Pustilnikov prepares builder’s remedy barrage in Beverly Hills 

UPDATED: JUNE 6 at 2:15 P.M.:

Eight months after one wave of builder’s remedy applications shocked Santa Monica and set off a slew of still-active projects, developer Leo Pustilnikov is preparing another wave of applications using the legal provision in Beverly Hills, Pustilnikov told The Real Deal. 

Pustilnikov has already filed applications for around a half dozen projects, he said, and plans to file around a half dozen more in the coming weeks.  

“We’re going to end up at 850 to 1,200 units, depending on where things land,” he said. 

“It’ll only be like 10 or 15 percent of the total multifamily housing stock in Beverly Hills,” he added sarcastically. 

The developer’s math is pretty accurate. A 2021 report counted 8,475 multifamily units in buildings with at least five units. The city had a total housing stock of just under 16,500 units. 

The largest, and potentially most controversial, of Pustilnikov’s builder’s remedy projects in the wealthy city is located at 125-129 South Linden Drive, just off Wilshire Boulevard west of the city’s main commercial and shopping district. Pustilnikov’s entity bought the property, which is partly being used as a surface parking lot, for $16 million in 2019, according to records. In October, the developer filed a preliminary builder’s remedy application for a 16-story multifamily project with 200 units. 

In April, in line with a six-month timeline afforded by state law, he then filed a full builder’s remedy application at the site that modified the earlier plans, proposing a 19-story mixed-use project that would have 165 units and a 73-key hotel.

Last month, the city ruled the application was incomplete, and determined that the developer’s modified full application, which included the hotel plan, constituted a “substantially different” project. 

A representative confirmed the city has received six preliminary builder’s remedy applications, not including the Linden project. Those applications total 493 units. 

According to state authorities, Beverly Hills is susceptible to the penalty, which allows developers to bypass local zoning considerations as long as their projects meet affordability requirements, because the city is failing to meet its housing planning obligations. For its most recent housing planning update, which stretches from 2021 through 2029, the state determined that Beverly Hills, which has a population of around 32,000, must plan for an additional 3,104 units. 

Like most of Southern California, the city faced an October 2022 deadline to reach a state signoff on its new housing plan, but Beverly Hills — along with numerous other cities — is still out of compliance. The city submitted its most recent version of its new plan to the state’s Housing and Community Development agency in March, but last month the agency determined the plan was still insufficient, in part because it found the city was not preparing enough incentives for a new mixed-use overlay zone — Beverly Hills’ main strategy to come up with enough new residential units. 

Like some other cities around the state, Beverly Hills has also begun a highly technical fight over compliance in an effort to avoid builder’s remedy. In communications between the state agency and the city over required revisions to the city’s draft, the agency representatives have used the term “fully comply,” according to a recent letter from HCD.  

But the legal term used in the relevant state law is “substantially comply,” and Beverly Hills officials have argued the city was meeting that threshold despite the state’s guidance about required revisions. The recent letter from HCD reiterated that the agency’s position is that Beverly Hills is not in substantial compliance.  

“In this context, ‘fully’ means addressing HCD’s findings from the prior review and should be considered synonymous with “substantial,” the letter states. 

Pustilnikov already owns over a half-dozen properties in Beverly Hills and is in contract to buy several more, he said. 

The developer’s new wave of builder’s remedy applications comes as he’s enmeshed in a complex, years-long battle over the AES power plant site near the Redondo Beach waterfront, where he has filed plans, also using builder’s remedy, to build a village-style complex that would include 2,700 residential units, a hotel and office space.

Last month, after the City of Santa Monica had adopted new, more pro-development zoning rules, the City Council approved a settlement agreement with WS Communities under which the development firm agreed to set aside most of its builder’s remedy applications in exchange for expedited approvals and additional incentives on projects that fit with the city’s new code. Pustilnikov has also filed a builder’s remedy application in Santa Monica. 

Clarification: Previous story did not include number of units in six preliminary applications received by Beverly Hills.

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