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Posted Jul 30, 2024, 3:54 PM
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Registered User
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Join Date: Jan 2013
Posts: 2,350
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X Phoenix luxury tower faces multiple lawsuits; project's future in question
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Originally Posted by IndyAZ
Sounds like this might get going again in the next couple months, heard it's a targeted early Q4 restart. Fingers crossed so we don't have a half finished building in the skyline.
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Appreciate the update IndyAZ!
PBJ article on this.
https://www.bizjournals.com/phoenix/...-lawsuits.html
Quote:
The general contractor of the second phase of the X Phoenix luxury residential tower, along with several subcontractors, have filed lawsuits alleging tens of millions of dollars is owed for completed work on the stalled construction project.
These lawsuits follow a series of mechanic's liens filed in connection to the project last year after work came to a screeching halt in September 2023. The project is being developed by The X Company, which has already completed and stabilized the first phase of X Phoenix but has since faced construction issues related to projects in the Valley and other cities.
Nearly a year since construction stopped, the status of the second phase of X Phoenix remains up in the air. At least seven lawsuits related to the project have been filed since late April.
The largest of those lawsuits comes from Chicago-based general contractor Clayco Inc., which alleges it is owed no less than $32.3 million as of May 17, plus another $3.9 million in accrued interest, according to court documents. Clayco alleges that the owners of X Phoenix breached a contract by "failing to timely pay amounts properly due to Clayco," according to the lawsuit.
Similar lawsuits alleging unpaid work have been filed by Suntec Concrete Inc., Action Gypsum Supply West LP, Apodaca Wall Systems Inc., White Cap LP, CM Builders Inc. and Metal-Weld Specialties Inc., according to court documents reviewed by the Business Journal.
Clayco Inc. on March 19 sent a notice of intent to terminate for nonpayment its contract with XSC Phoenix Investment 2.0 LLC — the X Co. entity that's developing the project — according to documents included in its lawsuit filed in May.
A March 27 settlement agreement shows that Clayco extended the termination date from March 26 until May 3 in "a substantial and valuable concession providing XSC additional time to pursue financing options." For its part, XSC acknowledged Clayco was owed more than $30 million and is entitled to suspension-related costs. XSC also agreed that Clayco has "no obligation to defend or indemnify XSC" against any lien or foreclosure action filed by a project subcontractor or supplier.
The agreement was signed by both Clayco's counsel and Evan Wagowski of Greenberg, Trager & Herbst LLP, on behalf of owner XSC. Wagowski declined comment, and The X Co. has not responded to multiple attempts by the Business Journal to solicit comments for this story. Clayco could also not be reached for comment for this article.
Phoenix officials mull several options related to project
The X Co. secured a Government Property Lease Excise Tax, or GPLET, through the city of Phoenix to abate property taxes while the project is under construction. That means the city currently owns both phases of X Phoenix, Christine Mackay, economic development director for the city of Phoenix, told Phoenix Business Journal in March.
At the time, Mackay said she had hoped X Co. would be able to get new financing in place to be back under construction this summer. Instead, the project remains on hold while millions of dollars worth of legal complaints rack up.
On July 29, Mackay said she has a call scheduled with X Co. this week for an update regarding the firm's efforts to secure new financing for the project.
"Our goal is always to move forward with the ownership of the building and move forward with the project," she said. "Especially in this one where the two buildings are meant to tie together with the amenity package. We'd love to have the existing developer finish the project and move forward as we had always planned."
That said, it's also the city's goal to protect citizens and the city, she said.
"Depending on the update this week, we'll make a determination as to what the plan moving forward is," she said. "Within all of our development agreements at the city, we have the ability to default the developer. Right now, we're weighing all options, depending on the outcome."
X Co. proceeds with Roosevelt project
These problems come at a time when the Valley's multifamily market is in throes of a "challenging, wonky year," Tower Capital's Adam Finkel told the Business Journal in May. For example, the One Camelback office-to-multifamily conversion was estimated to be 85% complete when it also halted construction in 2023.
Separately, another X Co. project in downtown Phoenix is making progress.
The 19-story, 325,000-square-foot X Roosevelt multifamily building was recently topped out, according to a July announcement from the project’s general contractor, Brinkmann Constructors. Once complete, X Roosevelt will have 370 luxury units. It was the No. 18 largest construction project in the Phoenix area at last check, with an estimated budget of nearly $87 million.
The residences located in downtown’s popular Roosevelt Row Arts District will cater to young professionals, with amenities including a professional-quality workspace for remote workers, a gym and fitness studio complete with programming, co-living suites and 3,500 square feet of ground floor retail.
X Roosevelt is expected to be completed in fall 2025.
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