Redondo Beach again denies Pustilnikov’s power plant project   

Vote portends clash with state authority over builder’s remedy interpretation

Leo Pustilnikov, rendering of rejected One Redondo, a 2,700-unit megaproject planned at the site of the AES power plant in Redondo Beach (Getty, Kevin Scanlon)
Leo Pustilnikov, rendering of rejected One Redondo, a 2,700-unit megaproject planned at the site of the AES power plant in Redondo Beach (Getty, Kevin Scanlon)

This week the Redondo Beach City Council voted again to deny an application by developer Leo Pustilinikov for a waterfront project that ranks as one of the most ambitious — and potentially consequential — housing developments inCalifornia. 

The Tuesday evening decision, which came after an explosive back-and-forth between council members and the developer’s lawyer, amounts to the latest twist in the city’s decades-long, often vitriolic battle over the site. 

The vote sets Redondo Beach on a path toward a high-stakes confrontation with Sacramento, because the council openly refuted advice given just a day earlier by the California Department of Housing & Community Development. 

“I have great respect for HCD and their efforts to resolve the issue of the housing crisis,” Mike Webb, the Redondo Beach City Attorney, said during the meeting. “However, I disagree with them as a matter of statutory interpretation.” 

“Nothing changed — Redondo will be Redondo,” Pustilnikov said ahead of the meeting, anticipating the denial and another court battle. He added that the city will continue shutting him down until the courts rule in his favor, “and even then they’re going to appeal and cry and see where they can get.”

Contentious site

Pustilnikov’s plans involve the site of an aging power plant. The battle over the industrial site has torn the city apart for decades, far predating the young developer’s involvement. He aims to build a complex that would include 2,700 total residential units, a 300-key hotel and more than a half million square feet of office space. More than 500 of the units would be affordable, representing a significant addition to the South Bay’s stock of low-income housing. 

In its rejection, both earlier this year and this week, the city ruled that the developer’s project application was incomplete, citing a litany of complaints that included missing permit fees, inadequate proof of ownership (the site is owned by 12 entities), missing details on planning drawings for things like recycling facilities and wall heights and a failure to include mailing labels for residents. 

“It’s an incomplete application under the Coastal Act, under the city’s Local Coastal Plan, under the city’s own rules,” Webb said at one point, and the city planner “made the only determination that she could under the circumstances.” 

The council’s recent vote was technically an appeal denial. After Pustilnikov filed his full application for the project in early February, the council voted the next month to deny it, determining it was incomplete. Pustilnikov then appealed that decision, and the appeal landed before the council this week. 

Much of the city’s stated rationale was based around its determination that the application neglected strict coastal development requirements. 

Yet the real elephant in the room was builder’s remedy, the decades-old California legal provision that allows developers to bypass local zoning entirely when cities fail to meet their state-mandated housing planning goals or submit a housing plan on time. 

‘A Red herring’

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Pustilnikov, who has pending projects in three different cities using the provision, filed a preliminary builder’s remedy application for the site last August, when Redondo Beach, according to the state, was still out of compliance on its Housing Element, the document that outlines each California city’s housing plan. The developer then filed the full application six months later, under a timeline outlined by state law.   

According to HCD, Redondo Beach regained compliance — which closes the window for new builder’s remedy applications — in early September, when the agency certified the city’s updated plan. But Redondo Beach is arguing the city actually became compliant in July, when it submitted the plan that was later certified. 

As such, the city is refusing to recognize Pustilnikov’s application as a builder’s remedy application, which would allow the project to bypass the property’s highly restrictive zoning and obviate some of the other application issues the city is citing.  

“The threshold issue is that the city does not agree that builder’s remedy applies. That’s the discussion, that’s the issue,” Michael Shonafelt, Pustilnikov’s lawyer, said during the meeting. “Whatever else we want to say about ‘25 items of incompleteness’ — that’s a red herring.” 

The development team has an ally in Sacramento: On Monday, the day before the meeting, an HCD official sent a “letter of technical assistance” to city officials reiterating that the city remained out of compliance until September, after Pustilnikov filed his preliminary application. (Under a different law only a preliminary application is required to cement housing rules.)

Redondo Beach officials vehemently disagreed, with at least one council member even questioning the credibility of the HCD official who sent the letter. Shonafelt countered that it was an official position from a state agency. 

Future litigation

In a sign of how contentious the development fight has become, the public meeting took on the confrontational, personal tone of a high-stakes criminal trial. At one point, Councilman Zein Obagi Jr., an attorney who is about to face his own trial for alleged legal misconduct, was palpably outraged as he sparred with Shonafelt in an extended exchange over the property’s wetlands status, the state Coastal Act and HCD’s certification process. A few minutes later Nils Nehrenheim, the city’s pro-tem, gleefully alluded to a recent bankruptcy filing by an entity connected to Pustilnikov.  

“Out of curiosity, has 9300 Wilshire paid you your $15,000 yet?” he asked Shonafelt. “Or they still owe you that?”

Pustilnikov has one lawsuit pending against the city over another builder’s remedy project he filed across the street from the main power plant site. Before the City Council meeting, he promised to file another. 

“I believe that the law is on my side, and ultimately Redondo will be forced to allow me to build my project,” he said. “It’s unfortunate that the taxpayers will have to pay for the mistakes of their elected officials.” 

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