‘Amazing potential’: Signs of life at troubled Park Reserve development in Kansas City
On the afternoon of July 16, well-connected real estate broker Gib Kerr was spotted leading a tour of the Park Reserve condominiums.
Construction halted at Park Reserve, situated near 31st and Main streets, two years ago, leaving many who live there in a lurch with poor building conditions and resulting in a maze of lawsuits and finger-pointing.
Reached this week, Kerr declined to discuss why he was there. But Kerr is deeply involved in making real estate deals happen in the downtown area and his presence may be the first bit of good news in some time for one of Kansas City’s most troubled development projects.
“I can say that site has amazing potential being adjacent to the new streetcar stop near 31st and Main,” Kerr said. “With a park on one side, the streetcar on the other, that’s definitely prime real estate. I think it has a bright future. Sometimes it’s hard to see beyond the current condition, which is pretty bad.”
Kerr is not wrong about his assessment of Park Reserve currently: The southernmost building has broken windows, concrete rubble and spray paint.
In other buildings in the Park Reserve complex, people still live in completed condos but have complained about apparent problems with the construction, including water intrusion into the units.
John M. Edgar, a Kansas City attorney, represents more than 30 Park Reserve tenants who are suing the condo project’s lender.
“Most of them are still living there,” Edgar said. “There are a couple that have moved but most of them are still living there under the very adverse circumstances.”
In May, the Kansas City Fire Department was called to put out fires at a vacant, unfinished section of Park Reserve. The police were called in the next day to clear out squatters, court records say.
In late May, a Jackson County judge appointed a receiver for the property. That move essentially stripped the previous developer of its control over Park Reserve.
Troubled history
That development group involved Wayne Reeder, a Kansas City businessman and convicted fraudster. Reeder and others bought the former Trinity Lutheran Hospital, which closed down in 2001, and announced plans to convert the three buildings that made up the hospital complex into a condominium project.
Situated atop the large hill that extends south from Union Station and overlooks Penn Valley Park, Park Reserve was supposed to become 267 condominiums, some which would have sweeping views of downtown. In 2007, a state agency overlooked Reeder’s past and awarded Park Reserve a break on property taxes.
To date, only 76 condos have been sold while 12 remain unsold. Large portions of the former hospital remain unfinished and it has become a haven for vandalism and squatters. Construction stopped in May 2019, around the time Park Reserve endured a battery of bad headlines when residents complained of significant flooding resulting from poor construction and upkeep of the condos by the developer.
A flurry of litigation ensued, which included a successful effort by Park Reserve lender, Citizens Bank & Trust, to have a receiver appointed to take control over the condominium project after the development group defaulted on its construction loan, leaving a $6.8 million balance.
The order gives the receiver, a man named James MacLaughlin, broad authority over the condominium site, including the ability to sell it to someone else.
Reeder family
Even Reeder’s daughter, Leslie Reeder, thinks it’s a good idea that someone else has taken control over Park Reserve.
In a brief call with The Star, Leslie Reeder called the receivership “a very positive move for the Park Reserve project.”
Leslie Reeder said in court filings that she is chief executive of Interstate Underground Warehouse and Industrial Park, which in 1978 took what had been underground limestone mines in east Kansas City and turned it into underground caves where businesses lease space to store their materials.
Interstate Underground filed for bankruptcy earlier in July.
In a declaration filed in the bankruptcy case, Leslie Reeder said that she moved back to Kansas City in March 2020 to take control of Interstate Underground’s affairs at the request of her mother and Wayne Reeder’s ex-wife, Sammy Jo Reeder.
In a bankruptcy court filing, Leslie Reeder accused her father of involving Interstate Underground in “fraudulent business transactions,” including guaranteeing the loans that supported the Park Reserve project.
“Reeder forged my signature and Sammy Jo’s signature on behalf of IUW (Interstate Underground Warehouse),” Leslie Reeder said in her bankruptcy declaration. “He also extensively misappropriated funds and diverted IUW’s cash in order to pay bills for these outside real estate and other projects.”
As a result, the filing said, Interstate Underground did not have enough liquidity to continue its business without seeking bankruptcy protection.
Reached by The Star this week, Wayne Reeder said he was on a long-distance call and would call back later. He subsequently could not be reached for comment.
Last year, Wayne Reeder sued his ex-wife and his daughters. He claimed they improperly wrested control over the Interstate Underground business and cut him out of the business’ revenue.
After Wayne Reeder and his wife divorced, they agreed to transfer titles to all his shares in Interstate Underground to Sammy Jo Reeder, who would hold it in trust for his benefit and they would be equal partners in the business going forward.
Wayne Reeder’s lawsuit accused his family of not giving him an accounting of Interstate Underground’s affairs, removing him from his office in the underground cave and taking his car. He’s seeking $4.75 million from his family from the lawsuit.
Leslie Reeder disputes her father’s allegations.
“He’s made so many false allegations and we have discovered multiple instances of — and again I can’t get into all of it — but multiple instances of illegal activity,” Leslie Reeder said. “Put it that way.”
Past fraud
Wayne Reeder, who spent much of his life in land development, was charged in 1993 in federal court in Rhode Island with 10 counts of wire fraud and transporting stolen property across state lines.
The indictment stemmed from charges that he and another businessman misappropriated assets from two insurance companies they controlled to pay obligations they owed in unrelated ventures.
His first trial ended in a hung jury but a second trial in 1996 resulted in his conviction. He served time in federal prison before going free in 2002.
Wayne Reeder’s conviction came with an order to pay $16.5 million in restitution. In an interview with The Star in 2019, he acknowledged that he hadn’t made payments on his restitution.
Unknown publicly at the time was that the year before he petitioned the Justice Department to release him of his obligation to pay the full $16.5 million.
When he wrote to the Justice Department, he said in a sworn statement that he possessed no assets, which would appear to contradict the claim in his lawsuit against his family that he controls part of Interstate Underground’s business.
“Reeder is either lying to this Court or to the Justice Department,” his ex-wife and daughters say in a court filing. “Either way, he has no credibility.”
A spokesman for the U.S. attorney’s office in Rhode Island confirmed that Reeder did make a request to settle his restitution.
American Universal Insurance, one of the companies Reeder was convicted of looting in the 1990s, caught wind of the litigation. Its lawyers have asked a Jackson County judge for permission to insert itself in the Reeder family litigation. They say the company is still owed $3 million and they planned to serve garnishments to obtain it.
Meanwhile, Wayne Reeder last month filed a motion to amend his original lawsuit against his ex-wife. Among his concerns is Citizens Bank & Trust foreclosed on the deed of trust for a penthouse he’s lived in at The View, another downtown condo development of Reeder’s at 600 E. Admiral Boulevard. A filing on Reeder’s behalf said he’s at risk of being evicted from the 20th floor penthouse.
His daughter said that penthouse doesn’t belong to him.
“He’s an unlawful squatter,” Leslie Reeder said. “... He broke into it in April of 2020 and has been living there unlawfully.”
Park Reserve
Meanwhile, Citizens Bank & Trust, the lender to the Park Reserve project, faces litigation of its own for its involvement in Reeder’s project. More than 30 condominium owners sued the bank, arguing it had an unusual arrangement with the Park Reserve financing that took it beyond the role of a typical lender.
The bank is accused of earning a fee each time a Park Reserve condo sold, something the condo owners say is more typical of a financial participation or joint venture in Park Reserve than merely a loan.
Edgar, the attorney representing plaintiffs in the case, said a trial is scheduled for August.
“It’s a mess,” he said of the Park Reserve situation, adding that condo owners are still dealing with many of the property’s defects since construction stopped two years ago.
A lawyer for Citizens Bank & Trust did not provide a comment.
This story was originally published July 25, 2021 at 5:00 AM.
