Beverly Hills must allow 165-unit builder’s remedy project

A superior court judge in Los Angeles County ruled Tuesday that Beverly Hills violated state housing law in its attempt to block Leo Pustilnikov’s proposal for a 19-story apartment building with a hotel and restaurant.

The city will now have to allow the application for the project at 125-129 S. Linden Drive to proceed. The ruling seems likely to affect other housing projects that have been proposed in recent years under California’s Builder’s Remedy law but held up by the city.

“I can’t begin to tell you how validating it is,” said Dave Rand, an attorney at Rand Pastor Nelson who represented Pustilnikov in the case that’s been playing out in court since last year.

“A lot of these legal questions — they’re new,” Rand said. “This puts the wind at our back and sends a message clear as day. The city cannot rely on specious legal arguments to delay and deny a developer’s vested rights.”

Pustilnikov did not immediately respond to a request for comment. Richards Watson and Gershon’s Ginetta Giovinco, who represented Beverly Hills in the litigation, did not immediately return a phone call from The Real Deal.

The Linden Drive project was one of the first proposals in Beverly Hills to exploit the legal loophole that lets builders override local planning boards when cities fail to plan for new housing as required by state law.

State lawmakers recently enabled such standoffs by reviving the 1980s-era provision known as Builder’s Remedy with a series of reforms chiseling away at the discretionary power of cities to block housing. California’s 2019 Housing Crisis Act and subsequent Permit Streamlining Act both came into play in Pustilnikov’s legal battle.

The drama began when the Ukrainian-born developer proposed replacing a five-story office building near the intersection of Santa Monica and Wilshire boulevards with a tower with 165 apartments and a 73-key boutique hotel.

The 2022 planning application hit tony Beverly Hills like a wrecking ball — and more soon followed.

The city has tried several tactics to regain control over the spate of Builder’s Remedy projects. City planners, for example, rejected Pustilnikov’s application and others like it on the grounds that the proposals changed too much during the review process or didn’t qualify as housing projects due to mixed-use components, among other arguments.

“These cases all involve the same basic questions,” said Californians for Homeownership’s Matt Gelfand, one of numerous lawyers involved in the yearslong effort to force Beverly Hills to follow state housing law.

The nonprofit firm, which is funded by the California Association of Realtors, and the California Housing Defense Fund, have both filed their own cases against the City of Beverly Hills.

Superior Court Judge Curtis Kin rejected all of the city’s arguments in the case, but stopped short of ruling that Beverly Hills acted in “bad faith,” which requires a higher legal bar, according to the Aug. 12 court filing.

The city’s lawyers invoked standards that do not exist in the law and illegally subject developers to the “whims and caprice of the city,” the ruling says.

“The court is unconvinced by the city’s claim that the petitions should be denied,” Kin wrote.

He ordered Beverly Hills to reverse its previous denials of Pustilnikov’s application and continue reviewing the project’s plans.

This week’s decision means that years of work will finally bear fruit, Gelfand told TRD.

He added that Beverly Hills may need to return to drawing board to come up with new arguments in similar cases pending over Max Netty’s 27-unit condo proposal at 140 South Camden Drive and a 134-unit building proposed for 8820 and 8800 Wilshire Boulevard, not to mention numerous other Builder’s Remedy proposals currently pending with the city.

Netty’s lawyer, Holland and Knight’s Ryan Leaderman, for his part agreed.

“This is super easy,” Leaderman told TRD. “The city’s argument is that due to a change in the project, you have lost your vested rights to proceed as a builder’s remedy project. We call ‘b-s’ on that.”