Business

Bel Aire office park trying to restart itself after legal, financial mess

Theron Froggatte is heading up an effort to resuscitate the collapsed Tierra Verde medical park development in Bel Aire.
Theron Froggatte is heading up an effort to resuscitate the collapsed Tierra Verde medical park development in Bel Aire. The Wichita Eagle

Except for the lonely office building in the center, the 77-acre field at 49th and Webb is empty, offering little evidence of the terrific mess created there.

In its eight years, the Tierra Verde development in Bel Aire has produced mostly lawsuits, unpaid taxes, bankruptcy, debts and a lot of hard feelings.

With roots going back to 2008, the development was supposed to be a swank and creative development with a host of health-related businesses, but it hit the rocks in 2014 and only now may be coming unstuck.

The original developers, Terrie Grillot and Paul Cavanaugh, took years to get the project moving and then ran into trouble when their lead tenant died, sparking a takeover by some of the other investors, who pushed them out. There is plenty of finger-pointing as to who is to blame and nasty stories aplenty.

At the moment, the development is basically in two pieces:

Most of the land is owned by Tierra Verde Development LLC.

The sole building on the site, nearly finished, is a separate entity called the Concierge Surgical Recovery Center (CSRC). The two companies have different, but partly overlapping, sets of owners.

After nearly three years, with a long interruption for legal combat, the CSRC is close to completion. John Eck, an investor in the deal, took control of the property and is pushing it toward completion. He is negotiating with tenants right now, said his partner, Theron Froggatte.

It’s been stuck in the mire and muck for so long.

Ty Lasher, Bel Aire City Manager

The taxpayers of Bel Aire spent about $3 million for the roads, water and sewer lines in the project three years ago. Tierra Verde Development hasn’t paid any of the specials yet.

Bel Aire city officials have tried to stay positive through all of the legal wrangling.

“John Eck is taking it over and making it work, so that’s encouraging,” said City Manager Ty Lasher. “It’s been stuck in the mire and muck for so long.

“Now we have to see what happens.”

What happened?

Grillot formed Tierra Verde Development in 2008 and bought 77 acres in 2009 from the city of Bel Aire.

The land was part of the city’s massive and, it turns out, burdensome land-buying/annexation effort more than a decade ago. The city is still wrestling with high-debt servicing costs.

Grillot said she was inexperienced at development — she had mainly been certifying aerobics instructors before that — but had big dreams for the land. By early 2010, she and Cavanaugh – the architect and builder on the project – were talking publicly about a medical spa, a sports complex, a 120-room hotel, organic gardens, an assisted living center, medical offices and more.

Most of the investors were doctors, acquaintances of Grillot, and there was plenty of planned crossover between their current practices and the planned development.

The two developers said they would have the sports complex ready by late summer of 2010. The Healing Center was to be ready by the end of that year, and most everything in the first phase under construction within six months.

By 2012, the city of Bel Aire approved the money for the roads into the development. The money was to be repaid by property taxes on the development.

It also approved $4.75 million in industrial revenue bonds for the first building, the spa, later dubbed the Concierge Surgical Recovery Center. In May 2013, the city issued the bonds, Series A and Series B — the loan that would pay for construction of the CSRC.

The Series A bonds were purchased by Community National Bank & Trust of Newton, and the Series B bonds were bought by the partners.

The big turning point came when Grillot’s biggest investor and intended main tenant, George Watson, a physician, died somewhat unexpectedly of cancer in May 2014, after the CSRC had been under construction for four or five months.

Losing her main tenant wrecked Grillot’s financial projections for the building, but she said she pushed ahead with the project, saying she would bring in some new tenants. By December 2014, the developers had a grand opening for the yet-to-be-completed center, but the project was struggling badly.

Nine years of my life I spent doing this, and I’ve got nothing to show for it.

Terrie Grillot, original developer of Tierra Verde

Grillot recruited several other doctors to work out of the building. But the effort struggled and attracted few patients. She failed to make the bond payments, defaulting on the loan, court documents say.

According to court filings, some of the partners rebelled, demanding to be bought out. Then, Community Nation Bank & Trust stopped extending credit to the project, and construction ended before final completion.

Eck bought the bonds from the bank, taking legal control of the company in spring of 2015, and fired Grillot, according to court documents. They’ve been fighting in court for the last year over who owes what, and whose financial guarantees will be collected.

Where is it now?

Grillot and Cavanaugh are out of the picture, although they may still be subject to legal action.

Grillot is a little bitter at how things turned out. She said she has nothing. She figures she will lose her house in north Wichita.

“Nine years of my life I spent doing this, and I’ve got nothing to show for it,” she said. “I’ve been verbally attacked so many times, and I didn’t do well under that. I just want it to go away.”

But, she’s also feisty. She said she wants the record set straight that she had a great idea, worked very hard and was conscientious.

Eck and Froggatte own the CSRC. They said they are 30 to 60 days away from naming the doctors who will use the facility.

Once they identify the doctors, they will build out the unfinished space in the basement to suit them. Froggatte said the plan is to acquire a skilled nursing facility license so they can use the 12 medical hotel rooms as surgical recuperation rooms.

This week, Froggatte gave a quick tour. It’s a beautiful building: upscale, with a limestone exterior, and roomy, with artwork sprinkled throughout. It’s largely Grillot and Cavanaugh’s work.

Outside of the building, the rest of the land is waiting for development. Pat Hughes, a lawyer representing Lisa Weber – an investor who is managing Tierra Verde Development LLC – said the partners are working to make sure any legal messes in the land ownership records and organizational structure are cleaned up before they start trying to sell or develop any of the land.

“To get into a position to sell further land, TVD (Tierra Verde Development) needs to clean up remaining legal issues,” Hughes said.

Dan Voorhis: 316-268-6577, @danvoorhis

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