Scott Reed, the developer behind the renovation of Porter’s Jazz Cafe at 315 Main St. in Little Rock, has fallen behind schedule on his most ambitious effort to date: the renovation of 30 residential properties using federal stimulus money.
Reed started work on the first four houses. Work on one is finished, and the other three are in various stages of completion.
"He was supposed to have them all completed by March 2013," said Mac Dodson, president of the Arkansas Development Finance Authority, which is administering the funding. "We have to make up our mind what to do. If he can’t finish it, we need to find someone else who can."
Reed hopes to work out a revised schedule to get the project back on track.
The project is supported by a $1.8 million funding agreement through the federal government’s Neighborhood Stabilization Program. The money is secured by the 30 properties.
The terms of the non-recourse financing include no interest charge, with payments to begin within three years. Reed’s work is backed by a $246,000 performance bond.
Reed has received $309,318 of the NSP funds to cover documented out-of-pocket expenses and has requested payment for still more.
"He submitted bills to pay him for work done," Dodson said. "Some we haven’t paid him because we don’t know what’s right or wrong. And we’re trying to figure it out."
Money to pay property taxes is among the items Reed submitted to ADFA for reimbursement under the NSP funding. However, under the terms of the agreement, he is responsible for paying the $6,894 tax bill on the 30 properties before seeking reimbursement.
"Of course, we now know he didn’t pay the property taxes, and we wouldn’t release money until he provided proof that he had paid," Dodson said.
Reed is responsible for delinquent penalties of $689 plus interest for not paying the property taxes by the Oct. 15 deadline.
Dodson said Reed also was responsible for $8,302 owed to the city of Little Rock for code enforcement cleanup of some of the properties between Feb. 3 and Dec. 12.
If Reed had responded to the notices from the city and taken care of the code enforcement issues himself, he could’ve submitted supporting documentation and recouped the costs from the NSP funding.
"He’s complained that we’re not paying fast enough, but this is taxpayer money," Dodson said. "He has to pay it first, and then we can reimburse him."
On Aug. 12, 2010, Reed paid $74,900 to the state Land Commissioner for 30 residential properties forfeited to the state for unpaid property taxes. The NSP funding covered this cost plus the expense of cleaning up the real estate records to perfect his ownership.
All but two of the properties are in neighborhoods south of Interstate 630, between Interstate 30 and University Avenue.
Reed’s residential redevelopment work has drawn favorable reviews. A project he did at 916 S. Elm St. still stands out to a local contractor active in the residential redevelopment market.
"I was totally impressed with what I saw," said the contractor, who didn’t want his name used. "It was a LEED-type project. It was a perfect example of how you do a good energy-efficient project, and it was a little no-nothing house.
"This guy has a lot of potential."
Reed entered the ownership picture of the Elm Street house in January 2009 by paying $1,400 to the Commissioner of State Lands. The property was forfeited for unpaid 2002 property taxes.
Reed fixed up the 1,065-SF house and sold it for $59,000 in February 2010.
By his count, Reed has completed 13 residential redevelopments around Little Rock.
The properties, a mix of single-family and duplexes, include some new construction and some rehab projects.
"That’s been going a little slower than I would like," said Reed of his residential endeavors.
In the coming weeks, he hopes to announce more commercial redevelopment deals along Main Street in downtown Little Rock along with getting apartment construction untracked at the 315 Main St. project.
"We’re dedicated to Little Rock," Reed said.
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