Kelly Gearhart just keeps on developing — now in Ohio

Having lost his Atascadero home to foreclosure and facing a $110 million bankruptcy, developer Kelly Gearhart has nonetheless turned his redevelopment skills to the downtown of a quiet community in the Rust Belt of Ohio.

Wadsworth was once famous for its manufacture of blue-tip “strike anywhere” matches, iron and steel valves and rubber products. Today, not much is left of the industries except a giant, 20-foot-tall, blue-tipped matchstick that highlights the city’s annual parade — and a lot of hulking, abandoned factories.

Wadsworth, population 21,000, is described as “peaceful” by the Wadsworth Chamber of Commerce Web site, and was selected by Money Magazine in 2008 as one of the nation’s “25 Best Places for Affordable Homes.”

Searching to revitalize its blighted industrial sections, Wadsworth hoped Gearhart would be just the guy to help.

“The city has a couple large industrial factories (now defunct),” said Chris Easton, assistant director of public service for Wadsworth. “It’s a policy of the city to encourage mixed use and redevelopment.”

As early as 2006, Rob Peters, who is now the city’s public services director, touted Gearhart’s efforts to the City Council’s economic development committee, saying the California developer had replaced all the windows of several of the old red-brick, 1942-era buildings. The town’s economic development committee minutes that year said part of this construction “should be ready for its first tenant soon.”

At the end of October 2008, Gearhart walked away from his Atascadero home as it barreled toward the auction foreclosure block. A month later, The Tribune discovered he had taken up the top floor of an old defunct waterworks factory complex he owned in Wadsworth.

City officials said they had the impression he was trying to keep a low profile.

“We didn’t know anyone was trying to live there until someone saw him hoisting a residential refrigerator in the building,” said Jeff Kaiser, the city’s planning director.

Gearhart split up the factory complex into separate parcels last September and sold one of them (the three-story building he was calling home) to a Wadsworth law firm, Palecek, McIlvaine, Hoffmann & Morse, for $400,000, according to county tax auditor Michael Kovack.

The lead partner of the firm, Tom Palecek, is also the president of the Wadsworth City Council and a champion of the downtown’s redevelopment efforts.

The bankruptcy trustee had abandoned the complex early in the bankruptcy process after determining that Gearhart had mortgaged the property “for vastly more than its worth,” although he did not specify how much Gearhart owed, and the sale proceeds have gone to pay off Gearhart’s mortgage to San Luis Obispo’s San Luis Trust Bank, said Ken Gibson, attorney for the Ohio bankruptcy trustee, Harold Corzin.

Palecek, McIlvaine, Hoffman & Morse has moved into the building’s second floor, according to Medina County documents. It also received an award by the Chamber of Commerce for renovating the building (in the $300,000 to $1 million range).

“It was more for moving into the building than anything else,” said Chamber of Commerce CEO Michelle Masica. “They’re the most prestigious law firm in the city, and it’s a sign of their faith in the revitalization of the industrial part of town.”

The Tribune has repeatedly tried to reach Gearhart without success.

“He has a way of disappearing when he doesn’t want to be found,” Kaiser told The Tribune.

Gearhart more than likely continues to live in the factory complex, either on the top floor of the law firm building or on a floor above the Medina Swarm Dog Obedience School, which is connected to the law firm building, according to tenants in the complex. A search of addresses in a national data base shows Gearhart at the law firm building address and the firm’s phone number as Gearhart’s contact.

Palacek, the law office building’s new owner, told The Tribune he did not want to discuss anything about Gearhart or his whereabouts. An e-mail sent to one of his partners, Mary Jo Morse, went unanswered. Gearhart has not responded to e-mail or messages left on his cell phone.

Gearhart has applied for a permit to renovate a 1900-era power station on the complex, complete with smokestack, into a new residence for himself as well as a mother-in-law unit, according to city building officials. Gearhart had removed the coal-fired boilers and electric equipment from the 7,000-square-foot, three-story brick building “a while ago” and has estimated the renovation, including at least one kitchen and several bathrooms, at $30,000, said Kevin Hall, director of the city’s Building Department. Kaiser said the permit won’t be issued, however, until the city gets more information on the building’s sewer capacity.

Gearhart has also listed the power house for sale as a “historic renovation opportunity” with “lots of interesting reuse potential” at $250,000. It is now a shell without electricity or water, according to a Gerspacher real estate group Web site.

The owner of one of Gearhart’s business neighbors, Bill Collins of Fin Tube Products, says he’s watched Gearhart’s redevelopment efforts since Gearhart bought the property in 2006.

“We heard he was a big-shot developer from California. It must have cost a fortune to put in those windows in all those buildings alone,” Collins said. “Once I heard he filed for bankruptcy and all, I just scratched my head and wondered where the money was coming from.”

As for the power house, Collins said, “All I know is I wouldn’t want to live there.”