Works Remains Stalled on Massive Oceanwide Development Project
Liens and legal actions accumulate amid signs of developer financial trouble
The three-tower Oceanwide Plaza project in Los Angeles suffered from a series of serious design issues and delays in the two years leading up to January, when work stopped, according to a lawsuit by a major subcontractor.
The concrete construction unit of San Francisco-based Webcor Builders is believed to be the biggest concrete subcontractor used on the project. It has filed a lawsuit in Los Angeles Superior Court claiming the company is owed more than $62.3 million for its work by prime contractor Lend Lease Construction, Inc. and a pair of local project entities formed by Oceanwide Holdings Co., a publicly-traded Chinese company.
Oceanwide is also developing another large project in San Francisco.
Work on the Los Angeles project, opposite the Staples Center, stopped in January and shows no sign of resuming soon.
At attorney for Webcor declined comment.
In addition to tens of millions of dollars in back payments, Webcor's lawsuit also seeks to foreclose on a mechanics lien on three-tower hotel, condominium and restaurant project being built in downtown LA by Oceanwide. If successful, the foreclosure on the mechanics lien could force the sale of the property.
A spokesperson for Oceanwide has declined to comment, but the halt by the developer has been attributed to financing difficulties related to the Chinese government’s recent efforts to restrict the flow of capital outside the country.
Lend Lease also declined to comment.“During the course of the Project, Webcor encountered extensive delays to the
performance of its work, labor inefficiencies, and disruption of productivity, for which Webcor was not responsible, and incurred significant additional costs as a result thereof,” states the court complaint filed by the subcontractor.
Webcor contends problems with the project began not long after it inked a $122-million contract in mid-December, 2015.
The lawsuit contends “a late” as well as “deficient” and “incomplete” project design “caused Webcor to expend time and resources to fix work conditions, wait for the resolution of design issues and conflicts, incorporate design changes into its planned activities, perform added and changed work, and work under disruptive conditions.”
The design issues and other problems first came to a head in May 2016 when Lend Lease issued stop-work orders on the project’s three towers in order to allow for design work on the lower levels of the buildings to finish up, attorneys for Webcor contend.
Even after work resumed, Webcor said it struggled to deal with continued design changes, as “Oceanwide would make field modifications or require adjustments to Webcor’s work after it had been installed.”
“The above and other substantial impacts caused not only substantial delays to Webcor’s work, but also caused Webcor to incur significant lost labor productivity, added supervision, and excessive overtime costs,” the lawsuit contends.
Webcor’s lawsuit also alleges irregularities related to the start of construction on the project back in 2015.
In July 2015, months after construction had started, Downtown Investment, an entity through which Oceanwide was building the project, filed a deed in trust against the city-block sized downtown building site to secure financing for the project. The deed, in turn, “purports to secure an original indebtedness of Three Hundred Twenty Five Million Dollars ($325,000,000.00),” the lawsuit states, arguing the timing of the transaction and other details are “suspicious.”