An elderly homeowner deep in debt after his code-challenged house was renovated by a court-appointed receiver has reached a settlement with the city of Berkeley that ends one piece of his eight-year legal tangle.
In a closed session meeting Monday, the city council voted to approve a court-approved settlement with Leonard Powell, 80, of 1911 Harmon St., agreeing to give Powell $95,000, as well as improve its communication with property owners facing receivership. This includes making referrals to free or low-cost legal advice. (Receivership is rare in Berkeley and the city says it’s now used only as a last resort.)
Powell, in turn, agreed in the settlement that Berkeley didn’t mismanage his code enforcement case or engage in any misconduct, and said he’d drop all charges against the city on the matter.
Both parties called the settlement “amicable.”
Mayor Jesse Arreguín wrote in a statement on behalf of the city council that the settlement is “an end to protracted litigation.”
However, this is only one aspect of Powell’s case in the courts.
The homeowner and his team of pro bono lawyers have also made claims against the case receiver, Gerard Keena, of Bay Area Receivership Group, saying he has mishandled his duties. Keena says he’s done nothing wrong.
This is slated for a court hearing on Oct. 7, extending the tense receivership stand off.
Berkeleyside has reached out to Powell, his lawyer, the Berkeley city attorney and the receiver for comment on the city settlement. The story will be updated with any new information.
Receivership of a property, a process used by cities, counties and other jurisdictions to remedy serious code violations, is officially ended when the receiver is “released” by court order.
Powell hasn’t agreed to release the receiver, asking the courts to resolve his claims of mismanagement in how the process was used with his property.
Powell’s house was put into court-ordered receivership in 2017, after he failed to fix a variety of city health and safety code violations first issued in 2014. The city said it worked with Powell on repairing the problems, including giving him a $100,000 interest-free loan, but deadlines were missed, and projects not completed.
Powell, 80, a retired U.S. postal employee and veteran, has owned the house for almost 50 years, raising six kids there with his wife, now deceased.
He has said he was confused by the city’s code enforcement requests and the receivership process, with which he was working to comply.
Under the receiver, Gerald Keena, the two-story Victorian was repaired and renovated, including restoring it to its original legal status as a duplex, which the city required. Powell had converted it to a single-family home without getting required permits for the work.
After relocating while the work was being conducted, Powell moved back to his home in 2020, with permission from the court and city (required because the home was still in receivership) and is renting out the second unit.
In his challenge to ending the receivership, Powell’s claims include that Keena went beyond the necessary scope of work in fixing the code violations, a project that has cost Powell roughly $700,000 to date: $500,000 for renovations and $200,000 for receivership administrative and legal fees.
In addition to a new foundation, wiring and plumbing, this includes cosmetic renovations such as marble countertops and stainless-steel appliances, spiff-ups Powell’s lawyers say were not required to comply with code. The quality of the receiver’s work has also been questioned, with new external paint visibly cracking.
The receiver is also asking the court to approve more than $290,000 in additional (largely legal/administrative) fees, which grow each month the property stays in receivership and the court battles continue.
Powell’s lawyers had also claimed the city violated the law in how it administered the code violations and directed the receiver. The settlement announced this week ends this accusation.
Keena, meanwhile, says he has done everything by the book on a complicated and costly property, as proven by the required court approvals for his spending decisions along the way.
Receivership accounting must get periodic court approval during the process.
The judge overseeing the case for the past few years, Jeffery Brand, had ruled in May that previous court accounting work and approvals stand and can’t be revisited.
But he also said that the court can hear new evidence on Powell’s claims of mismanagement of the case (by the receiver or the city) if it’s distinct from evidence presented in earlier rulings.
Brand also ruled that outstanding receiver fee claims will be addressed separately. This will likely be one subject of the hearing scheduled for October.
Judge Paul Herbert presided over the settlement hearing, which has been overseen by three judges through the years.
“This receivership has taken a considerable toll on my family and me,” Powell told Berkeleyside through his lawyers in May. “I am 80 years old. It is painful and exhausting that I continue to be put through this ordeal. … I’m simply hoping for a just and expeditious end to this receivership so my family and I can move on with our lives.”
Hundreds of thousands in debt and trying to keep his home
A court-appointed property receiver essentially is given legal authority over all matters relative to the property to bring it into building code compliance. Disagreements among Powell, the receiver and the city on the legalities and fairness of the case have persisted.
The roughly $700,000 price tag for the process prompted many following the situation to wonder how a senior citizen ended up in hundreds of thousands of dollars of debt trying to hold on to his beloved, if deteriorated, old house.
Powell had largely blamed the city for its handling of his situation. He didn’t argue that the house hadn’t fallen into disrepair. He said he was confused by the code repair process and had taken steps to get the work done.
The receiver maintains he was following a scope of work presented by the city: a plain paper document that the city claims it didn’t issue, but nonetheless is included with city documents, with “approved” initialed by a city planner.
To cover the costs of receivership, and keep his house, Powell has taken on a $600,000 Veterans Affairs loan, and received donations and help from family. This is in addition to the $100,000 loan from city’s Senior and Disabled Home Renovation Program, which doesn’t need to be repaid until he dies, or the house is sold, whichever is first.
In 2019, the Berkeley City Council asked city staff to look further into what happened with Powell’s case, including how this kind of situation can be prevented in the future. One result appears to be the recent settlement.