to go in once and have a disaster that is paid for off taxpayers’ backs, but if they choose to live there after that, they should have money as a community to pay for the next one . . . because it will happen again.”

Each Malibu disaster inspires not only resentment but new proposals to change the way government deals with emergency relief. Federal Emergency Management Agency officials say states may be asked to pay a greater share of disaster expenses. A bill in Congress would require insurance companies to contribute to a national disaster fund. Fire experts suggest that fire corridors such as Malibu should be zoned as flood plains are, with residential building there discouraged. Other critics simply want cities to be required to pay more of their own relief costs.

The debate is likely to intensify as Malibu pursues $21 million in state and federal disaster funds to halt an active landslide. State Sen. Tom Hayden (D-Santa Monica), whose district includes Malibu, calls the project wrongheaded.

“You do not urbanize flood zones, earthquake zones and fire areas,” he says. “We’ve invented a fool’s paradise.”

Fires have struck Malibu about once every seven to 10 years since 1945, state experts say. That makes it one of the most fire-prone places in the country, according to Klaus W. H. Radtke, a nationally recognized authority on wildfires that burn into urban areas.

The 1993 blaze--set by an arsonist in Calabasas--scorched 16,000 acres of the Santa Monica Mountains, killing three people and destroying 400 homes, 278 of them in Malibu.

With the flames have come a domino effect of other disasters. Heavy rains on hillsides denuded by fire have often unleashed landslides, mudslides and floods that spew from the mouths of canyons, crashing into million-dollar homes and shabby shanties built along the coast.

Last March, sliding mud and rocks seriously damaged 30 homes and caused minor damage to nearly 300 others, nearly all of them along Pacific Coast Highway. Cosentino’s flower shop and nursery, at Las Flores Canyon Road and Pacific Coast Highway, flooded for the sixth time. Two houses along Pena Creek were condemned.

The disasters add up to big bucks for residents outside the city:

* First are the direct costs of fighting and cleaning up the disasters. Of the $67.2 million in such costs caused by Malibu’s last five crises, FEMA is picking up 75%, with the state paying most of the rest, reimbursing a wide variety of local firefighting, flood-control and road agencies.

* Then there are the indirect costs, such as Small Business Administration loans. The government can afford to make the 30-year recovery loans at an interest rate of 4%--well below market levels--because 25% of the cost of lending the money is subsidized by federal taxpayers.

* The private insurance system also takes a hit. An example is the California Fair Plan, an industry-financed high-risk insurance pool created in 1968 for low-income urban areas after the Watts riots.

Most Malibu residents cannot qualify for standard homeowners insurance because they live in a high-risk fire zone. Instead they are insured under the Fair Plan. When the Fair Plan’s claims exceed premiums--as was the case after the fires in Southern California in 1993 and after the 1994 Northridge earthquake--a special assessment is levied on insurance companies, which pass on the cost to California policyholders. (The 1993 Malibu fire generated an estimated $375 million in private insurance claims.)

“Malibu’s history of burning, sliding and flooding drives up the [state’s insurance] rates,” says Richard A. Wiebe, a deputy state insurance commissioner. “The losses that the Fair Plan is sustaining [are] then spread throughout the insurance industry and, in turn, absorbed by the policyholders.”

The community’s congressman, Rep. Anthony C. Beilenson, (D-Woodland Hills), says Malibu deserves its share of federal assistance.

“[We] just went through Congress and got $11 billion [in relief funds] for the [Northridge] earthquake,” he says. “So I may be a bit jaded, but the amount spent in Malibu is relatively small. I don’t have any problems justifying help for Malibu.”

Malibu City Councilman Jeffrey W. Kramer says the city’s taxpayers contribute far more to the county in annual property taxes (roughly $35 million) than they get back in services, since there is a limited demand in Malibu for many of the county’s social programs. (Malibu’s median household income is $81,000 a year, compared with $34,000 in Los Angeles County as a whole.)

Federal officials say they have no choice but to continue aiding the city under the 21-year-old Robert T. Stafford Act, which guarantees federal relief for any community hit by a natural disaster.

“It doesn’t matter if you are wealthy or not, if you are burned out of your house or are out because a wall of mud came down, you need a place to live,” says Andrew Sachs, assistant to the associate director for FEMA’s response and recovery directorate. “Disaster relief is based on immediate needs.”

Sachs describes the amount spent on Malibu in the past four years as “not that much in the grand scheme of things.” He ticks off the totals (including disaster relief and insurance claims) for the costliest disasters of late: $30 billion for Hurricane Andrew in 1992, $20 billion for the Midwest floods in 1993; $20 billion and counting for last year’s Northridge earthquake. That compares to about $445 million in disaster relief and insurance claims in Malibu since 1991.

Critics say that perspective is faulty. The proportion of aid for its small population (11,400 within city limits, 19,000 in Greater Malibu) makes the coastal community is a huge beneficiary, they say.

“Malibu, compared to any other place in the country, probably ranks with a few coastal areas as getting more aid per capita,” says urban critic Mike Davis, whose forthcoming book, “The Ecology of Fear,” concerns disasters in California since the 1992 riots. “Residents need to pay their share.”

In a chapter titled “The Case for Letting Malibu Burn,” Davis argues that residents of Los Angeles tenements face far greater risk of dying in fires than Malibu residents but receive much less fire protection. “Malibu, and areas like it, basically have a blank check,” he says.

Hayden argues that the disaster-relief system is spinning out of control, a potentially ruinous combination of “nature, a deficit-driven government and a semi-insolvent insurance industry. . . . The system is developed in such a way that a disaster is the next best thing to a war for turning on the spigot for money.”

Against this backdrop, Malibu city officials are pressing for $21 million in federal and state funds to stop the Rambla Pacifico landslide, which destroyed eight houses in 1984 and closed Rambla Pacifico road. The hillside moves an average of 65 feet a year; it slid about five feet after March’s rainstorms, pushing five houses off their foundations.

Hayden opposes the project on the grounds that it is costly and would destroy the creek. “To build a little Los Angeles drainage ditch in there and ask for $21 million, I think, merits a terrible environmental solution,” said Hayden, whose wife, Barbara Williams, owns a house at nearby Point Dume.

But city officials argue that the landslide project, which must receive the approval of FEMA, is designed to prevent future disasters.

The plan calls for the purchase of four private properties along the creek and possibly five other parcels, areas where a huge earthen buttress will be constructed to stop the landslide.

That, city officials say, would help offset poor decisions made by Los Angeles County years ago to allow the construction of homes on the landslide and a road at the base of it.

“This money is a well-spent investment,” says Councilman Kramer. “What happens if we don’t fix it is it gets worse and the taxpayers pick up the bill.”

California Coastal Commissioner Madelyn Glickfeld, a Malibu resident, says stopping the slide is important not only to the 400 residents who live nearby, but also to hundreds of people who use Las Flores Canyon Road to visit public parklands in the area.

And the new bridge is needed to accommodate the ever-increasing traffic on Pacific Coast Highway, she says. “It serves more than rich Malibu residents,” says Glickfeld, who expresses support for the project’s goals but opposes the plan to line the creek.

Supporters of continued aid for Malibu point out that the city and its residents have made serious efforts to gird against future calamities. For instance, the city and the county Fire Department are strictly enforcing a brush-clearance code, fining and prosecuting offenders. And residents of the La Costa area, where 110 houses burned in 1993, are paying a $3,250-per-household fee to install a new water system with an improved capacity for firefighting.

But critics counter that Malibu has also allowed all fire victims to erect new homes with 10% more square footage than they previously had. In La Costa, the larger homes will make the already dense area, where roads are very narrow, even denser.

“Residents build bigger and dig in deeper, taking all these . . . opportunities to rebuild,” says Davis. “There should be a moratorium on future development until there is an adequate water system and wider streets to give firefighters defendable space.”

Others recommend a more drastic approach.

“At some point, you have to say, ‘Should we end the public subsidizing of this?’ ” comments Stephen J. Pyne, author of the recently published book “World Fire: The Culture of Fire on Earth.” “Would people really be living in Malibu if they had to pay the real cost of all the various subsidies to bail themselves out?”