PeakCM is filing a lien on Q Burke Hotel. Paperwork for the lien was sent by an attorney for the construction company to the Town of Burke on Friday, according to Jerry Davis.
Jerry Davis, principal and president of PeakCM Construction
“I’m optimistic,” Davis said. “I know Bill is trying.”
Stenger said on Friday night that Davis will be paid Monday and “we will continue paying him over the next few weeks until he is fully paid.”
“We would have wired today but due to it being good (sic) Friday it was not possible,” Stenger said in an email. “We will make the payment Monday. Jerry has been advised of this.”
PeakCM is owed $900,000 for November construction costs, and $5.4 million in total. This week Davis says he paid $500,000 to four subcontractors for the November requisition because they were either unable to meet payroll or had lost a line of credit.
Davis says he was told he would receive the November payment last Monday. On Thursday he hadn’t hear from Stenger, and he moved ahead with placing a lien on the $50 million hotel.
Once Stenger and Quiros, make the November payment, Davis says the remaining balance of $4.5 million will be due in 30 to 45 days.
While there is a dispute over $1.2 million in payments over state approvals, Davis says “I don’t have a contract with the state.” The expenditures for the construction of the hotel, Davis says, have been billed and approved by the architectural designer and the owner and he has the right to move ahead with a lien.
The $50 million Q Burke Hotel and Conference Center is part of a $120 million athletic center with an aquatic center, a mountain biking center and indoor and outdoor tennis courts. PeakCM is the contractor for the athletic center. According to state documents, there are 103 investors who each provided Stenger and Quiros with $550,000 for the Q Burke Hotel and Conference Center, or about $56.65 million.
Stenger was recently in Vietnam soliciting immigrant investors for the hotel and he has said he believes he will be able to raise the remaining balance for the athletic center.
PeakCM is also the contractor for AnC Bio Vermont, a $118 million planned biotech facility in Newport. There was a groundbreaking in May 2015. The project is still in the planning phase, according to Davis, who says he is owed $200,000 for pre-construction work for AnC Bio.
Stenger says there may be an outstanding invoice, but “I know those are in process of payment.”
Davis says “It’s hard to plan” without knowing the fate of the two projects, which he describes as “$80 million worth of construction on hold.”
The Vermont Agency of Commerce and Community Development suspended the state’s memorandum of understanding with the Q Burke and AnC Bio projects in August 2014 when Quiros and Stenger did not provide the state with financial documents. The Vermont Department of Financial Regulation was given oversight of the projects in January 2015, and under special agreements last year required that Stenger and Quiros place all new immigrant investor funds in escrow and seek state approval for all construction costs for Q Burke and AnC Bio Vermont.
The agreement was put in place July 15, 2015.
As of Feb. 12, the owners had not fully complied with DFR’s request for financial information. Susan Donegan, the commissioner of DFR, in a memo said the Q Burke owners had not provided the state with “general ledgers.”
“In short, your failure to engage in best business practices has further prevented us from considering the removal of the escrow conditions to date,” Donegan wrote.
Davis says he is not interested in serving as the general contractor for the Q Burke athletic center and the AnC Bio project if the owners have to get approvals from the state.
Stenger said he understands “the contractor’s reluctance but expect we can organize going forward protocol to avoid a repeat of what happened at Q-Burke last summer.”
“Going forward construction for our projects will require close coordination with contractors and developer and state officials,” Stenger said. “The Q-Burke Hotel was in full construction mode when the DFR required authorization of invoicing from a third party. That protocol took a lot of time to set up, time that delayed payment to the contractor and slowed construction. That kind of thing can’t be repeated going forward because it is expensive in every way.”
50 PERCENT CHANCE Q BURKE HOTEL WILL OPEN FOR NEXT WINTER
Davis, under a Feb. 3 escrow agreement with Stenger, retained the Certificate of Occupancy for the Q Burke Hotel, and has said he will not release the permit until he is paid or terms for payment are agreed to.
Without the permit, the owners cannot open the hotel.
The Q Burke Hotel was completed in January, but is shuttered indefinitely. Weddings have been cancelled and the hotel is not taking reservations until after Nov. 15.
Ary Quiros, president and CEO of Q Burke Mountain Resort (and son of Ariel Quiros), said in an interview Friday night that there is a 50-50 chance the hotel will open next year.
Quiros says he doesn’t want to give a fixed date for the hotel opening.
“I don’t want to give my team false hope,” Quiros said. “I don’t want my team to worry about the hotel.”
Quiros said the summer camp, biking center and ski resort will be open this year.
The hotel, is a different business entity from the resort, he said, and is owned by his father and Stenger. Ary Quiros said he is responsible for operations at the hotel.
“I don’t own that, I provide staff from my resort,” Quiros said.
Quiros said he had no choice but to lay off 45 hotel staff who have been sitting idle since December when the hotel was originally slated to open.
Ary Quiros (left) and Bill Stenger attend a news conference on improvements at Newport State Airport in Coventry. Photo by Anne Galloway/VTDigger
In all, 180 workers at the resort, including ski staff, will be laid off April 4. On Wednesday, the Department of Labor will come to Q Burke’s base lodge to provide “rapid response” support for workers who need unemployment benefits and help finding work elsewhere. About 20 employees will remain at the resort.
In a March 20 letter to employees, the layoff was described as “indefinite in duration and should be considered permanent.”
Andy Barter, a human resources representative for the resort, wrote: “I do not anticipate this layoff situation changing in the foreseeable future.”
Quiros said because Q Burke doesn’t offer furlough for workers, they needed to make a “clean cut.”
“You make a commitment to the community and the only way to do that is to create jobs,” Quiros said. The hotel, he said, was “that vehicle” and without a destination resort for guests from out of state, “our area is a failure.”
When the hotel opens, Quiros says it will make $12,000 to $15,000 for wedding parties and $30,000 to $50,000 a weekend from guest stays, depending on occupancy levels.
“The key is to get this hotel up and running,” Quiros said.
In an email, Stenger he wants to get the property open for the summer tourist season.
“The thing we need to not loose (sic) site of is the Hotel is well built, beautifully designed , located in one of the most beautiful sites in Vermont and has great market demand,” Stenger wrote. “It will be a great success once opened . All these delays are regrettable and trying to find who is to blame is counterproductive to the end goal which is to offer a quality product in a beautiful community and employ a great group of staff. East Burke is a quintessential Vermont town with great residents many who are employed or will be employed at the Resort.. This hotel itself will employ many great local folks and will contribute significantly to the tax base of the town. All the positives about this project have gotten lost in the noise of payment delay and a horrible weather winter. The reality is that over the past 24 months millions of dollars of construction has occurred in East Burke Vt. That construction was done by local contractors and the investment kept local. All very good outcomes. Now the obvious need is to get the property open for the next busy season which is summer. Economic development is not always easy but worth the outcome which is the infusion of capital into a community at all levels which benefits everyone.”
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