Development

Midtown condos promised luxury. Angry tenants say it’s been more blight than bliss

Ashley Morgan was among the first in her family to go to college. She later put herself through law school.

So it became a point of pride for Morgan when she bought her first home in 2017. She purchased a condominium at Park Reserve in Midtown Kansas City. Situated south of the Federal Reserve Bank building near the sloping hills of Penn Valley Park, the condo offers an expansive view of the western half of downtown from Morgan’s balcony.

She bought the condo while it was still under construction. Its developer, Park Reserve LLC, was refashioning the former Trinity Lutheran Hospital, which closed in 2001, into what the developer was calling luxury dwellings. The development promised a menu of amenities — an indoor pool, a game room, dog grooming and others.

Park Reserve, which was approved for tax abatements in 2007, should have been among the first in what became a wave of residential developments in and near downtown. Developers like Park Reserve hoped to capitalize on renewed interest in Kansas City’s urban core. Like many developments in Kansas City, Park Reserve was able to obtain a property tax break from a state agency as an inducement to rid the empty hospital of blight.

But 12 years later, deteriorating conditions persist at Park Reserve, a reminder of how tax breaks sometimes fall short of their goal of removing blight.

Morgan’s elation with homeownership quickly soured. Within a month of closing on her condo, water started leaking into her home. These weren’t small leaks, she said, as water entered through electrical lighting and other spots in her ceiling.

“It would just fill up buckets,” Morgan said, “even when it was a sunny day.”

The leaks persisted until she moved out in February.

Morgan can’t say for sure what caused leaks in her condo. She is suing Park Reserve in Jackson County Circuit Court.

Park Reserve’s developer, Wayne Reeder, thinks he knows how water entered Morgan’s condo.

“That girl did try to drill some holes in the roof, by the way, and the roofer caught her doing that,” Reeder told The Star.

Why would Morgan drill holes to cause water intrusions in her own condo?

“Well, to vandalize it,” Reeder said, “to make it leak.”

“I did not,” Morgan said. “That’s absurd.”

Pressed for evidence, Reeder insisted that a reporter from The Star contact Bryon Coatney, a contractor that Reeder paid to repair the roof at Park Reserve.

Reached by The Star, Coatney did not say he saw Morgan damaging the roof. Coatney spoke of an encounter with Morgan as she was filming his crew as they worked, resulting in a heated discussion.

Morgan acknowledges the confrontation, and said she recorded the crew because of her concerns over the work they were doing.

A lawyer for Reeder filed a response to Morgan’s lawsuit. It makes no mention of any act of damage to the roof caused by Morgan.

Reeder’s attorney, Phil Klawuhn, admitted to hearing Reeder’s claim about Morgan for the first time during The Star’s interview with Reeder, for which Klawuhn was present.

“I have not heard that part before,” Klawuhn said, while acknowledging that it would be a substantial fact for Reeder’s defense if it was true.

Later, when The Star notified Klawuhn that Coatney did not say he saw Morgan damaging the roof, Klawuhn asked to have Reeder’s statement retracted.

Reeder, 87, insists other Park Reserve residents who are suing him on claims that their condos leaked water damaged their own units.

“It was sabotage,” Reeder said.

Reeder’s evidence for the claim?

“I know I was told that,” Reeder said. “I don’t have any proof of that.”

Reeder calls alleged damage caused by residents and other acts of vandalism an “inside job.”

He said upward of 100 security cameras were installed “trying to catch the insiders.” He said someone has removed them all. Asked if any of this was caught on camera, Reeder said, “Unfortunately, the person is a very clever thief and vandal.”

Tax breaks, blight

Reeder received a tax abatement from the Planned Industrial Expansion Authority to develop Park Reserve, meaning no new property taxes are paid in the first 10 years, and only half during the following 15 years. In return for the reduced tax liability, the development was supposed to replace blight with luxury condos.

But 11 years after receiving approval from the PIEA, some residents contend that blight still exists at Park Reserve.

“You name it, it’s the worst kind of blight that’s a few hundred feet from our front door,” said Kate Sweeten, who moved to Park Reserve with her husband.

Among the concerns cited about the redevelopment:

Earlier this month, the Kansas City Fire Department shut down its parking garage after inspectors discovered a broken alarm system, exposed wiring and other hazards.

Kansas City Municipal Court records show 11 open codes violation cases at addresses linked to the Park Reserve complex.

City records indicate multiple codes violations at 3030 Baltimore Ave., an unfinished section of the former hospital that was supposed to house more condo units and several amenities but that the developer now says won’t be developed.

Park Reserve faces four pending lawsuits; three from condo owners who claim their units suffer from extensive water damage and one from a homeowners association that alleges Park Reserve LLC, which is owned by a company Reeder controls, owes more than $43,000 in assessments and dues.

In each instance, Reeder denies wrongdoing. In a lengthy interview with The Star last week, Reeder claimed others bore responsibility for the state in which Park Reserve finds itself today. He blames the Park Reserve Homeowners Association, its former board president, those who purchased condos and others who he said are part of an “inside job.”

In a brief phone call to arrange an interview with The Star, Reeder said he would provide proof and documentation. Much of Reeder’s support for these claims is circumstantial or comes from people with whom he has financial connections.

Meanwhile, frustrated residents at Park Reserve are wondering when conditions at the property will improve.

“We are now attached to the unfinished development, which at this point we don’t think is ever going to get done,” Sweeten said. “It was supposed to house more condos, the majority of the amenities, like the indoor pool, movie theater, poker room and all that stuff and now it’s full of human and animal feces and it’s broken windows and stagnant water and used needles.”

FROM PRISON TO PARK RESERVE

Reeder left a federal lockup on the Nellis Air Force Base in Nevada in 2002. He was convicted in 1996 of wire fraud and other counts related to a labyrinthine scheme involving an attempt to purchase two insurance companies.

Before his conviction, Reeder had a far-flung real estate enterprise. A real estate holding company he started in California in 1956 called Hill Top had assets that reached a book value exceeding $150 million, according to court records.

His 1997 prison sentence included an order to pay $16.5 million in restitution. Reeder said he hasn’t paid any of it.

“Well, because I don’t need to,” Reeder said. “I lost $180 million buying a defunct insurance company that I didn’t know was defunct.”

Nevertheless, Reeder got back in real estate early in the 2000s, identifying an opportunity to turn an old hotel in downtown Kansas City into what today is The View, a 144-condominium development at 600 Admiral Blvd.

For The View, the Planned Industrial Expansion Authority awarded the development a full 25-year 100% tax abatement, the first time the agency awarded a benefit of its type.

A 2004 article in The Pitch indicates that PIEA officials had at least some idea of Reeder’s past but granted the tax break anyway.

Reeder would again receive approval for a PIEA abatement in 2007. It’s less clear what the PIEA board at the time knew about Reeder.

“Ultimately, I don’t know what the individuals on the Board or the staff knew or didn’t know about the Developer in 2007,” wrote PIEA director David Macoubrie in an email.

Reeder once again got a PIEA tax abatement in 2014 for what was called The View II, a proposed redevelopment of the former Wheel Weld building in the West Bottoms into apartments. Today, work doesn’t appear to have started for The View II.

Macoubrie said the PIEA commission became aware of “the unfortunate situation” at Park Reserve in July.

“I toured the deteriorating condominiums in early August and was assured by the developer these units would be made ready for sale in short order,” he said.

Only existing condominiums receive abatement from the PIEA, Macoubrie said, and his agency’s agreement with Park Reserve does not give the PIEA authority to revoke an abatement.

“And since the individual condominium owners enjoy the abatement, if we did have that authority, removing the abatement would hurt them,” Macoubrie said.

One condo owner, Alex Malloy, has complained that Park Reserve LLC did not complete the paperwork to trigger the property tax abatement for Malloy’s condo in 2017.

“From our perspective, the 2017 property taxes are due,” Macoubrie wrote Malloy in an email. “If the Developer would’ve timely initiated the abatement, it would be a different story. But, he did not. It’s really that simple.”

SIGNS OF PROBLEMS

Bill Nelson moved into Park Reserve with his wife in 2017; the couple relocated from Liberty to be closer to the excitement in Kansas City’s urban core.

Nelson and his wife bought a unit in one of the three buildings that make up Park Reserve. Nelson’s building is called Yellowstone and rises six stories on the northwest corner of the complex. Most of the condos there have been purchased; only four unfinished units remain, each belonging to Park Reserve LLC.

The first unit to become condos is called Yosemite; it was a former residence for nurses and doctors when the hospital was running. All those units have been sold.

The third building, dubbed Grand Teton, is connected to the main hospital facility on the southwest corner of the complex. Of the 22 units currently approved for Grand Teton, half have been sold.

Nelson would see things early on that caused him some concern.

“I knew there was probably some financial difficulties from the developers because the landscaping isn’t very good,” Nelson said. “I had no idea of the depth and scope of problems that are here.”

When Nelson moved in, the Park Reserve Homeowners Association was controlled by the developer.

By June of 2018, homeowners convinced Reeder to allow a slate of condo owners to occupy the board.

That decision would give homeowners more responsibility over maintaining the common areas of Park Reserve with a budget collected from dues paid by those living in condo units. The precise lines that separate the responsibility for keeping up Park Reserve between homeowners and the developer are not clear. It’s a situation that’s complicated by the unfinished nature of the Park Reserve complex.

According to a Sept. 10, 2018, letter from the homeowners association to condo owners, the new board discovered that the developer-controlled board kept dues artificially low for the previous eight years.

“This resulted in a number of deferred maintenance issues,” the letter said.

The new board’s president was Alex Malloy, who said that prior to his election to board leadership he had pushed for more transparency from Reeder.

With more control over HOA finances, Malloy and the board embarked on a project to lay new concrete around the condo buildings to add parking and patio space.

Reeder said this project led to flooding in lower levels of the Park Reserve buildings. Supporting his claim is an eight-page report from Dennis Bradley of B+A Architecture.

“That really gives you a story right there,” Reeder said.

The report, dated April 29, said the concrete rebuilding project caused conditions that compromised exterior drainage, reduced landscaping that could absorb stormwater and directed water toward the buildings.

Bradley said his report was not an engineering report.

“Basically I toured the project and made visual observations of some of the shortcomings of the work that had been done and I just prepared a report on that,” Bradley said.

Bradley’s firm lists its business address in a building owned by Park Reserve LLC, a business affiliate of Reeder’s.

Bradley was cited in a 2010 complaint by the Missouri Board for Architects for representing himself as an architect during a time when his architecture license had lapsed in 2004.

The Board for Architects found that Bradley and his firm — which at the time did not hold or had not applied for a certificate to practice architecture — involved themselves as architects in various projects, including preparing floor plans and construction documents for the Park Reserve project in 2009.

Since then, Bradley renewed his license. A Missouri professional licensing database shows Bradley’s architecture license is currently active through 2020.

“I didn’t get my license renewed at that time, taxes had to be paid and I was really struggling at that point and didn’t get my license renewed,” Bradley said.

Malloy said the report was a potentially “biased analysis” and that Bradley is not a civil mechanical engineer or any other type of engineer. Nelson said flooding issues in lower levels of the Park Reserve buildings preceded the 2018 concrete overhaul.

Malloy’s presence as the HOA president would become an annoyance for Reeder.

“Alex doesn’t have any sense whatsoever,” Reeder said.

Reeder particularly objected when a standby generator for the Park Reserve fire protection system was removed from the property. It’s an act that Reeder said damaged the development and put it out of compliance with city codes when it was taken out without a permit.

“That’s an expensive portable generator,” Reeder said.

In court records, the HOA said the generator was an ugly and noisy nuisance.

“That generator was a cat house,” Nelson said of the equipment that attracted felines. “I don’t know that it was connected for sure.”

In any case, city officials said removing the backup generator without city approval was a violation of fire codes. But city officials also said the building didn’t need the generator to meet code.

“(T)he assessment by inspection is that it was not needed for a safety code requirement in this case,” wrote Beth Breitenstein, a public information officer for Kansas City’s planning and development department, in an email.

Fire department officials appear ready to move on from the generator issue.

“I understand that in the last day or so that removal was approved and as soon as I receive that documentation, I will drop the generator from the list of violations that needs to be abated,” said Jimmy Walker, chief fire marshal for the Kansas City Fire Department, in an email on Thursday. “We will just need to ensure that emergency lighting and exit signs are battery backed up.”

Klawuhn, Reeder’s attorney, said removing the generator was one of the homeowners’ “high-handed tactics.”

Nelson thinks it’s consequential for a different reason.

“I think it’s consequential in the fact that it’s something Reeder can point to to say all this stuff is not his fault,” Nelson said. “To me it’s a smokescreen, it’s a diversion from the real issues at play here.”

Even so, it appeared to make Malloy’s relationship with Reeder untenable. Homeowners at Park Reserve have mixed feelings about Malloy’s tenure as HOA president. On one hand, his supporters say he brought to light problems going on at Park Reserve.

“There were things we didn’t know about until he got on the board and shared what had happened or things he had found,” Sweeten said.

Others say Malloy’s animus with Reeder got in the way of solving issues between the developer and the HOA. In any event, Malloy resigned from the board earlier this year and Nelson took over as board president.

In that role, Nelson is hoping to take a more positive approach, including staging community events at Park Reserve to quell some of the negativity at the complex.

“I would love to sit down with (Reeder),” Nelson said. “But I’m not sure there would be a point.”

What’s ahead?

Last year Reeder sold a building he owned at 911 Wyoming St. in the West Bottoms, one that he once considered turning into apartments, to a business entity in Colorado for $1.12 million.

He said he’s considering selling the former Weld Wheel building in the West Bottoms that was supposed to become The View II.

Reeder established his profile in Kansas City when he and his ex-wife bought the more than 200 acres of caverns in a far east industrial sector in Kansas City and turned it into underground storage. He may sell that business, Interstate Underground Warehouse, too.

“Now I’m retiring, the senior years of my life...I want to see this thing (Park Reserve) to completion of course,” Reeder said.

On the other hand, a 2018 story in the Excelsior Springs Standard describes how Reeder bought the historic Royal building in Excelsior Springs at auction. He planned to convert the building into apartments. The story said he was given tax breaks to pursue the project.

Meanwhile, Morgan, who is suing Park Reserve for leaks in her condo, is waiting until litigation is over to figure out what’s next.

“I was really proud of that,” Morgan said of buying her first home. “It’s just been the antithesis of everything I thought it would be.”

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