Published: May 21, 2007 11:22 pm      

BUSINESS: 18 subcontractors on Victorian Village haven't been paid

There’s a catch-22 in the pending sale of the first four condominium units at Victorian Village, 501 Park Lane Circle.

Eighteen subcontractors who helped build the units have taken legal action to hold up the sales in an effort to ensure they get paid for their work.

But the men behind Lockport Condominium Development LLC, the project developer, say if the liens aren’t lifted nobody’s going to get paid because, minus the sales, they don’t have any money.

Separately, the LLC needs a sign-off from the state Attorney General’s office before it can sell those condos but the OK has been held up after the City of Lockport asked for scrutiny of the offering plan.

One year after the kickoff of a project to build 80 condominiums on one of the last vacant residential stretches in the city, only four units are done. While project manager Edward E. Lewis promises the rest will be built in time, he’s in a bit of a bind now as ticked-off contractors demand an explanation for why he hasn’t paid overdue bills adding up to more than $220,000.

While Lewis talked up the virtues of his nearly finished units earlier this month, and the open house he’s planning to show them off, contractors have been talking amongst themselves about someone they describe as a serial non-payer who seems to be playing games with them.

Carpenter Leonard Higgins said Lewis owes him $17,000 for work and equipment rental dating back nearly a year.

“I got half of what I was owed. I’m one of the lucky ones,” he said. “It’s going on all over (the project).”

John Lavin, attorney for Home Insulation & Supply of Lancaster, another contractor hired to work at the site, said when he started taking the pre-steps to foreclosure due to nonpayment, he got an eye-opener. A stub search of claims against Lewis’ company showed Home Insulation is but one in a lengthy line of lienors, many of whom are owed far more than Home Insulation.

“It’s kind of interesting. You can (almost) track the construction of this thing by the liens,” Lavin said.

The debts Lewis has incurred are the consequence of unexpected turns in the project, including City of Lockport-caused construction delays, charged Clifford Raab, spokesman for the unidentified investors’ group that is said to be backing the development.

Lewis spent a good portion of his construction budget on “front load” expenses — the land purchase, design and engineering fees — and exhausted it on unexpected expenses including repeated flood cleanup and a paved road that the city required him to build in order to obtain a building permit, Raab said.

“That road cost $80,000. It wasn’t budgeted. Otherwise, we would have had money to pay these other contractors,” he said.

Lewis speaks as though it’s not that big a deal to be so indebted to subcontractors. He claims he hired them on as a sort of test of their abilities, professionally and financially, and promised the ones who stick with him through a hard time that they will make big money in the long run.

And Raab, even as he lays partial blame at the city’s feet for Lewis’ debts, suggests there’s nothing unusual about subcontractors not getting paid until the product is sold.

In the first phase of a construction project, “you find out who you can work with and who you can’t,” Raab said. “The reason Trump chooses some subcontractors is they carry him. He’s not reaching into his own pocket. ... It’s the nature of construction that sometimes subcontractors do a little of the financing.”

That’s news to many of the subcontractors, who say they were never informed of such a deal. The idea that they unwittingly gave Lewis interest-free loans has them feeling fooled — especially the ones who say Lewis assured them he already had all the necessary financing in place.



What is the deal?

About half the Victorian Village contractors who have filed liens on the Park Lane Circle property said they’ve been after Lewis repeatedly for payment of their invoices and gotten nothing in return but stall tactics.

Several, including Lee Cadby, owner of Northeast Paving in Lancaster, have said Lewis told them a sale was imminent and they’d be paid soon.

“My last conversation with (Lewis) was in February. He said they’d be closing in March, then everybody would get their money,” Cadby said. “It hasn’t happened.”

Richard Blatner of Capital Heat Inc., Depew, said he’d worked for Lewis in the past and wasn’t concerned, at first, when other subcontractors started talking to him about a slew of unpaid bills.

“I’ve dealt with Ed before. He’s always been a straight shooter with me,” Blatner said. “Months ago he said he was faxing the bills to New York City and nothing happened. Now all of the sudden he doesn’t return my calls.”

Dorene Bruce, vice president of Bean-Crete Concrete in Orchard Park, said she’s heard a couple of different stories about when her company would be paid. In December when she sent a bill, she said, Lewis told her he was personally taking a stack of bills to New York City and they’d be paid in seven to 10 days.

Months later, Bruce tracked down Raab by phone in New York. She claims he told her Lewis planned from the outset not to pay anybody promptly.

“He said (Lewis) doesn’t pay contractors until the job is done and sold, that (Lewis) looks for contractors who are willing to finance the construction for him,” Bruce said.

Raab flatly denies he said that, while claiming Bruce said repeatedly in their conversation that she had “assumed” payments would be made 30 days after billing or she wouldn’t have taken the job.

Thirty days is the standard, according to Joseph W. McIvor Jr., executive vice president of Buffalo Niagara Builders Association, but then so is specification of due dates in the contracts. The contracts that Lewis signed with subcontractors spell out the work being commissioned and the amount to be paid for it — but not payment terms.

Lewis dodged discussion of the lienors’ specific complaints with him, instead suggesting construction of the first condo building is a sort of test he’s giving his subcontractors. Over the course of the 20-building project, he said, he’s offering them an “opportunity to have a lot of work, hundreds of thousands of dollars” if they stick with him.

“It’s an opportunity for both sides to get acquainted with one another. While they see us, we can see their level of craftsmanship ... and who has staying power in terms of holding receivables,” he said. “We don’t think (subcontractors holding) $5,000 to $10,000 is unreasonable given what they stand to make off this project.”

By waiting to be paid, subcontractors are essentially financing building construction. That’s not unheard of in the industry, according to McIvor, but the deal is normally spelled out in writing between developer and vendor.

“If that’s the arrangement, interest would be built into the bills,” McIvor said. “Most (builders) couldn’t get subcontractors to be used as a bank because most subcontractors can’t afford it. ... They need to be paid so they can feed their families.”

According to Raab, construction of building one has involved at least 30 subcontractors. Pointing to the fact that not all have filed liens, he suggests they’re not all unhappy or unwilling to be Lewis’ bank. Perhaps Lewis’ mistake was in hiring “mom-and-pops” who can’t afford to sit on the bills, he added.

“We have some contractors who know the game. They haven’t been paid and they say, ‘It’s OK. We’ll be OK,’ ” he said. “Are (lienors) upset about the money or upset because they’re (financing construction)? If they’re worried about nonpayment, that’s legitimate. I can understand that. If they’re worried about financing, that’s stupid, considering how much money they can make (in the long term).”

Lienors who’ve heard rumblings about trouble with a past Lewis project in Amherst might question that. Lewis oversaw construction of Overbrook Condominiums, now Chestnut Ridge Condominiums, around 1990 and got caught up in building code snags as he was trying to sell the last two units. By his own admission, Lewis said his inability to close the sales meant he couldn’t pay outstanding bills including $35,000 to Sparks Plumbing & Heating of Lockport.

While the code issues eventually were settled, the Sparks bill wasn’t. The company never received payment for the work it did on that project, co-owner Mike O’Neil said this month.

Victorian Village subcontractor Gene Felicetti of Niagara Falls knew the Amherst story but figured he’d take a chance on Lewis. He’s sorry now that he did.

“This Amherst business was about 20 years ago. I thought he’d changed. He told me all the money was in place,” Felicetti said. “He gave me a line of stuff.”

Contact reporter Joyce Miles at 439-9222, ext. 6245.