State Tells Beverly Hills to Approve Builder's Remedy Tower

The California Department of Housing and Community Development (HCD) and Gov. Gavin Newsom have warned Beverly Hills it must approve a builder’s remedy project to build the tallest tower in the city or face legal action by the state.

The Beverly Hills City Council in June rejected developer Leo Pustilnikov’s application to build a 19-story tower including a 73-room hotel, 165 residential units and a restaurant on a site occupied by a vacant building and a parking lot at 125-129 South Linden Drive on the corner of Wilshire Boulevard.

Pustilnikov’s proposal includes 33 low-income rental units, making it eligible for a builder’s remedy fast-track that is available in California cities without an approved state-mandated housing plan.

At the time of his application in 2023, the eight-year housing element plan for Beverly Hills had not yet received approval from HCD. On May 1, the state’s community development approved the housing element plan that Beverly Hills submitted in March.

At its June 27 meeting, the City Council unanimously denied an appeal from Pustilnikov, declining to process his builder’s remedy application and maintaining that the project would require a zone change.

This month, HCD sent a letter to Beverly Hills notifying the city its rejection of the mixed-use tower violates state housing law and must be reversed, Politico reported.

“The City Council should reverse its decision and direct city staff to process the project without further delay,” the HCD letter stated, adding that the state will pursue litigation if the city doesn’t move forward with the project.

Gov. Gavin Newsom also called on Beverly Hills to approve Pustilnikov’s project. “While I’m glad Beverly Hills has finally adopted a compliant housing plan, their attempt to block this housing project violates the law,” Newsom said, in a statement to Politico Playbook.

“We can’t solve homelessness without addressing our housing shortage,” Newsom added. “Now is a time to build more housing, not cave to the demands of NIMBYs.”

In 2022, California began enforcing a 1990 law that allows developers of projects with at least 20% affordable housing to bypass the local zoning approval process in cities and counties that don’t have state-certified housing element plans that mandate the number of new houses needed over the next eight years.

The state invoked builder’s remedy in Southern California beginning in 2022 and in Northern California in 2023.

As of May 2024, 58 jurisdictions in Southern California and 35 in the Bay Area still did not have state-approved housing plans, SiliconValley.com reported. More than 150 builder’s remedy applications for housing projects have been filed, including 53 projects in 19 Southern California cities.

In March, a Superior Court judge ordered the city of La Canada Flintridge to set aside its 2023 finding that a proposed 80-unit apartment project didn’t qualify for builder’s remedy. The judge ordered the city to begin processing the developer’s application.

In another ruling in March, a Superior Court judge rejected a motion by the city of Los Angeles to dismiss a lawsuit by developers who filed a plan to build a 40-unit apartment building just five days before the state housing department certified L.A. housing element plan.

The city argued that its plan was “substantially compliant” before the developer’s plans were filed because the state eventually approved it. The judge ruled that a city can’t “self-certify” or “backdate its housing element compliance to circumvent builder’s remedy.”