Beverly Hills’ building moratorium could “tap the brakes” for developers

Beverly Hills’ building moratorium could “tap the brakes” for developers

  • Andrew Asch | The Real Deal
  • 01/19/24

Los Angeles County Superior Court Judge Curtis Kin has ordered the City of Beverly Hills to stop issuing building permits for anything but new residential developments — putting a hold on everything from kitchen upgrades to celebrity swimming pools.

Now builders and real estate agents are taking stock of how the order might affect the housing market.

Lawyers for Beverly Hills have appealed the court order. Meanwhile, officials continue to issue building permits, according to a statement from the city.  But Michael Nourmand, president of the Nourmand & Associates residential brokerage, thinks the decision could tip the scales for some residential deals.

“It could theoretically make existing remodeled homes in more demand, and do the opposite to houses that need work,” Nourmand said. “I could see a buyer trying to figure out how long this delay could be and asking the seller to discount the price according to their estimated carrying costs.” 

He also predicted that some homeowners would do work without permits.

Jason Somers, co-founder of Crest Real Estate, a developer and consultant who focuses on helping other developers navigate through Beverly Hills and Los Angeles, said a possible standstill could damage the economy. 

“City Halls and building inspection departments never shut down during the pandemic,” he said. “They were a lifeline for our local economy. To see a possible stop to production is concerning.” 

Despite five attempts, Beverly Hills has failed to complete its housing element — an eight-year plan to build more homes that requires certification by the state. That’s what prompted a lawsuit and the judge’s decision. Californians for Homeownership, a nonprofit backed by the California Association of Realtors, sued to demand Beverly Hills pass a housing plan that would meet state requirements. 

Somers forecast that Beverly Hills’ housing element would be approved by the state before the court-ordered building moratorium takes effect. The decision was the first time within his memory that a judge gave a city an ultimatum with its housing element, Somers said.

Leo Pustilnikov is principal at SLH Investments, a development firm that has filed multiple  residential projects in Beverly Hills under builder’s remedy, a legal loophole that allows affordable housing projects to bypass local zoning rules. He also forecast that the Beverly Hills; housing element would be resolved before the city would be forced to stop issuing permits.

But he played down expectations of any big changes. 

“I’ll continue with the process,” he said of his projects, such as a 16-story, 200-unit apartment building at 125-129 South Linden Drive. “Either they process it or they don’t. They’ve been resistant so far; if they deny it, there will be another lawsuit.”

Donovan Healey, an agent and co-founder of Healey Gavin Group at Coldwell Banker, said that even if the order is enforced, it would not shake up Beverly Hills business much. 

“There’s still going to be closings and property transfers everyday, no matter what the market is doing and what politics are involved. It’s Beverly Hills. It’s one of the most desirable destinations in the world,” Healey said. “All it will do is tap the brakes on some developments where developers already were frustrated. It takes a lot of patience to build in Beverly Hills and Los Angeles.”

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