Reel Inn restaurant among businesses that were told they can't rebuild after Palisades Fire

MALIBU, Calif. (KABC) -- The road to recovery after the Palisades Fire has been anything but smooth for a group of historical business owners on the eastern edge of Malibu.

For years, the Reel Inn was a staple along Pacific Coast Highway at Topanga Canyon Boulevard. The famous seafood shack fed surfers and tourists for nearly 40 years.

Its sign is now in a pile of rubble, and because of a yearslong dispute over land use, the Reel Inn may never reopen.

Other businesses are facing the same roadblocks when it comes to rebuilding -- The Topanga Ranch Motel, Wiley's Bait and Tackle, Cholada Thai and Rosenthal Wine Bar.

"When I would go to fish, of course, we would go to Wiley's Bait and Tackle, Cholada Thai all the time to get some curry, some pad thai. Reel Inn was like, my spot. That's where I would always go for clam chowder after," said David Solomon, a surfer who frequented the Reel Inn.

Today, the Los Angeles Department of Water and Power (LADWP) is using the land, which is owned by California State Parks. They recently informed the destroyed businesses that their leases are cancelled and they can't rebuild.

"Due to the catastrophic property loss associated with the Palisades Fire, DPR has regretfully determined that it will not continue to lease this site," the letter the Reel Inn received read.

"We wanted to rebuild, remodel, expand from day one for thirty years. We thought that somebody from state parks, at some point, would go, 'Look, we're remodeling the whole place down there anyway. These guys have got good press. Why don't we lean in with them and do something cool? And let's do it rather sooner than later because it will make it look like we're getting things going down here.' And the phone, not only didn't ring, but we got that letter two weeks ago," said Andy Leonard, the owner of the Reel Inn.

The Reel Inn says it would be too expensive to operate what they had at another location. Leasing from the state park allowed them to offer high-quality seafood at a reasonable price.

"It's a snake chomping on its own tail because the Reel Inn wouldn't be as old school, funky, fish shack if it didn't have that handicap on the property. Because if that were a plate-glass and aluminum restaurant, you would be paying $40 for a piece of fish, because you would be paying for the real estate and the building," Leonard said. "Because it was in those circumstances, we were able to do what we did, and people fell in love with it, because that's the way it used to be."

The state has offered the Reel Inn some nearby land for a food truck, but Leonard says it's a bad location with no sewer, no running water, and he'd have to bid on it.

"The same thing's going to happen like that happened with Topanga Ranch. It's going to sit empty for years. So at least let these people open back up, get back to work. I mean, these people are out of jobs. It's terrible," Solomon said.

In a statement, California State Parks said, in part, "Some of the department's recent communications with the Leonards may have not fully conveyed our values and intent to partner with them, and the letter reaffirms our commitment to thoughtfully exploring a path forward that makes it possible for the Reel Inn to thrive on state parks property while serving current and future generations. State parks looks forward to continuing this dialogue with the Leonards, and to working together so that the Reel Inn can once again be a place where residents and visitors alike gather in a vibrant, welcoming setting."