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Contractor files $6 million claim against Kings and partners for work on downtown hotel

The Sawyer hotel and condos project sits next to the Golden 1 Center arena.
The Sawyer hotel and condos project sits next to the Golden 1 Center arena. rpench@sacbee.com

The Sacramento Kings and their downtown development partners have been hit with two legal claims for $6.3 million in unpaid work at the Sawyer hotel and condominium tower project.

The 16-story tower, still under construction, is part of the emerging downtown arena district and a key piece of the Kings’ plans to turn the area in a recreation hub. The hotel portion of the tower opened last month, a year behind its initially planned debut.

The claims were filed in September in the form of mechanics liens. They stem from an undisclosed dispute with one of the project’s largest subcontractors, Pacific Structures, Inc., a San Francisco concrete company.

Pacific filed a $6,062,866 claim for money it says it’s owed for its work, which involved building the hotel’s concrete foundations, floors and pillars. An attorney for Pacific Structures declined comment Wednesday.

A second lien for non-payment of $246,000 has been submitted by the company that provided the concrete forms and other materials for the job. That company, Dayton Superior Corp. of Illinois, did not respond to a request for comment.

Todd Chapman, head of JMA Ventures, the Kings’ development partner, said the project is moving forward on its current schedule, and the contractor, Swinerton Builders, is working to resolve disputes.

“The tower has achieved substantial completion and all finishing work remains on schedule,” Chapman wrote. “Swinerton is closing out all subcontractors and working to resolve any disputes.”

Swinerton head Eric Foster said in an email that the development team and Pacific Structures “are actively working together toward a solution that is agreeable to all parties. This dispute will not impact the scheduled completion of the tower.

“On a project as large and complex as the mixed-use tower, subcontractor requests for additional compensation are not uncommon,” he added.

The dispute comes as the Kings make a major push to sell 45 condominium units under construction at the top of the tower. The Kings have said they have executed sales contracts for more than one-half of the units, and are targeting late December as a move-in date for new owners.

Sacramento attorney William L. Porter, a specialist in construction law, said a mechanics lien could throw a title “cloud” over condo sales. If the dispute is not resolved, a judge could determine that the condo unit buyers bear some financial responsibility, he said.

In his email to The Bee, however, JMA’s Chapman wrote, “All condo units are scheduled to be delivered on time and their closings will not be affected.”

One subcontractor, Steve Ayers of Iron Mechanical, a plumbing, heating and air conditioning firm, said the project involved “challenges,” but said his company sat down with the development team this week and came to an amicable agreement. He declined to offer details.

“This is a marquee project, and we’re here to bring it to success,” he said. “We resolved everything. They were very fair.”

Several other subcontractors contacted by The Bee declined comment about the status of their payments and whether those involved disputes.

The Sawyer tower, which shares a plaza on K Street with Golden 1 Center, is partially open. A 250-room Kimpton Hotel and Revival, a nightclub, opened in October. The Kings moved their corporate offices in at the same time.

Several planned businesses in the building have not yet opened, including an Urban Outfitters store on the ground floor. Work was underway this week at the store site. An entertainment venue called Punch Bowl Social has not yet opened, nor has a planned restaurant called Echo & Rig.

With online shopping on the rise and traditional retail malls struggling, the Kings hope to lure suburbanites, families, tourists and urban millennials downtown by building what they call a lifestyle district, where entertainment is the main selli

The hotel tower is privately financed, unlike the arena, which was a partnership between the Kings and the city. The city committed $255 million to the arena construction.

The Kings have told city officials they expect to earn revenues from the hotel, office and retail space adjacent to the arena that could help them pay off a refinanced version of a major loan the city gave the Kings in 1997.

Work was continuing as well this week on other retail and restaurant outlets planned near Macy’s by the Kings and their partners.

Desmond Parrington, the city of Sacramento’s project manager for the arena, said “it is not surprising to have a contractor’s lien on a project this size,” and said he is pleased the parties appear to be trying to work it out.

Tony Bizjak: 916-321-1059, @TonyBizjak

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