Builders of Arroyo Grande hotel stiffed
September 4, 2010
After a foreclosure and a bank failure the contractors who built the Hampton Inn in Arroyo Grande have been told they will not be paid for their services. [KCOY]
More than 20 contractors, sub-contractors and vendors provided labor and materials to build the hotel which is more than 90 percent completed. They said they are owed over $2 million and that the bank which currently owns the property is refusing to pay them.
For almost a year, the unfinished Hampton Inn sat idle while the developer defaulted on his loan to Imperial Capital Bank near San Diego. The bank foreclosed on the property.
Last December, the Federal Deposit Insurance Corporation shut down the insolvent bank and transferred the assets, deposits, loans and a portion of its debts to Beverly Hills- based City National Bank.
City National Bank took over ownership of the property and is planning to sell the Arroyo Grande Hotel.
Nevertheless, City National Bank is claiming they are not responsible for any obligations under the original loan including paying the contractors and material suppliers monies they are owed.
“It’s important to understand that our company did not make this loan,” City Bank said in a statement it recently released. “We obtained it when we acquired a failed bank last year. The borrower, a development company that defaulted on its loan, is responsible for paying the contractors. This is an unfortunate situation for everyone and we have made a number of good-faith efforts to help resolve it.”
Some of the contractors do not agree and said they should have lien rights that City Bank should honor.
“If they don’t pay and foreclose us out, that’s another two million they can put in their pocket when they sell the property”, said general contractor Brad Anderson to KCOY. “All the contractors on this job worked in good faith with the bank that was in question and failed. We all just wanted to be paid and go on with our lives.”