Struever replaced as leader on Cotton Shed project

A series of lawsuits filed against the developers of the Cotton Shed, a West Warwick mill redevelopment, have led to the replacement of the managing partner in the limited liability company that is developing it, according to an attorney for one of the partners.
Struever Bros., Eccles & Rouse, the Baltimore-based developer that for almost a year has been struggling to pay its subcontractors on a number of projects around the country and in Rhode Island, has been replaced as the Cotton Shed project’s leader, Nixon Peabody LLP attorney Jeffrey S. Brenner said.
Brenner declined to name his client, the partner that will now decide the project’s future.
“The managing member had been Struever corporation and, given the delays with the project, and all the other issues, the limited member has taken over as managing member,” Brenner said in a telephone interview last week.
He added, “This all happened within the last week. I think it’s fair to state that the new managing member will take a fresh look at the project and all the issues regarding it. And [they] will make a decision shortly about what’s going to happen with this project.”
SBER Vice President and Director of Marketing and Communications Bob Rubenkonig said he had not been briefed on any changes.
SBER still “has an interest” in the development company, but “the important fact is that Struever’s no longer the managing member,” Brenner said. “So they are not calling the shots for the LLC, the corporate entity that owns the project.”
The project has been mired in problems since at least July 2008, when lender Rockland Trust Company, a Massachusetts-based bank, said SBER’s loans were in default and halted any further payouts, according to a Kent County Superior Court decision filed on May 1.
The bank, however, was not the only party seeking money owed to them. In a series of 14 lawsuits, 13 subcontractors had also sought to resolve the “hundreds of thousands” of dollars that they were owed, according to Brenner. The subcontractors filing liens were: Northern Site Contractors, Sheridan Electric Inc., Rustic Fire Prevention Inc., Roofing Concepts Inc., Westbay Welding & Fabrication Inc., Kitchens International Inc., Graybar Electric Company Inc.; Eagle Carpet Inc., Gem Plumbing & Heating Company Inc., Joseph Tavone Painting Co. Inc., Northeast Steel Corporation Inc., Jesmac Inc. and J.D. Cement Works Inc. On May 1, in Kent County Superior Court, Associate Justice Jeffrey A. Lanphear filed a decision that consolidated the subcontractor’s claims. He ruled in favor of those subcontractors, saying that their mechanic’s liens have priority over payment to lenders.
In denying Rockland’s claim that it should be paid before the subcontractors, Lanphear pointed out that Rockland Trust had failed to reply to citations issued after the mechanic’s liens were filed.
The Cotton Shed project, along the Pawtuxet River and across Providence Street from SBER’s completed Royal Mills redevelopment, is a 34,000-square-foot commercial redesign, according to SBER’s site plans. A former storage warehouse, built in 1890, it had been an arrival point for cotton coming by rail to the West Warwick mill. Billed by SBER as a “typical cotton warehouse,” plans for the three-story building include knocking out the second story to increase ceiling height for the first-floor commercial space.
And the Cotton Shed project isn’t the only Rhode Island project where SBER is having financial problems. In April, it became clear that work had stopped at the $137 million mixed-use Dynamo House project in Providence. There, some of the subcontractors had halted work because they hadn’t been paid at least $1.85 million, according to liens that had been filed with the city.
CEO Bill Struever had said in February that at least a portion of SBER’s financial issues could be traced to the decision by Rhode Island’s leaders to pare the R.I. Historical Preservation Investment Tax Credit program. R.I. Division of Taxation records on that program show that the Cotton Shed project is a $12.27 million redevelopment, for which the state authorized tax credits of $3.07 million. Because changes were made to the structure of those state tax credits – an up-front 3 percent fee was added – SBER had to pay $367,979 by March of this year.
Brenner, the attorney for the new managing partner that had been a limited partner, said last week that his client now is in the process of reassessing the project, including how to fund it.
“So now, what the owner needs to do, as directed by the new managing partner, is analyze the situation, see how much money is owed, see how much money could be raised, and figure out what to do with the project,” Brenner said, “which is a different status than what’s been going on for the last six or eight months.” &#8226