An elderly homeowner shut out of his south Berkeley house due to code violations has moved back in, after securing enough money to pay the hefty price tag of a court-monitored renovation of the property.
Leonard Powell, 77, secured loans worth $660,000 and donations for about another roughly $150,000, to end receivership of his two-story wooden house at 1911 Harmon Street. The financing was pooled from a Veteran’s Administration loan, a city of Berkeley loan, a Go Fund Me campaign, family help, and an anonymous donor.
An order “discharging” or ending the receivership was recorded with the Alameda County Superior Court in May. The agreement left open the possibility of a future hearing on finances.
Receivership, usually a last resort for cities and counties dealing with unresolved code violation situations, gives a court-appointed receiver legal authority to bring properties into code compliance, or sell them. The cost of the actual repair of Powell’s house eventually cost $550,000, far more than some people familiar with the house thought it would take.
While Powell, a veteran and retired from the U.S. Postal Service, is happy to be back in his house, he criticizes the process that began in 2014 when city code enforcement officers found numerous health and safety violations at his property, and ordered repairs.
In 2017, Berkeley, citing years of working with Powell to bring his property into code compliance with no success, petitioned the courts to put the home in receivership and the court agreed.
“I was living my life and relatively satisfied with what I had, and was looking forward to leaving my granddaughter a property that was paid for, that she could do with what she want,” Powell said in late April. Berkeleyside reached out to Powell last week and hasn’t heard back.
“It’s encumbered now. The house is encumbered now by $600,000,” Powell continued. He said the experience was deeply stressful and he felt he’d been treated unjustly. “There would have been a better option.”
A core issue of debate around Harmon Street is the level or degree of work done to bring the property into compliance. Many say it went overboard and was excessive. Others say under the circumstances, the extensive rebuilding was required and appropriate.
Powell, who currently works as a Berkeley school crossing guard, has owned his Harmon house for more than 45 years. He raised his large family of six kids there with his wife, Mabel, who died 20 years ago. A legal duplex, at one point Powell converted the house to one unit to better meet his needs, without getting city permits for the work. He said the house suited him through the years, but he didn’t pay close attention to maintenance issues or repairs. He said he got some of the work done on code issues.
City officials say receivership was taken only after other measures to work with Powell failed. That included giving him an interest-free $100,000 Senior & Disabled Home Rehabilitation loan that doesn’t need to be paid until his death or the sale of the property. The city also waived about $3,000 of discretionary fees for the project.
The city’s goal was always to keep Powell in his house, city officials said. But the building had to meet safety codes. Cities can be held liable for problems related to code violations if they knowingly allow the violation to exist without trying to resolve it.
“Our goal has always been to get Mr. Powell back into his house and we’re very happy that he is,” said Matthai Chakko, city spokesperson.
Many community members and activists, however, questioned the Harmon Street receivership process. The group Friends of Adeline cited the Leonard Powell story as an example of older, lower-income residents of color being pushed out by a system favoring gentrification and upscale neighborhood development. Powell is African-American. They also question the decisions of the receiver overseeing the repair of Powell’s house.
“I’m overjoyed that he’s back in his house and the receiver can’t keep adding costs to his charge of moving back in,” said George Tribble, who was the mortgage broker that helped Powell secure his VA loan. “That part is over. Now he can relax and decide what he wants to do.”
Tribble points out that Powell must now manage considerable debt, and says he believes this could have been avoided. He said he’s suspicious of the receiver’s expenses.
Gerard Keena, the receiver appointed by Alameda County Superior Court to solve the code violations at the Harmon house, said he worked hard to fix the Harmon Street house with a pathway for Powell to move home and maintain the property.
One of the responsibilities of a receiver is to come up with a solution that prevents the property from slipping back into disrepair. This can mean selling the property, boarding it up while a solution is reached, or repairing.
These decisions, including in this case, are made by the receiver in consultation with the property owner and under review by the court through regular hearings. Powell had a lawyer and family attend most court hearings. The receiver had to submit accounting updates to the court. The receiver reports to the court, not the city.
Keena, like the city, said he was relieved Powell was back in his house. “I’m so glad that Mr. Powell and his family have been able to move back to his property; that has been the goal of the receivership,” said Keena, founder of Bay Area Receivership Group.
City Council consideration
In the wake of controversy, concern, and confusion around the Harmon house, the City Council will consider tomorrow night authorizing a fact-finding process of the Powell case, including reviewing the actions of the receiver and communications between the city and the receiver. The Housing Advisory Commission and Peace and Justice Commission made several recommendations including asking the council to clarify standards for code enforcement actions.
The housing commission is suggesting that the city “set in place clear, objective, and equitable standards for conducting code enforcement actions and ensure that due process rights of affected homeowners and/or tenants are preserved.”
The Peace and Justice Commission is recommending that situations like the one Powell faced should only be used as a last resort.
“Punitive actions such as eviction, substantial fines, or placing an individual into legal guardianship, or receivership that are likely to result in the permanent displacement of a homeowner or their low-income tenants presently occupying or renting their home is the very last resort that city staff should take. It should only be conducted if all other attempts to resolve the situation have been unsuccessful; and should only be a response to severe code enforcement violations that cause immediate danger to life safety or have been determined by a quasi-judicial body (e.g., Zoning Adjustments Board, City Council) to endanger the health and safety of the immediate neighbors.”
The Peace and Justice Commission is also asking the city to reimburse Powell, Friends of Adeline and the NAACP for an amount not to exceed $68,000 for legal and administrative fees paid to the receiver.
The city manager, however, in a staff report on the matter, said no new actions are needed. Berkeley acted properly and only referred Powell to a receiver when he did not fix up the property despite financial assistance from Berkeley, according to the report.
“The city took all steps possible to obtain voluntary compliance with state and local laws and only referred Mr. Powell’s case to the Court as a last resort,” Dee Williams-Ridley wrote in the report. “The city actively tried to assist Mr. Powell to complete the renovations prior to receivership with standards that are beneficial to the borrower via the Rehabilitation Loan. More generally, receivership is already viewed by city code enforcement staff as a last resort, to be used when other measures to obtain voluntary compliance fail, and it presently is the policy of the City Attorney to seek the approval of the City Council before seeking a receivership. However, receivership remains an important tool to protect public health and safety when property owners are unwilling or unable to correct serious code violations on their property.”
Berkeley’s municipal code details “the procedures for issuing citations, the penalties for violations, and the provisions for abating code violations when property owners are unresponsive. If a good faith effort was made to correct the violation, the officer may grant an extension so long as there is no risk to life and safety. If the offender remains noncompliant, the officer will force remediation through civil action and abatement.”
Differing views of events
Differing perceptions of the history of 1911 Harmon persist. Court and city records, which Berkeleyside has reviewed, shed light on much of the code compliance history. But not everyone agrees that these accurately capture the full story.
Given the high cost of the Harmon Street receivership, it’s not surprising that the case set off alarms for some in the community. What started as an estimate of about $180,00 to fix the house, grew to around $550,000, as more was revealed about its condition. Receivership expenses topped this amount, for a total of near $800,000.
The finances of the receivership are complicated. [Court document of receiver’s motion of final accounting]
Based on court records, construction for the house was the bulk of the expense, at about $550,000. Habitat for Humanity was the project contractor. Additional receivership costs, at roughly $185,000, cover staff time, architectural and engineering work, legal fees, office and administrative costs, and storage and relocation among other expenses. Powell and his family stayed in a hotel during some of the construction, then moving in with family. Add to this interest on loans and loan processing fees.
In order for Powell to qualify for the VA loan, he needed to pay off his personal debts and the mortgage he had on an Oakland house he owned with one of his sons. These were covered by the receiver and folded into his final costs.
To help, Keena waived about $135,000 of his personal fees to Powell, working pro bono. He billed for the time of his staff.
The longer a property stays in receivership, the greater the cost due mainly to loan interest and staff time.
Keena points out that the cost of construction on older homes can be much greater than people expect. In addition to needing a new foundation, mold and lead abatement, and extensive wiring, Powell’s house needed to be restored to a duplex.
Keena also said that the work had to meet design and construction standards set by the city and lenders, including the Veteran’s Administration.
“I’m held to a much higher standard than a developer who flips a property,” he said.
Restoring the legal duplex status was legally required, but also created a way for Powell to generate income to help pay the new loans, Keena said.
“Although it’s a tremendous amount of money he was burdened with, tremendous, he has his house, it can be passed down for generations and generations. He has a house that will last at least for another 100 years. His family, after his passing, can continue to live in the house and have a mechanism to support that [the rental apartment].”
By Keena’s documents, the appraised value of the house increased from about $499,000 to $1.3 million, after the work. [Court document with receiver’s motion including his appraisals and pre-receiver scope of work]
Never an easy situation
The Powell situation grew more contentious over time, with his team disputing the receiver’s charges, which resulted in higher receiver legal fees, according to court documents. A sibling of Powell’s contacted Berkeleyside claiming there is family disagreement about their brother’s handling of an Oakland house he transferred to his son last year. Additionally, Habitat for Humanity had to return to re-paint parts of the Harmon Street exterior house which were failing, and examine some of its other repairs, and more termite damage needed fixing for loan qualification.
Kelvin Beene, the Chicago-based president of the American Association of Code Enforcement, said dealing with occupied or lived-in older homes with multiple violations is challenging.
The primary goal of code enforcement officials, he said, is to work with property owners to get voluntary compliance. This often includes city or government loans or grants. For homeowners, he said, “It’s a very difficult place to be in. These properties are very tough to manage and maintain.”
Elderly property owners, he said, take it especially hard. “They’re worried about losing their items and their things, and they’re afraid of being taken advantage of.”
Beene wasn’t familiar with Powell’s case and was speaking generally from his experience as a code enforcement officer and serving with the association.
Receivership, Beene said, is used mainly for “really distressed properties” when voluntary compliance has failed. “Receivership is pretty much a last resort when it comes to home properties,” Beene said.
The receiver’s goal should be to make the place habitable, meeting a minimum standard, he said. Anything beyond this should be of clear benefit to the property owner.
Options for code noncompliant properties are limited. Cities can demolish structures with the consent of the owner, or through a court warrant, if they can’t get consent.
The role of code enforcement is critical but delicate, Beene said. “Code enforcement takes the brunt of aggression from homeowners. We have a due diligence, a responsibility to make sure these neighborhoods and homes are safe.”
Without help from friends, family, and the Go Fund Me campaign, which raised almost $90,000, Powell wouldn’t have had the money to close the receivership and move back home.
He expressed deep gratitude for this.
“I am so grateful. I don’t even know who to thank or how to thank all the contributors,” he said. “I’m just so thankful. I’d like to take out a billboard. I’ve always felt like there is a core, a nucleus of justice in this country despite all the racist comments and activities, the us against them and rich against poor, and all the conflicts. I think there is a string of wanting to do what’s right and help where we can.”