Sacramento Kings

Kings sue contractor over soaring costs at unfinished downtown tower project

The Sacramento Kings have sued their downtown hotel tower general contractor this week, claiming mismanagement has caused the project to soar as much as $50 million over initial budget estimates.

The lawsuit, filed Tuesday according to Kings' development group representatives, is the latest volley in an ongoing fight over who should pay to clear up dozens of subcontractor liens for nonpayment against the project.

The 16-story mixed-use tower at 500 J Street is a cornerstone of the Kings' six-block Downtown Commons project site, which includes the Golden 1 Center arena as well as restaurants, stores and a cinema. It has been under construction for nearly three years and is still unfinished.

The 250-room Kimpton Sawyer Hotel opened in the tower in October, along with Revival, a nightclub that overlooks the hotel pool. Some of the 45 condo units on the top floors, however, are not yet finished.

The contractor, Swinerton Builders of San Francisco, filed a $36 million lien on the tower in February, contending the Kings' development group, SG Downtown LLC, owes them and contractors that amount in unpaid work.

In this week's court filing, SG Downtown, which includes JMA Ventures of San Francisco, responded that Swinerton mismanaged the project and its budget. Kings' group officials contend Swinerton initially told them the project would cost about $148 million, and say they believe they had an agreement with Swinerton that it would cap the Kings' maximum payment amount at somewhere around that number.

But, despite cost cutting over the last few years, the Kings' group says in its lawsuit that Swinerton is putting the tower project at $194 to $198 million, and contends it has not agreed to a cap on what the Kings have to pay.

"To call that budget shocking would be an understatement," the Kings and JMA wrote in the lawsuit.

JMA and the Kings asked the court to award them at least $36.4 million in damages and lost income.

The Kings partnership group also also says Swinerton failed to deliver the hotel opening, as hoped, in time to host NCAA basketball tournament games in March 2017.

The hotel did not open until October 2017. While some condos are still under construction, deeds to at least 11 of them have been signed over, including one for $4.1 million, and the first few residents have moved in. The Kings said last week they have contracts for 39 of the 45 units. A JMA representative, Todd Chapman, said condo construction should be finished in August.

Kings and JMA officials declined to be interviewed Tuesday, but JMA issued a statement, saying, "we need to ensure that Swinerton, the general contractor, resolves all remaining disputes with sub-contractors for work on the project and that the sub-contractors are fairly paid.”

Swinerton officials did not immediately respond to a Bee request for comment.

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