The upscale city of Beverly Hills near Los Angeles is facing a lawsuit for blocking an affordable housing development, the latest example of litigation that relies on a builder’s remedy provision in California housing laws.
Californians for Homeownership, a nonprofit group sponsored by the California Association of Realtors, filed a lawsuit against Beverly Hills at the end of June after the city council voted not to approve a 165-unit multifamily development five blocks from the pricey Golden Triangle retail area.
SLH Investments wants to build the housing and a 73-room hotel on property it owns at 125-129 South Linden Drive. The developer intends to make 20% of the 165 apartments affordable to people with low or moderate incomes. SLH Investments' principal, Leo Pustilnikov, has used the provision in several California communities recently to try to overcome city resistance.
The builder's remedy provision of the California Housing Accountability Act, known as the “anti-NIMBY law,” states if a city lacks enough housing to meet goals set by the state, it has to approve a proposed development even if it doesn't fall within local zoning rules.
Beverly Hills first denied plans for SLH Investments' project in 2023, claiming the application was incomplete because it did not meet the standards of the city's general plan and zoning code, according to the lawsuit.
Californians for Homeownership aims to address California's housing crisis through impact litigation to challenge housing denials under the law. SLH Investments' affiliate 9300 Wilshire is listed in court records as a real party of interest in the lawsuit.
The nonprofit group previously won a lawsuit it filed last year against Beverly Hills for not complying with state mandates to produce more affordable housing.
“We won our last case against Beverly Hills because the city’s housing plans were unreasonable and unlikely to produce affordable housing,” Matthew Gelfand, in-house counsel for Californians for Homeownership, said in a statement. “Now, a developer has come forward with a real plan to build housing, including income-restricted affordable units, and the city said, ‘no.’ We had no choice but to return to court to address the city’s continued resistance to housing development.”
Pustilnikov said in an email to CoStar News that the city council's recent action "gives Californians for Homeownership an easy path to yet another win over the city."
The city’s general plan designates the Linden Drive property for “high-density” uses, but that’s a misnomer given the city’s refusal to approve the 19-story building, Gelfand told CoStar News. The city also denied the mixed-use aspect of the project, which would include a hotel.
Beverly Hills is standing by its defense that the development proposal needs to be tweaked to meet the city’s planning and zoning rules.
“The city believes that the application associated with the development located at 125-129 S. Linden Drive was and is incomplete,” Beverly Hill City Attorney Larry Wiener said in an email to CoStar News.
The property is being used as a surface parking lot. A trial-setting conference for the case is scheduled for Oct. 3 in the Los Angeles court.
Lawsuits in California using the builder’s remedy argument are “quite new,” Gelfand told CoStar News.
A Los Angeles County Superior Court judge gave a boost to builder’s remedy cases in April, ruling that the L.A. suburb La Canada Flintridge had a noncompliant housing element and couldn’t avoid approval of a proposal for 80 apartments.