“Milestone decision” against Beverly Hills could boost builder’s remedy

In a decision that doubles as a major shot in the arm for local builder’s remedy projects, an L.A. County judge has ruled in favor of a nonprofit housing group that sued the City of Beverly Hills over its housing plan. 

The case concerns Beverly Hills’ Housing Element, the planning document that outlines every California city’s building plans. Failure to secure state compliance on the Housing Element opens cities up to penalties that include builder’s remedy, the controversial provision that allows developers to bypass local zoning.

While Beverly Hills has submitted an updated plan, the state has rejected it, and for months the city has pushed back against state authority. Earlier this year, Calfiornians for Homeownership, a nonprofit pro-housing group, brought its suit against the city as a way to force the issue into the courts.

The lawsuit specifically focuses on the sites the city has identified in its updated Housing Element for potential development. Under the state’s allocation, the city of some 31,000 residents has to plan for an additional 3,104 units, including 1,688 low income units. 

But to meet those numbers the city largely relied on commercial corridors that are already developed with office or other buildings, which Californians for Homeownership — and the California Department of Housing & Community Development, the state agency tasked with granting approval — argued amounted to disingenuous counting.

At this week’s hearing the judge determined that the city’s Housing Element is in fact deficient, agreeing with Californians for Homeownership that Beverly Hills’ site inventory is unrealistic, although the court has not yet issued its judgment, which will specify remedies. 

“This is a milestone decision in state housing law,” Jennifer Branchini, the president of the California Association of Realtors, the parent group of Californians for Homeownership, said in a statement following this week’s court ruling. “For far too long, cities and counties have used unrealistic and underdeveloped housing plans to skirt around state planning rules.” 

Branchini added that recent legislative improvements to the law “go a long way toward solving this problem, so long as these new laws are vigorously enforced.” 

The Beverly Hills City Attorney countered that the city’s use of the commercial zones for residential development planning is a result of its high percentage of low-income renters. 

“The city has established a mixed-use zone in order to direct new development away from multi-family areas to preserve rent-stabilized units and avoid displacing tenants,” Larry Wiener, the city attorney, said in the statement. 

The city plans to appeal, the Beverly Hills city attorney said in a statement provided to TRD. 

“These are exactly the sorts of maneuvers that the recent changes to Housing Element law were designed to address,” Matthew Gelfand, an attorney for Californians for Homeownership, said in a statement. “When cities include inappropriate sites and overcount the potential housing on those sites, it undermines the RHNA (Regional Housing Needs Allocation) system and is deeply unfair to those cities that have put in the work and developed realistic housing plans.” 

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Assuming it stands up to Beverly Hills’ promised appeal, the court’s decision is likely to come as good news for developers who may be considering filing builder’s remedy projects in the wealthy city — and especially for Leo Pustilnikov, who earlier this year filed around a dozen applications.  

“We’re going to end up at 850 to 1,200 units, depending on where things land,” Pustilnikov told TRD in June. “It’ll only be like 10 or 15 percent of the total multifamily housing stock in Beverly Hills.” 

The Beverly Hills ruling comes several weeks after a judge issued a favorable ruling for Californians for Homeownership related to another builder’s remedy fight playing out in La Cañada Flintridge.