El Jebel townhouse project feels sting of credit crunch
EL JEBEL, Colorado ” A luxury townhouse project that signified the go-go development scene in the midvalley two years ago has become a poster child for how the national credit crunch is now impacting local projects.
Construction stopped earlier this year at the Shadowrock project in El Jebel and the developer is scrambling to pay more than $1.2 million in liens filed by the general contractor and subcontractors.
Shadowrock is located across from the El Jebel City Market, upvalley from the El Jebel mall that includes Bella Mia restaurant and the Short Stop bar. It was approved by Eagle County for 100 luxury units. Thirty have been built and 22 have been sold. Sales have been closed as recently as Sept. 29 for close to $1 million, according to deeds filed with the Eagle County Clerk and Recorder’s office.
But after a booming start, the project crashed to earth this year. All construction activity stopped. A handful of poured foundations haven’t been touched for months. At least some of the firms that have worked on the project haven’t been paid for months.
R.A. Nelson, the general contractor on the project, filed 10 mechanics’ liens on and around Oct. 31 for a total of $1,139,128, according to lien statements filed with the clerk and recorder’s office.
Eight other liens have been filed by subcontractors on the project who say they are owed $119,605. Those subcontractors include Mountain Terrascape Inc., an excavating firm in Carbondale; Insulvail of Vail; and Western States Fire Protection. A ninth subcontractor’s lien for $29,548 was filed and released by Wind River Trees, either because it was paid or the parties came to an agreement. All liens are filed against Blue Ridge Investments Ltd., a Dallas firm developing the El Jebel project.
A source familiar with the project said the mechanics’ liens represent only a portion of the unpaid bills. Other subcontractors haven’t been paid but haven’t filed liens yet, a source said.
Representatives of the development firm and its primary lender, Colorado Capital Bank, met with R.A. Nelson and a major subcontractor Wednesday to try to resolve the payment delay.
“We have what would qualify as a handshake agreement with R.A. Nelson,” Larry Vineyard, a vice president with a general partner in Blue Ridge Investments, said Friday. Attorneys for the development firm and the contractor worked Friday to convert the handshake agreement into a deal.
Randy Garman, executive vice president of Colorado Capital Bank’s Eagle branch, said the Shadowrock project was too large for his bank to finance by itself, so it worked with Missouri banks to supply the funds. The national credit crisis hit those banks hard and they weren’t able to meet all their obligations.
“Those banks sort of put us in a bind, temporarily,” Garman said.
Now, funds from other lenders have been secured and made available for Blue Ridge Investments. Those funds available are sufficient to cover the unpaid bills of the contractor and subcontractors, Garman said.
Bruce Gentry, a representative of R.A. Nelson who signed the liens, couldn’t be reached for comment Friday on the pay dispute. The delay in payment is bound to be a financial hardship for some of the construction firms. Work in the Roaring Fork Valley is tougher to come by these days. Going 12 weeks or more without getting paid for work performed is likely putting some firms in a bind.
Garman said he couldn’t address how Shadowrock will proceed with its development plan. Vineyard said construction will commence, but probably in a different way. Blue Ridge Investments likely won’t be able to start construction on additional buildings until all the units in that particular building are sold. In the past, it constructed buildings when just a portion of units were sold. The reality of the post-credit crunch world requires a change.
“We’re going to be moving forward as business picks up,” Vineyard said. “Like everybody else, we’re sort of at the mercy of the market.”