It was a scene that left residents of this expensive, palm-lined Santa Monica neighborhood flabbergasted.
With out warning, some 50 strangers had all of a sudden arrived in vans and have been occupying a vacant constructing on Ocean Avenue the night time earlier than Thanksgiving.
A few of them smoked cigarettes, others had canines working round unleashed, and no less than one combat broke out throughout the boisterous move-in.
“If I didn’t know what was happening, I might have thought it was theater,” resident Ashley Oelsen recalled.
However Oelsen and her neighbors would quickly study that these new arrivals have been purchasers of an unannounced and unpermitted sober dwelling operation — a revelation that has triggered outrage amongst residents and as soon as once more pitted Santa Monica officers towards a controversial Los Angeles developer.
The dustup over the sober dwelling middle is simply the most recent in a collection of clashes between metropolis officers and Leo Pustilnikov, a developer who was lately ousted from the Downtown Santa Monica Board of Administrators for “not being a useful contributor.” The episode has additionally centered harsh mild on a proposal by Pustilnikov and others to transform two senior dwelling services into luxurious housing.
The empty, low-rise buildings at 413 and 825 Ocean Ave. sit on prime, blufftop actual property overlooking Palisades Park and the Pacific Ocean. Whereas the properties have been zoned to be used as supportive housing for years, they’re surrounded by swank condominiums which have offered for as a lot as $7 million.
Site visitors makes its means down Ocean Avenue in Santa Monica.
(Genaro Molina / Los Angeles Instances)
The buildings, which have been bought by the Bourne Monetary Group in early 2023 for $13 million, are leased by Pustilnikov, who stated he’s making an attempt to earn rental revenue from them whereas he seeks change of use permits from town.
However Ocean Avenue residents have been fast to sentence the sober dwelling facility, complaining that it posed a possible security hazard and that residents have been by no means knowledgeable of the plan or allowed to touch upon it.
Confronted with the general public outcry, officers imposed fines towards Pustilnikov and ordered facility employees to take away the sufferers. By the next Monday, the property was cleared out.
It was the second time in only a few months that Pustilnikov’s makes an attempt to fill the constructing had been thwarted. A plan to deal with county behavioral well being sufferers on the website this previous summer time was additionally scrapped.
“I didn’t understand you’re not allowed to assist individuals which might be struggling in prosperous communities,” Pustilnikov stated.
Pedestrians alongside the strolling path on Ocean Boulevard.
(Christina Home / Los Angeles Instances)
Rezoning property in Southern California is a pricey and time-consuming course of that entails numerous authorities pink tape.
Builders usually do what they will to hurry up the method, in order that they understand a revenue sooner, and reduce their losses throughout the rezoning course of. In Pustilnikov’s case, which means renting to nonprofits to generate some revenue till he can redevelop the property for luxurious housing.
“I don’t attempt to disguise the ball,” Pustilnikov instructed The Instances. “The concept was at all times, I pay the property proprietor, somebody pays me hire, I roughly break even and I’ve time to entitle the property for one thing greater.”
Pustilnikov has constructed a popularity as a shrewd businessman who pursues unconventional actual property offers. The 39-year-old developer pioneered the playbook for forcing high-density “builder’s treatment” initiatives in Santa Monica and different prosperous cities. He’s additionally one of many area’s main non-public suppliers of low-income housing and has a tender spot for rescuing historic L.A. buildings.
His methods usually contain exploiting authorized loopholes and tying up free ends in court docket. He has been accused in civil litigation of making an attempt to inflate buy costs to safe bigger federally backed loans, allegations he denies, and has been concerned in bitter disputes with enterprise companions over possession stakes.
Extra lately, residents of his Skid Row developments instructed The Instances that sanitation and safety companies degraded months after he bought 17 ageing buildings held in receivership by town of Los Angeles. Pustilnikov chalked the problems as much as rising pains, given the dimensions of the acquisition.
Considered one of two Ocean Boulevard properties which have generated controversy in Santa Monica could be seen within the background as a lady walks via Palisades Park lately.
(Genaro Molina / Los Angeles Instances)
The Thanksgiving chaos wasn’t the primary time residents stated that they had been blindsided by plans for the property.
Over the summer time, neighbors observed the vacant constructing was being renovated. It was repainted, safety cameras have been put in and a “non-public property” signal was posted. Months later, the county defined why: 49 behavioral well being sufferers enrolled in a county transitional housing program have been slated to maneuver in.
Because it turned out, Pustilnikov and his companions Bourne Monetary Group and St. Joseph Middle had approached county psychological well being officers about utilizing the constructing. The county in the end awarded them $3.5 million in bridge housing funds to renovate and home homeless Santa Monicans.
However there was immense backlash. The Metropolis Council presupposed to be simply as clueless as residents and the plan was finally halted, with the county taking accountability for its lack of communication with neighbors. When requested if the county supplied any of the $3.5 million in funds to Pustilnikov for the renovations earlier than the challenge was canceled, the county declined to say.
After that plan fell via, Pustilnikov stated he was “executed” making an attempt to get the constructing crammed. That’s, till the operators of a sober dwelling facility approached him.
“I stated, ‘Certain, why not?’ It sounded advantageous. They appear like respected individuals,” he instructed The Instances in a telephone interview.
A runner passes alongside the trail on Ocean Boulevard.
(Christina Home / Los Angeles Instances)
So Pustilnikov pivoted, leasing to Pacific Coast Healthcare in November.
However earlier than the operators had obtained a enterprise license or move-in approval from town, residents have been being shuttled in, in accordance with Metropolis Supervisor Oliver Chi. Pustilnikov stated he was not conscious the corporate can be transferring them in the nighttime. Pacific Coast Healthcare didn’t reply to The Instances’ requests for remark.
Neighbors and a few metropolis leaders haven’t been proud of Pustilnikov’s method.
“They introduced all these people in after which it took them a number of days to relocate them. To an addict, all that chaos is simply a chance for a relapse,” Santa Monica Metropolis Councilmember Lana Negrete stated. “Are we exploiting susceptible populations as a way to float some 20-story luxurious challenge?”
In Santa Monica, companies are boarded up, tourism is in a hunch and crime has change into extra seen. It’s a development officers acknowledge is entangled with town’s enhance in homelessness. Just lately, the Metropolis Council introduced a monetary emergency fueled by authorized payouts and a decline in financial exercise downtown that hasn’t recovered because the pandemic.
The town labored with Pustilnikov again then, too. In 2020, he bought retail house within the Third Road Promenade, then defaulted on $19 million in mortgage funds. Final 12 months, the Metropolis Council ousted him and different appointees from the Downtown Santa Monica Board of Administrators.
His observe file has left town’s new mayor, Caroline Torosis, who lately succeeded Negrete, skeptical.
“I feel that it’s worthwhile to middle the wants of the individuals that you simply’re making an attempt to assist and ask, ‘Does it serve somebody to drag the rug out from below them?’” Torosis stated. “Anybody who desires to work with us in earnest to resolve our inexpensive housing and homelessness disaster, we wish to work with. … That stated, his actions in and across the metropolis depart us with questions.”
Regardless of current missteps, Pustilnikov is in discussions with the Division of Psychological Well being to discover different websites in Santa Monica nearer to current service suppliers, county Supervisor Lindsey Horvath’s workplace confirmed.
