Debt, Liens & Lawsuits Entangle Downtown Little Rock Developer

If Scott Reed is searching for a belated New Year's resolution, cleaning up financial clutter accumulated in Little Rock during 2011 represents a solid choice.

The man behind the 315 Main St. redevelopment also is in a legal wrangle with the project's lone tenant: Porter's Jazz Cafe.

Among the items in need of Reed's attention are two claims by unpaid construction vendors totaling $57,083 and 18 liens by the city of Little Rock for code enforcement cleanup totaling $8,302.

The outstanding bills for city-mandated cleanup of residential properties date from Feb. 3 to Dec. 12 and encompass 15 corrective actions involving mowing grass and trash removal. The other three liens are for demolition and related costs at 2305-2307 Rock St., boarding and securing 4405 W. 14th St. and graffiti removal at 2005 S. Monroe St.

Also on Reed's to-do list are delinquent property taxes totaling $6,894 on 30 residential properties and $5,537 on the Gus Blass Dry Goods Warehouse at 315 Main St. in downtown Little Rock. Reed indicated money troubles weren't the cause of the unpaid bills. Some of the debts are in dispute, but he didn't explain why undisputed ones remain outstanding.

The redeveloped Blass property, his most high-profile project to date, is home to Porter's Jazz Cafe. His plans for the long-vacant historic 35,000-SF building include 30 apartments that remain drawing-board dreams for now.

Reed and the owners of Porter's are entangled in a financial disagreement, one of three active lawsuits involving the Reed family's development activity in Little Rock.

The landlord-tenant tiff surfaced only five months after Porter's opened during the Labor Day weekend after construction delays prevented an Aug. 3 grand opening.

Reed's K Lofts LLC served an eviction notice on Dec. 27 to Porter's Jazz Cafe and its three partners, Augusta Farver Jr., Milton Shannon and Marcell Dean.

That was followed by a lawsuit against Porter's and its partners on Jan. 4 alleging unlawful detainer and breach of contract on its three-year lease.

According to the complaint, K Lofts is owed a total of $10,212 for monthly rent for December and January. Reed declined to comment on the Porter's litigation.

The investment trio behind Porter's couldn't be reached for comment: Farver, vice president of instruction at North Little Rock's Pulaski Technical College; Shannon, who helped

launch the Little Rock Copeland's Famous New Orleans Restaurant & Bar and a soon-to-open Copeland's in Texarkana; and Dean, a jazz pianist who owned Skyward Jazz Lounge in Texarkana.

Porter's Jazz Cafe leases the ground-level  and basement floors of the five-story 315 Main St. project.

The restaurant, which altered its offerings to a dinner-only format except for Sunday brunch, reported total food sales of $34,113 during September and October.

No sales information was available for Porter's during November and December.

According to the Little Rock Advertising & Promotions Commission, Porter's hasn't paid any A&P taxes since October, and legal action to collect is in the offing.

On Nov. 30, Treadway Electric Inc. filed a lien claim of $35,305 for money owed on materials used in the redevelopment of the 315 Main St. property.

Scott Reed said the disagreement actually involved less money although the company withheld payment on a much larger amount.

"We have a dispute over $5,000 of wire, the wrong wire," he said. "They ordered and delivered it. We're willing to pay $28,000. We'll have to work it out."

Reed said the 315 Main St. redevelopment is self-financed, but he hoped to obtain a loan to fund the apartment construction on the top three floors.

Resolving the lien dispute with Treadway Electric and the lease dispute with Porter's are likely requirements before a lender will sign on to the project.

Other Lawsuits

Reed came to Little Rock in 2008 with his wife, Stacy, and busied himself with residential redevelopment opportunities while she dove into her dermatology residency at the University of Arkansas for Medical Sciences.

The Reeds have since moved back to Portland, Ore., to be closer to her family although they still own a house in Chenal Valley. Scott Reed said he returns to Little Rock monthly to spend about a week tending to business.

He assembled a roster of residential parcels forfeited to the state for unpaid property taxes. The buys spread across neighborhoods south of Interstate 630 in Little Rock ranged from $1,000 to $5,050 between January 2009 and August 2010.

Kaufman Lumber Co. filed a lawsuit on Dec. 21 in Pulaski County Circuit Court against Reed and his brother Geoffrey to collect $21,778.

Scott Reed described the bone of contention as a double-billing mistake. According to the complaint, the Reeds personally guaranteed payment in a credit agreement with Kaufman.

The money is owed for building materials linked with six residential projects by Jeff Reed Construction LLC, formed in 2009. The Arkansas Secretary of State lists the status of the limited liability company as revoked.

According to the Secretary of State: "Corporations that are in a revoked status endanger their corporate protections and are barred from many corporate activities. Revocation occurs for failure to comply with all franchise tax obligations. The most common reason is the failure to pay its annual franchise tax."

Jeff Reed Construction filed a $34,765 lien claim on an eight-unit apartment project at 2017-2019 W. 17th St. The property is owned by Urban Frontier LLC, led by Paul Dodds.

"You have got to pay for the work when it gets done," Scott Reed said. "Paul doesn't believe the contract is valid. But he wrote the contract, and he's a Harvard-trained attorney."

Urban Frontier filed a lawsuit on Dec. 21 to have the lien declared invalid and the construction contract declared unenforceable.

The complaint alleges the lien notification process wasn't done properly and that the scope of the project required that Jeff Reed Construction have a commercial contractor's license, which it didn't.

The answer to the complaint denies both that the lien notification was done improperly and that a commercial contractor's license was necessary.

According to the construction company's response, work was halted on the project in August after Dodds terminated the contract and changed the locks on the project.

Dodds referred questions about the lawsuit to his attorney, Kevin Keech.

"We're not going to have a comment about the ongoing litigation, and we'll let the pleadings speak for themselves," Keech said. "I don't know if it's in my client's best interest to talk about the underlying issues of this case."