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April 16, 2021

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Nike contractors file $100 million in liens over headquarters expansion

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A host of construction companies and design firms have filed liens against Nike and its general contractor claiming they’ve been shortchanged as much as $110 million for work performed on the company’s mammoth campus expansion near Beaverton.

At the top of an extraordinary list of disgruntled companies is Hoffman Construction, Nike’s go-to contractor for decades. It claims Nike owes it more than $48 million.

Skylab Architecture, another favorite of Nike, alleges it has not been paid $7.1 million.

“I think what is extraordinary here is that if you looked at the people involved in this project, you have some of the all-stars of Oregon construction,” said Darien Loiselle, a construction lawyer with Schwabe Williamson Wyatt. “The key question is, why would so many of these all-stars have similar problems getting these buildings built and then getting paid what they’re owed?”

Loiselle is representing Skylab in this case.

Nike’s headquarters expansion is one of the largest construction projects in state history. It took six years to plan, design and build the four new structures on site. Two of them are enormous – a one-million-square-foot office building named after tennis star Serena Williams and a 450,000-square-foot merchandising center. A large parking structure and a new fitness center rounded out the project.

Nike declined to address whether the claims by its contractors are valid. “A project of this size and scope involves complexity,” the company said in a statement. “We are committed to seeing through the successful completion of our expansion. But as we have done throughout this project, we will refrain from sharing details related to costs and contracts.”

“We’re excited to create an environment that fosters creativity and collaboration among our teammates and an expanded campus footprint that celebrates the magic of sport,” the company added.

The buildings have sat mostly empty since their completion due to the COVID-19 pandemic. Like most companies, Nike sent its workers home and tried to adjust to a virtual workplace last spring when the virus first hit Oregon.

Nike has never divulged the full price tag. But in its lien filed on Feb. 23 with the Washington County Recorder’s Office, Hoffman revealed its original contract was for $433 million. Nike has already paid $410 million to Hoffman, the documents indicate. But the contractor insists it is owed another $48 million.

The new structures were not your standard concrete tilt-up suburban office buildings. They are full of wild angles, vibrant color and unusual shapes. Architecture critics may love the daring look, but they proved challenging to build.

Nike has played this tune before. Back in 1991, a small army of subcontractors also filed liens and lawsuits against the company for allegedly refusing to pay them in full.

Back in those days, the hard-nosed Nike executive who insisted on the tough approach was Howard Slusher.

Slusher has been retired for several years. But he apparently agreed to help lead this project back in 2014. In its lien, Hoffman said the “name of the person who employed claimant (Hoffman,) was Howard S. Slusher on behalf of Nike.”

As the project progressed, Slusher apparently stepped back. Instead, a former Hoffman manager named Matthew Swaim emerged as project manager.

Swaim has since left Nike. He also declined to comment.

Construction liens are not unusual. As a project proceeds, clients often decide to make changes or various problems can arise that lead to delay and unexpected cost. In such cases, the parties have to negotiate whether subcontractors should be paid more or held to the initial contract.

If the two sides can’t come to an agreement, contractors can file a construction lien against their client’s property. A construction lien can pressure the property owner because it creates uncertainty that makes selling or refinancing a property difficult to impossible.

But to have claims this large from this array of contractors is definitely uncommon.

Hoffman was the general contractor on this job, meaning it managed all the other subcontractors.

The Portland firm’s long partnership with Nike has helped it become the largest construction company based in the Northwest.

Hoffman officials said they couldn’t talk about the matter at this time.

Other companies to file construction liens on Nike since the first of the year include: Culver Glass, $7.7 million; Performance Contracting, $13.4 million; Siemens, $4.2 million; Western States Fire Protection Co., $1.78 million; and Dynalectric, $13.2 million.

In all, companies have filed construction liens claiming they’re owed more than $100 million. But it’s not entirely clear what the total is. Some of the $48 million claimed by Hoffman may be money ultimately owed to other subcontractors.

A handful of contractors have gone the next step beyond a construction lien and filed lawsuits to foreclose on the lien.

One of them is Fetzer Inc., a Utah firm hired to manufacture and install carpentry in the hulking Nike merchandising building. Fetzer claims the original architectural drawings did not reflect what the Nike design team ultimately wanted. The company was ordered by Hoffman to perform extra work to comply with last-minute design changes.

In the end, Fetzer’s work for Nike took 45 months, instead of the 23 months it originally scheduled. The company has been paid its original contract amount of $12.4 million. It claims Nike owes another $2.8 million.

Carr Construction has also attempting to foreclosure on its lien. In February, the Portland company sued Nike and Hoffman claiming they owe Carr more than $5.4 million. In its lawsuit, Carr describes frustrations similar to Fetzer’s.

“Due to massive inadequacies in the design documents,” Carr says it was “forced into a design-assist role which was not accounted for in plaintiff’s original lump sum pricing for the work.”

“Hoffman repeatedly failed to timely review the plans, drawings and submittals; and attempted to fault Nike for the design issue,” Carr alleged.

ZGF Architects, another prominent Portland design firm that worked on the headquarters project, sued Hoffman in 2018 seeking more than $6 million. The case settled. Terms were not disclosed.

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