Archive for Wednesday, July 31, 2013

Junction City properties owned in part by Rock Chalk Park developer going to auction for unpaid taxes and fees

July 31, 2013

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Geary County officials will auction off 182 Junction City building lots later this month for nonpayment of taxes and fees by a development group that includes Lawrence businessman and Rock Chalk Park partner Thomas Fritzel.

An official with the Geary County attorney’s office confirmed that lots owned by Fort Development LLC will be sold at an Aug. 28 sheriff’s auction after at least three years of unpaid real estate taxes and special assessments. The property is part of the company’s troubled Olivia Farms housing development.

Fritzel is the resident agent and an investor in Fort Development LLC, and has been considered by Junction City officials to be one of the lead developers of the Olivia Farms project. In Lawrence, Fritzel has been the driving force behind the public-private partnership for the Rock Chalk Park sports complex now under construction in northwest Lawrence.

The upcoming sheriff’s auction has been months in the making. The Journal-World reported in February that Fort Development LLC owned property in Junction City with about $3.4 million in unpaid taxes, special assessments, interest and penalties. This week a Geary County Treasurer’s spokeswoman said the amount is now about $3.5 million.

The bulk of the money that Fort Development owes is for special assessments meant to reimburse the city for public infrastructure such as streets, sidewalks and stormwater improvements related to housing ventures in Junction City. Junction City financed about $11 million in infrastructure that was built by Fort Development under a no-bid contract. Junction City expected special assessments from the new housing development, which is near Fort Riley, to repay the city over a 20- to 30-year period.

This week, Junction City Mayor Cecil Aska said the upcoming sale will help bring some closure to a tough development deal for the city.

“The city probably never should have ventured into it, period,” said Aska, who wasn’t on the commission when the deal was struck in 2006. “City leaders at the time, though, were acting in good faith, and they (Fort Development) haven’t lived up to their end.”

An attorney for Fort Development said his clients didn’t have any comment on the pending sale, and Fritzel also did not respond to a request for comment. But Fritzel did provide a written statement in February detailing how the company had worked to make the development successful.

“The problems in Junction City are the result of a perfect storm of unrealized expectations and predictions by many people, ourselves included,” Fritzel wrote in February.

The project was dealt a major setback in 2007 when the Geary County Commission vetoed an incentive package for the development. At nearly the same time, the Junction City real estate market also took a downward turn.

The sheriff’s sale is not unexpected. Fritzel in February indicated that Fort Development might not be able to turn the project around, in part because of a city policy that forbids development on any of the property until the back taxes and special assessments for all the parcels are paid.

“Given those realities, Fort may be unable to make any reasonable progress toward developing Olivia Farms, which is extremely unfortunate because Fort has invested millions of dollars of its own capital in Junction City,” Fritzel wrote in February.

Lawrence officials in February said Fritzel’s involvement in the Junction City development did not give them pause in an entering a public-private partnership with his Bliss Sports firm to develop Rock Chalk Park.

This week, city officials reiterated that position. City Manager David Corliss said there are performance bonds and contractual provisions in place to guard the city’s interests.

“We believe we have sufficient protection of the city’s interests out there,” Corliss said.

The Rock Chalk Park project also does not involve the levying of any special assessments that Fritzel’s firm will be expected to pay. Instead the city is paying Fritzel entities to build a recreation center, which was competitively bid, and about $12 million in parking and infrastructure that was not competitively bid.

Comments

pizzapete 1 year, 9 months ago

"The problems in Junction City are the result of a perfect storm of unrealized expectations and predictions by many people, ourselves included," Fritzel wrote. "The city probably never should have ventured into it period," said Aska. And the story concludes that the recreation center will be different, because Fritzel won't owe Lawrence anything, we're actually paying him to build this money pit for us.

Bike 1 year, 9 months ago

"Junction City financed about $11 million in infrastructure that was built by Fort Development under a no-bid contract." Junction City paid him as well - $11 million under a no-bid contract!!

George_Braziller 1 year, 9 months ago

Do a Google search and enter the words "College Hill" "Topeka" and "Doug Compton." You'll find a very similar scenario.

jack22 1 year, 9 months ago

George, we really shouldn't be comparing Junction City and Topeka with Lawrence, Lawrence is different. In Lawrence we give these developers 20 year tax abatements so no new taxes are owed by them and we give them their own special tax districts so they actually get to pocket revenue that should go to the city. The tax revenue lost, unpaid, and given away to these guys in Lawrence just doesn't compare.

Michelle Reynolds 1 year, 9 months ago

Aren't the Fritzels only a small investor in the development group. Why doesn't the paper mention all the other partners that are at fault also? Also if you did your research you would find that the Junction City officials changed the way development property taxes are paid. Chad you might do a little more research. I do think some of the business practices of Thomas Fritzel aren't always to my liking but Chad tell the whole story.

Eileen Jones 1 year, 9 months ago

Perhaps because those other developers are not involved in a controversial and very expensive new development in Lawrence.

minimadoff 1 year, 9 months ago

The guy selling all the concrete at Rock Chalk Park, Bill Penny is a partner in Fort Development , Brent Padgett major KU donor and Endowment board member is a partner in Fort Development, Todd Sutherland local banker is a partner in Fort Development.

Uhlrick_Hetfield_III 1 year, 9 months ago

And wasn't Lathrop and Gage somehow intertwined on both sides of this deal? There seems to be a lot more here than meets the eye. Maybe we can count on a strong series of Dolph Simons Saturday columns on the behind the scenes shenanigans.

Oh, and it just hit me, Isn't Sutherland's family suing him because he has allegedly been screwing them? This appears to be a pretty sleazy batch just begging for some good investigative journalism.

nick_s 1 year, 9 months ago

"Fritzel is the resident agent and an investor in Fort Development LLC, and has been considered by Junction City officials to be one of the lead developers of the Olivia Farms project." If others are correct he seems to be the only developer in the group, making him a little more to blame because this is his profession & he should have known better. The others could have just been negligent partners who were swindled, trying to cash in on a pipe dream.

Political & legal environments change all the time in the business world, its called coping with change. We as the little people are forced to conform to changes all the time, without retaliating & taking our ball & going home to the tune of millions in neglected oversights.

nick_s 1 year, 9 months ago

You guys have it wrong. They're taking from those communities to bring it back to home base in Lawrence. They'd never do that here.

jack22 1 year, 9 months ago

After his epic failure in Junction City it's no wonder he wants to build us a recreation center with OUR money. It's a sure thing, right. What could go wrong? If the rec. center is an economic disaster for the city he'll still be laughing all the way to the bank.

nick_s 1 year, 9 months ago

It sounds like he was exposed to some real world business scenarios/problems, not the accustomed vacuum here in Lawrence.

he_who_knows_all 1 year, 9 months ago

Just pay the bill. Call it a gift to the city.

jack22 1 year, 9 months ago

Why would the city choose to partnership with a developer who built a housing development where all the houses look exactly alike? It seems to me he has no vision, no imagination, and no concept of what people really want. It wouldn't surprise me if people get confused trying to find the new recreation center because they're going to mistake it for a warehouse or factory building.

fiddleback 1 year, 9 months ago

Yes, God help us if what's erected is anywhere near as terrible-looking as that picture they've attached. That could be an online stock photo for "soul-crushing hellscape." Who would voluntarily pay to live in such a miserable row of cheap-looking blandness? Clearly nobody -- I'd imagine even hobos or lepers would need to be paid something to live in a place that monstrously depressing -- life under a bridge or in a hobo camp would at least be more colorful.

nick_s 1 year, 9 months ago

Because he's the hometown kid. He'd never do that here. He's saving all of the good business practices & vision for us here at home. It will not be a warehouse, it will be a magnificent palace for all of Lawrence to behold. You just wait.

melott 1 year, 9 months ago

Here we have more evidence of the great wisdom of the City Commission.

Sue McDaniel 1 year, 9 months ago

The good ole boys strike again, does anyone see any patterns here? City Commission, City Manager, SOMEONE???

crafty 1 year, 9 months ago

Junction City officials are probably shaking their heads and laughing their butts off. The City Commissioners knew this before giving final appoval. This is so embarrassing for Lawrence.

Kookamooka 1 year, 9 months ago

I have never wanted an unbiased new source covering the inner sanctum of Lawrence, KS more than I do right now! Why can't we have a "Lawrence" edition of the KC Star? There is just too much cronyism and interconnectedness by the Simon's Family to get these stories straight! Even the UDK is just a branch of the World Company. No checks and balances here.

Bob Forer 1 year, 9 months ago

Friztel is simply a deadbeat who happens to have some money.

He violates city ordinances by installing artificial grass at the Oread Hotel and later, the Tuckaway (formerly Boardwalk) Apartments, claiming ignorance of the city code. I surmise he simply flaunted the code. A contractor for multimillon dollar projects who doesn't know the Lawrence Building Code????

Then he ignores the provisions of the Varsity House contract, and later agrees to pay a $50,000.00 fine.

Then he and his buddies stiff Junction City for several million dollars.

Despite all of those facts, the City Commission, with Mike Amyx the lone dissenter, not only sign a deal with him for the Rock Chalk project, but give him a no-bid contract on the infrastructure. Of course, none of us are surprised when the costs for the infrastructure come in above the estimate, even though the bids on the structure were well below estimates.

The guy has the integrity, morals and character of a run-of-the-mill, garden variety common petty thief.

The city commissioners who signed on to the original deal, as well as the newbies who rubber stamped it, should all be ashamed of themselves. They violated the public trust by cavorting and doing business with an absolute scoundrel.

Absolutely shameful. I wouldn't buy a 25 cent cup of lemonade from the guy, even if I had a parched throat.

he_who_knows_all 1 year, 9 months ago

You forgot to mention when he installed the fountains on the Hutton Farm ponds, installing a flag pole on the downtown Oread and intalling the cell phone towers on top of the new Oread. All of these were done without first getting approval by the city as well.

minimadoff 1 year, 9 months ago

KU Endowment and Dr Zenger - KU Athletics, made all this possible. They allowed Fritzel to use KU as leverage with the public, with city officials, and in the newspaper to get what he needed.

Schumm, Dever, and Corliss are up to their eyeballs in this scam.

lawrencereporter 1 year, 9 months ago

Is Bliss Sports “the Contractor” who will be paid $12,300,000 million dollars for infrastructure really providing payment and performance bonds protecting the city taxpayers as Corliss states?

Get some proof Chad.

Bliss Sports “the Contractor” could just barely bond a Schumm’s outhouse.

lawrencereporter 1 year, 9 months ago

Junction City vs. City of Lawrence

The difference is (at least) Junction City had an agreement with Fritzel to pay the taxpayers back over time. The city of Lawrence is giving Fritzel $12.3 million of dollars for 100% of the infrastructure which the city will only use 30% of for the recreation center. 70% of the infrastructure is on Fritzel's 57 acres.

This no-bid infrastructure project pays every cent of the $12.3 million dollars to Fritzel including millions in profit. Fritzel is getting his infrastructure for free and being paid millions to build it.

Why isn’t Fritzel required to pay for the infrastructure being built on his property for his own use?

Thomas Fritzel has kept the same dream team together for the Rock Chalk Park project that he used in Junction City. Same concrete supplier; Bill Penny, same excavation, infrastructure contractor; Dan King, same engineers; Landplan, same architect; Paul Werner, same subcontractors...

shanep 1 year, 9 months ago

So will Fort Development be allowed to bid on the land at auction? Seems like the kind of deal where they find themselves in this huge mess, refuse to do anything about it, and then buy their own land back for pennies on the dollar (owed) and try again. Something of a settlement.

Currahee 1 year, 9 months ago

While I am pro business, I think this represents entirely what is wrong with our economy. By having people evade what is ultimately their responsibility, the public has to pick up the cost for risk. Risk is when you gamble and you can lose. This project is Fritzel's repsonsibility too and yet he chooses to run and let the taxpayers shoulder the burden. Is it risk anymore when you shove your losses onto the public? The city and KU are corrupt in my eyes for allowing an irresponsible person ask for a no bid contract. This goes everything against a free economy. Businesses it seems deem a free econpmy when they can manipulate the rules without regulation. This is a shame. With the credit issue I don't think 2010 was better than the 1920s credit crunch and subsequent crash.

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