Beverly Hills Braces for Builder’s Remedy Litigation

The City of Beverly Hills is preparing for a showdown with Max Netty’s Soundview Investment over a proposed builder’s remedy development just south of the famous Rodeo Drive luxury shopping street.

The city has received “a written threat of litigation” over a proposed development project at 145 South Rodeo Drive, according to an agenda for the City Council’s closed session conference with legal counsel Friday afternoon.

The site is just south of Wilshire Boulevard, about a quarter-mile away from Rodeo Drive and the Beverly Wilshire Hotel.

The saber rattling on the proposed development, which would replace a two-story office building, came in an email from Netty’s lawyer in May, shared with The Real Deal. The looming showdown comes as Beverly Hills has begun signing off on some other projects in the tony enclave.

“The attached letter is a denial of the project because it takes away the ability to proceed under builder’s remedy,” Ryan Leaderman of Holland and Knight wrote in the email to the city. “Without a modification to the City’s position on this issue, litigation is highly likely given the denial of the project as proposed.”

Builder’s remedy allows housing developers to skirt local zoning in cities such as Beverly Hills that have failed to certify their state-mandated housing plans. Beverly Hills was subject to builder’s remedy for several months but is now in compliance with the state’s requirements, known as the “housing element” on plans for housing development.

“Please let me know if there is going to be a change in the City’s position,” Leaderman wrote. “I assume that you might need to go to City Council for a closed session discussion.”

The proposed development on Rodeo Drive would replace a two-story office building. Soundview wants to construct a new mixed-use development, per a May 1 email the city sent Leaderman. City officials said the latest application differs significantly from a previously approved plan, and has been deemed ineligible for processing as a “builder’s remedy project.”

The city claims the preliminary application was submitted in February 2024 as all rental units.

The more recent plans include a subdivision that now includes condominiums as well as rentals.

“City staff has determined in good faith that the 145 South Rodeo Drive project is a different project than the [preliminary application] project because of the omission of subdivision information,” the city wrote.

In addition, the letter says the 180-day deadline to resubmit an application expired on Aug. 24, 2024.

The latest proposal does not comply with the city’s zoning ordinances in its height and density, and therefore needs builder’s remedy to override city rules.

“It is not a valid builder’s remedy project, and thus can no longer rely on the builder’s remedy provisions of Government Code Section 65589.5 to insulate the Development Application Project from the general plan and zoning consistency requirements,” the letter says.

To proceed with the development application project, the developer would have to seek general plan and zoning amendments for non-builder’s remedy projects.

Leaderman was “out sick” per an email, and a city attorney didn’t respond to a request for comment.

The cases could be impacted by Leo Pustilnikov’s victory in superior court in August. A judge ruled that Beverly Hills violated state housing law in its attempt to block his proposal for a 19-story apartment building with a hotel and restaurant at 125-129 South Linden Drive. Pustilnikov’s projects got a greenlight from the Beverly Hills Planning Commission.

Netty’s Soundview, meanwhile, also has proposed a 27-unit condominium development at 140 South Camden Drive, a block south of Wilshire Boulevard, which appears bound for a showdown with city officials, too.

“Please also be aware that we are preparing to litigate for the 140 S. Camden project as well,” Leaderman wrote.