Atascadero files claim against Gearhart

The city of Atascadero has joined a growing list of creditors filing claims against bankrupt developer Kelly Gearhart.

Gearhart owes Atascadero more than $260,000 in unpaid fees, and the city will “take all reasonable legal steps necessary to see these fees are paid,” City Attorney Brian Pierek said.

The U.S. trustee in Ohio is sorting out who owes what to whom in the Gearhart case, and Atascadero and other creditors need to file claims with the bankruptcy court as part of that process, according to Ken Gibson, one of the attorneys for the trustee.

As of Friday, 608 claims had been filed saying the builder formerly of Atascadero owes them a total of $105 million. Gearhart had estimated he was about $45 million in debt when he first filed for Chapter 7 bankruptcy protection in February. That amount grew on an amended schedule in May to $65 million. In that schedule, Gearhart also listed his assets at $13.5 million.

Once one of the city’s most prolific developers, Gearhart had lived in Atascadero since junior high school — and was honored in 2005 as its citizen of the year — until moving to Ohio about a year ago. Gearhart also invested in real estate there, including a residential subdivision and a historic building that he restored before he went bankrupt.

After reviewing more than 54 of Gearhart’s building permits, Atascadero officials found the builder has owed them some of the money since 2004. Most of the debts are from Gearhart not paying plan check fees or capital facility fees on his projects, said Warren Frace, the city’s community development director.

“This is the public’s money that he owes, and we will do everything we can to get it back,” he added.