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UK Coldstream research campus developer awash in financial, legal woes

A pair of six-story buildings packed with high-tech businesses would adorn one of Lexington's most prominent intersections had the University of Kentucky's plans for Coldstream Research Campus panned out.

Instead, the corner of Interstate 75 and Newtown Pike is a hotbed for lawsuits, mechanics' liens and a mortgage default. The Lexhold International Center for Technological Innovation at Coldstream is substantially behind schedule, plagued with unpaid bills and mired in legal wrangles.

Developer Kale Roscoe, who pleaded guilty to tax evasion in 1999 and was recently fired from his job as developer of a building at the University of South Carolina's research park, was sued in May by the bank that holds the $18.5 million mortgage on the one partially complete Lexhold building.

Flagstar Bank estimates in its Michigan lawsuit that "several million dollars in additional funds may be needed" to finish the building, which already houses two tenants.

The disappointing venture is a major stumble for the 735-acre Coldstream campus, which has been touted as a place where Lexington's technology and pharmaceutical industries could bloom. Although it has been under development since 1991, more than half of the research campus remains grassland. It houses 51 tenants in 14 buildings, employing about 1,000 people.

UK has taken a more lenient approach to its research park woes than the University of South Carolina, which is investigating John Parks, the former director of Coldstream who now heads South Carolina's research park. University officials there are trying to determine whether Parks, who left UK in 2007, properly vetted Roscoe before bringing him on board.

Although UK told Flagstar Bank in a letter that Roscoe has "consistently failed" to make timely payments on his land lease since 2005, the university has taken no legal action against Roscoe or his companies.

Roscoe's Lexington Dark Star was required to make a monthly payment of $8,721 for the land associated with the first building beginning April 1, 2005.

UK has "had discussions" with Roscoe, but university spokesman Jimmy Stanton declined to elaborate, citing "pending litigation."

"I'd sure like to know why the University of Kentucky hasn't cut their ties with him," said Phil Angelucci. His company, Angelucci Acoustical, is still allegedly owed $88,000 for work on another building at Coldstream built by Roscoe.

UK officials did temporarily cancel the school's lease with Lexington Dark Star but reversed course in April so that Flagstar Bank and Lexington construction management company Denham-Blythe could try to finish the first building.

Still, it remains incomplete. A large strip of uncovered Tyvek moisture wrap bisects the exterior of the building. Inside, duct work remains exposed; walls are unfinished.

While acknowledging that UK is worried about the Lexhold building, Stanton said that "we are encouraged by the progress made over the past several months and are hopeful the final stages of the building will be completed soon and additional tenants can move in."

UK continues to receive frequent inquiries from developers and companies interested in locating at Coldstream, he said.

Empty space

So far, the Lexhold building isn't a hotbed of high-technology firms.

The American Board of Family Practice moved earlier this year from its Young Drive location to the Lexhold building. The board sent a notice of default in March to Lexington Holdings, another Roscoe company associated with the project, claiming that it failed to pay for fitting-up the new office space.

Another tenant, MedTech College, occupies the second floor and now offers short-term programs such as phlebotomy and pharmacy assistance. Beginning Sept. 28, the college will begin offering associate degree programs, including health care management and medical lab technology.

UK itself was supposed to be a tenant in the second building planned for the site.

In November 2008, UK counsel Barbara Jones sent a letter to Roscoe's attorney, saying that the university had been forced to cancel plans to house its information technology center and medical center information technology center in the proposed building.

"The university invested substantial time and energy into the Data Center," Jones wrote to Roscoe attorney Charles Mihalek, who had requested a meeting to discuss the issue. "The delay in its construction and occupation has caused the University significant financial and logistical problems."

Mihalek could not be reached for comment.

Complaints abound

Although Parks claimed in The State newspaper in Columbia, S.C., last month that Roscoe "performed very well in Kentucky" and "is one of the most tenacious developers I know," subcontractors on the Lexhold building might have a different assessment.

The building has at least 15 mechanic's liens — documents filed to secure payment for unpaid bills for services and materials used in construction — totaling more than $2 million filed against it in the Fayette County clerk's office.

In addition, two contractors, Fayette Heating & Air Conditioning and Dave Steel, have filed a lawsuit citing more than half a million dollars in unpaid bills for the building: $441,770 for Fayette Heating & Air and $102,607 for Dave Steel.

A local real estate brokerage firm, Haymaker & Bean, has filed a claim, also in circuit court, saying that it and Colliers Turley Martin Tucker, another real estate firm, are owed $137,092 for a broker's fee for the building.

These are not Roscoe's first legal troubles.

In 1999, he pleaded guilty to tax evasion and served time in a federal prison camp in Duluth, Minn., according to federal Bureau of Prison records and court records from the Eastern District of Michigan.

When a Lexington constable heard that a Herald-Leader reporter was scheduled to meet with Roscoe on Thursday, she called the newspaper to ask the location: She had numerous papers to serve on behalf of other companies and was having trouble locating Roscoe.

The Herald-Leader didn't provide the meeting location to the constable. But Roscoe canceled the meeting anyway and ignored a request to reschedule. Parks also did not return phone messages seeking his comment.

Michael McGovern, Flagstar Bank's representative in the default suit, could not be reached for comment, nor could Denis Steiner, president of Denham-Blythe.

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