In a move that adds more legal pressure to one of California’s most consequential development battles, this week YIMBY Law, a San Francisco-based pro-housing nonprofit, filed a lawsuit against the City of Redondo Beach over the city’s rejection of developer Leo Pustilnikov’s major builder’s remedy application.
“Redondo Beach has ignored state law as well as their own municipal code by not treating their housing plan as a meaningful, effective part of the general plan,” Rafa Sonnenfeld, policy director at the nonprofit, said in a statement. “Because of their actions, they don’t have a compliant housing plan and the builder’s remedy applies in the city. These homes must be approved.”
The lawsuit signals the latest turn in an explosive housing saga that began years ago and has major implications for not only Redondo Beach but California development writ large.
The project from Pustilnikov, a blunt-spoken Ukrainian immigrant who in recent years emerged as one of Southern California’s biggest development players, would transform an aging waterfront power plant into a village-style complex that includes 800,000 square feet of commercial and office space, a hotel and 2,700 residential units, including 540 affordable units.
The project would be a major addition of affordable housing in the city. Last summer, after months of sparring with city officials — and after decades of often toxic local turmoil over housing development and the fate of the power plant site itself — Pustilnikov filed an application to build the project utilizing builder’s remedy, the decades-old California legal provision that allows developers to bypass local zoning in cities that are failing to meet state-mandated housing planning goals.
The builder’s remedy application instantly turned Pustilnikov, a feisty character who would go on to file builder’s remedy applications in Beverly Hills and elsewhere, into a kind of poster boy for the controversial development provision.
“Leo is the perfect kind of character to push the boundaries on what’s possible,” Sonnenfeld, of YIMBY Law, previously told TRD. “He has the resources, and I guess more importantly the attitude, and he’s willing to take risks that a lot of people aren’t.”
But since filing that application Pustilnikov has grappled with numerous challenges, including financial debts and disputes related to his power plant purchase that led an entity he controls to file for bankruptcy protections. Meanwhile, the City of Redondo Beach — some of whose officials have made no bones about their enmity toward him — have fought his project at every turn, forcefully rejecting the project twice this year while asserting that builder’s remedy doesn’t apply.
YIMBY Law’s suit asserts that it does. The dispute mostly comes down to timing: While Redondo Beach has argued that the city became compliant with Housing Element Law — the determining factor for builder’s remedy eligibility — last July, when it submitted a housing plan that was later accepted, the state’s Housing & Community Development Department (HCD) has repeatedly asserted the city remained out of compliance until September, when the agency actually signed off on the plan.
Pustilnikov filed his application for the project in August, while the builder’s remedy window was still open, at least according to the state.
“The city’s interpretation of the Housing Element Law is legally incorrect and directly conflicts with HCD’s determination that the Housing Element Law was not compliant until Sept. 1, 2022,” YIMBY Law’s suit says.
Redondo Beach has also claimed Pustilnikov’s application was incomplete, with various missing details and fees, but the developer’s team, and now YIMBY Law, have argued the city was really nitpicking as an attempt to stave off a project they don’t want but have no choice but to approve.
“The threshold issue is that the city does not agree that builder’s remedy applies. That’s the discussion, that’s the issue,” one lawyer for Pustilnikov argued in a tense public hearing this spring. “Whatever else we want to say about ‘25 items of incompleteness’ — that’s a red herring.”
YIMBY Law’s suit seeks various remedies, including declarations from the court that the city is violating California housing law and that it must promptly approve Pustilnikov’s project.
The suit from the nonprofit comes after Pustilnikov has already filed his own lawsuit against the city. Earlier this summer an L.A. County judge also ruled favorably toward builder’s remedy in a high-profile saga unfolding for years in La Cañada Flintridge, prompting developers there to file their own suit against the city.
The Redondo Beach city attorney and city manager did not immediately respond to a request for comment on the suit from YIMBY Law.
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