A Denver-based real estate firm that plans to build high-rise apartments in Topeka went about three weeks without its license to do business in Kansas, although that’s now been restored.
That firm, Flywheel Fairlawn, LLC, forfeited its license effective July 15 because of its failure to file an annual report with the state in a timely manner, said information posted on the state’s Business Entity Database.
The forfeiture came three days after Topeka’s mayor and city council approved $24.5 million in taxable industrial revenue bonds for the company’s project to build high-rise apartments at the site of a former Holiday Inn Holidome at 605 SW Fairlawn Road.
Flywheel Fairlawn’s license remained forfeited as recently as Thursday, but had been restored as of Saturday, the business entity database said.
The Capital-Journal received no response to telephone and email messages it left this past week seeking a response from Denver-based Flywheel Capital, LLC, the parent company for Flywheel Fairlawn, LLC.
Topeka’s city government, which has not yet committed to issuing the bonds for the project at the site of the former Holiday Inn Holidome, was aware of what happened to Flywheel Fairlawn, city communications director Gretchen Spiker confirmed Thursday.
At that point, the license had not yet been restored.
“The city has been in contact with Flywheel Fairlawn, LLC, and is reviewing its options,” Spiker told The Capital-Journal. “The city wants the community to know there is no liability to the city for the Industrial Revenue Bonds.”
Meanwhile, psychotherapist Sarah Bremer Parks, co-owner of a nearby business and building at 5315 SW 7th, told the Capital-Journal Thursday that Flywheel Fairlawn wasn’t maintaining the former Holidome property at 605 SW Fairlawn Road.
“There’s homeless people in there now,” she said.
‘Providing much-needed quality housing’
Hotels had been operated on the property for decades before Topeka’s mayor and city council learned at a meeting in September 2020 that the property had recently been vacated.
They voted that evening to change zoning to enable Flywheel Fairlawn to use that property to provide “market rate, workforce housing” for 130 to 140 dwelling units of studio, one-bedroom and two-bedroom apartments.
The Denver Post reported in October 2021 one of the 50% partners in Flywheel Capital, Adam Hazlett, had filed a lawsuit against the other, Ben Hrouda, alleging he misappropriated investor funds and filed fraudulent tax returns.
Hrouda was then among those on hand as Topeka’s mayor and council voted in November 2021 to issue $10 million in Industrial Revenue Bonds to help investors finance Flywheel Fairlawn’s Topeka development, named “Fairlawn Acres.”
In exchange for the bonds’ issuance, Flywheel Fairlawn agreed to limit the monthly base rental rate to $550 for studio apartments and to $775 for one-bedroom units, while being allowed to impose increases amounting to as much as 5% annually.
Topeka’s mayor and city council voted July 12 to approve another zoning change and to amend the IRB amount for the development to $24.5 million.
The bond issuance would pose no financial risk for the city. Investors would buy the bonds, which would be paid off using revenues brought in by the project. If the project defaulted, that would become an issue between the developers and the investors.
Flywheel Fairlawn plans to demolish the existing structures “and build two, four-story buildings containing approximately 220 new workforce apartments to meet Topeka’s attainable housing needs,” said a document in the July 12 meeting’s agenda packet.
“The project will cost approximately $24.5 million and will take 15 months to complete,” the document said. “The project will include a top-of-the-market amenity package such as lounge, fitness center and laundry. This project will revitalize a vacant building while providing much needed quality housing in Topeka.”
‘The city can refuse to sign’
Flywheel Fairlawn’s license to do business in Kansas was forfeited three days later, on July 15, according to the state.
“The city of Topeka was made aware of the issues with the LLC’s status during its standard review process,” Spiker said Thursday. “This review process is part of the city’s due diligence before signing a performance agreement, which is a condition of the bond issue.”
The city has not yet entered into a performance agreement with Flywheel Fairlawn for the project, she said.
“The city can refuse to sign the agreement and proceed with bond issuance until the company has corrected the issue,” Spiker said Thursday.
A records check conducted two days later showed Flywheel Fairlawn’s license had been restored.
‘The fence is not secured and does not keep anyone out at all’
Meanwhile, Sarah Bremer Parks said Thursday that nobody has been taking care of the property since its former live-in manager, Michael Grant, moved away at least three months ago.
Parks said she works in private practice with her husband, Peter Parks, out of the building they co-own near the site of the proposed high-rise.
She keeps an eye on the former Holidome property, where she said people can easily gain entry and the doors to the buildings are unlocked.
“There are homeless people coming and going despite a fence that was put up about a month ago,” Parks said. “The fence is not secured and does not keep anyone out at all.”
A hole could be seen in that fence this past week.
The city doesn’t have any comment at this time about Parks’ assertions regarding the access and upkeep of the property, Spiker said.
Tim Hrenchir can be reached at [email protected] or 785-213-5934.