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Developers of the Gale Boutique Hotel & Residences in Fort Lauderdale have failed to pay $2.7 million to contractors, according to construction lien claims filed as recently as August 2020.

The Gale Boutique Hotel and the Gale Residences are two neighboring properties in Central Beach, Fort Lauderdale. Both of the properties are under the development of Tiffany Hotel LP, a partnership between Newgard Development Group and Merrimac Ventures.

Newgard Development is a Miami-based firm headed by Harvey Hernandez. Mr. Hernandez has been the subject of a number of recent, high-profile financial disputes, including allegations of fraud by AirBnb and at least one lawsuit over delinquent payments.

Merrimac Ventures is led by Dev Motwani, a prolific developer in the Fort Lauderdale area.

Straticon LLC, based out of Stuart, Fla., is the general contractor on the current construction projects at the Gale Boutique Hotel & Residences.

Plans for the Gale Boutique Hotel started in 2015. The luxury hotel is a redevelopment of the Escape Hotel, a property which had laid vacant for around 10 years before it was purchased by Tiffany Hotel, LP. The project has a price tag of approximately $120 million, and it will feature 96 rooms with multiple amenities.

The adjacent Gale Residences has been open for business since 2018, but it’s unclear as to when the Gale Boutique Hotel will open its doors.

The Gale Boutique Hotel is located at 2900 Riomar St. Gale Residences is located at 401 N. Birch Rd.

9 Contractors File Mechanics Liens on Gale Boutique Hotel & Residences

Eight subcontractors as well as the general contractor have filed mechanics liens against the owner, Tiffany Hotel LP. When contractors go unpaid on construction projects, they can file a construction lien to recover the money owed to them. Construction liens, more commonly known as mechanics liens, attach to a property, inhibiting its sale until the lien claimant gets paid.

Eight of the mechanics liens were filed on the Gale Boutique Hotel project and one was filed on the Gale Residences project. Each lien was filed with the recording office in Broward County, where the Gale properties are located.

Straticon, the general contractor on both projects, filed a mechanics lien on July 17th, 2020 for the unpaid amount of $1.86 million. The original contract price was around $13.5 million.

Straticon was hired by Tiffany Hotel for the construction and renovation of the Gale Boutique Hotel, which includes 96 rooms, a fitness center, pools, cabana, and parking garage. Straticon first furnished materials and labor on February 28th, 2018 and last furnished on June 29th, 2020.

Solution Construction Inc. filed the second-highest mechanics lien on April 21st, 2020. Solution is a subcontractor hired by Straticon for sitework materials and services for phase II of construction on the Gale Residences. Solution’s mechanics lien claims $468.8K in unpaid wages. Solution first furnished labor and materials on June 21st, 2018 and last furnished on March 5th, 2020.

Phase II is the stage of the project that includes the Boutique Hotel, and it was made possible thanks to a construction loan of $35.6M granted to Newgard on behalf of Aztec Group in 2016.

Proval Construction & Consulting was hired by Straticon for labor and materials related to aluminum railings as well as steel and concrete work on the Gale Boutique Hotel. Proval filed a mechanics lien worth $244.5K with an original contract price of $802.6K. Proval first furnished labor and materials in March 2018 and last furnished in April 2020.

In descending order of value, the remaining mechanics liens are as follows:

Hollywood Woodwork filed a mechanics lien on August 4th, 2020 claiming $78.6K in unpaid wages. Hollywood was hired by Straticon for millwork and installations for the Boutique Hotel project. Hollywood first furnished in March of 2020 and last furnished in May.

Door Supply of Florida filed a mechanics lien on August 10th, 2020 to the amount of $49.6K. Contracted by Straticon, Door Supply installed doors, frames, and other hardware at the Boutique Hotel. Work started for Door Supply in August of 2018 and ended in July of 2020.

Spikebusters, Inc. filed a mechanics lien on July 6th, 2020 for $69.1K in unpaid wages. Spikebusters was hired by Straticon for electrical work on the hotel. Spikebusters first furnished labor and materials in October of 2018 and last furnished in May of 2020.

Crossroads Paving Solutions filed a mechanics lien on June 4th, 2020 for the unpaid amount of $17.5K. Crossroads was contracted by Straticon for pavers, labor, and related supplies for the hotel project. Crossroads first furnished labor and materials in May of 2019 and last furnished in March of 2020.

Associated Steel and Aluminum Ltd. filed their mechanics lien on July 9th, 2020 for the amount of $8,090. Straticon contracted Associated Steel for materials and labor related to a hotel lobby rail as well as a pool fence and two gates. The lien is attached to 401 N. Birch Rd., the address of Gale Residences. Associated first furnished in April of 2020 and last furnished in May.

Lastly, TJ Pavement Corp. was hired by both Straticon and Solution Construction for work involving construction, concrete, and providing other related materials and services for Phase II of the Gale Boutique Hotel project. The lien is worth $3,142.12.

Newgard Development and Merrimac Ventures Plan For the Future

Newgard and Merrimac were able to begin recent renovations on the Gale Boutique Hotel & Residences in 2018 after raising $19.5 million from Hall Ft. Lauderdale GH, an affiliate of Dallas-based financier Hall Group.

Although many balances on those renovations remain unpaid, Merrimac Ventures and Hernandez Construction have secured another loan in February, worth $10.4M, which will go towards a self-storage and retail project in Fort Lauderdale.

This news rolls in as Merrimac Ventures currently oversees over $3 billion worth of projects, which include the Four Seasons Hotel, Paramount Fort Lauderdale Beach, Broadstone Oceanside, the Flagler Village Hotel, and the Gale Boutique Hotel.

Construction is considered essential labor in Florida, keeping the projects and employment on a relatively stable trajectory. However, some experts worry that the lack of a long term plan could cause major issues down the line. “The bottom line is we have to get back to having consumer and overall investor confidence,” said Peter Dyga, president and CEO of the East Coast Florida chapter of Associated Builders and Contractors.

Florida construction employment is curiously on the rise, even as hundreds of mechanics liens roll in all across Miami and southern Florida and COVID-19 cases hit all-time-highs. The long term effects of this boom in development have yet to be understood.