SugarHouse Casino cut the ribbon in May 2016 on an
expansion that more than doubled the size of the only state-licensed gambling
complex in Philadelphia.
More than a year later, many of its builders are still
trying to get paid for the work they said they did.
The Delaware Avenue center, by Penn Treaty Park between
the river and I-95, added a string of restaurants, a seven-story parking
garage, an Event Center for concerts, weddings and corporate gatherings, the
Poker Night in America room, scores of new poker and table game seats, hundreds
of new slot machines, and 500 full-time positions, taking the total
workforce to 1,700, in a city hungry for job growth..
Last week Skanska USA Building Inc., the New Jersey-based
American arm of the global Skanska construction and general contracting group,
sued SugarHouse owner Sugarhouse HSP Gaming LP, based in Chicago, in Common
Pleas Court, seeking $14 million for work performed at SugarHouse by Skanska
and subcontractors.
Skanska says SugarHouse agreed to pay $123 million for
the work, following changes agreed to by both sides early in the
project. But according to Skanska, later changes ordered by SugarHouse —
for the kitchens used by Geno’s Steaks and Saxbys Coffee, for new waterproofing
and changes to ceilings, the big chandelier and the armored car bay and more —
added $8 million in costs that SugarHouse hasn’t paid. The casino also deducted
more than $1 million in claimed “liquidated damages” from its payments,
according to Skanska.
The contractor says it has been paid only $118 million,
and has gone to court for the balance. “We can’t comment on pending
litigation,” SugarHouse spokesman Jack Horner told me.
It’s not just Skanska. “There are subcontractors with
balances that are awaiting payment,” Mason Avrigian Jr., partner at Post &
Schell PC in Philadelphia, who is representing Skanska, told me.
A check of Common Pleas Court filings shows that, since
last fall, at least a dozen subcontractors who worked on the SugarHouse
expansion have also filed mechanics’ liens seeking payments totaling more than
$10 million, at least some of which they are also trying to collect from
Skanska. I have talked to other builders who say they are also owed money
and are considering their options.
“It is the obligation of the general contractor to pay
the subcontractors,” said SugarHouse’s Horner. “Unfortunately, the general
contractor has not done so, and the subcontractors have filed liens to protect
their interests. It is important to SugarHouse that the subcontractors who
built our expansion are compensated fairly and that our general contractor
meets its obligations to them.”
The dispute takes place amid signs that gambling industry
growth may have flattened in the region — even as Pennsylvania state officials
in Harrisburg have been pushing to expand gambling, so they can raise more
gambling taxes to help fill a $2 billion state budget gap. In a report last
week, S&P Global Ratings analyst Timothy Little warned that existing
casinos in Pennsylvania and neighboring states have brought in all the likely
gamblers they can expect to attract, and that increasing casino capacity “will
only exacerbate the narrowing competitive advantage of new properties being
developed in the region.”
How often are contractors in court seeking payment after
a big job gets done? “Unfortunately, a lot of these larger projects do go to
disputes because of issues,” Avrigian said. He added that contractors would
rather spare the cost of litigation.
Mechanics’ liens, filed when subcontractors don’t get
paid, represent a claim on the property where they worked, and typically have
to be paid before a property can be sold or used as collateral, which may
not be much leverage when an owner has no near-term plans to sell or expand. In
Philadelphia, court records show that some subcontractors have a dozen or more
mechanics’ liens against clients they say didn’t fully pay them.
The opening of one of the biggest public construction
jobs in the region in recent years, the $400 million State Correction
Institute–Phoenix in Skippack, Montgomery County, has been delayed two years
amid disputes between the state’s representatives and two national contractors
hired to oversee the work; some subcontractors on that job have sued the
general contractors, and some have privately complained that they have had to
borrow money to meet payroll while waiting for money that’s due them.
It shouldn’t take legal action to get paid every time,
says Shawn R. Farrell, a partner at Cohen Seglias Pallas Greenhall & Furman
in Philadelphia, which represents several SugarHouse subcontractors. Farrell
represents Emms Electric, a family-owned union electrical contractor in
Boyertown, which says it is owed $214,000 for work on SugarHouse. “This is not
normal,” Farrell told me. “I don’t see a resolution anytime soon.”
Other mechanics’ liens filed for payment over work at
SugarHouse include:
- Philadelphia D&M Inc., drywall, Plymouth Meeting, two liens totaling $2.83 million
- Miniscalco Construction, demolition, Skippack, $1.97 million
- McCrae-Gordon Joint Venture, electrical contractors, Philadelphia, $1.56 million
- Ébénisterie Beaubois Ltée., cabinetry, St. Georges, Quebec, Canada, $1.2 millionKone Inc.. elevators, Kennesaw, Ga., $451,000
- Falasca Mechanical Inc., Vineland, $424,000
- Central Metals Inc. steel fabricator, Camden, $355,000
- L&H Signs, Reading, $277,000
- Eastern Exterior Wall Systems Inc., Allentown, $208,000
- R. R. Pucci Inc., fencing, Ivyland, $201,000
- Thomas United Inc., food service equipment, Egg Harbor, $154,000
- BFC Ltd., floor coverings, Egg Harbor, $84,000
Source: Philly.com
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