Dynamo House work stalls as contractors seek pay

Construction has stalled on the Dynamo House, the $137 million mixed-use redevelopment on Providence’s waterfront that includes the long-planned Heritage Harbor Museum. At least some subcontractors report they have not been paid and have halted work, according to the president of the museum’s board of directors and mechanic’s liens filed with the Providence recorder of deeds.
In 2007, Baltimore developer Struever Bros. Eccles & Rouse inked a deal with Heritage Harbor Corporation, a nonprofit, for development rights for the project. It broke ground in November 2007, but SBER has been unable to pay at least $1.85 million to local contractors, according to mechanic’s liens.
Cranston’s Advantage Glass Company, which has been working on the project’s windows since fall 2008, was the most recent company to file a lien. As of March 18, Advantage had been paid only $114,820 for $803,136 worth of work as part of its $3.05 million contract with SBER.
Heald & Leboeuf Ltd. attorney Thomas W. Heald, who is representing Advantage Glass, last week confirmed that the company stopped work in mid-March, after filing a lien for $688,316.
Since early March, two other subcontractors have filed mechanic’s liens against SBER. Johnston’s Baccala Concrete Corp. contends that it’s owed $129,852.77 and Cumberland’s H.W. Ellis Painting Company Inc. filed two liens, totaling $31,682.
Bob Rubenkonig, SBER vice president and director of marketing and communications, acknowledged that SBER hadn’t paid its subcontractors.
“We’re working hard to do that,” he said. “We have a commitment to get everybody paid and that stands.”
But Rubenkonig insisted the project is only in a “lull” period, not stopped.
“Currently, we’re getting our bids for plumbing and electric – there are a lot of things going on, but it might not be a beehive of activity from the exterior,” he said. Providence Business News on Feb. 23 reported that 14 other liens have been filed against SBER – and its local Dynamo House LLC – between September and February. Those liens, from five subcontractors, totaled $1,001,166 in unpaid bills. Two of those contractors, Testa Corp. and H. Carr & Sons Inc. are owed $496,477.37 and $311,800, respectively. At the end of March they announced that they were filing their claims with Providence County Superior Court. Those judicial filings could lead to court action if the suits aren’t settled, Heald said.
The redevelopment of the 97-year-old South Street Station, a former power station, is set to include a 168-room aLoft hotel, office space and a 55,000-square-foot Heritage Harbor Museum that will feature exhibits about Rhode Island maritime history. The 360,000-square-foot building is listed on the National Register of Historic Places.
Patrick T. Conley, a lawyer and developer who early this year was elected president of the Heritage Harbor Museum’s board of directors, last week said that many of the subcontractors that filed liens had stopped working at the Dynamo House site.
“The subcontractors have ceased to perform at the site until this financial impasse can be resolved,” Conley said, adding that he was “very confident” the developer – or another developer – would eventually be able to restart the project. “As far as the Heritage Harbor Museum is concerned, we are moving along as if nothing has happened. We are still laying the plans for our exhibits.”
Heritage Harbor Museum interim Executive Director Ken Orenstein added that the deal the museum corporation signed with SBER has a clause that would require any new developer – if SBER were to sell the project or was foreclosed on – to build the museum as part of the building’s redevelopment. Gov. Donald L. Carcieri’s administration supports the project, said Director of Community Relations Sue Stenhouse, who in October joined the Heritage Harbor board as Carcieri’s appointee. She has been working with SBER to identify possible state and federal funding for the project, which the governor has identified as a “priority,” she said.
SBER is applying for federal stimulus money to fund the job-creating project, Stenhouse said.
Providence, through the quasi-public Providence Economic Development Partnership, has also invested in the project.
PEDP, of which Mayor David N. Cicilline is chairman and Director of Planning & Development Thomas E. Deller is acting president, loaned Heritage Harbor Corporation $234,547 to pay the first part of a state fee for the R.I. Historic Preservation Investment Tax Credit program, according to a letter dated Feb. 27 from SBER CEO Carl W. “Bill” Struever to the city.
A message left for Deller at the Department of Planning & Development wasn’t immediately returned last week.
In February, SBER CEO Bill Struever told PBN that part of his company’s financial issues were caused by changes made to the R.I. Historic Preservation Investment Tax Credit program, which in April 2008 was cut from 27.75 percent to 22 percent of qualified projects. He said that caused financing gaps of more than $10 million in SBER’s Rhode Island projects, including Dynamo House and American Locomotive Works.
Conley added that those changes have hurt many developers, but SBER was one of the hardest hit.
“This is a state law violating the obligation of contracts, the contracts between Struever and the state over the tax credits, on which Struever Bros. detrimentally relied,” Conley said “Now it has impaired their ability to carry forward its projects.” •