by Garth Meyer
One of six lawsuits from the AES power plant site owners against the city was settled March 30, Leo Pustilnikov agreeing to dismiss claims that Redondo Beach engaged in a multi-year scheme to prevent development of the property.
Pustilnikov, and fellow developer Ely Dromy, filed the suit three years ago saying the city tried to “zone out of existence any economically viable alternative use” for the 51-acre lot.
The $120 million suit alleged violation of the owners’ equal protection rights and due process, along with regulatory takings – that the city seized value from the property owners by not allowing them to build what they wanted.
Redondo Beach attorneys countered in court that the city took no action to change allowable uses of the land. Long-zoned as industrial, a classification of “generating plant” was adopted by the city council in 2010.
Ten years later, Pustilnikov, Dromy and partners bought the site, and the now-permanently closed power plant.
“The current owners purchased the property with full knowledge of the applicable zoning…,” said Joy Abaquin Ford, Redondo Beach city attorney.
Pustilnikov signed the settlement agreement with prejudice, which means it cannot be brought again.
“This is great news,” Ford said. “The city aggressively defended itself against these unfounded claims. Going forward, I hope we can work cooperatively with Mr. Pustilnikov towards finding a way to resolve the remaining cases.”
As part of the conclusion, Redondo Beach agreed to waive $30,000 in sanctions ordered by a judge against the cross-complainants (Pustilnikov, Dromy, etc.)
“This is an extremely important victory,” Redondo Beach Mayor Jim Light said. “Mr. Pustilnikov was effectively threatening to bankrupt the city if we did not agree to his massive and illegal development scheme. Now that the case has been permanently dismissed, the city is safe from this threat.”
Pustilnikov’s five other lawsuits against the city are related to his proposals to develop the former AES site into a mixed-use project, as well as to build an apartment building across Harbor Drive, behind the former S.E.A. Lab building.
In 2023, Pustilnikov submitted a “builder’s remedy” proposal for 2,700 residential units, a hotel and 500,000 square feet of office space on the land with the shuttered power plant.
Various city leaders have long sought to turn the site into a park, or mostly a park, once the plant is torn down.
The remaining Pustilnikov lawsuits against Redondo Beach are; one about the S.E.A. Lab building, with arguments that the city is preventing development; one suit each about applying for builder’s remedy at S.E.A. Lab and at the power plant site; a bankruptcy case which the city filed to join as a party of interest, to restore a 2020 option agreement between Pustilnikov and the city to reserve part of the site to be a park; and the final lawsuit Pustilnikov won against the city’s Housing Element, which the city has appealed.
The S.E.A. Lab case is expected to go to oral arguments next, an appeal of the case after the city won at trial, a judge ruling that builder’s remedy cannot be applied in the Coastal Zone.
Is there potential to reach a settlement in all of these cases?
“Yes,” Ford said.
The city was represented in the settled lawsuit by Jon Welner and Chris Banks of Crowell & Moring LLP.
“We’re very happy about this success. We hope to be able to work with Leo moving forward,” Ford said.
A housing element is a list of places to zone for state-mandated new units.
Builder’s remedy is a previously obscure part of state law that exempts property owners from certain zoning rules if the city they intend to build in does not have a state-certified housing element – and the proposed project includes a certain amount of affordable housing.
Efforts to reach Pustilnikov for comment in this article were unsuccessful. ER
