CINCINNATI - Bank of America's settlement of a three-year-old legal dispute over the Kenwood Towne Place project could net the bank at least $5 million from investors who signed promissory notes to guaranty a loan on the failed development.
Details are found in Hamilton County Common Pleas court records, where BofA filed a foreclosure complaint against the project in 2009. According to a June 28 filing, Kenwood investor Tim Baird agreed to a consent decree judgment of $5 million. Baird's attorney, Steven Davis, said other investors have signed confidential agreements. Those investors are Henry Schneider, Nathan Bachrach, Bruce Baker, Daniel Lipson and Thomas Zemboch.
"Because the collapse of the KTP project crippled Mr. Baird financially, he is unable to pay the consent judgment at this time," said Davis, a partner in Barron Peck Bennie & Schlemmer law firm. "His ability to pay the judgment in the future will depend on his ability to resurrect his career, which we fully expect."
Kenwood Towne Place was a $175 million office and retail complex at the Montgomery Road exit off Interstate-71. Unpaid contractors walked off the job in late 2008, leaving behind the rusty shell of an office building that still mars the Kenwood landscape. The building was sold in foreclosure to an affiliate of Phillips Edison & Co., which is trying to attract office tenants and upscale retailers to the site. The project sports a new name, Kenwood Collection.
When Bank of America sued to foreclose on the property in 2009, it sparked dozens of claims and counterclaims, ultimately making it one of the most complicated legal cases in Hamilton County's history.
The case also triggered an FBI investigation.
The former chief financial officer of Kenwood Towne Place, Tina Schmidt, has admitted to taking part in a conspiracy to commit bank fraud. The project's lead developer, Matt Daniels, is facing a September trial date on 25 counts related to bank fraud.
Tim Baird was Matt Daniels' business partner. Their company, Bear Creek Capital, was among Cincinnati's most active developers prior to Kenwood's demise. Baird's attorney said his client played "absolutely no role" in the collapse of Kenwood Towne Place.
"For Mr. Baird, the resolution was purely an economic one given that he potentially faced a $100 million liability," Davis said.
WCPO Digital's attempts to reach the other Kenwood investors were not successful. Schneider, founder of local nursing home company, Dov Ltd., partnered with Daniels and former Hamilton County Commissioner Tom Neyer Jr. in 2007 to spearhead the Kenwood project. Neyer's personal guaranty was wiped out by his bankruptcy filing in 2011. Bachrach, Lipson, Baker and Zemboch held smaller investment stakes in the project.
Bank of America spokeswoman Shirley Norton confirmed the settlement.
"The parties, without admitting any liability on either side, have reached a settlement of all pending disputes between them relating to the construction loan for the Kenwood Towne Place project," she said. "The terms are confidential and we have no further comment."
The history of the Kenwood Towne Place collapse is told in some detail in a June 21 filing in which Hamilton County Common Pleas Judge Beth Myers outlines "findings of fact and conclusions of law" after a trial in which 15 contractors sought more than $9 million in judgments for past-due bills.
Among the highlights of that document:
- Billing problems started soon after the project's 2007 groundbreaking and overruns on the project totaled almost $30 million.
- When contractors raised concerns about payments, the project's construction manager, Audie Tarpley, told them what Matt Daniels told him. "Daniels assured Tarpley that the project was fully funded and that if there were changes that ran over the budget, additional loans would be acquired or the partners would put in additional capital," Judge Myers wrote.
- Kenwood Towne Place investors were aware of cost problems in early 2008, months before contractors walked off the job. "Hank Schneider, Tom Neyer and Matt Daniels, managing members (of Kenwood Towne Place LLC) each received copies of the draw packages which were being sent to the bank for payment which included change orders which began in January of 2008 thereby demonstrating the increasing costs on the project," Myers wrote.
- The 15 contractors are entitled to judgments totaling $9.3 million from Kenwood Towne Place LLC, Myers ruled. Attorney John Higgins said contractors are not likely to collect on that ruling."I don't think KTP has any assets to pay that judgment. The case is winding down," said Higgins, a litigator in the Frost Brown Todd law firm.