By Jorge Casuso

December 31, 2025 -- Leo Pustilnikov -- who sued the City after being ousted from the Downtown board and tried opening two mental health facilities on Ocean Avenue -- has defaulted on a $37.5 million loan on a Promenade building, according to a real estate website.

The Real Deal reported Monday that "entities connected to Pustilnikov, Ely Dromy and Eli Taban are past due on about $39 million as of early November," according to Los Angeles County records."

Pustilnikov and his partners "appear to be scouting for additional tenants" for the 5-story 30,000-square-foot property at 1315 3rd Street Promenade that houses Holey Moley, a mini-golf cocktail bar.

Pustilnikov, Dromy and Taban, "who are listed on various documents as co-owners and borrowers," did not respond to The Real Deal's requests for comment.

A former member of the Downtown Santa Monica, Inc. (DTSM) Board, Pustilnikov sued the City after he was ousted by the City Council on July 29 along with the other five Council appointees.

The lawsuit, filed on September 4, claims the City attempted to remove the members without just cause and seeks to invalidate the appointments the Council made to fill the vacancies ("Council to Take Up Suit Filed By Ousted Downtown Boardmembers," September 9, 2025).

One month after filing the lawsuit, Pustilnikov found himself at the center of a brewing controversy when he tried to open two transitional housing facilities for the mentally ill homeless on Ocean Avenue.

The facilities at two properties he owns at 413 and 825 Ocean Avenue triggered a community outcry that led County Commissioner Lindsey Horvath to pull the projects ("Ocean Avenue Mental Health Projects Pulled," October 27, 2025).

Horvath said the programs operated by Venice-based St. Joseph Center and funded with $4 million from the LA County Department of Mental Health (DMH) "moved forward without the transparent coordination and communication that a project of this scale demands."

The two facilities facing Palisades Park in Santa Monica's upscale north side were expected to offer 49 beds, at least 15 of them reserved for clients who live on Santa Monica's streets.

News on Monday of the default on the Promenade property loan comes after the The Real Deal reported last year that Pustilnikov was "working with the lender" on a default tied to a retail property that covers 1241 to 1247 3rd Street Promenade.

"The lender indicated about $19 million was past due," said the site, which provides news and analysis on the Los Angeles real estate market.

"At the time, Pustilnikov said it was difficult to refinance in that interest rate environment, which hasn’t changed much despite the Federal Reserve’s few rate cuts."

Three years ago, Pustilnikov, together with Dromy, purchased the AMC theater in Santa Monica at 1310 3rd Street Promenade.