Vandervert’s financial troubles spill into Spokane construction projects, sites around the region

In early January, the owners of a hotel under construction in Marysville, Washington, were worried about Vandervert Construction’s financial situation.

Unpaid subcontractors were filing liens against the Home2Suites by Hilton. An attorney for the hotel’s owners asked Tim Stulc, Vandervert’s president and owner, if the Spokane-based general contractor had the money to finish the job.

Stulc “took exception to the attorney’s questioning solvency and represented to us that Vandervert was solvent enough to complete the project,” wrote Richard Heide, an agent for the hotel’s owner, Washington Hotel Development.

Three weeks later, Vandervert Construction filed for receivership.

The 42-year-old company’s business failure has created chaos at construction sites throughout the Northwest. Creditors have filed more than $46 million in claims for payment.

While many of the people affected are reluctant to talk publicly, hundreds of pages of documents filed in Spokane County Superior Court describe the disruption following the general contractor’s Feb. 2 receivership.

In Spokane, the owners of an unfinished apartment building said they’re taking a $40,000 monthly hit from lost rental income.

Avista Development, which hired Vandervert Construction to remodel the restaurant and kitchen in Steam Plant Square, said the company didn’t pay its subcontractors on the project.

Washington Trust Bank has filed a $46,000 claim for overdraft fees and interest from Vandervert’s bounced checks.

A carpenter employed by Vandervert said the company closed the day his rent was due, forcing him to get emergency assistance because he didn’t get his last paycheck.

In Marysville, the hotel owners have filed a $2.95 million claim against Vandervert Construction. The hotel hasn’t opened. It’s months behind schedule.

The hotel owners’ attorney, Jami Elison, expects the dollar value of the claim to grow.

The hotel “was behind schedule before the receivership and it is further behind schedule as a result of the receivership,” Elison said in an email.

More than 470 claims filed for payment

More than 470 claims for payment, totaling $46.5 million, have been filed with Vandervert Construction’s court-appointed receiver, attorney Barry Davidson.

However, Davidson called the $46.5 million figure “provocative,” saying he expects a much lower tally after the claims are vetted and duplicate requests are sorted out.

Davidson’s job as receiver is to liquidate Vandervert’s assets and distribute payments to creditors. So far, he has raised about $685,000, mostly from sales of company vehicles and forklifts.

Davidson said it will take months to cash out company assets and collect payments from Vandervert’s insurance policies, but he expects creditors to recover at least part of their money.

“The liquid value (of Vandervert Construction) is far from being determined, but it is significant,” Davidson said last week.

Through the receivership, Davidson said he expects to settle Vandervert’s back taxes and wage claims from company employees. He also anticipates payments to unsecured creditors, which would include suppliers and subcontractors.

Stulc, Vandervert Construction’s owner, declined to comment for this story, referring questions to Davidson. According to Davidson, Stulc expected to get new loans to complete Vandervert’s outstanding jobs.

“I know the company was trying to finalize financing to finish the projects. When the funding did not materialize, they found themselves in an unworkable situation,” Davidson said.

When banks refused to issue new credit, Stulc filed for the receivership. Davidson said Stulc has been cooperative throughout the process.

Stulc bought Vandervert Construction in 2011 after managing the daily operations for more than 10 years. The company was founded by Dick Vandervert.

Dick Vandervert remains the president and owner of Vandervert Developments, which owns hotels and manages commercial properties, but isn’t affiliated with Vandervert Construction.

Company blames troubles on hotel projects

Vandervert Construction blames most of its business troubles on $14 million in losses at five hotel construction projects in Washington and Oregon, including the Marysville project.

Each of the hotels had cost overruns, but the most expensive problems occurred at a 254-room Hilton Garden Inn in downtown Bellevue, according to an earlier company statement.

Heavy rains and delays in the hotel’s roof installation led to mold problems and required the electrical system to be redone, the statement said.

The Bellevue hotel’s owners, Washington Square Hotel Holdings LLC, have filed a $7.8 million claim against Vandervert.

Closer to home, Vandervert was the general contractor for a Pullman hotel, the Courtyard by Marriott, whose owners have filed a $618,440 claim against Vandervert. Subcontractors and suppliers for the 122-room hotel weren’t paid, resulting in multiple liens against the property, according to court documents.

Spokane area projects also were affected, including the Steam Plant Square’s kitchen and restaurant remodel.

“We were one of the luckier ones, because our project was mostly done when we found out that the company was going into receivership,” said Latisha Hill, Avista Development’s senior vice president.

However, Avista Development has filed a $1.2 million claim against Vandervert Construction over charges from about 20 unpaid subcontractors.

“We paid Vandervert in full, then Vandervert did not pay their subs,” Hill said. “I feel saddened by the way this turned out, because we made it pretty clear we wanted them to hire local subs.”

The Steam Plant once burned coal to produce electricity. It was built in the early 1900s with local labor, and Avista Development wanted to continue that tradition during the remodel, Hill said.

Avista Development will pay the subcontractors after verifying their claims, then seek recovery of that money through the receivership process.

“The unfortunate piece is that you have the subs still waiting on this cash flow,” Hill said.

Avista Development is separate from Avista Corp.’s utility business, so ratepayers will not be affected, she added.

Spokane apartments months behind schedule

Another Spokane project affected by Vandervert’s receivership was the College Avenue Apartments at 1310 W. College Ave.

The apartments were supposed to be finished in January, but the projected completion date has been pushed to August, according to court filings. Not being able to rent the apartments is costing the owners $40,000 per month in lost revenue, according to court documents.

The owners, Centennial Property Developers LLC, filed a $1.5 million claim against Vandervert Construction, saying Vandervert failed to pay suppliers and subcontractors.

Vandervert officials made “false representations” about its progress on the apartment building, collecting payments for unfinished work, Centennial Property Developers’ attorney said in court documents.

Vandervert Construction’s employees also took a hit from the company going under.

Michael Puksta spent two years with Vandervert as a journeyman carpenter. The Spokane father of five said he’s still owed about $4,000 in back wages.

Vandervert Construction closed the day when Puksta’s $1,000 rental payment was due.

“We didn’t get that paycheck,” he said. “We had about $200 in the bank. … It was horrible, stressful.”

Puksta and his wife were able to qualify for emergency assistance, which kept their family from being evicted, he said.

When Vandervert closed, Puksta was working on the construction of a new Super One Foods in Athol, Idaho. The grocery store’s owners employed him and other former Vandervert workers for about two months to finish up the work so the Super One Foods could open.

Puksta said he’s since found another job.