Business & Real Estate

Kings’ downtown condo tower is behind schedule. Could this deal speed up construction?

New chairs are moved toward Echo Rig Butcher and Steakhouse which will open soon in the DOCO district across from the Golden 1 Center on Wednesday, January 24, 2018. The Sacramento Kings’ three-year effort to build a major downtown entertainment district took several steps forward this week with the quiet settlement of a $6 million construction lawsuit that has been slowing the effort down, and a public opening of the district’s first retail store, an Urban Outfitters.
New chairs are moved toward Echo Rig Butcher and Steakhouse which will open soon in the DOCO district across from the Golden 1 Center on Wednesday, January 24, 2018. The Sacramento Kings’ three-year effort to build a major downtown entertainment district took several steps forward this week with the quiet settlement of a $6 million construction lawsuit that has been slowing the effort down, and a public opening of the district’s first retail store, an Urban Outfitters. rpench@sacbee.com

The Sacramento Kings’ four-year effort to build a major entertainment district downtown took several steps forward this week with the quiet settlement of a $6 million construction lawsuit and the opening of the district’s first new retail store, Urban Outfitters.

The store gives Downtown Commons, or DoCo, an urban-oriented clothing and housewares outlet, adding to the mix of shopping and entertainment the team is building in the six-block area around Golden 1 Center.

Work had slowed since last summer on the Sawyer hotel and condominium tower after the Kings and development partners ran into a series of payment disputes with contractors. One of those, Pacific Structures, a San Francisco-based concrete company, filed suit for nonpayment.

That issue was resolved last week, a developer spokesman said. Pacific Structures filed legal notices this week dropping the lawsuit and releasing a lien it had filed against the tower.

The Kings and their development partners remain enmeshed, however, in disputes that continue to cast uncertainty on the completion date for the hotel and condominium tower. More than 20 other subcontractors have filed roughly $15 million in liens on the hotel property for unpaid work.

In a brief statement to The Bee, Todd Chapman of JMA Ventures, the Kings’ development partner downtown, said the deal with Pacific Structures has freed the Kings’ group to begin paying off many of those subcontractors as well.

“We continue our significant progress towards completing DoCo and the mixed-use tower,” Chapman wrote. “Working together with (general contractor) Swinerton, we have finalized payment to Pacific Structures and have made final payment to a substantial number of other subcontractors on the project.”

The 16-story tower has been partially in use since October when the Kimpton Sawyer Hotel and Revival nightclub opened. Punch Bowl Social entertainment venue opened last month. Urban Outfitters, which moved from its previous Arden Fair Mall location, is in the building’s ground floor, facing the arena plaza.

Forty-five upscale condominiums at the top of the building were initially slated to open late last year but remain unfinished. The Kings say they have sold 32 of the units, but the team has not issued a public estimate for completion or move-in date.

Work is still underway as well on the shells of buildings near Macy’s that will house restaurants and other retail outlets. Team officials declined this week to estimate when those structures will open.

The hotel tower project, viewed as a co-anchor for DoCo along with the arena and Macy’s, has been under construction for more than two years and fallen behind original schedules.

Several project subcontractors said progress on the tower slowed even more last fall when the Kings and their partners, JMA Ventures, asked several dozen subcontractors to accept 90 percent of what the contractors say they were owed. Contractors, who spoke to The Bee on background, said the Kings’ group indicated the initial $6 million Pacific Structures payment challenge caused their lender to withhold funds.

Kings development group representatives have declined to discuss contract issues, including whether contractors were asked to agree to a 10 percent pay cut.

Several contractors said they accepted the “haircut” offer rather than risk waiting months or years for final payment due to protracted litigation. But 21 instead filed liens against the property, according to county records.

Several subcontractors told The Bee this week they have received checks from the Kings group in recent days for the amount they believed the team owed them. Other contractors, however, report they have not received payment, and said the development team has not told them when or if they can expect final payment for their work.

William Porter, an attorney representing six contractors, said two of those companies have been paid and one has been partially paid, but another three are waiting. He said he is optimistic the Kings’ group will do that soon. “The other three have not been told they won’t be paid or that there is any dispute,” Porter said. “They are being patient and hopeful.”

Porter, who declined to name his clients, warned that some companies may have to file lawsuits against the Kings’ development group soon in order to legally establish their claims.

Tony Bizjak: 916-321-1059, @TonyBizjak

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