Leo Pustilnikov tangles with red tape over builder’s remedy in Beverly Hills

Leo Pustilnikov has run into a labyrinth of red tape put up by Beverly Hills to stave off a builder’s remedy project with apartments and a hotel that defies the city’s zoning rules.

The locally based developer and pioneer in employing the state housing provision to bypass zoning has been thwarted by a city government that refuses to process his proposal to build a 165-unit complex and 73-room hotel at 125-129 South Linden Drive, Urbanize Los Angeles reported. 

Late last month, the Beverly Hills City Council unanimously voted to deny an appeal by Pustilnikov challenging what the city claimed was an incomplete application, putting the project in limbo.

The Ukrainian-born developer had rattled the affluent city in October 2022 with a preliminary proposal to employ the legal loophole for what was initially a 16-story, 200-unit complex. It’s now 19 stories with fewer units.

The builder’s remedy allows housing developers to skirt local zoning in cities such as Beverly Hills that failed to certify their state-mandated housing plans, provided the project includes 20 percent affordable housing.

Beverly Hills had missed its deadline — and Pustilnikov was the first to pounce. He previously bought the development site, a vacant building and parking lot on the corner of Wilshire Boulevard, in 2019 for $16 million.  

But rather than process Pustilnikov’s application, the city has focused on procedure, according to Urbanize.

In determining that his project application was incomplete, Beverly Hills argued the project had lost its vesting rights under SB 330 because he added the hotel between the preliminary and later project applications.

The city argued that the revised proposal constitutes a distinct project from the original, while Pustilnikov contends the new plan hasn’t changed enough to lose vesting rights.

At the same time, Beverly Hills has repeatedly instructed Pustilnikov to apply for a general plan amendment and a zone change for the project — which the city would have the authority to approve or deny. 

Putsilnikov has declined to request those entitlements, as the builder’s remedy is intended to override local zoning rules. 

This spring, the state Department of Housing and Community Development implied in an April 2024 letter to the City of Compton that the remedy doesn’t prevent the city from requiring “discretionary permits and/or legislative actions,” which Beverly Hills cited in affirming its stance on the Linden Drive project.

Then the housing regulator fired off a letter to Beverly Hills dismissing the rationale used in its Compton letter as “absurd” — while recommending the city grant Pustilnikov’s appeal and process the apartment and hotel tower.

The outcome of the ongoing fight over Linden Drive could have major implications for the city, according to Urbanize. There are more than a half-dozen other proposals which made use of the builder’s remedy before the certification of the city’s “housing element” plan, including other proposed high-rise buildings.

— Dana Bartholomew

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