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Contractors claim $11 million in unpaid work at Kings’ downtown hotel project

See the exterior of Sacramento's new luxury hotel and construction around Golden 1 Center

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
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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

A contract dispute between the Sacramento Kings’ development group and companies hired to build its downtown hotel tower has escalated in recent weeks – with six contractors now claiming they have done $11 million worth of work that they have not been paid for.

The flurry of financial claims has been filed just as work is winding up on the roughly $200 million project on J Street near the Golden 1 Center arena. While construction hasn’t stopped, real estate experts say the dispute could make it more difficult to complete sales of 45 condominium units that are perched above the hotel in the 16-story building.

One of the project’s key contractors, Pacific Structures of San Francisco, filed the first and largest claim for $6 million in late September. The company says it did $34.8 million worth of concrete work, but has been paid only $28.8 million by the tower ownership group, which includes the Kings and JMA Ventures of San Francisco, an upscale, boutique development company.

Last week, Placerville-based Coffey Building Group jumped in with a $2.66 million lien for unpaid drywall, plastering, framing and insulation work. Siemens Industries of Illinois filed for $1.4 million it says it is owed for installing building management and fire alarm systems.

NMI Industrial, a south Sacramento company, filed a $638,000 lien claim two weeks ago for what it says is unpaid work on design, construction and installation of the pool that sits on the third-floor night club deck overlooking the hotel and arena plaza.

NMI attorney Robert Zimmerman said project officials have asked his company and others to take smaller payments due to undisclosed financing issues that appear to be prompted by the Pacific Structures dispute.

Several subcontractors have told The Bee they have heard the dispute with Pacific Structures is in mediation talks, and that they are hoping for a settlement that could free up final payments to other subcontractors.

Zimmerman of NMI, a certified, small local business paying union wages, said subcontractors worked extended hours, pushing to meet deadlines with the goal of collectively creating “a shining gem of revitalizing downtown.”

“We worked weekends. We worked long hours. The subs (subcontractors) got it done,” he said. “We feel like, not getting paid since September, we are kind of financing the end of the job. It doesn’t feel fair.”

The project’s general contractor, Swinerton Builders, did not respond to Bee requests for comment this week. Swinerton officials last month told The Bee in an email they were “actively working together toward a solution that is agreeable to all parties.”

Todd Chapman, president of JMA Ventures, said in an email Wednesday that work is continuing on the project. That includes final construction of the 45 condominium units.

“Construction has reached its final phases at the tower and finish work on the condos continues to allow residents to move in beginning the first quarter of 2018,” Chapman said in an email to The Bee Wednesday.

Earlier this fall, Kings officials said the condominiums would be done and ready for move-in December.

The hotel/condo tower is an anchor in downtown’s emerging arena district and a key piece of the Kings’ plans to turn the area in a recreation hub that it has dubbed Downtown Commons, or DOCO.

A 250-room Kimpton Sawyer Hotel in the building opened in October. The Kings have also moved into new offices in the building on the fourth floor. A multiplex theater, restaurants, stores and other entertainment venues are expected to open nearby as well in the coming months, joining Macy’s.

The Kings reported this week they have sales contracts signed for 29 of the 45 condos. No sales deeds have been filed at the county recorder’s office.

Sacramento attorney William L. Porter, a specialist in construction law, told The Bee last month that the mechanics liens 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 its lawsuit in Sacramento Superior Court, Pacific Structures has included an exhibit that lists “allocations” of anywhere from $14,000 to $28,000 for 44 units, based on the square footage of each of those units, which range from 800 square feet to 2,300 square feet.

Pacific Structures attorneys did not respond to a Bee request for an explanation of that allocation list.

The city of Sacramento’s arena-area development manager, Desmond Parrington, this week said he is not concerned about the effect the dispute will have on the project.

“It is not unusual to have claims at the end of a large complicated project, and I am confident that they will get this resolved,” Parrington said.

A unique urban living experience in Sacramento: The 16-story Sawyer Hotel tower overlooking the Golden 1 Center arena and downtown, where small condos will start at $600,000.

Tony Bizjak: 916-321-1059, @TonyBizjak

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