Local architect Ken Schaumburg is known in the real estate development business for hits and misses.
His townhouse designs – downtown’s Le Bijou, the Versailles on Henderson Street, and the Schaumburg Lofts on the Near South Side – have all won acclaim from local architects. But his misses are huge, mostly in the form of announcing big projects that never get off the ground. The Ruins, a 26-story office/condo project overlooking the Trinity River, was announced in 2004 and is still on the drawing board. (It supposedly will feature a rooftop heliport and pet daycare.)
Schaumburg and some partners announced plans for a 60-story office/condo project downtown a few years ago but later sold the land to XTO Energy for a parking lot. The local architect was also one of the investors in and designers of West Exchange, the Stockyards nightclub complex that crashed and burned last summer after only a few months of operation.
But the West 7th Street entertainment complex Schaumburg planned, on land he had acquired through the years just west of the Trinity River, has caused more controversy than a skyscraper being scrapped for parking spaces. The complex was to have eight restaurants, bars, and private clubs – including a gaming room with eight-liner machines. However, Schaumburg sold his 18 or so acres to Chesapeake Energy last fall, and now investors and contractors say they are owed money for a development that was mismanaged and fraught with broken promises. “Schaumburg made a lot of money, and the rest of us lost a lot,” said Bradley Kay, a Haltom City tool equipment company owner who has nothing to show for the $60,000 he invested in the project.
Kay and several other investors, who asked that their names not be used, tell a rather bizarre tale that might make a good Law & Order plot. One investor said he saw a contractor on the project get beat up after he complained about not being paid. Kay was arrested by Fort Worth police after one of Schaumburg’s partners said the tool company owner had stolen tools, construction equipment, and even a wheelchair, but prosecutors dismissed the case for lack of evidence. And Pete Gilfeather, the lawyer hired by Kay and others to file a civil suit against Schaumburg and his partners, was killed in a downtown auto accident in January on his way to the courthouse to file papers in the case. The center of all the controversy is David Ousley, a Dallas businessman and Schaumburg’s partner in the 7th Street project. Ousley told Fort Worth Weekly he has “vast” experience in restaurants and bars in Dallas but would not name any of them.
The idea he proposed to Schaumburg in the fall of 2006 was to turn the former 7th Haven bar into a hip nightclub and the former Sapphire Lounge next door into a private BYOB club. Late-night eateries like a diner and barbecue joint would go in out back. The whole complex would have a South Beach-Miami feel, with palm trees next to buildings painted turquoise and pink. “I thought there would be a market for this type of complex in Fort Worth, but we had problems from the beginning,” Ousley said. The problems, he said, included a roof collapse in the Sapphire Lounge from a rainstorm and fire damage in the old 7th Haven. And Ousley said Schaumburg had nothing to do with the project: “He was nothing more than the property owner who we were going to pay rent to.”
Others held a different view of the project. They’d been told it would be finished a few months after redevelopment started, but a year later, when Schaumburg sold the property to Chesapeake Energy, the work wasn’t even close to being done.
“Ousley would never show up, and we had workers there all the time just waiting to find out what they were supposed to do,” said bar owner Tad Gaither, who had planned to re-open his Black Dog Tavern in the space formerly occupied by 7th Haven. “Plans were always changing, but nothing was ever done. I spent about six months trying to get any kind of answers and never did.” He had no good words for Ousley. “He was hiring people and then not paying them,” Gaither said. “Schaumburg wasn’t around very much, but he had to know what was going on.”
Investors said Ousley told them the restaurants and clubs would operate for about five years, until Schaumburg was ready to redevelop the property, perhaps as yet another office/condo building. But Schaumburg said that’s incorrect. “I didn’t foresee this lasting much more than a year or so, and [Ousley] knew that,” Schaumburg said. “I didn’t put one penny in and didn’t get one penny in rent. The renovations were only supposed to take a few months, but [Ousley] never met any deadlines, and a year into it, there was not much done.” Schaumburg said he was supposed to receive rent payments beginning when renovations were finished and a percentage of the profits once the businesses opened.
Ousley said he expected the complex to operate two or three years and that he never told investors it would last five years. But the key question is why Ousley thought that such a short-lived project could ever turn a profit for investors, particularly since bars and restaurants often take a long time to develop a clientele and seldom make much money in their first few years. “I just thought the renovations would be done fairly quickly, and I thought there was a hole in the market for this type of entertainment in Fort Worth,” Ousley said. “We tried to make it work, but the more we worked on it, the bigger hole we dug. It was almost like we were trying to make a sow’s ear into a satin pillow, and we all know how that works out.”
Ousley accepts some of the blame for the project’s demise but also is happy to share it around. Gaither never came up with any of his own money to complete the work on his new bar, Ousley said. (Gaither said his contribution was his liquor license.) And Kay recommended bad subcontractors, Ousley said. Kay “was always recommending friends of his for work, and because I didn’t have good contacts in Fort Worth, I went along with them. If we’d had the right contractors, we would have been open in 90 days.” But the most serious dispute seems to be the accusation by Ousley that Kay and others broke into a building on the property and took tools and construction equipment. Ousley said the three break-ins had to be the work of insiders because there was no evidence of forced entry.
Fort Worth police records show that Brian Lee Scott, another Ousley partner, reported that Kay and two others entered one of the buildings last July, and that one of the other men was carrying a baseball bat and threatened to beat Scott with it. Scott said he was “in fear for his safety” as Kay and the others loaded a truck with the tools and other equipment. Scott picked Kay and the others from a photo lineup, but later declined to press charges. Ousley, however, did press charges, claiming the stolen equipment was his and that Kay did not have permission to be on the property. In a rather bizarre twist, the arrest report lists the burglary as being possibly gang-related because Kay and the others were thought to be members of the Aryan Brotherhood of Texas.
Kay said the Aryan Brotherhood reference is “another one of the outlandish lies being told about me.” He said he never recommended any contractors and heatedly denied being involved in any burglaries. “They never found any of the stolen goods; they never had any evidence that I was involved,” he said. “Why do you think I got no-billed on this case?” Kay said Fort Worth police detectives contacted him recently about an investigation into other matters involving the project. Schaumburg, meanwhile, is trying to distance himself from the controversy. “There are two sides to issues like this, and I hope it gets resolved,” he said. “I had to act as a referee sometimes between these people. There were a lot of problems with this project, and they were not solved in the right way.”