David Mendez

AES parkland talks stall between Redondo Beach and Pustilnikov

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The AES Redondo Beach power plant. File photo

by David Mendez

Ambitions for a 21 acre park on the current AES power plant property were put in jeopardy Tuesday night, when the Redondo Beach City Council shot down a proposal by developer Leo Pustilnikov, who proposes to buy the 50-acre power plant property on Harbor Drive. His proposal to provide open space to the city in exchange for the city’s support in keeping the power plant open until 2023, was rejected by the Council according to Pustilnikov and city officials. The developer is not confident discussions regarding the open space will resume.

According to Pustilnikov, his agreement to purchase the land from AES is likely to close within the month. But his separate negotiations to provide land to the City for open space have been complicated by a number of conditions, including a state-level decision that may have major repercussions on any deal made between the City, Pustilnikov and AES.

Pustilnikov proposed keeping the power plant online until Dec. 2023 — three years after its planned closure, but consistent with a potential operating extension under consideration by the state. In exchange for securing support for the extension from both Pustilnikov and the City, AES would have funded at least $2 million for planning, development and engineering of the property, and contributed toward a $12 million fund with Pustilnikov to remediate the land. After the site is sold to Pustilnikov, AES would lease the land from him until it shut down in 2023.

Pustilnikov would then make available to the city 21 acres of public open space at no cost for 99 years. Under a previous proposal, which Pustilnikov withdrew, he would have sold the City about 25 acres for approximately $50 million.

“They talk about wanting half of the site for open space, they want to buy it — you don’t have to, it’s free,” Pustilnikov said in an interview. “You’d think that you give them everything they’ve  wanted for the last 20 years, it’s no problem. Instead, all you get is no.”

“We thought we had an agreement in principle for 25 acres at $2 million per acre. Now he mentions a covenant,” countered Councilman Todd Loewenstein, who represents the harbor area. “I don’t know why he would need to be in control…we’re looking to do everything we can to buy that property and all of a sudden, he seems to think it should be privately owned. I don’t know too many city parks that are privately owned.”

Pustilnikov’s offer was inspired by a similar deal between the Oxnard City Council and GenOn, the owner of an ocean-cooled power plant at Ormond Beach. In exchange for Oxnard buying in to continue power plant operations, GenOn will create a trust to fund land remediation after the plant’s closure. 

The City Council rejected Pustilnikov’s offer during the closed session portion of its Tuesday night meeting. In closed session, the City Council discusses matters too sensitive to discuss before the public, including legal action and real estate negotiations.

According to City Manager Joe Hoefgen, the Council was hung up on two significant issues. First, the continuation of the power plant operations. “It shouldn’t surprise anyone that the answer to that is no,” Hoefgen said.

Redondo Beach has fought for years to close the plant down. A state law ordering the closure of once-through, ocean-water cooled power generators would have shut the plant down at the end of 2020. But late last year, the California Public Utilities Commission recommended the Redondo plant stay open for at least three more years to stave off possible power shortages. A decision by the CPUC is due later this year.

“The City has spent significant time and money over the last 10 years or so to ensure the AES Redondo Beach power plant and SCE power corridor (along Herondo/190th Street) is permanently retired. While AES and the potential new property owner want the plant extended for financial reasons, the community wants an end to the noise nuisance and impacts to the public health,” Mayor Bill Brand said in an email, in which he attached three years worth of data documenting pollutants emitted by the AES power plant. “Not unexpectedly, the Redondo Beach City Council has made it clear they are not willing to trade public health and quality of life for private parkland as part of a future private development plan that the public has never seen.” 

The Council also took issue with being granted public access to the land, rather than obtaining outright ownership of the land. Last year, Redondo won $4.8 million in state grant money to purchase a portion of the land, and has worked with the L.A. County Board of Supervisors to create a tax overlay district to help finance the city’s plan to purchase nearly half of the 52 acre power plant site. Pustilnikov authored multiple letters of support backing the City’s attempts to win grant funds, outlining his previous plan to sell 25 acres of land at $2 million per acre.

“There’s a fundamental difference between park space being owned and operated by the City versus privately-owned and operated space that the public has some access to,” Hoefgen said.

Part of the difficulty, he said, is that Pustilnikov has not yet shared his plans for the property with the City. In an outline of the agreement, the developer described the open space “to be park, plaza, viewing decks, walkway, bike path, etc.”

Pustilnikov responded to that concern with a question of his own: if he sells the City the open space, would they be able to tell him what it will look like?

“First, I need to plan it — and I’d get three years to plan it while cleaning the land,” Pustilnikov said. “But if we don’t do the deal, I’m not cleaning the site until I have an approved project.”

Which leads to one of his sticking points. Article 27 of the Redondo Beach City Charter states that any major land use changes to large land parcels must be approved by a public vote. The land is currently zoned for parkland and conditionally allows power generation. Pustilnikov’s redevelopment plans have not yet been detailed, but would likely fall outside those uses.

“But I can’t even go onto the ballot because the City is suing the state over election codes,” Pustilnikov said. (Redondo Beach is in litigation with the State of California regarding a law designed to force municipal elections to take place on the same day as state and national elections. The City won its case at L.A. County Superior Court, but the decision is under appeal.) “I’m in limbo on proposing a project until the City and the State resolve its issues.”

Pustilnikov called the offer a “win-win-win” among him, AES and the City of Redondo Beach.

“It gives me income for three years while I plan the site, AES gets three years to operate, and the City gets more open space than they could dream of,” Pustilnikov said in an email. He added that privately-owned, public open space has been successful across the country.

But having to deal with the City Council, and having observed “the condition of the properties they control,” for nearly two years, he said, has made Pustilnikov wary of any deal that would give Redondo Beach control of the land. “They are subject to a number of constraints — financial, political, etc. — whereas I am not and can upgrade and maintain without issue,” he said.

“What changed my perspective is, having worked with the City for the last year and a half, I have come to realize they have no plan other than to block, restrict and otherwise impede any sort of development,” Pustilnikov said in an email. “Thus, having the City control half the site would have made the redevelopment impractical at best and impossible at worst. For a site to remain vibrant it must be able to change and adapt with the times, and the City is not built to change.”

Any development plans would be at “constant risk to conflicting opinions within the City Council,” he said, recalling the City’s erstwhile development partner, CenterCal Properties. CenterCal was chosen to redevelop the Redondo waterfront, but stopped when citizen-led efforts, supported by then-Councilman Brand, halted the project. “The Mayor is dead set on dictating to the Council his terms,” Pustilnikov said.

Councilman Loewenstein said the Council is “in agreement that we want something to happen down there,” but not if it means the power plant remains operational.

“The minute it starts belching out black smoke again, do you think people are going to be happy that we’re waiting another three or four years?” Loewenstein said. “I think they’ll be pretty upset with us.”

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