By Jorge Casuso
January 15, 2026 -- In a highly unusual move, the City Council on Tuesday disclosed the privileged discussion of a potential real estate deal involving Santa Monica's largest affordable housing provider and a controversial developer.
According to a report from closed session, Community Corporation of Santa Monica (CCSM) has been considering selling their property at 419 Ocean Avenue to Leo Pustilnikov, who attempted to open a transitional housing program for mentally ill homeless individuals next door.
The Council waived its attorney client privilege to disclose details of the negotiations between City Manager Oliver Chi and CCSM Executive Director Tara Barauskas to sell the non-profit's properties at 419 and 1616 Ocean Avenue.
Both properties were deeded by the City to Community Corporation in 2016, and any sale requires Council approval, according to the report read by Mayor Caroline Torosis.
The City was "asked by CCSM and Mr. Pustilnikov to consider approving the deal," Torosis said. "CCSM has shared that they need the funds that they would accrue from selling 419 Ocean Avenue to help stabalize their operations."
Although there were no "reportable actions taken by the Council," it was decided to disclose the negotiations considering Pultilnikov's controversial actions at the adjacent property, Torosis said.
According to Council's report, Pustilnikov "is considering other interim/transitional housing uses at 413 Ocean, including a possible project with the Office of Diversion and Reentry from what has been described to the City as 'prisoner housing.'
"Also, Mr. Pustilnikov has indicated that if the City signed off on the transaction, he would forgo any proposed interim/transitional housing use at 413 Ocean Avenue.
"We are aware that CCSM is also considering selling other properties they own to Mr. Pustilnikov. We have been made aware that CCSM and Mr. Pustilnikov are still negotiating potential deal terms for a possible transaction."
CCSM issued a statement from Barauskas on Wednesday saying that Community Corp. "is not in negotiations with Leo Pustilnikov to purchase any of our properties.
"On Monday, January 12, the Community Corp. board voted not to engage in any discussions or negotiations with Leo Pustilnikov," the statement read. "Remarks from any other parties suggesting otherwise are inaccurate.”
The disclosure of the closed session negotiations comes less than three months after County Commissioner Lindsey Horvath terminated two transitional housing facilities for homeless individuals with serious mental illness at two properties owned by Pustilnikov at 413 and 825 Ocean Avenue.
The transitional housing program operated by Venice-based St. Joseph Center and funded with $4 million granted to the County by the State spurred a community outcry ("Ocean Avenue Mental Health Projects Pulled," October 27, 2025).
A week after the program was pulled, the Council unanimously approved steps proposed by Councilmember Lana Negrete to make the process for new homeless housing facilities more transparent ("Council Votes to Make Homeless Housing Projects More 'Transparent,'" November 3, 2025).