Business > Real Estate/Development

Posted on Sun, Nov. 15, 2009

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Developer's history complicates project

BY DAN VOORHIS

The Wichita Eagle

Several developers are pushing a plan for a large complex of attached housing and apartments north of K-96 in Maize.

But while Maize officials say they want the development, they are concerned that one of the people associated with the project, Wichita builder Tim Malone, has sustained millions of dollars in foreclosures in the past year.

In September, the Maize City Council rezoned about 33 acres of land so developers could build the estimated $21 million, 260-unit development of townhomes, four- and six-plexes and apartments.

The project, called Summerfield Park, would sit southeast of 53rd Street North and Tyler Road, just north of the Emerald Springs development.

The developers have not yet presented the final plat of the project for approval.

The council must approve the final plat and agree to spend tens of thousands of dollars to extend water and sewer lines to the project.

The bonds would be repaid by special assessments levied on the property, but the city ultimately would be responsible for paying the bulk of the loan if the owners don't pay.

"If it happens like they say it will happen, it will be a fabulous mixed-use project that would be great to have," said city planning and zoning director Kim Edgington.

What's raised concerns for some city officials is the presence of Malone.

Malone was one of the most aggressive builders and developers in Junction City in 2005 and 2006, when many thought the population at Fort Riley would jump. That never materialized, and Malone was stuck with millions of dollars in loans for speculative homes and hundreds of acres of land that he couldn't repay.

The foreclosures in Junction City and slowing Wichita home sales then pushed homes and land he owned in Wichita into foreclosure.

In all, banks have foreclosed on at least $3.6 million in land and homes.

The most severe fallout occurred in Bentley, a city of about 500 in northwest Sedgwick County, which borrowed $1.5 million to extend water and sewer lines to a Malone development. But development stalled and the owner, an investor in other Malone projects, stopped paying the specials.

As a result, the city has had to spend all of its cash reserves, raise taxes and cut its budget so deeply that it might lose its police department, said Bentley Mayor Shelley Armstrong.

A message left on Malone's cell phone was not immediately returned Friday.

Summerfield Park was presented to the Maize Planning Commission in August by Jean Evers, the managing partner of 53rd Street Development.

Edgington, the Maize city planner, said Evers told the commission there were other partners in the project but declined to name them.

Edgington said Evers also assured the commission that the partners have the financing in place to start work as soon as the approval is given.

Evers has long worked with Malone at his Castle Realty and Castle Investments as a broker and agent.

The commission approved the rezoning and the initial plat. The rezoning project was approved in September by the Maize City Council.

When contacted Friday, Evers initially said that Malone is not associated with the project.

But Malone's participation in the project was confirmed by Gene Woodard, the owner of the land. Woodard said Friday that he had only dealt with Malone and Evers on the project, and that he had talked to Malone in the past week.

Evers said later Friday that Malone was a consultant to the project but that he had no ownership stake. She declined to reveal who her partners are.

Having silent partners is common in development, but Maize Mayor Clair Donnelly said that given the city's investment, the City Council would insist that all financial partners and their financial viability be known before it approves the project and the bonds.

Part of the responsibility of a city's bond counsel, the legal advisers who help write the bond documents, is to evaluate the financial soundness of the developers, Edgington said.

Donnelly said he still welcomes the project and a chance to look it over.

"We have tried to be developer friendly," Donnelly said. "But I know we would take a harder look at it because of this."

Reach Dan Voorhis at 316-268-6577 or dvoorhis@wichitaeagle.com.