Posh Four Seasons project in downtown Seattle faces liens, lawsuits
More than a year after downtown Seattle's $120 million Four Seasons Hotel and Private Residences opened to considerable fanfare, a dozen firms that designed and built the ultraluxury project say they haven't yet been paid.
Seattle Times business reporter
Four Seasons Hoteland Private Residences
Opened: fall 2008
Construction cost: $120 million
Liens filed by contractors: $34 million
Condos sold: 23 of 36 units
Top unsold condo: 5,200-square-foot, two-story unfinished penthouse; price recently reduced to $8.7 million
Developer: Seattle Hotel Group; partners include businessman John Oppenheimer, former Mayor Paul Schell, venture capitalist Tom Alberg
Notable residents: arts patrons Bagley and Virginia Wright, retired Nordstrom co-chairman John McMillan, Space Needle co-owner H.S. Wright III
More than a year after the $120 million Four Seasons Hotel and Private Residences opened to considerable fanfare, a dozen firms that designed and built the ultraluxury project say they haven't been paid in full.
They have recorded claims totaling more than $34 million against the downtown Seattle building. The largest lien, for $23.7 million, was filed in August by Lease Crutcher Lewis, the project's general contractor.
Most of the other liens were filed by subcontractors who say Lease Crutcher Lewis, in turn, hasn't paid them. Two of those subcontractors last month took the next legal step to collect what they are owed by filing lawsuits.
In an e-mail, Lease Crutcher Lewis CEO Bill Lewis indicated the Four Seasons is experiencing financial difficulties.
"The Four Seasons project is not immune to impacts related to current market conditions," he wrote, calling those impacts "significant."
The 21-story building, at First Avenue and Union Street, features 36 of the most expensive condos ever marketed in Seattle, atop a 149-room hotel. Only one condo has been sold during the past year, according to county records, leaving 13 still on the market.
One is a 5,200-square-foot, two-story unfinished penthouse with two spacious terraces whose sales price recently was reduced by 20 percent, to $8.7 million.
Information on the Four Seasons Hotel's economic performance was not available. But downtown hotel revenues overall dropped sharply last year, according to one consultant.
John Oppenheimer, managing partner of project owner Seattle Hotel Group (SHG), would not address the Four Seasons' finances.
"Large, complex projects such as the Four Seasons all have issues that get resolved at the end of the project," he said in an e-mail. The liens "address some of these issues and are in the process of being resolved," he added, declining further comment.
Host of defendants
Two Four Seasons subcontractors and lien claimants — Redmond millwork installer Surgent and Silverdale mechanical contractor Stirrett Johnsen — filed separate suits in King County Superior Court last month.
The lawsuits name Lease Crutcher Lewis, SHG, each owner of the building's posh condos and a host of other defendants, and seek judgments totaling more than $1.8 million against Lewis and two other contractors.
Surgent's attorney and Stirrett Johnsen's president did not return calls. Other contractors could file suits if the situation isn't resolved.
Partners in SHG, besides Oppenheimer, include former Seattle Mayor Paul Schell and venture capitalist Tom Alberg. Oppenheimer is president and CEO of Columbia Hospitality, a hotel and conference-center management and consulting firm.
The Four Seasons isn't the only project caught in the chill of the real-estate downturn. It actually has sold a higher share of its condos than several high-end downtown condo towers.
Some local developers have lost properties to foreclosure. A few have sought bankruptcy protection. Others are struggling to satisfy lenders at a time when the sluggish economy has slashed demand for new buildings, both residential and commercial.
Unpaid contractors have filed lien claims against several other high-profile condo projects. But Associated General Contractors of Washington spokesman Jerry VanderWood said there has been no noticeable upswing.
"It's not surprising that this tactic is being used in this economy," he said, "but it is still unusual."
Under state law, contractors who haven't been paid must record lien claims within three months after their work is done to protect their right to collect. If there's no resolution, lawsuits seeking judgments must be filed within eight months to preserve their rights.
Judgments can result in foreclosure, but "like any lawsuit, the vast majority are settled," said Van Collins, legislative counsel for Associated General Contractors of Washington.
Surgent and Stirrett Johnsen were among the first subcontractors to file lien claims against the Four Seasons, and also among the first to face the eight-month deadline for filing suit. Three more subcontractors will hit that deadline this month.
More buzz than buys
The Four Seasons generated considerable buzz when it opened in fall 2008.
It marked the return of the swanky Four Seasons hotel brand to Seattle after a five-year absence. And the condos, ranging from 1,300 to 10,000 square feet, were perhaps Seattle's most expensive multifamily residences ever on a per-square-foot basis.
Presale buyers had closed on 22 of the 36 units by February 2009, paying between $1.26 million and $11.4 million. Buyers included arts patrons Bagley and Virginia Wright, retired Nordstrom co-chairman John McMillan and Space Needle co-owner H.S. Wright III.
The one condo that has sold since then went for $1.84 million in November. SHG cut prices on the remaining 13 units last month, announcing reductions ranging from 8 to 47 percent.
The hotel also almost certainly is not generating as much revenue as SHG projected. Downtown Seattle hotels' revenue per room fell 19 percent from 2008 to 2009, says Bellevue hospitality consultant Wolfgang Rood.
Lease Crutcher Lewis' project manager for the Four Seasons, Bill Gormley, said his firm and SHG met with a mediator in late January in an attempt to settle Lewis' lien claim. "We didn't resolve it on that day," he said, but talks continue.
He and Lewis declined further comment.
Representatives of most subcontractors who have filed lien claims against the Four Seasons either did not return calls or declined to comment. Those who would talk downplayed the situation.
"My client is not dissatisfied or unhappy," said Bellevue attorney Thomas Hansen, who represents Western Tile & Marble, which recorded a $430,000 lien claim in November.
The filing largely was a protective measure, he said. "We anticipate our claim will be paid."
Architect NBBJ recorded a $1.05 million lien claim against SHG in August. Project manager Jim Tully said the filing of such claims after a project is completed is "not routine, but not uncommon."
"At the end there's always discussions about who's owed what, and that's what's going on now," he said.
Eric Pryne: 206-464-2231 or email@example.com