It was a scene that left residents of this dear, palm-lined Santa Monica neighborhood flabbergasted.
With out warning, some 50 strangers had instantly arrived in vans and have been occupying a vacant constructing on Ocean Avenue the evening earlier than Thanksgiving.
A few of them smoked cigarettes, others had canine working round unleashed, and not less than one combat broke out through the boisterous move-in.
“If I didn’t know what was occurring, I’d have thought it was theater,” resident Ashley Oelsen recalled.
However Oelsen and her neighbors would quickly study that these new arrivals have been shoppers 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 heart is simply the most recent in a sequence 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.
Visitors makes its approach down Ocean Avenue in Santa Monica.
(Genaro Molina / Los Angeles Occasions)
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 the 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 season was additionally scrapped.
“I didn’t notice you’re not allowed to assist folks which are struggling in prosperous communities,” Pustilnikov stated.
Pedestrians alongside the strolling path on Ocean Boulevard.
(Christina Home / Los Angeles Occasions)
Rezoning property in Southern California is a expensive and time-consuming course of that includes numerous authorities crimson tape.
Builders typically do what they will to hurry up the method, in order that they notice a revenue quicker, and decrease their losses through the rezoning course of. In Pustilnikov’s case, meaning renting to nonprofits to generate some revenue till he can redevelop the property for luxurious housing.
“I don’t attempt to conceal the ball,” Pustilnikov instructed The Occasions. “The thought was at all times, I pay the property proprietor, somebody pays me lease, I kind of 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” tasks 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 gentle spot for rescuing historic L.A. buildings.
His methods typically contain exploiting authorized loopholes and tying up unfastened 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 Occasions that sanitation and safety providers degraded months after he bought 17 getting older buildings held in receivership by the 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 girl walks via Palisades Park lately.
(Genaro Molina / Los Angeles Occasions)
The Thanksgiving chaos wasn’t the primary time residents stated that they had been blindsided by plans for the property.
Over the summer season, neighbors seen 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 Heart had approached county psychological well being officers about utilizing the constructing. The county finally 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 ultimately halted, with the county taking accountability for its lack of communication with neighbors. When requested if the county offered any of the $3.5 million in funds to Pustilnikov for the renovations earlier than the undertaking was canceled, the county declined to say.
After that plan fell via, Pustilnikov stated he was “finished” 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 folks,” he instructed The Occasions in a telephone interview.
A runner passes alongside the trail on Ocean Boulevard.
(Christina Home / Los Angeles Occasions)
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 the town, residents have been being shuttled in, based on Metropolis Supervisor Oliver Chi. Pustilnikov stated he was not conscious the corporate can be shifting them in the midnight. Pacific Coast Healthcare didn’t reply to The Occasions’ requests for remark.
Neighbors and a few metropolis leaders haven’t been pleased with Pustilnikov’s strategy.
“They introduced all these people in after which it took them just a few days to relocate them. To an addict, all that chaos is simply a possibility for a relapse,” Santa Monica Metropolis Councilmember Lana Negrete stated. “Are we exploiting susceptible populations with a view to float some 20-story luxurious undertaking?”
In Santa Monica, companies are boarded up, tourism is in a hunch and crime has turn out to be extra seen. It’s a development officers acknowledge is entangled with the town’s enhance in homelessness. 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.
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 report has left the town’s new mayor, Caroline Torosis, who lately succeeded Negrete, skeptical.
“I believe that you want to heart the wants of the folks that you just’re making an attempt to assist and ask, ‘Does it serve somebody to tug the rug out from beneath them?’” Torosis stated. “Anybody who needs to work with us in earnest to unravel our reasonably priced housing and homelessness disaster, we need 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 present service suppliers, county Supervisor Lindsey Horvath’s workplace confirmed.
