Photo of University of Nevada with problem projects graphic

A significant Nevada mechanics lien claim over an apartment complex being used as a University of Nevada, Reno temporary housing facility got more complicated on August 30, 2021, when claimant Alpha Omega Mechanical, LLC filed a petition for removal — bringing what was a state legal action to federal court.

Alpha Omega’s claim — levied against general contractor Spire Construction, LLC and property owner Canyon Flats III, LLC — stems from a $407,005.79 dispute over Alpha Omega’s work providing plumbing services for the Canyon Flats apartments in Reno.

The original claim by Alpha Omega dates back to March 15, 2021, with the company noting that it had been paid $2,741,733.55 of its original $2,900,000 contract, but was denied the remainder — as well as $292,375.06 in additional work, materials, and equipment. 

On August 3, 2021, the company additionally filed a lien foreclosure complaint and request for a jury trial.

Originally announced in September 2017, Spire Construction was hired as a general contractor for the Canyon Flats project on December 21, 2018. Work began on January 7, 2019, and the building reached substantial completion on January 15, 2021, with Spire Construction listing 54 different local contractors collaborating on the project along with Alpha Omega. 

At the time of its announcement, the complex was viewed as an attractive opportunity for the Reno housing market. 

“This will finally be the link that draws students downtown,” said Ken Krater, president of Reno’s Krater Consulting Group, of the multi-faceted appeal the project had to construction investors and its possible impact on future construction in Reno.

“I feel that this is just one great thing to move downtown forward…The population density is extremely low, so bringing this many people in close proximity to [the university] and downtown, in my mind is going to be terrific.”

The Canyon Flats project faces delays and difficulties — but Alpha Omega and Spire Construction disagree over why

According to Alpha Omega’s lien foreclosure complaint, it was originally contracted to install bathtubs, plumbing, and any related mechanical services at the Canyon Flats complex. 

However, the project very quickly ran into supply issues — a common thorn in the side of contractors during the COVID-19 pandemic. Though the original agreement called for the installation of “one-piece” bathtubs, Alpha Omega found them “difficult to obtain” and so Spire Construction and Alpha Omega agreed to use “three-piece” bathtubs — a decision that resulted in financial charges that Spire Construction allege stemmed from “delay and trade damage.”

Alpha Omega claims that the delays suffered in its work were the direct result of the COVID-19 pandemic, saying that “There were multiple days where the project was shut down or Alpha Omega could not work.”

Additionally, the company complained that additional requirements stemming from pandemic compliance disrupted work, and defended the work that it did, maintaining that it “did not cause trade damage during their job performance” and adding that “any such damage was caused by other subcontractors.”

Dive deeper: Construction Delay – Types, Claims, and Defenses

In total, Alpha Omega’s case notes seven causes of action against Spire Construction and Canyon Flats, including breach of contract and a claim of unjust enrichment. 

This dispute isn’t even the only recent one related to the Canyon Flats complex’s construction. A February 23, 2021, lien filed by Super Contracting Corporation dba Gale Building Products — which provided insulation work for the project — claimed a similar financial situation as Alpha Omega. Despite being paid $1,067,419.31 on an originally $1,040,459.31 contract, changes totaling $83,140 may have delayed payment significantly, leading the company to make a $56,180 lien claim on the Canyon Flats property.

It also is not at all the only instance of disputes coming out of the pandemic. Levelset reporting in June and July of 2021 noted that supply chain issues stemming from the pandemic — such as Alpha Omega’s difficulty finding the agreed-upon materials for the Canyon Flats project —  were causing significant issues for contractors nationwide. 

Caitlin Walter, Vice President of Research for the National Multifamily Housing Council, noted in May 2021 that “Material shortages and cost increases will lead to development cost increases and potential project delays…longer term, these disruptions could challenge the already supply-constrained market and threaten to derail housing affordability efforts. New units need to be built at a variety of price points, and cost increases only make building those units more difficult.”

Reno’s university housing issues have put extra pressure on off-campus apartments like Canyon Flats — and while more such construction may increase, it’s unclear how universities will be involved

The dispute takes on a new level of importance in light of the nascent 2021-2022 academic year. Canyon Flats is normally an off-campus housing facility marketed towards University of Nevada, Reno students, but it is currently being leased by the university to serve as temporary housing while the university has been rebuilding two other residence halls.

In February 2020, a university announcement noted that approximately 506 university students and residential staff would be housed at the facility. Though the announcement noted that the school’s residence hall construction was scheduled to be completely done by August 2021 — theoretically removing the need for additional temporary housing — Canyon Flats is still being used by the university as of September 2021. Delays caused by the pandemic have held back completion of the university’s Argenta Hall until at least 2022.

Related: Clark Atlanta University Hits Major Construction Roadblock When Dorm Renovations Remain Unfinished as Students Return

Despite these issues, the university is actually looking away from bulking up its on-campus housing solutions — instead turning to the possibility of instigating more private housing that would appeal to its students. 

Vic Redding, the University of Nevada, Reno’s vice president for administration and finance, noted that there was an “opportunity cost” to building certain projects with university funding — pointing to housing as an area where the university thinks that “the private sector can be part of the solution.” 

“The private sector really can’t do lab buildings or instructional buildings or public health labs or those types of things, so that’s really where we have to step in,” Redding added. “But with the growth, and all the [private student housing] around campus, and the scarce real estate that we have, I’m not really sure I see another university-owned housing complex on the horizon for undergraduates.”

In speaking to The Nevada Independent, Dean Kennedy — the University of Nevada, Reno’s Executive Director of Residential Life, Housing & Food Services — echoed these claims, noting the importance that demographic has on the university’s view of new construction.

Kennedy noted that the university had good reason to encourage private housing construction near campus specifically, noting that “[Between] the student-focused housing properties that are currently existing and those that are being developed, I anticipate more and more students wanting to live close to campus, because they have 18 months of not having that social, academic, engaging conversations and connections.”

This may have a significant impact on the type of construction being done in the area going forward. 

“The properties that are close to campus, they’re student-focused apartment complexes, period,” Kennedy noted. “We compete, a little bit, but once students and their families find out the level of support [from the university] that students get when they live on campus, I would say we are in a different league.”