The city of Austin is growing at a rapid pace, in both population and economic terms. An “unsustainable” number of people – estimated at 100 per day – are moving to the city, according to Patch News. For construction companies that operate in Travis County, that probably sounds like great news. And it is – until you’re filing a $5 million lien on a condo project that you’ve been waiting for 4 months to collect on. After that, all of the construction growth just looks like projects that you don’t have the funds to get involved in.
As you’ll see below from this month’s 5 biggest lien cases in Travis County, large lien cases involving the hotel or real estate market are still trending. Since May, 4 out of 5 of the largest liens in Travis County have involved projects happening on hotels or real estate projects. Texas subcontractors take note: You can file liens on a hotel when you are subcontracting in Texas. (Just make sure you’re submitting required monthly notice.)
Table of Contents
1. $5.1 million lien against Hunt Construction Group (now Aecom)
Lien Amount: $5,133,370.88
Claimant: Bergelectric Corp.
Hiring Party: Hunt Construction Group, Inc.
Property Address of Lien: 101 Red River Street, Austin, TX
Property Owner: Manchester Texas Financial Group, LLC
Bergelectric Corp. filed the biggest lien in August against Hunt Construction Group for over $5 million in outstanding debt. Hunt hired Bergelectric to work on the Fairmont Austin Hotel project for three months, from March to May.
As the name suggests, Bergelectric Corp. is an electrical contracting and building consulting services. Bergelectric was formed in 1946 and offers its services to entertainment complexes, telecommunication facilities, hotels, bioscience, and office facilities. The company is headquartered in Carlsbad, CA, but holds an office in Austin.
Manchester Texas Financial Group, LLC manages all Texas-based holdings in commercial real estate and hotel development for Manchester Financial Group, a San Diego-based hotel and commercial real estate development firm. The 37-story Fairmont Hotel covers 1,400,000 square feet with 1,048 rooms. The Fairmont Austin is the largest building in Fairmont’s chain of hotels, and it’s also the tallest hotel in Austin.
Interestingly, just two months after the Bergelectric project wrapped, Hunt Construction Group was acquired by construction giant Aecom. And check out Aecom’s Contractor Profile: With 28 payment disputes in the last 12 months, they’re considered a high risk for non-payment. Coincidence? Possibly. Or maybe ducks of a (slow payment) feather just stick together.
2. $2.7 million lien against Edison Austin Investors, LP in Austin
Lien Amount: $2,765,714.88
Claimant: Cadence McShane Construction Company, LLC
Hiring Party: Edison Austin Investors, LP
Property Address of Lien: 4711 East Riverside Drive, Austin, TX
Property Owner: Edison Austin Investors, LP
Edison Austin Investors, LP hired Cadence McShane to serve as the GC at the Edison Apartments project on East Riverside. Only, according to Cadence McShane, Edison didn’t pay their bill. Cadence McShane filed a lien for just shy of $3 million after working on the project from May to July of 2019.
Edison Austin Investors has been around for three years and is the owner of Edison Apartments. These luxury apartments are located just over three miles from downtown Austin. Monthly rent for these one- to three-bedroom luxury apartments range from $1,345 to $3,062.
3. $2.2 million lien against Downtown Austin Lakeside in Austin
Lien Amount: $2,268,058.99
Claimant: Structure Tone Southwest, LLC
Hiring Party: Downtown Austin Lakeside, LLC
Property Address of Lien: 111 East Cesar Chavez Street, Austin, TX
Property Owner: Downtown Austin Lakeside, LLC
Structure Tone Southwest filed this $2+ million mechanics lien against Downtown Austin Lakeside (DAL). They filed the lien after going unpaid for work they performed on The LINE Austin, DAL’s boutique hotel downtown.
It’s not Structure Tone’s first time at the mechanics lien rodeo. It’s not even their first time filing a lien against DAL! They filed another claim against the same company back in June for $3.26 million. That time, too, for work they performed on The LINE Austin.
Structure Tone Southwest is a full-service general contracting firm located in Austin thats been in business since 1977. The company has offices in Dallas, Houston, San Antonio, and Austin. With annual revenue of $400 million and more than 200 employees, this is a construction company that knows the value of protecting their lien rights. And clearly, they don’t just protect their right to get paid – they enforce it when necessary.
4. $1.1 million lien against 3rd & West, LP in Austin
Lien Amount: $1,132,797.58
Claimant: The Porter Company
Hiring Party: Balfour Beatty Construction
Property Address of Lien: 301 West Avenue, Austin, TX
Property Owner: 3rd & West, LP
The Porter Company (TPC) filed this lien for over $1 million against Balfour Beatty Construction. The 690-foot luxury condo property, known as The Independent, is the tallest in Austin. TPC, who provided mechanical and plumbing services on the project, is fighting to recover more than $1 million in retainage that Balfour withheld for the job. There’s a reason that most subcontractors dislike the practice. Retainage is notoriously difficult to collect from the GC or property owner.
Balfour Beatty Construction has been a chronic offender on the list of slow-paying contractors. Levelset’s Contractor Profile for Balfour shows 263 payment disputes or slow payment incidents, including 49 mechanic lien filings, 2 lien threats, and 212 slow payment claims. And all of that just in the last year. Unsurprisingly, Balfour ranks as a high payment risk.
Of course, Balfour is a behemoth in construction. As such, they haven’t just been involved in mechanics lien filings on The Independent, or even just on US soil. Earlier in 2019, Balfour Beatty was also kicked off of the UK’s Prompt Payment Code for delaying payment to subs & suppliers.
5. $848k lien against Tyndall Partners, LP in Austin
Lien Amount: $848,823.35
Claimant: BD Drywall Management, LLC
Hiring Party: White Construction Company
Property Address of Lien: 800 Embassy Drive, Austin, TX
Property Owner: Tyndall Partners, LP
BD Drywall Management filed a lien for nearly $850,000 against White Construction Company. The drywall contractor, based out of Dallas, TX, provided their services at the Tyndall at Robertson Hill in Austin, TX. It’s not the first time The Tyndall has been the subject of money disputes. Back in June, a different claimant filed another 6-figure lien on the luxury condominium complex.
Payment disputes aren’t always an indication that the work was substandard, either. The Tyndall won the 2019 Best Multifamily Development by Austin Business Journal. The Tyndall offers one bedroom apartments that sell for around $310,000 with between 571-815 sq. ft. The luxury condo development also offers two bedroom floor plans as well as penthouses that sell for $730,000.
Hotels and high rises in Travis County
These five liens alone add up to more than $12.1 million in unpaid construction bills. And in each case, the lien deals with either a hotel or luxury condominium project. No real shock there, since hotel revenue in greater Austin has been growing fast. According to the Statesman:
Revenue at hotels in the Austin-Round Rock metro area jumped 13 percent year over year in the first quarter, the largest increase for any metro area in the state. Fort Worth and Dallas were next at 7.6 percent and 6.1 percent. Average occupancy in Austin was 73.3 percent — well above the state average of about 65 percent.
In Travis County during August overall, 108 different construction companies filed 195 liens. All told, they total more than $19.8 million. The smallest lien claim was for just $240. That’s 108 contractors, suppliers, and their employees losing sleep over a payment they earned for work they have already completed.
Before you bid on a project, do your due diligence on the general contractor and project owner. Research their payment practices on Levelset’s Contractor Profiles, and read former customer reviews. Look for recent news articles that might give you an indication of their ability – and willingness – to pay the contractors that work for them. If the parties at the top of the payment chain have a history of payment problems or mechanics lien filings against them, it may be wise to consider investing your resources elsewhere.