California construction site photo with mechanics lien graphic

As major corporations are looking to get their operations back on track in the most tech-focused areas of the country, some of their most ambitious projects are still being held back by payment issues and contractor disputes.

Though prior Levelset coverage has noted the impact that disputes can have on major corporations’ projects, giants like Microsoft and Facebook are still dealing with roadblocks as companies try to return to major work going into 2022.

Major liens continue to impact Microsoft’s Silicon Valley campus

Allied Fire Protection, Bay City Mechanical Inc., and Stomper Demolition vs. Rudolph & Sletten, Inc., and Microsoft Corporation: $2,585,272.87 (total)

Levelset’s August 2021 California Lien Roundup covered Microsoft’s Silicon Valley campus and its difficulties with non-payment stemming from contractor Rudolph & Sletten, Inc., with coverage focused on the Rancho Cordova-based Urata & Sons Concrete, LLC. However, the project’s issues haven’t yet been resolved, as evidenced by multiple other recent liens filed against the property involving disputes with at least three other contractors.

Besides Urata & Sons’ original claim of $4,733,846.48, liens from Bay City Mechanical, Inc., Allied Fire Protection, and Stomper Demolition come to a total of $2,585,272.87.

A July 2, 2021, filing by Bay City Mechanical Inc. alleges $780,407.87 in non-payment on the part of Rudolph & Sletten, Inc. Bay City Mechanical is a major HVAC supplier in the Bay Area, claiming that it “has provided design and engineering solutions for the heating, ventilation and air conditioning systems of some [of] San Francisco’s most iconic buildings and professional spaces.”

July 9, 2021, saw Oakland, California’s Allied Fire Protection file a lien against the project for $1,385,012 stemming from work done for Rudolph & Sletten on the Silicon Valley campus, while Stomper Demolition filed its own lien claiming $419,853 on August 12, 2021.

Stomper Demolition noted that it works with “many of the most reputable contractors in the Bay Area,” incidentally listing Rudolph & Sletten as a key business relationship.

A project that Microsoft has touted as part of its “forward-looking mentality” and the company’s “smartest, greenest office yet,” the Silicon Valley campus has gained a lot of positive exposure in recent months even as the project’s builders have struggled with payment problems behind the scenes.

Darren Lombardi, senior real estate manager for the Silicon Valley facility noted that the company was most focused on employee satisfaction and productivity, saying “When we think about the campus and what we wanted to build, our goal and our focus was really, ‘How do you build a space for people?’…Let’s build a space that people are really going to want to work at.”

Sam Nunes, a partner at architectural firm WRNS Studio, said that the developers studied how the company’s employees worked and how their needs could be answered by the campus’ construction.

“We wanted to give them choices so that they can optimize their day as they saw fit,” Nunes said. “One of those choices is the ability to quickly move outside and reconnect with the day. This building is open and transparent, both visually and physically, between the natural environment and the built environment, between the interior and the exterior. It’s a real blurring of that line.”

These choices have led to good things for the project in the press, as well — the Silicon Valley Business Journal awarded the 2021 Structure Award for Best Campus Project to the Microsoft facility.

Work on soon-to-be reopened Facebook Reality Labs impacted by lien claim

Joseph J. Albanese, Inc., Hathaway Dinwiddie Construction Company, Burlingame Point, LLC: $980,537.55

The research and development headquarters of Facebook’s Oculus virtual reality subsidiary has run into problems just as the company is looking to move employees back into the 767,000 square foot space.

A July 6, 2021, claim by Joseph J. Albanese, Inc. noted $980,537.55 in non-payment stemming from work done on the Burlingame Point complex in Burlingame, California. According to the filing, the dispute comes from concrete and general engineering construction services and materials supplied by Joseph J. Albanese to the project.

The Santa Clara-based company noted that it provides site concrete, structural concrete, demolition, earthwork, and shotcrete and rebar work as a subcontractor for California-based construction projects.

The five-building Burlingame Point complex, owned by Burlingame Point, LLC, is currently leased to Facebook Reality Labs, but the company is in the midst of a transitional period as it decides what to do with the space during the COVID-19 pandemic.

“Given the recent health data showing rising COVID cases based on the delta variant, our teams in the US will not be required to go back to the office until January 2022,” Facebook spokesperson Chloe Meyere said of the company’s current plans for in-person work at the location.

As construction work has been done to get the building ready for the return of employees, however, many Burlingame residents are unsure of the impact of the project on the city, and there’s a chance that opposition may lead to the building requiring more work.

“It’s certainly a major change out there to have a building that large,” said Burlingame Councilmember Emily Beach, who also serves as the chair of the San Mateo County Transportation Authority Board of Directors. “We’re going to do everything we can to make sure that it’s a positive [development] for the community and that we protect everyone’s safety and quality of life in the process.”

Residents are particularly unsure, and have been vocal about the possible impact on the community, with North Shoreview Neighborhood Association president Cynthia Newton noting that “We are definitely concerned about the opening of the Facebook Oculus building, once again.”

“It’s been a long journey to get it going,” said Beach. “We need to watch it very carefully to make adjustments as needed, but I am optimistic.”

Contractor dispute puts City of Palo Alto in a difficult position

McGrath Electric, Inc., Swinerton Builders, and the City of Palo Alto: $2,102,964

The construction of a six-level parking garage in Palo Alto has surprisingly led to a significant lien claim, with Fairfield, California’s McGrath Electric, Inc. claiming $2,102,964 for its work on the project.

Swinterton Builders completed the project in early 2021, but city officials have struggled to figure out how to allocate the space. The project has been significantly controversial in the Silicon Valley cornerstone of Palo Alto, which has seen an influx of residents in recent years due to the presence of major technology-focused companies such as Tesla, Hewlett-Packard, and Lockheed Martin. 

Though the Palo Alto City Council originally envisioned that the $41.3 million structure would be able to take pressure off of streets that have been packed with office workers in recent years, many residents and local businesses have clashed with the proposals for space allocation that the council has discussed. Palo Alto business owner Michael Ekwall even went as far as to say that there had “zero outreach” and “zero transparency” in the process of interacting with the business community, saying that “[the council’s] proposal basically erases any benefits that the new garage creates.”

“It is amazing that low-wage retail workers who come and go throughout the day and often cannot take public transportation are not given any spaces in the new garage and employee permits are not being moved out of the neighborhood, despite the large increase in parking available within the business core,” saidEvergreen Park resident Carol Scott.

“Instead, the recommendation de facto gives almost the entire garage over to commercial office workers — the very ones who should be parking in their own parking lots or commuting by public transportation in this ‘transportation rich’ area.”

This controversy may impact future construction in this area, as well. The Palo Alto City Council was considering a number of new developments for the area in early 2021, with the construction of a new public safety building and new affordable housing complexes on the table for development in 2021 and 2022, and it’s likely that the city will take a more cautious approach to the approval process for these projects before embarking on construction work.