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Feb. 28, 2020

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Clark Asks: What’s going on with construction of Salmon Creek apartment complex?

Apartments sat unfinished for months due to legal battles, but investment company says construction has resumed

By , Columbian business reporter
Published:
6 Photos
A locked fence surrounds the 134th Street Lofts complex at the corner of Northeast 134th Street and 23rd Avenue on Monday. (Nathan Howard/The Columbian)
A locked fence surrounds the 134th Street Lofts complex at the corner of Northeast 134th Street and 23rd Avenue on Monday. (Nathan Howard/The Columbian) Photo Gallery

A legal battle between a project manager and an investor has sidelined contractors working on a high-profile apartment complex in Salmon Creek and prompted queries to The Columbian’s Clark Asks feature.

Construction at the 134th Street Lofts is scheduled to resume soon following several months of inactivity triggered by a dispute between 134th Street Lofts LLC, a company formed by Kirkland Development to manage construction of the project, and its investing partner, iCap Northwest Opportunity Fund.

Kirkland Development is the company behind the future Indigo Hotel and Kirkland Tower at The Waterfront Vancouver. It has the same address and governing officer as the LLC, according to state records.

The dispute between the project manager and investing partner prompted the fund to take control of the project this spring. The project manager filed suit in July seeking to block the transfer of control, according to Clark County Superior Court records.

The legal battle, which remains unresolved, prevented the project from moving forward for several months, but the investment company said it had resumed construction work as of this week.

“iCap has assumed control of the project,” iCap’s attorney Wendy Lyon said Tuesday, speaking on behalf of her client. “iCap has just secured a refinanced construction loan and has resumed construction.”

An attorney for 134th Street Lofts LLC declined to comment about the dispute. Kirkland Development Chairman Dean Kirkland said he wasn’t involved with the project or the legal dispute between the project manager and the investing partner, but he said he was pleased to hear that the project was back on track.

Repeated delays

Plans for the $22 million apartment complex were announced in 2013 by Dean Kirkland and local developer Tom Files, who together had built the 192nd Avenue Plaza near Vancouver’s border with Camas.

The five-story 134th Street complex just south of Legacy Salmon Creek Medical Center is slated to include 93 apartment units and 31 extended-stay units for families of hospital patients. Construction of the project was managed by 134th Street Lofts LLC, a company formed by Kirkland Development CFO Drew Miller.

The project was originally scheduled to break ground by the fall of 2013 and be completed in 2016, according to news stories and a promotional video released at the time.

That deadline was pushed back more than once. Clark County records show the project was granted a building permit extension in November 2015, and staff notes indicate that construction had been rescheduled to begin in the following month.

Another extension was granted in January 2017, moving the project’s deadline to June 30, 2017. A Columbian story in November indicated that the apartments were scheduled to open in April.

In September, a reader used The Columbian’s Clark Asks feature to ask why construction had halted. An employee at a nearby business contacted by a reporter gave the same story as the reader: Construction stopped at some point in this year, and the site has been devoid of activity since then.

Exterior work on the two main 134th Street buildings appears to be nearly complete, but the interiors appear unfinished. The site still looks like a dirt and gravel construction lot, and at the start of October it was empty apart from a construction office trailer, a shipping container, a dumpster and a boom lift.

Legal fray

Court filings from both parties say that 134th Street Lofts LLC and iCap Northwest Opportunity Fund formed a partnership in 2015 to build the project; private construction lender Parkview Financial supplied the funding.

The project manager and the investment partner first went to court in June 2017, with iCap alleging that the 134th Street Lofts LLC had failed to fulfill its contractual obligations.

The parties reached a settlement in January, but went back to court in July after iCap filed a deed of trust on the property — a move that drew objections from Parkview Financing, which already had a deed of trust on the property and began withholding future project funding, according to court documents filed by 134th Street Lofts LLC.

The result, according to the complaint from 134th Street Lofts LLC, was a three-week standoff during which “contractors began walking off the job and the project had to be completely demobilized. Any chance to complete it on schedule was lost.”

In its response, iCap argued that it was obligated to secure the second deed as part of the previous settlement between the partners.

“The developer failed to meet the timeline and comply with the contract,” Lyon said. “We worked out a settlement where the developer kind of got a second chance. We had hoped he’d come through with a little more time and money, [but] he didn’t.”

Lyon said development could have resumed sooner, but 134th Street Lofts LLC had filed a notice of a dispute over the property’s ownership, which prevented iCap from obtaining a refinanced loan until the court ordered the filing to be canceled in September, according to court filings. In addition to dismissal of the July lawsuit, iCap is also seeking damages for the delay.

A hearing on both issues has been scheduled for Nov. 2 before Superior Court Judge Daniel Stahnke.

Lyon said she did not know the project’s new expected completion date, but said that the project was not negatively impacted apart from the delay in construction.

“Nothing should be affected by the change in control,” she said.

According to Clark County records, K&F General Contractors filed for another building permit extension in early July, which the country granted.

However, county staff noted that the project had already received multiple extensions, and stated that a new permit would be required if the project is not completed by June 4, 2019.

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