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Home / Articles / News / Local News /  Debtor management
Market Station Construction
The Market Station will hold its grand opening in mid-September, though REI will hold a soft opening in August.

Debtor management

Railyard progresses; contractors complain.

July 30, 2008, 12:00 am
A theater with 12 screens, $150,000 digital projectors and skyboxes furnished with lounge chairs and ottomans. A digital-age sports bar “experience” with seven bowling lanes, 30 virtual reality games and 50 screens displaying live sports channels. A space-themed coffee shop, a European wine bar, a chemical-free day spa…

Railyard Co. LLC is making big promises about the out-of-this-world tenants it has cultivated for Market Station, the 132,000-square-foot shopping and entertainment megaplex under construction in the Santa Fe Railyard. But, at the same time, the developer has had trouble keeping a more traditional pledge: paying its bills on time.

Court and lien records show that at least three construction subcontractors have filed more than $2 million in liens and lawsuits against the company, claiming they weren’t fully paid for their work.

In 2004, Railyard Co., a partnership between Richard Jaramillo and Allen Branch, won $30 million in bids from the city and the Santa Fe Railyard Community Corp. to develop the Railyard’s underground parking garage and the Market Station complex above it. The building is nearly finished, with one of its most prominent tenants, Recreation Equipment Inc. (better known as REI) scheduled for a soft opening in August.

However, as of July 28, the Santa Fe County Clerk’s Office shows that Stock Building Supply Inc., a Raleigh, NC-based material supplier, has a $41,700 lien against the Railyard Co. property. Jaramillo tells SFR that the debt has been paid and there are no current liens against the property—a requirement for the construction loans the company recently procured.

Nevertheless, it was the third lien filed against the company this year.

Contractors  might take a cue from Am Fab Inc. and Thos. Byrne Ltd. if they want to collect: The fastest way to get Railyard Co. to pay up is to complain in court. Am Fab, the Bernalillo-based company that built Market Station’s steel skeleton, filed a breach-of-contract complaint against Railyard Co. for $1.25 million in February for services rendered but left unpaid. The move essentially raised the stakes; Am Fab demanded that the court appoint a “special master” to seize the facility and sell it to pay off the debt.

A week and a half later, Railyard Co. cut Am Fab a check and the suit was abandoned.

Railyard Co. was even faster to clear up its debt when it was sued in April by another contractor, Thos. Byrne, which claimed that it was owed almost $500,000 for its work on the city’s underground parking garage. This time, Railyard Co. paid up within hours of the complaint being filed in First Judicial District Court.

“It’s just a long project with a lot of delays with the weather, infrastructure, water and the capital markets were a little tough,” Railyard Co. principal Jaramillo tells SFR.  “The financials are in place and everybody’s been paid and the show’s on the road. Sometimes, suppliers and contractors file their liens until they get paid.” Jaramillo adds that the financing, and in turn the payments, also were slowed down by the process of applying for title insurance and the bureaucratic hoops the company needed to jump through, such as bypassing railroad easements.

Richard Czoski, the executive director of the Santa Fe Railyard Community Corporation, the nonprofit assigned by the city to oversee and implement the Railyard’s master plan, tells SFR that he was aware of the liens but remains unconcerned as long as Railyard Co. continues to settle its debts.

“You have to remember that the size of their portion of the project is in excess of $30 million,” Czoski says. “It’s not unusual for there to be construction disputes over contracts… As long as [the liens] are cured, we are not concerned about them. We do not want to be in a situation of advocating for a contractor or a tenant because the issue is between them.”

City Councilor Miguel Chavez tells SFR he’s not surprised that there are construction disputes regarding the project, but he is concerned about where the trend may lead.

“Liens seem to be a standard practice in the construction field and those liens are sometimes used to get the attention of the contractor to be paid for work that’s been done,” Chavez says. “It’s unfortunate that the subcontractors would be in that position…Without getting into their personal business plan and without being personal or petty, it just raises a question of the financial viability of those projects.”

Railyard Co. has already collected 12 tenants at Market Station, including Downtown Day Spa, Satellite Coffee and the wine bar Vin 132. The largest anchor tenants for the complex will be Maya Cinemas, REI and RingSide Entertainment, the digital-age sports bar. The facility’s grand opening for most tenants is scheduled for September, with a second opening in time for the holidays in December.  The parking garage will open in the first half of August.

“They’re making good progress,” Czoski says. “The building is turning out exactly the way we anticipated it. It’s a big endeavor, one of the largest buildings in the city and [Railyard Co.] has been able to get it done.”

 

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