Leo Pustilnikov gains clarity on builder’s remedy in project snub

UPDATED, Feb. 2, 2024, 5:02 p.m.: An L.A. court judge looked to deny developer Leo Pustilnikov’s application to build a 35-unit apartment project in Redondo Beach earlier this week, but offered clarification on the builder’s remedy provision, the penalty facing cities that do not get their housing plans in order. 

The site, located at 1021 North Harbor Drive, is home to the shuttered 116-year-old Redondo Beach Power Plant. Pustilnikov’s project was one of the earliest builder’s remedy cases, filed in 2022, and is seen by many as a litmus test for the legal exception in California. 

In a tentative ruling, L.A. County Superior Court Judge James Chalfant said that even though builder’s remedy applies in a coastal zone, the site where Pustilnikov wants to build is not zoned for residential property.

“Nothing in the Coastal Act, the Local Coastal Program and the Coastal Ordinance prevents low- and moderate-income housing from being built in the coastal zone,” according to the tentative ruling. “But it must be based in residential zones within the coastal zone.” 

Pustilnikov’s New Commune Development “presents no evidence or argument that this Coastal Act requirement presents a de facto ban on low- or moderate-income housing in the city’s coastal area,” the judge added.

While this is a tentative ruling and the parties can still make their arguments at a future hearing, some view it as the latest signal of the wider legislative support and political momentum in favor of builder’s remedy in California. 

The ruling marks one of the few times a judge has weighed in on builder’s remedy, the penalty where cities lose the right to reject a housing project based on local zoning plans if the municipalities do not have state-approved housing plans in place. A project has to meet certain affordability thresholds to qualify for the remedy.

“Before the city’s housing element was approved by HCD [the state’s Housing and Community Development Department], NCD was free to apply the builder’s remedy anywhere in the coastal zone where the LCP [Local Coastal Program] and Coastal Ordinance permitted residential housing,” the Feb. 1 ruling said.

The next hearing will take place on Feb. 8.

“There are more and more signals that state officials are going to have the backs of the people who are trying to build housing,” Chris Elmendorf, a professor at UC Davis School of Law, told TRD. “That’s what this decision and the larger narrative that this decision contributes to.”

In December, Gov. Gavin Newsom and the state’s attorney general addressed builder’s remedy for the first time when it asked to intervene in a court case over a builder’s remedy project in La Cañada Flintridge. 

Elmendorf added the judge’s decision is “very pro-housing and will probably embolden those who were on the fence about submitting BR projects,” in a post on X on Feb. 1. 

Pustilnikov agreed that the procedural ruling was positive overall for his case, but still planned to fight it in court. 

In his tentative ruling, Chalfant ruled the city did not come into compliance until Sept. 1, in contrast to a 2022 court ruling that sided with the City of Redondo Beach and said its housing element became official at an earlier date.

“So it’s all going in the right direction,” Pustilnikov noted.

Pustilnikov hopes this ruling will be followed by others connecting the dots between competing statutes like the Housing Accountability Act and the Coastal Act.

“In the Housing Accountability Act, it says nothing will relieve the local agency from complying with the coastline; the Coastal Act says nothing will exempt the local government from complying with the Housing Accountability Act,” he said. “It’s almost like a circle, so which one applies?”

“This year you’ll see a lot of clarity between the Redondo’s builder’s remedy [case], La Cañada ones, Beverly Hills ones,” Pustilnikov added. “Hopefully the state opines and the legislatures tell the courts what they mean, because a lot of these laws — the judges are left to harmonize them because it doesn’t say which one supersedes which.”

This story was updated to reflect that the ruling is tentative and applies to Pustilnikov’s 35-unit project in Redondo Beach.

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