Nearly three years after the Chase Center opened doors in downtown San Francisco to house the six-time NBA champion Golden State Warriors, at least one subcontractor is still out over $12 million in unpaid construction work.
According to the San Francisco County clerk’s office, subcontractor Rosendin Electric is owed $12,223,214 after filing an unpaid construction work claim — also known as a mechanics lien — on January 28, 2021, after the 580,000 square-foot, $1.4-billion arena officially opened in August of 2019.
Mechanics liens are filed by unpaid contractors to gain a security interest in the serviced property until they receive payment. By filing a lien, the contractor can hinder the property owner from selling or refinancing.
The mechanics lien was filed pursuant to a contract between Rosendin Electric and a joint venture general contractor known as Mortenson Clark. The property owner is listed as GSW Arena, LLC.
“[Mortenson Clark] is huge, and they didn’t get to be that big by paying debts that they don’t have to pay,” said David Tran, managing partner of San Francisco-based construction law firm, Prosperous Law Group.
“They’re fully aware of the [mechanics lien] procedure. They’re not going to be taken upfront. But, in fact, [Mortenson Clark] prefers subcontractors to do things the right way with mechanics liens.”
The chief financial officer of Rosendin Electric that filed the mechanics lien, Lorne Rundquist, declined to comment.
According to Mortenson Clark’s project page for the Chase Center, construction on the project lasted 30 months. Rosendin Electric’s mechanics lien was filed roughly two-and-a-half years after the Chase Center began housing events at the arena.
“It is highly unusual for a lien to be this long out,” said Cathleen Curl with the Law Offices of Cathleen Curl, a construction law firm located outside of San Francisco in Millbrae, California.
“The job is now ‘done,’ and the law uses the term ‘substantial completion.’ There very well could be public money and funds going into the stadium or anything that would require acceptance by a public organization, such as a board of supervisors,” Curl said.
A request for comment was left with Hani Alawneh, vice president of Mortenson Clark, which has not been responded to as of time of reporting.
As Rosendin Electirc’s lien sheds light on delays in processing liens, Curl forewarns that subcontractors in the San Francisco area could experience their own lien delays following the onset of the coronavirus pandemic.
“Sometimes, liens get pushed back,” said Curl. “For instance, there’ve been some processing delays with the building department where they’re having trouble staffing due to COVID to get people out to do all of the proper inspections. There was quite a backlog recently.”
While lucrative, arena projects pose a risk for contractors to get burned financially. Beyond San Francisco’s Chase Center project, Los Angeles withstood the construction of SoFi Stadium, which recently faced over $3 million in contractor payment claims months after opening — similar to the Chase Center lien claim.
“Approach [arena] projects with caution, and make sure that you are not waiting too long to file a lien,” said Curl. “[Contractors] are sort of used to over the years not getting paid right away, like 30 or 60 days. I wouldn’t let the time go too long. Make sure that you follow the requirements for mechanics liens and give notices. Also, find out if there’s a bond that’s posted. Know that in advance before you go in because that can help you get paid.”
Tran also advises subcontractors, especially smaller subcontractors that may be seeking their first “big” job, to take time in reviewing the mechanics lien and notice processes on every job — no matter the size.
“The old adage of strong fences make for good neighbors is really applicable here with this [stadium project] of its size,” attorney David Tran commented. “Be aware of your rights. For subcontractors, no matter what tier you are, especially when you’re the lower tier, it does not hurt to give notice to everyone and their mother to tell them you’re working on this project.
“The best way to give notice is with pre-lien notice, and you can find out who the project lenders are,” Tran said. “It doesn’t hurt [subcontractors], and it certainly keeps [subcontractors] as one of the first set of vendors that gets paid — always. You don’t want to be the vendor that relied upon the layer above you to [pay you] when there’s no guarantee that they’re going to get paid.”
Read more: What is a Pre Lien?
Golden State Warriors face over $50M in debt from Oakland Arena
In December or of 2020, San Francisco’s NBC affiliate reported the Golden State Warriors were taking on a legal battle with the California Supreme Court of debts surrounding their previous arena.
According to the report, the Golden State Warriors are faced with $50 million in debts at the former arena, known as the Oakland Arena.
The debt reportedly accrued from renovations that took place at Oakland Arena since 1996.
By February 2021, the Golden State Warriors reached a settlement with Oakland-Alameda County Coliseum Authority to pay the $50 million with an additional $1.2 million in legal fees.