AES site owners served foreclosure notice
by Garth Meyer
The AES power plant site is in foreclosure, with more than $36 million in past due payments.
Site owner Leo Pustilnikov describes the Oct. 21 Los Angeles County issuance as a “negotiation of a true-up over accounting,” stemming from state payments to keep the plant on standby.
The Los Angeles County Recorder’s Office sent a “Notice of Default and Election to Sell Under Deed of Trust” to Pustilnikov and the site’s other investors, stating that “Your Property is in foreclosure because you are behind in your payments; it may be sold without any court action.”
“AES and I have an ongoing dispute over public payments,” said Pustilnikov. “Balances between what AES owes me and what I owe AES. It should be resolved in the next couple of weeks.”
By law, the county may not set a sale date within 90 days of the Oct. 21 notice of default.
The balances in question, Pustilnikov explained, relates to California’s three-year extension for the AES plant to be kept on standby. It was originally scheduled to close in 2020.
“AES Redondo Beach has a valid lease with the property owner under which we can operate the Redondo Beach OTC (Once-Through Cooling) units through December 31, 2023,” Mark Miller, AES market business leader and general manager for California, said in a statement. “AES Redondo Beach is exercising its rights under the transaction agreements consistent with the goal of concluding the (2020) sale’s transaction.”
California pays AES to keep the plant operational, if not producing at limited capacity. When Pustilnikov bought the site, it was under a one-year extension with the state.
“It’s merely a dispute between what AES owes me for the extension and what I owe due to how the extensions were procured as a one + two instead of a straight three-year,” Pustilnikov said.
“It’s literally a negotiation of a true-up over accounting.”
District Two Redondo Beach City Councilman Todd Loewenstein declined to comment on the foreclosure notice, as did District Three councilman Christian Horvath, citing related litigation between the city and Pustilnikov – a lawsuit by the city against the state for the plant extensions.
Pustilnikov and investors have a “lease-back” agreement with AES. Total past due payments alleged are $36,708,314.61.
Is there any concern this will not be resolved?
“No,” he said.
Will this affect his development plans for the site?
“Nope,” said Pustilnikov. “Some of the elected officials in Redondo Beach are holding out hope that this means something… It’s how businesses negotiate sometimes.”
Pustilnikov, head of SLH Investments (Beverly Hills) and partner Ely Dromy of Dromy International Investment Corporation (Los Angeles), are the lead investors in a list of 11 limited liability companies, and an individual investor, served by the foreclosure notice.
Pustilnikov noted that this week he will file a final application for “1021 Harbor,” his proposed residential and commercial development at the former S.E.A. Lab building – increasing the original proposal in July to 35 apartment units instead of 30. For the AES plant site itself, he has filed a preliminary proposal for 2,320 units, which he has said will increase to 2,700.ER