President Donald Trump moved Thursday to block federal money from supporting a low-income housing project in Pacific Palisades.
During a Cabinet meeting he warned that the development would damage a wealthy Los Angeles neighborhood still recovering from devastating wildfires.
“They want to build a low-income housing project right in the middle of everything in Palisades, and I’m not going to allow it to happen,” Trump told Cabinet members, declaring that he would not permit a project he argued would hurt existing homeowners. “I’m not going to let these people destroy the value of their houses.”
Trump framed his opposition as both economic and personal, noting his own background in the housing industry while rejecting the proposal outright.
“I built a lot of low-income housing. I made a lot of money building low-income housing,” he said, before repeating that the Pacific Palisades project would not move forward.
The president also blamed state and local policies for compounding wildfire damage in the area, tying the housing dispute to broader frustrations with California’s handling of infrastructure and rebuilding.
He argued that regulatory decisions contributed to conditions that worsened last year’s fires and slowed recovery efforts afterward.
During the meeting, Trump instructed Environmental Protection Agency Administrator Lee Zeldin to ensure that residents seeking to rebuild damaged homes receive federal permits without unnecessary delay.
He also directed Treasury Secretary Scott Bessent to take steps preventing California from securing federal financing tied to the proposed affordable housing project.
Trump asserted that the federal government has already moved faster than California officials when it comes to post-fire recovery, claiming Washington was able to clear permitting obstacles before the state and city acted.
He positioned the administration’s involvement as a corrective to what he described as local inaction.
California Gov. Gavin Newsom’s office quickly pushed back, using social media posts to dispute Trump’s statements and his description of the housing funding.
One post included a map and mocked the president’s comments about water sources, while another challenged the idea that the disputed funds were limited to Pacific Palisades.
“This funding is not limited to the Palisades,” Newsom’s office wrote online. “It supports affordable housing in multiple wildfire-impacted communities, including Altadena.”
The governor’s team also rejected criticism that California was blocking rebuilding efforts.
“The Governor has taken steps to make rebuilding easier, not harder,” the office added, pointing to policy changes that suspended certain replacement mandates in coastal zones.
The statement said the moves were intended to speed recovery while preserving existing affordable housing stock.
Earlier this year, Newsom and the California Department of Housing and Community Development committed $101 million toward rebuilding affordable multifamily rental housing across fire-damaged areas of Los Angeles.
The funding announcement came six months after the fires, with state officials describing it as a response to widespread displacement.
“Thousands of families — from Pacific Palisades to Altadena to Malibu — are still displaced, and we owe it to them to help,” Newsom said in a July statement.
He argued that accelerating construction of affordable rental units was essential for families trying to return after the disaster.
While clashing with state leaders over housing policy, the Trump administration has also taken steps to bypass local permitting delays for wildfire survivors. Federal officials announced that Californians affected by the fires would gain immediate access to $3.2 billion in Small Business Administration disaster relief loans.
According to the SBA, fewer than 15 percent of homes destroyed in the fires have received the approvals needed to begin rebuilding. The agency said local and state permitting delays have stalled progress for more than a year.
SBA Administrator Kelly Loeffler described California’s permitting backlog as a “nightmare” that has dragged out recovery. She credited Trump with opening a faster path forward for borrowers who have been waiting to rebuild.
“Today, with President Trump’s leadership and alongside EPA, the SBA is opening an expedited path to recovery for every borrower who has been held hostage by the bureaucracy of Gavin Newsom and Karen Bass,” Loeffler said.
Under new SBA guidance, builders are allowed to self-certify compliance with state and local requirements after 60 days of permitting delays.
The change allows reconstruction to begin without final local approval, provided builders attest that all applications were submitted and that safety standards will be met.
Federal officials say the scale of destruction makes speed critical. The Eaton and Palisades fires burned a combined 37,728 acres, destroying more than 16,200 buildings.
Despite the widespread damage, construction has begun on fewer than 600 homes and businesses.
More than 96 percent of destroyed structures remain untouched, according to federal figures cited by the SBA.
Loeffler said fewer than 3,000 rebuild permits have been issued across Los Angeles and claimed that fewer than 10 homes have been fully restored.
She called the pace unacceptable given the resources deployed by the federal government.
“The wildfire recovery effort in California has been a national disgrace under the leadership of Governor Gavin Newsom and Mayor Karen Bass,” Loeffler said earlier this month. She argued that billions in federal assistance have failed to translate into meaningful rebuilding due to local delays.
Trump reinforced that criticism last week when he signed an executive order aimed at accelerating rebuilding in Los Angeles. The order directs the heads of the SBA and FEMA to issue regulations overriding certain state and local permitting requirements.
“I want to see if we can take over the city and state and just give the people their permits they want to build,” Trump said as he signed the order, signaling frustration with California’s regulatory framework.
Los Angeles Mayor Karen Bass has disputed claims that the city is dragging its feet.
She said recovery efforts following the Palisades fire were among the fastest in state history, despite ongoing criticism from federal officials.
Bass addressed the issue on the “At Our Table” podcast earlier this month, comparing Los Angeles’ progress with recovery efforts in Hawaii.
“If you look at Hawaii, those fires were two years ago,” she said. “And they have about 300 homes that are being rebuilt.”
She added that more than 300 homes are currently being rebuilt in the Palisades, while acknowledging that many residents remain displaced.
Bass said the pace has not erased the hardship experienced by fire victims.
“It doesn’t make anybody feel wonderful for me to sit here and tell you that this is one of the fastest recovery and rebuilding efforts that the state of California has ever seen,” Bass added, while also noting the grief and pain families have endured.
Bass also accused “opportunistic individuals” of spreading misinformation about the fires and the city’s response, arguing that misleading claims have distorted public perception of Los Angeles’ rebuilding efforts.
Newsom echoed those accusations, blasting Trump for spreading what he called misinformation about water shortages during the fires.
Responding to questions about the issue earlier this year, the governor sharply criticized the president’s claims.
“It was hurricane force bulls— coming from Trump’s weaponized lies and disinformation,” Newsom said during an interview, arguing that the remarks undermined public trust during an emergency.
Trump has repeatedly defended his comments, including in a Truth Social post alleging that water shortages were linked to Newsom’s failure to sign a water restoration declaration.
The president claimed the move would have allowed additional water flow into fire-affected areas.
Newsom’s office dismissed that allegation as “pure fiction,” insisting that no such declaration existed and accusing the president of promoting false narratives during an active disaster.
