Redondo Beach Nixes Builder’s Remedy Plan for 35 Apartments

February 10, 2023

SLH Investments' Leo Pustilnikov, rendering of 1021 North Harbor Drive (Getty, City of Redondo Beach, Kevin Scanlon)
SLH Investments’ Leo Pustilnikov, rendering of 1021 North Harbor Drive (Getty, City of Redondo Beach, Kevin Scanlon)

The city of Redondo Beach has thrown a punch at developer Leo Pustilnikov, who plans to redevelop a local power plant and a former marine aquarium next door into thousands of homes under the state builder’s remedy provision.

The City Council has upheld an administrative decision to reject Pustilnikov’s permit application to build a 35-unit mixed-use apartment complex at the former SEA Lab aquarium at 1021 North Harbor Drive, the Torrance Daily Breeze reported.

The proposal, which the city ruled incomplete, was filed in tandem with a controversial plan to redevelop the coastal AES Power Plant with 2,300 homes, offices, shops, restaurants and more. 

Pustilnikov, a partner in Beverly Hills-based SLH Investments, bought the 49-acre plant and the 2-acre offsite aquarium, which once served as a pump house for AES. The deal closed in 2020 for $150 million.

The smaller project, dubbed Ten21, would include a six-story building with 35 apartments, seven to be set aside as affordable for low-income residents, plus 8,500 square feet of storefronts.

The builder’s remedy, built into state housing law since 1990, forces cities and counties to bypass local zoning rules and automatically approve projects with enough affordable units if they’ve failed to adopt state plans to build more housing. 

For its latest housing element, the state determined Redondo Beach must plan for 2,500 new homes. By last spring, however, the city had twice failed to submit a compliant plan. 

In July, Pustilnikov filed a builder’s remedy application for the Ten21 mixed-use project, across the street from the power plant. A few weeks later, he filed a similar application for One Redondo, the urban village proposal to replace the plant set to close on Dec. 31.

In November, he also submitted a development permit application for Ten21 under state Senate Bill 330, which bars governments from rejecting projects for low-income residents.

The City Council this week upheld a previous decision by Community Development Director Brandy Forbes that the permit application was incomplete. 

City officials say residential buildings aren’t allowed at that site because the land is now designated for “coastal commercial” use. So before the city can officially receive and consider the permit application, Pustilnikov must apply for amendments to the city’s general plan, its local coastal program and its zoning and land use plans.

The California Coastal Commission, meanwhile, would likely have to OK any changes to Redondo’s local coastal program. And under Redondo’s City Charter, any major land-use change would require voter approval.

It’s unclear, however, whether the state housing mandates could override those requirements, according to the Breeze. It’s  also unclear whether Pustilnikov would apply for the amendments — though he has argued they shouldn’t be necessary.

“We dispute that the city can lawfully require a General Plan, LCP and/or zone change amendment in this case,” Michael Shonafelt, Pustilnikov’s attorney for Ten21, said in an email to the newspaper.  “In the wake of last night’s decision, we are considering our options.”

Shonafelt called the notice of incompleteness a rejection of the project, saying the builder’s remedy provision and SB 330 — the latter of which gives more teeth to the former — would require the city to process the application regardless of its own rules.

Forbes disagreed.

“It wasn’t a denial,” Forbes said of the decision. Rather, the letter gave “an option for a path forward; if the client wants to do residential uses, (they) must apply for (the) amendments.”

If the developer reapplies correctly, according to the city, Forbes can approve the project at her own discretion.

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