People call it “The Pit.”

It’s a massive, unsightly hole in the ground — the site of a construction project in downtown Carmel-by-the-Sea whose previous owners ran out of money six years ago, leaving behind nothing but concrete, rebar and hard feelings.

In 2020, The Pit was purchased by Patrice Pastor, a billionaire real estate developer from the tiny European nation of Monaco, for $9 million.

Last year, he plopped down $22 million for a much prettier property: Cabin on the Rocks, the only oceanfront home ever designed by famed architect Frank Lloyd Wright.

And in mid-June, he got approval from the California Coastal Commission for his “visionary plan” to restore public access at Rocky Point, a seaside property he bought for $8 million in nearby Big Sur with views of the iconic Bixby Bridge.

Pastor has been on a buying spree in and around Carmel-by-the-Sea, dropping more than $100 million on at least 18 properties over the last decade. So much so that his presence has become a source of intrigue, and for some, downright suspicion, in this moneyed one-square-mile town of 3,200 people.

Pastor bought the Hog’s Breath Building, the site of the pub once owned by actor Clint Eastwood. He bought the L’Auberge Carmel hotel, which houses a Michelin star restaurant. He snapped up the Der Ling building, a 1924 shop, done in fairytale-style architecture next to a stone pathway leading to a hidden garden.

“When someone comes in with so much money and can use that money for influence on so many things, that’s … scary in any community,” said Dee Borsella, who owns a custom pajama shop across from The Pit. “Every person has the right to do this. But why is he picking Carmel?”

Pastor is the scion of a powerful real estate family that built much of mega-rich Monaco, a dense, one-square-mile nation on the French Riviera.

He says he first came to Carmel-by-the-Sea at age 7 during a trip with his father, and that he had never seen his dad more relaxed. The memory stuck with him. He now owns multiple homes in town and visits several times a year.

“It’s not like he picked up a book one day and was like, ‘Let me find the best place to invest.’ It’s that he personally loves it here,’” said Claire Totten, a spokeswoman for Esperanza Carmel LLC, the local branch of his international real estate company.

Still, Pastor has created quite the buzz in this gracefully aging town where, according to Zillow, the typical home price is $2.2 million.

During a scuffle last summer, the city administrator took a swing at an art gallery owner who accused local officials of being xenophobic for slowing one of Pastor’s projects. And the billionaire’s local real estate portfolio burst into international headlines this year after an article by SF Gate quoted an anonymous business owner who said people were “terrified” of his intentions.

Soon afterward, Pastor showed up to a City Council meeting via Zoom and said he would “like to inform those who feel terrified by my presence” that he would be in town a few days later: “So I suggest they either take a vacation during this period or come and meet me for a relaxation class.”

Pastor — who, according to the French newspaper Le Monde, has squabbled over lucrative development contracts with associates of Monaco’s Prince Albert II — has more humble antagonists in Carmel-by-the-Sea: the City Council, the Planning Commission and the Historic Resources Board.

The city has rejected several of his design proposals, including two for The Pit.

Development — including upgrades to private homes — is notoriously slow here. The city strictly regulates architecture to maintain the so-called village character of this woodsy place. Carmel uses no street addresses (people give their homes whimsical names instead), and has no streetlights or sidewalks in residential areas.

The Mrs. Clinton Walker House is the the only oceanfront home designed by famed architect Frank Lloyd Wright.

Eastwood, who was mayor in the1980s, got involved in local politics after fighting with the City Council over what he said were unreasonable restrictions on the design of an office building he wanted to erect. Pastor now owns that building.

Pastor “loves that it’s a bit idiosyncratic,” Totten said. “Carmel is a little bit etched in time. The world moves on, but Carmel is still Carmel.”

Pastor’s local defenders question whether he is being discriminated against because he is too rich.

“He’s had a hard time with the city,” said Karyl Hall, co-chair of the Carmel Preservation Assn. “It’s one thing after another after another. They’ve just beaten him down incredibly.”

“There’s no question that he gets more scrutiny,” said Tim Allen, a real estate agent who has handled most of Pastor’s local purchases, including the Frank Lloyd Wright residence, also known as the Mrs. Clinton Walker House.

Completed in 1952 and listed on the National Register of Historic Places, the architectural jewel had been kept within the original owner’s family until Pastor bought it in February 2023. The 1,400-square-foot house, on a rocky bluff jutting into Carmel Bay, has a hexagonal living room and stone masonry walls shaped like a ship’s prow cutting through the waves.

In a 1945 letter to Wright, artist Della Walker wrote: “I am a woman living alone — I wish protection from the wind and privacy from the road and a house as enduring as the rocks but as transparent and charming as the waves and as delicate as a seashore. You are the only man who can do this — will you help me?”

The architect replied: “Dear Mrs. Walker: I liked your letter, brief and to the point.”

“There’s no question that he gets more scrutiny,” real estate agent Tim Allen says of Monaco billionaire Patrice Pastor, whose land purchases in Carmel-By-The-Sea have generated suspicion.

Allen said Pastor’s purchase includes the original furniture, because “he’s buying a piece of history” — albeit one that “needs a ton of work,” including an expensive new roof.

Last spring, Esperanza Carmel LLC, applied for a Mills Act contract for the site, a tax break for owners of historic properties who commit to restoring and preserving them. Although the City Council had approved such a contract for the home’s previous owner, some council members balked at giving the tax break — a saving of an estimated $1.5 million over 10 years — to Pastor and postponed a decision for several months.

One resident, in a letter to the City Council, wrote: “I doubt the applicant is in financial hardship … I’m not in favor of giving handouts to ultra wealthy property owners.”

Before the council approved the tax break this spring, city officials tried to persuade Pastor to give public tours of the house and to make direct payments to local schools (which are partly funded by property taxes) — requests not made of applicants for other properties. Pastor refused.

Via Zoom, Pastor told the council he would “maintain this wonderful house in perfect condition, even if only to continue to bother those jealous people who will never have access to it.”

City officials are waging another only-in-Carmel fight with Pastor over a mixed-use development and subterranean parking garage on Dolores Street that he has been trying to build for more than three years.

Plans submitted to the city in 2021 called for the demolition of a former bank annex once used as a community room. Because it was less than 50 years old, it did not qualify as a historic structure — but after it turned 50 in October 2022, the Carmel Historic Resources Board voted to add it to the city’s historic resources list.

Pastor agreed to build around the annex.

Then, another issue arose: The project would require the removal of a small concrete wall, decorated with exposed aggregate and inlaid rocks, built in 1972 by a man local historians dubbed the “father of stamped concrete.”

The City Council last fall said the wall was too important to be moved and sent Pastor’s company back to the drawing board.

Allen, the real estate agent, decried the delays as petty grievances. Pastor’s proposed developments, he said, will add apartments, parking and public restrooms — all of which are sorely needed.

Carmel-by-the-Sea relies on the tourists drawn to its cottages, courtyards and secret passageways.

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Carmel-by-the-Sea strictly regulates development to maintain its village character. The city uses no street addresses. Instead, people give their homes whimsical names.

“He doesn’t just buy to terrorize people,” Allen said. “He buys because it’s a good investment.”

Mayor Dave Potter said it is tough for anybody to build here and that Pastor is being treated fairly.

“We pride ourselves on our uniqueness,” he said. “You don’t get to just come in and build whatever you want. We don’t care if you’re a movie star or a mega-millionaire. You have to play by the same rules everybody else does.”

Hall and Neal Kruse, co-chairs of the grassroots Carmel Preservation Assn., are adamant, if surprising, supporters of Pastor.

They believe modern architecture — which they describe as ‘Anywhere, USA’ buildings with sterile facades and box-like structures — poses an existential threat to Carmel-by-the-Sea, which depends on tourists drawn to its cottages, courtyards and secret passageways.

Hall, a retired research psychologist, said she talks regularly with Pastor, whom she described as “so nice, so charming and so heartfelt,” and noted that he has several modern-architecture projects in the works overseas.

“He said, ‘Karyl, you’d hate them,’” she said, laughing.

Hall and Kruse started the preservation association in response to the first proposal for The Pit, a contemporary design approved by the Planning Commission for the previous owners. They called that planned edifice “the ice box.”

Hall said they were heartened by Pastor, who proposed more traditional buildings for The Pit.

Longtime residents “remember Carmel, and we remember the sacredness of it and why people come here,” said Kruse, an architectural designer. “We’re the ones that are largely concerned about the loss of character. But Patrice played a central role in reassuring the residents that he would help that not happen.”

Karyl Hall, left, and Neal Kruse started the Carmel Preservation Assn. Longtime residents “remember Carmel, and we remember the sacredness of it and why people come here,” Kruse says.

Over more than two years, the Planning Commission rejected two Esperanza Carmel designs for The Pit before approving a third last August for a mixed-use project with apartments, stores and an underground parking garage. Construction has not yet begun.

The 91-year home of the Carmel Art Assn. — of which surrealist painter Salvador Dali was a member — is next door to The Pit. The demolition of two buildings there, which started in 2017, caused the art gallery to shift so much that it damaged its new roof, which started “leaking all over the place,” said Jeff Becom, president of the art association’s board.

“It’s on a sand dune. You dig a big hole and you vibrate it for several weeks, it starts to slip,” Becom said. “It’s an important place, and we didn’t want it to fall into The Pit.”

With Pastor’s plans, “I have much more hope than I’ve had for some time,” he said.

Across the street, Borsella, owner of the sleepwear shop Ruffle Me to Sleep, is more dubious. She keeps prints of the architectural designs tucked under colorful tissue paper because customers ask her about The Pit every day.

Dee Borsella, owner of Ruffle Me to Sleep, says Patrice Pastor seems to be on a charm offensive “to ease the collective opinion that somebody’s invading our property, our town.”

Borsella, who used to work in one of the now-demolished buildings, thinks Pastor’s planned complex is too big. She doesn’t like its mezzanine. And she does not think the city should compromise its building standards just because people are sick of looking at a hole in the ground.

Pastor, she said, seems to be on a charm offensive “to ease the collective opinion that somebody’s invading our property, our town.” A few weeks ago,he stopped in her shop to introduce himself.

“I’m a bit of a lion,” she said. “I knew he was kind of trying to come over and pet me. I felt like he was trying to win me over.”

In 2021, Pastor bought another coastal gem in Big Sur, about 10 miles south of Carmel-by-the-Sea: a 2.5-acre cliffside parcel off Highway 1 occupied by the closed Rocky Point Restaurant.

Pastor inherited a slew of issues with the land, including investigations by the California Coastal Commission into unpermitted development by the previous owners and the use of locked gates and “No Trespassing” signs to block access to public land.

The Coastal Commission struck a deal with Pastor to clear the violations and potential fines if he restores the poison oak-covered bluffs and trails and removes the gates. Pastor also agreed to add public bathrooms, parking and electric vehicle chargers.

The deal is limited to clearing the violations — not the redevelopment or reopening of the restaurant.

Jeff Davisson takes in the view from a bluff on Rocky Point in Big Sur.

On a recent blue-sky Monday, Jay Davisson, chief executive of a Carmel-by-the-Sea luxury home-building firm, led family members visiting from Detroit and Tampa, Fla., to a bluff top on the property where they could see the Bixby Bridge.

Davisson, who recently moved to Carmel from Atlanta, said he considered buying Rocky Point, but it was “a little too expensive.” He loves Pastor’s plans to restore access — and has been closely following the news and scuttlebutt about his other purchases.

In such a small town, he said, “everybody talks. But I like the fact that it’s growing.”

The rate of inflation eased slightly last month, the government said Wednesday, but the financial squeeze that Americans are feeling is not likely to let up anytime soon, especially in high-cost California.

That’s because a residue of sharply higher prices left behind by the COVID-19 pandemic still weighs on the pocketbooks and psychology of consumers.

Prices of new and used cars and trucks, for example, are 27% higher than before the pandemic, even though they went down 3.4% in May from a year earlier, according to the report from the Bureau of Labor Statistics. Much the same is true of other consumer goods and services, including dining out and personal care services such as hair salons as well as housing.

And there won’t be much relief on interest rates in the near term. The Federal Reserve has raised interest rates to the highest level in more than two decades to fight inflation, and on Wednesday policymakers said the fight wasn’t over.

Despite previous expectations of multiple rate cuts this year, fed officials projected just one quarter-point rate cut in 2024 in its benchmark interest rate, which currently is in the range of 5.25% to 5.5%.

The Fed, in its statement, said the economy was growing at a “solid pace,” with strong job gains and low unemployment. And Chairman Jerome H. Powell nodded to Wednesday’s better-than-expected inflation numbers.

“We do see today’s report as progress and as building confidence,” he said at a news conference. “But we don’t see ourselves as having the confidence that would warrant beginning to loosen [monetary] policy at this time.”

According to inflation data released Wednesday, overall consumer prices were up 3.3% in May from a year earlier. That’s down slightly from an annual inflation rate of 3.4% in April but still well above the Fed’s 2% target.

“We still need several more months of this, but the fundamentals are encouraging,” said Paul Ashworth, chief North America economist at Capital Economics, a research firm.

Other experts were less sanguine about the near-term inflation outlook: “It’s a maddening, sticky, stubborn situation,” said Dan North, senior economist at Allianz Trade, a credit insurance firm.

Both economists and political analysts have been puzzled that President Biden’s standing with the public on the economy has been languishing despite steady growth, strong job gains, and significant improvement in inflation. A big part of the answer is that people are still feeling the aftershocks of price increases in 2021 and 2022, when inflation peaked at 9.1%.

The costs of a broad range of everyday goods went up very sharply in those two years, and they’re not likely to return to pre-pandemic levels soon, if ever. The spillover effects are still playing out.

New vehicle prices, for example, went up by double-digit percent mostly in 2022, but auto insurance premiums, partly reflecting the higher car costs, started taking off last year and were up 20% in May from a year earlier.

Housing inflation, including rising rents and what are called homeowners’ equivalent rents, has been especially sticky, remaining in the range of 4.5% to 4.7% this year. That’s a particular concern in California, where the housing market has soared beyond the reach of most would-be buyers and high interest rates have only compounded the problem.

Despite broadly higher prices, analysts note that workers’ wages have been outpacing inflation, meaning that their purchasing power overall hasn’t weakened. In May, average weekly earnings were up 3.8% from a year earlier — a half point higher than inflation, according to a separate government report.

Still, most people living today have never experienced the kind of sharp, broad inflation that hit the U.S. during the pandemic.

“Even if you had a job, inflation is stressful because it forces you to think about day-to-day purchases,” said Aditya Bhave, senior U.S. economist at Bank of America Global Research.

People may not get over the inflation gloom and get used to the new price levels, he said, until they have “fully internalized the fact that their wages have also grown.”

But in large part because of the incremental gains in income and job gains, the higher costs have not stopped people from spending.

Consumer spending, which accounts for about two-thirds of U.S. economic activity, is expected to grow by a solid 2% this year.

Wednesday’s report showed that annual inflation also slowed in the Pacific coast region in May but is running above the nationwide average, at 3.7%, in part because of higher price increases for food, transportation and gas.

Housing inflation in May was 4.6% for the U.S. and 4.5% for the Pacific coast states, including Alaska and Hawaii.

Analysts are expecting inflation across the country to come down very slowly in the remaining months of the year, if at all. Prices for many goods, including appliances and new cars, dropped in the second half of last year, and inflation slowed sharply for other items and some services as well, all of which will make year-over-year comparisons more difficult to show favorable readings.

A red phone sits on Palmer Luckey’s desk at the Costa Mesa headquarters of his military tech company, Anduril Industries.

The phone is a genuine article from the U.S. nuclear command, once connected to the network that led to the bunkers dug into the Rockies west of Colorado Springs that could order up the apocalypse. Luckey owned the red phone before he started Anduril, back when he was only famous for inventing the Oculus virtual reality headset in a trailer in the driveway of his childhood home in Long Beach, then selling that company to Facebook for $2 billion at age 21.

Back then, the phone was just kitsch, a physical piece of history he could gaze at as he worked on VR for a social media company. But after he donated $10,000 to an anti-Hillary Clinton political group in the fall of 2016, then got fired from Facebook a few months later, the red phone changed from a prop to a proposition. Flush with cash, unemployed and annoyed at Silicon Valley, he decided to become a military mogul — possibly the first whose office uniform is a Hawaiian shirt, cargo shorts and flip-flops.

“That was the dream, to be the guy with the red phone who gets The Call,” Palmer, now 31, said in an interview at Anduril’s headquarters.

He founded his new enterprise with four others. One had worked with Luckey at Oculus, but the remaining three came from Palantir, the intelligence analytics software company founded by Peter Thiel, the billionaire tech investor and right-wing political donor. When Thiel founded Palantir in 2003, he named the firm after the magical seeing-stones from Tolkien’s “Lord of the Rings.” Luckey followed in Thiel’s footsteps. Anduril is the elvish name of the reforged sword of Aragorn, king of men and hero of the forces of good in Tolkien’s epic. Translated into English from Quenya, the name means “Flame of the West.” A replica of the sword from the “Lord of the Rings” films hangs on the wall in Anduril’s office.

“The first page of our first pitch deck said that Anduril is a company that will save Western civilization by saving taxpayers hundreds of billions of dollars a year as we make tens of billions of dollars a year,” Luckey said.

“We’re not making tens of billions of dollars a year yet,” he said, “but we’re getting there.”

Six years later, Anduril has signed well over $1 billion in public contracts with the U.S. and allied governments and raised more than $2 billion in venture funding. Last year, it brought in around $500 million in revenue, according to investor presentations reported by the Information.

Of those contracts, $250 million are with the U.S. Border Patrol, which is in the process of deploying a network of 189 Anduril sensor towers to form a “virtual border wall” of semiautomatic surveillance across the U.S.-Mexico border. Another $100 million is with the Australian navy, which hired Anduril to build submarine drones. Its biggest deal came in 2022, when the U.S. Special Operations Command awarded a 10-year, billion-dollar contract to Anduril for counter-drone defense systems that combine sensors, AI software and drones like Anduril’s Anvils, which can physically ram enemy drones to knock them out of the sky.

Luckey’s company has also developed a tube-launched drone with a “loitering munition” model (a.k.a. an exploding drone) and bought a rocket engine manufacturer in Mississippi that makes propulsion systems for hypersonic missiles. In late 2023, it unveiled a jet-powered drone that could be flown multiple times for surveillance missions, or equipped with a warhead for suicide missions. In April, Anduril beat out Boeing, Lockheed Martin and Northrop Grumman in an Air Force competition for a new autonomous fighter drone that can fly alongside manned warplanes like robot wingmen.

That red phone on Luckey’s desk isn’t connected to a live line — but he is undoubtedly getting The Call.

“We are preemptively being invited to conversations to help solve problems — most companies will just never get that call,” Luckey said. “It’s the dream come true for someone with my ideological bent.”

Luckey’s bent, at least when it comes to business, runs counter to the last few decades of America’s economic development. When he was working at Facebook and trying to scale up the production of the Oculus headset in Chinese factories, he started to believe that something had gone seriously wrong.

“I felt that we lived in a unique period of U.S. history where we had allowed our technological innovation apparatus to be completely hijacked by a foreign power: China,” Luckey said. “Almost none of the major tech companies in the United States were willing to work with the DoD in a major way, because doing so would get them locked out of China, Chinese capital, Chinese markets, Chinese manufacturing.”

“Apple could not pivot away from China even in the event of World War III,” Luckey said. “So you get to this weird situation, I realized, where these people who are supposed to be the most powerful people in the country are actually handcuffed and prohibited from saying anything that they might believe,” including criticizing the Chinese government’s mass detention of Muslim minorities. “If you’re the CEO of Apple, you can’t go out and say, ‘I think concentration camps are wrong, no matter where they are.’ I looked at that and said, ‘Oh my God, this is terrifying.’”

This line of thinking was considered fringe in the tech industry in 2016, when Luckey left Facebook, but after COVID-19 pandemic supply-chain disruption and wars in Europe and the Middle East, a growing slice of the tech industry has switched to Luckey’s point of view, emphasizing the need to bring manufacturing back to U.S. shores — or at least U.S. allies — and disentangle from the Chinese economy.

Luckey’s enthusiasm for working with the military was unpopular for much of the last decade, but his basic pitch for Anduril is classic Silicon Valley: Use software, venture capital money and a new business model to disrupt an industry full of lumbering incumbents. He and his co-founders thought that they could tap tech talent to bring machine vision and other AI technologies to military operations, and outflank the defense giants of Lockheed Martin, Raytheon, General Dynamics, Boeing and Northrop Grumman — known as the five “primes” in the industry — by pitching the military on a new way to pay. Instead of billing on a cost-plus basis, where the government covers all the costs of development and manufacturing, plus a little profit margin on top, Anduril talks to Department of Defense decision-makers up front, uses its own capital to develop new software and drones, and then sells the finished product to the military.

The company is not profitable, and has no intention of becoming profitable in the next few years. “We should not be profitable” in the near future, Luckey said. “We should be taking all of the money that we’re making and putting it back into growing the company, launching new product lines, trying to become the next major defense prime.”

It was an uphill fight to secure his first round of funding. Investors would tell him, “We love your people, we love your tech. You’re very patriotic, you’re very smart, but we don’t think you can actually get the government to buy your stuff.”

Through a series of LLCs with names such as Luckey Arms, Luckey Air Transport and Luckey Ground Technology, he owns a couple of submarines, a Black Hawk helicopter and a fleet of motorcycles and cars. On the day we met, he drove a Tesla stripped of all paint to the bare aluminum to work. He drove a 1990s Mazdaspeed Autozam converted to electric drive and skinned hot pink with graphics from the anime series “Gun Gale Online” to the annual Anime Expo at the L.A. Convention Center last summer. During his time at Facebook, the Wall Street Journal reported that he would drive a military Humvee to the Menlo Park, Calif., offices, complete with fake guns in its machine-gun mount.

Real guns are also a hobby. “I have a huge number of guns. Massive collection of guns.” His main interest is failed gun designs, stabs at innovation that led to technological dead ends. “I will say I’ve got the extreme machine gene,” Luckey said.

And then there are the nuclear missile silos. “I own a lot of ICBM sites all over the United States.” Corporate filings show that a decommissioned Atlas ICBM silo in rural Saranac, N.Y., is owed by Black Omen LLC, which is in turn managed by Fiendlord’s Keep LLC, whose chief executive is listed as Palmer Luckey.

Luckey would not confirm nor deny his ownership of that site, but he did say that he’s in the process of collecting the entire U.S. ground-based nuclear deterrent system. His goal, he says, is to turn it into a vast museum.

“There are so many air museums, quite a few naval museums and ship museums, and there’s literally only one missile museum in the United States, the Titan II in Tucson, Arizona,” he said. “It’s just kind of weird that one of the three pillars of the nuclear triad has just been completely ignored by all the people that build museums. So I’m collecting those and restoring them.”

Like the red phone, only bigger.