It was a scene that left residents of this dear, palm-lined Santa Monica neighborhood flabbergasted.
With out warning, some 50 strangers had out of the blue 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 struggle 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 have 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 middle is simply the newest 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 targeted harsh gentle on a proposal by Pustilnikov and others to transform two senior residing amenities 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 Occasions)
The buildings, which have been bought by the Bourne Monetary Group in early 2023 for $13 million, are leased by Pustilnikov, who mentioned 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 residing 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 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 just some months that Pustilnikov’s makes an attempt to fill the constructing had been thwarted. A plan to accommodate county behavioral well being sufferers on the web site this previous summer season was additionally scrapped.
“I didn’t understand you’re not allowed to assist individuals which are struggling in prosperous communities,” Pustilnikov mentioned.
Pedestrians alongside the strolling path on Ocean Boulevard.
(Christina Home / Los Angeles Occasions)
Rezoning property in Southern California is a pricey and time-consuming course of that entails loads of authorities purple tape.
Builders usually do what they’ll to hurry up the method, in order that they understand a revenue quicker, and decrease 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 conceal the ball,” Pustilnikov instructed The Occasions. “The concept was at all times, I pay the property proprietor, somebody pays me hire, I kind of break even and I’ve time to entitle the property for one thing greater.”
Pustilnikov has constructed a fame 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 delicate 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 Occasions 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 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 by way of Palisades Park lately.
(Genaro Molina / Los Angeles Occasions)
The Thanksgiving chaos wasn’t the primary time residents mentioned 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 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 ultimately halted, with the county taking duty 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 undertaking was canceled, the county declined to say.
After that plan fell by way of, Pustilnikov mentioned he was “accomplished” making an attempt to get the constructing stuffed. That’s, till the operators of a sober residing facility approached him.
“I mentioned, ‘Positive, why not?’ It sounded high quality. They appear like respected individuals,” he instructed The Occasions in a cellphone 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, in keeping with Metropolis Supervisor Oliver Chi. Pustilnikov mentioned 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 method.
“They introduced all these of us in after which it took them a couple of days to relocate them. To an addict, all that chaos is simply a possibility for a relapse,” Santa Monica Metropolis Councilmember Lana Negrete mentioned. “Are we exploiting susceptible populations in an effort to float some 20-story luxurious undertaking?”
In Santa Monica, companies are boarded up, tourism is in a stoop and crime has develop into extra seen. It’s a development officers acknowledge is entangled with the town’s enhance in homelessness. Not too long ago, 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 report has left the town’s new mayor, Caroline Torosis, who lately succeeded Negrete, skeptical.
“I believe that you should middle the wants of the individuals that you simply’re making an attempt to assist and ask, ‘Does it serve somebody to tug the rug out from underneath them?’” Torosis mentioned. “Anybody who needs to work with us in earnest to resolve our inexpensive housing and homelessness disaster, we need to work with. … That mentioned, his actions in and across the metropolis go away 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.
