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Lien times hit construction

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Saturday, November 01, 2008

SeymourCourt Sophia’s View on Seymour Court: an ambitious project hit by construction liens.

STATEWIDE The steep hillside overlooking the Willamette River is a Portland residential community without residents. On one side of Seymour Court, all of the newly built homes are either for sale or for rent. On the other side of the street, seven townhouses and eight condominiums stand not quite finished, an ambitious project swamped by construction liens.

It’s an increasingly common scene in once-hot real estate markets from Eugene to Portland to Bend. Construction liens have doubled in Multnomah County and tripled in Washington County, and while other major metro counties throughout Oregon do not track those pleas for payment specifically, the anecdotal evidence suggests that the love affair between banks, developers, builders, suppliers and subcontractors is officially over.

“It’s not good when you don’t get your money,” says Mike Reed, a project manager for Pagh Custom Woodworking in Sandy. “Nobody likes to work for free.”

Pagh is one of a dozen or so subcontractors to file liens over the restoration of Block 90 of Portland’s Pearl District. The four-person shop is owed $47,120 and Reed is worried that the company may end up eating it. The point of a construction lien is to give debtors an incentive to pay the bills in order to complete the project. But in the case of Block 90, work was already finished by the time Pagh, Cascade Plumbing, Herinck Painting and other subcontractors filed their liens.

Even if a lien halts a project, there is no guarantee the money will follow. Milwaukie-based Trinity Carpet Brokers learned that the hard way, going bankrupt earlier this year after performing $1 million of unpaid work for Renaissance Homes. Renaissance has followed Trinity into bankruptcy, along with Legend Homes, formerly one of the largest homebuilders in Oregon.

Smaller subcontractors and suppliers hoping to avoid similar fates are growing increasingly aggressive in filing liens. Wilsonville Concrete Products recently filed six in a single day. “It’s our only way to protect our interests,” says general manager George Adams.

Canby-based Roth Heating and Cooling has filed “so many I can’t keep track,” says owner Kory MacGregor, who has had to lay off 60 employees over the past year.

And then there is the granddaddy of all Oregon construction liens: the $15.8 million owed to Hoffman Construction by the developers of Portland’s 194-condo Waterfront Pearl. Hoffman vice president Bart Eberwein says it is by far the largest lien the company has filed. If the bill is not paid, Hoffman could end up owning the entire development. “We try to avoid situations like this,” says Eberwein, “because the whole thing just trickles down and people get hurt.”

Hoffman is also ensnared in another high-profile project being torpedoed by liens, The Nines hotel above Macy’s in downtown Portland. Two subcontractors filed liens for a combined $6.5 million just days after invitations went out to the high-priced hotel’s grand opening in late October.                                           


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