The city of Beverly Hills is facing recrimination from the state for denying a 165-unit project at 125-129 Linden Drive, a decision that has attracted comment from the Governor and triggered a letter from the California Department of Housing and Community Development (HCD) alleging a violation of housing law.
The HCD sent a “Notice of Violation” to the city on Aug. 22, warning that its decision earlier this summer to reject developer Leo Pustilnikov’s Linden Drive project application falls afoul of state law. In June, the Beverly Hills City Council rejected Pustilnikov’s proposal to build a 200-foot-tall tower with 132 market-rate apartments and 33 affordable units.
“The City Council should reverse its decision and direct city staff to process the project without further delay,” states HCD’s letter, in a copy obtained by the Courier.
In a statement shared with the Courier shortly before going to press, the city said it plans to respond to HCD with “detailed reasoning in support of its actions, which were taken in good faith,” by a Sept. 20 deadline.
“The city wants to clarify that the project has not been denied, and that the appeal hearing was related to procedural matters,” the statement continued. “What was originally submitted as a purely residential project has now morphed into a 73-room hotel and restaurant project with 35 fewer residential units, including a reduction of seven affordable units.”
Dave Rand, a lawyer for Pustilnikov, pushed back on the city’s response.
“HCD’s letter is clear that the allegedly ‘problematic’ project changes cited by the city are not a legally valid reason to reject the project and refuse to deem the application complete,” Rand told the Courier. “The state is telling the city in pretty clear and stark terms that these invented so-called procedural defects are not a reason to not process the project.”
The controversy has made its way all the way up to Governor Newsom, who commented to the online news site Politico about the matter. “While I’m glad Beverly Hills has finally adopted a compliant housing plan, their attempt to block this housing project violates the law,” said Newsom.
“We can’t solve homelessness without addressing our housing shortage,” the governor’s statement continued. “Now is a time to build more housing, not cave to the demands of NIMBYs.”
The state’s position is that the city broke a housing law known as the builder’s remedy.
Under the builder’s remedy, developers can submit project applications that vastly exceed local zoning restrictions if a city does not have a compliant Housing Element.
Beverly Hills’ Housing Element was certified by HCD on May 1, 2024. Pustilnikov submitted a preliminary application for the project in October 2022.
The state and Pustilnikov believe that the builder’s remedy allows the Linden Drive project to advance, because the project application was submitted prior to the certification of the city’s Housing Element.
Although the state’s letter to the city focuses on the builder’s remedy, the city argues that this law is not the reason why the City Council opposed the project.
“The city’s action on the Linden project was procedural in nature and unrelated to the certification date of the Housing Element,” said the city in its statement.
Rand told the Courier he was pleased by the Notice of Violation letter, which confirmed what he already believed to be true regarding the city’s actions.
“Everything that the state has told the city we communicated with them, and we begged them to work with state law, but they rejected it,” he said. “What this letter says is that there are consequences today under state law for violating housing law.”
Both the state and Rand have threatened litigation if the city does not reverse course and accept the project application.
“As I told the City Council when we went before them on the appeal, this is not where we wanted to be, this is not what we signed up for and what we were hoping for was to work with the city and find a path forward for the project,” said Rand. “There’s still an opportunity to do that, but because the council violated housing law, we will be vindicating our rights and the fact that the state is with us is only strengthening our resolve.”
In addition to the Linden Drive project, Pustilnikov has five other applications for builder’s remedy projects for large apartment complexes pending with the city.
