Leo Pustilnikov Fails to Purchase Ocean Avenue Buildings

An affordable housing nonprofit has put the kibosh on selling some Santa Monica buildings to developer Leo Pustilnikov.

At a Santa Monica City Council meeting last week, officials disclosed that they had privately discussed a potential sale of 419 and 1616 Ocean Avenue, properties controlled by Community Corporation of Santa Monica, the Santa Monica Daily Press reported. Any transaction would require city approval because Santa Monica deeded 419 and 1616 Ocean to the nonprofit in 2016 and retained reacquisition rights.

After the private discussions, Mayor Caroline Torosis said the City had been asked by both CCSM and Pustilnikov to evaluate a potential deal between the parties.

“The city discussed the potential real estate transaction in closed session, given that Mr. Pustilnikov is considering other interim [and] transitional housing uses at 413 Ocean, including a possible project with the Office of Diversion and Reentry for what has been described to the city as ‘prisoner housing,’” Torosis said. “[Community Corporation of Santa Monica] has shared that they need the funds that they would accrue from selling 419 Ocean Avenue to help stabilize their operations. Also, Mr. Pustilnikov has indicated that if the city signed off on the transaction, he would forgo any proposed interim [and] transitional housing use at 413 Ocean Avenue.”

“We are aware that [Community Corporation of Santa Monica] is also considering selling other properties they own to Mr. Pustilnikov. We have been made aware that [Community Corporation of Santa Monica] and Mr. Pustilnikov are still negotiating potential deal terms for a possible transaction [for 419 and 1616 Ocean],” Torosis said after the meeting.

Shortly thereafter, Community Corporation of Santa Monica pushed back on the mayor’s statement and confirmed that it was no longer in talks with Pustilnikov.

“Community Corporation of Santa Monica is not in negotiations with Leo Pustilnikov to purchase any of our properties,” Tara Barauskas, executive director of Community Corporation of Santa Monica, said. “On Monday, Jan. 12, the Community Corporation board voted not to engage in any discussions or negotiations with Leo Pustilnikov. Remarks from any other parties suggesting otherwise are inaccurate.”

The affordable housing nonprofit opted not to move forward with any deals and said it does not need to sell properties to maintain operations. It also noted that it was not interested in selling any of its other properties to Pustilnikov and that the organization did not ask the City Council to discuss the situation.

Pustilnikov, for his part, said he spent months talking with Community Corporation of Santa Monica about the potential purchase of 419 Ocean Avenue. The developer said he began discussions when he acquired the rights to the neighboring property at 413 Ocean Avenue, one of two Ocean Avenue sites owned by Pustilnikov that has drawn ire from local residents over supportive housing plans, for which 413 Ocean Avenue is zoned.

Pustilnikov said he has not limited potential development to so-called “prisoner housing.”

“I need to generate a use to hopefully come close to breaking even,” Pustilnikov said. “There are a number of uses that are permitted due to the unique nature of the property and within what is allowed… I’ve given the city five uses and tell me what’s least offensive.”

The developer is asking the city for its preference but confirmed he would absorb the cost of keeping the buildings vacant if he could purchase more adjacent property. “I’ve said if I can acquire the adjacent site, I don’t mind leaving it vacant for the rest of the term [of any potential deal],” he said.

— Chris Malone Méndez