Newsom administration tells Beverly Hills its efforts to block a high-rise violate state housing law

California housing officials are sending a message to the city of Beverly Hills: approve plans for a high-rise apartment building, or we’ll see you in court.

On Thursday, the state’s Department of Housing and Community Development sent a letter to the affluent city saying their failure to process an application for a 165-unit building just off Wilshire Boulevard “is in violation of state housing law.”

“The City Council should reverse its decision and direct city staff to process the project without further delay,” the department’s letter goes on to say.

Gov. Gavin Newsom said he expects local governments to do their part to address the state’s housing shortage. In a statement, Newsom said of Beverly Hills: “Their attempt to block this housing project violates the law. Now is a time to build more housing, not cave to the demands of NIMBYs.”

In response, Beverly Hills officials said they have not yet denied the project and their actions so far have been “procedural in nature.”

“Beverly Hills has until September 20, 2024 to submit a response to HCD’s letter and intends to provide HCD with detailed reasoning in support of its actions, which were taken in good faith,” city officials said in a statement.

The details of the project

The project in question is located at 125 Linden Drive. If approved, it would be one of the city’s tallest residential buildings at 200 feet. Twenty percent of the apartments would be reserved for low-income renters. The building would also include a hotel.

Developer Leo Pustilnikov first submitted the plans in October 2022 under a provision known as the “Builder’s Remedy.” This law applies to cities that fail to adequately plan for state-mandated housing goals.

What’s the ‘Builder’s Remedy’?

When cities blow deadlines to plan for new housing, the Builder’s Remedy gets activated. It allows developers to submit plans for housing that normally would not be allowed under local zoning restrictions. Under the law, cities without a state-approved housing plan cannot reject these projects, as long as they include some affordable units.

Beverly Hills was out of compliance with state housing law when Pustilnikov first submitted the Linden proposal. State officials have told cities they must process Builder’s Remedy projects like this one based on the situation on the ground when developers first applied — not based on later compliance. Beverly Hills received state approval for its housing plans this May.

How the developer’s team is responding

Dave Rand, the land use attorney for the Linden project, said the state’s letter to Beverly Hills shows cities will face consequences if they flout the law.

“You have actors at the highest level of state government forcefully intervening to push housing forward and to prevent cities from taking tactics like this,” Rand said. “The state cannot afford to turn down affordable housing in a place like Beverly Hills, where it's incredibly difficult to build.”

This isn’t the first time state officials have cracked down on cities resistant to new housing. The Newsom administration sued Huntington Beach in 2019 over failures to plan for state housing goals, and in 2022 the state told Pasadena that the city’s plans to block new housing in “landmark districts” were illegal.

What the city has done so far

The city’s most recent action on the Linden project came on June 27, when the Beverly Hills City Council voted to deny an appeal from the developer challenging the city’s conclusion that the project application was “incomplete.” The state’s housing department sent a letter the day before the council meeting taking the side of the developer.

Any litigation that could stem from this showdown would not commence until after Sept. 20, the deadline the state gave Beverly Hills to respond to Thursday’s letter.

Under state law, the city has to plan for 3,104 units of new housing by 2029. More than half of those units must be affordable to low-income households.