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Vandervert Construction statement says $14 million in losses on hotel projects led to its closure

UPDATED: Wed., Feb. 14, 2018, 10:45 p.m.

This apartment complex in the 1300 block of West College Avenue is a project of Vandervert Construction. Photographed Tuesday, Feb. 6, 2018. (Jesse Tinsley / The Spokesman-Review)
This apartment complex in the 1300 block of West College Avenue is a project of Vandervert Construction. Photographed Tuesday, Feb. 6, 2018. (Jesse Tinsley / The Spokesman-Review)

Vandervert Construction lost more than $14 million on a string of hotel projects across the Northwest, which pushed the Spokane-based general contractor into receivership, company officials said.

The company, which is owned by Tim Stulc, released a statement Wednesday detailing the events that led to its financial troubles during a booming period in the construction industry. Hundreds of subcontractors have filed claims against Vandervert for payment.

“The closure of a company that successfully sustained operations for over 42 years is tragic and the rippling impact for Spokane’s business community is regretful,” the statement said. “It is hoped that through receivership the employees, subcontractors, vendors and clients that provided support and contributed to the success of Vandervert Construction will receive payment for monies owed and the impact of Vandervert Construction’s financial situation and closure will be minimized.”

The problems arose after the general contractor landed its largest contract – a $32.6 million deal to build a 254-room Hilton Garden Inn in downtown Bellevue in 2015, the statement said.

The company also had contracts for four other hotels: the Marriott Towne Place Suites in Lakewood, Washington; the Courtyard By Marriott in Pullman; the Marriott Towne Place Suites in Beaverton, Oregon; and the Home2 Suites in Marysville, Washington.

Each of the hotel projects experienced cost overruns, which Vandervert officials said were caused by several subcontractors refusing to honor their original bid pricing. Some of the problems stemmed from the large volume of construction activity in the Interstate 5 corridor and employee turnover, the statement said.

Vandervert Construction lost more than $2 million on the Pullman and Beaverton hotels from construction complexities, weather impacts and delayed opening of the hotels. The Marysville project had similar problems, which led to more than $400,000 in losses, the statement said.

But most of the financial difficulties stemmed from the Hilton Garden Inn in Bellevue, which had $12.3 million in losses, the statement said. According to company officials, the five-story, wood-frame structure was on schedule in July 2016 when revisions to the roof design and framing quality issues created delays in installing the roof. Heavy rains during October created mold problems and required replacement of the electrical wiring. The project fell about nine months behind schedule while corrective repairs were undertaken, the statement said.

Vandervert Construction is pursuing a builder’s risk insurance claim for the water damage. The company also is seeking payments from the framing contractor for the framing revisions, the statement said.

Vandervert Construction started falling behind on payments to subcontractors and vendors in mid-2017. It also missed Washington State Excise Tax payments for November and December.

After the company exhausted efforts to secure additional financing, it filed for receivership Feb. 2 in Spokane County Superior Court. A court-appointed receiver, Barry Davidson, will manage the company’s assets, collect remaining money owed to Vandervert Construction and distribute funds to company creditors. The process is expected to take months.

Vandervert Construction was founded in 1975. Stulc purchased the company in 2011 after managing the daily operations for more than 10 years.