It was a scene that left residents of this dear, palm-lined Santa Monica neighborhood flabbergasted.
With out warning, some 50 strangers had immediately arrived in vans and had been occupying a vacant constructing on Ocean Avenue the night time earlier than Thanksgiving.
A few of them smoked cigarettes, others had canines operating round unleashed, and at the very least one combat broke out throughout the boisterous move-in.
“If I didn’t know what was happening, I’d have thought it was theater,” resident Ashley Oelsen recalled.
However Oelsen and her neighbors would quickly be taught that these new arrivals had been purchasers of an unannounced and unpermitted sober residing operation — a revelation that has triggered outrage amongst residents and as soon as once more pitted Santa Monica officers in opposition to a controversial Los Angeles developer.
The dustup over the sober residing heart is simply the most recent in a sequence of clashes between metropolis officers and Leo Pustilnikov, a developer who was not too long ago ousted from the Downtown Santa Monica Board of Administrators for “not being a useful contributor.” The episode has additionally targeted harsh mild on a proposal by Pustilnikov and others to transform two senior residing 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 bought 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 had 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 had been fast to sentence the sober residing facility, complaining that it posed a possible security hazard and that residents had been by no means knowledgeable of the plan or allowed to touch upon it.
Confronted with the general public outcry, officers imposed fines in opposition to 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 individuals which are 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 expensive and time-consuming course of that entails quite a lot of authorities pink tape.
Builders typically do what they’ll to hurry up the method, in order that they notice 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 informed 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 repute 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 personal suppliers of low-income housing and has a comfortable spot for rescuing historic L.A. buildings.
His methods typically contain exploiting authorized loopholes and tying up free ends in courtroom. 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 not too long ago, residents of his Skid Row developments informed The Instances that sanitation and safety providers degraded months after he bought 17 growing older buildings held in receivership by the town of Los Angeles. Pustilnikov chalked the problems as much as rising pains, given the size of the acquisition.
One in all two Ocean Boulevard properties which have generated controversy in Santa Monica could be seen within the background as a lady walks by means of Palisades Park not too long ago.
(Genaro Molina / Los Angeles Instances)
The Thanksgiving chaos wasn’t the primary time residents stated they’d been blindsided by plans for the property.
Over the summer season, neighbors observed the vacant constructing was being renovated. It was repainted, safety cameras had been put in and a “personal property” signal was posted. Months later, the county defined why: 49 behavioral well being sufferers enrolled in a county transitional housing program had 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 duty 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 by means of, Pustilnikov stated he was “achieved” making an attempt to get the constructing crammed. That’s, till the operators of a sober residing facility approached him.
“I stated, ‘Certain, why not?’ It sounded high-quality. They appear like respected individuals,” he informed 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 the town, residents had been being shuttled in, in response to Metropolis Supervisor Oliver Chi. Pustilnikov stated he was not conscious the corporate can be transferring them in the midnight. Pacific Coast Healthcare didn’t reply to The Instances’ 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 weak populations so as to float some 20-story luxurious undertaking?”
In Santa Monica, companies are boarded up, tourism is in a hunch and crime has grow 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 for the reason that pandemic.
Town labored with Pustilnikov again then, too. In 2020, he bought retail house within the Third Avenue Promenade, then defaulted on $19 million in mortgage funds. Final yr, the Metropolis Council ousted him and different appointees from the Downtown Santa Monica Board of Administrators.
His monitor report has left the town’s new mayor, Caroline Torosis, who not too long ago succeeded Negrete, skeptical.
“I believe that it is advisable to heart the wants of the individuals that you just’re making an attempt to assist and ask, ‘Does it serve somebody to drag the rug out from underneath them?’” Torosis stated. “Anybody who needs to work with us in earnest to resolve our inexpensive 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 current service suppliers, county Supervisor Lindsey Horvath’s workplace confirmed.
