Contractors have more than $1.5 million in claims for unpaid work on two unfinished Main Street redevelopments in downtown Little Rock.
AMR Construction LLC of Little Rock, general contractor on the K Lofts project at 315 Main St. and Main Street Lofts at 510-524 Main St., filed liens totaling more than $1.3 million against the properties.
A 2014 lien claim of $182,475 by Fleming Structural PLLC of Little Rock became a breach-of-contract lawsuit earlier this year against Main Street Lofts LLC and its bonding company, Travelers Casualty & Surety Co. of America.
Scott Reed, the mover behind both projects, declined comment.
The liens and lawsuit underscore Reed’s financial troubles in completing both redevelopments and add to his track record of overreaching, underfinanced, subsidy-supported development in Little Rock. (See timeline here.)
Reed, of Portland, Oregon, hit the development spotlight in Little Rock in 2010. Nearly five years after he unveiled his plans and two years after a relaunch, the 30 apartments in the K Lofts project remain unfinished.
Bigger redevelopments such as the Mann on Main project across the street were started and completed during the same window of time that K Lofts has languished.
Development of the planned upper-floor apartments is in limbo at Main Street Lofts, and Reed’s inability to keep the 125,000-SF project on schedule is causing problems for ground-floor tenants.
“Our space was supposed to be completed a year ago,” said Phil Kaplan, a member of the Arkansas Symphony Orchestra’s board of directors. “It’s unlikely it will be completed within the next couple of months.
“We have had meetings with Scott Reed, but at this point, I think it’s wise not to say too much, so I don’t exacerbate the situation.”
Cranford Co. is working to finish its space so it can finally move in by fall.
“We got tired of waiting for them,” said Ross Cranford, partner in the advertising firm. “We don’t have a set date to move in. The first-floor space is about done, and we’re working to build our basement studio space.”
Wooten Epes, a partner in the Main Street Lofts, couldn’t be reached for comment. Josh Blevins, Reed’s man on the ground in Little Rock, referred questions to the legal counsel for Main Street Lofts.
“The owners remain committed to getting this project finished,” said Ben Brenner of the Mitchell Williams law firm. “We’re working hard to get the tenants in there.”
The Arkansas Democrat-Gazette reported on May 3 that Blevins said the group has the money to finish the projects.
However, he didn’t offer any insight as to why the group is more than $1.5 million in arrears to its contractors and subcontractors on the K Lofts and Main Street Lofts projects.
‘Just Didn’t Pay His Bills’
On paper, Main Street Lofts realized a financial windfall in March 2014 when it sold the Boyle Building for $4.6 million. The Reed-led group bought the 12-story office building and three adjoining buildings that now comprise the Main Street Lofts project for $1.5 million in August 2012.
Reed’s financial shortcomings prompted AMR Construction to shut down work on K Lofts and Main Street Lofts.
“I was under the impression he had set aside money to complete the work, but that’s not what happened,” said Manly Roberts, president of AMR Construction.
“I have been working with Scott for two years and thought we had a deal worked out to finish those projects. I’m in the business to build buildings, not finance them.”
Fleming Structural, the engineer of record for structural evaluation and renovation of the Main Street Lofts project, grew weary of contending with Reed last year.
“I like the guy, but he just didn’t pay his bills,” said Paul Fleming. “We got to the point where we couldn’t deal with him, and it just wasn’t going to happen.
“We did the work, and he didn’t pay us. I don’t have anything against him personally, but he hasn’t done what he said he’d do.
“He should’ve had enough money to pay everyone. He was trying to do a $6 million job for $3 million. He was just unrealistic.”
Reed and his associates have indicated that changes this year in the Arkansas historic tax credit program have put a crimp in the funding formula for their downtown redevelopments.
However, money issues were manifesting at K Lofts and Main Street Lofts a year ago.
Last summer, Reed arranged to establish permanent electrical service for the apartments in K Lofts. But he didn’t give Entergy the promised $5,000 deposit, and the electric company pulled the meter the next day.
The apartments were still without electricity when Reed decided to go ahead with an April 13 open house for members of the Historic Preservation Alliance of Arkansas.
With no electricity to power light fixtures, members de-ployed cellphones as makeshift flashlights to tour the darkened corridors and rooms. The hosts never really explained the unfinished state of the project, according to Vanessa McKuin, executive director of Preserve Arkansas.
“We were hoping that it would be completed when we scheduled that event,” McKuin said. “It clearly wasn’t on schedule.
“It seemed like it was pretty close to being finished. There weren’t appliances. But there clearly wasn’t work being done either. It is very puzzling.”
Reed and his associates have put some of their downtown Little Rock property up for sale, including part of the Main Street Lofts, the former M.M. Cohn Building at 510 Main St.
The lien claim by AMR Construction will have to be settled before the property can be sold.
The same goes for the other two Main Street Lofts buildings and K Lofts.
“We’ve made improvements to that building, and we just want to make sure that we get paid when those buildings sell,” said Roberts of AMR Construction. “There are a lot of people who haven’t been paid. It’s an unfortunate situation, and it’s all in Scott Reed’s hands.”
(Also see: Timeline: Scott Reed’s Development Doings in Little Rock)