A luxury residential development in Old Town is more than two years delayed, and one partner is now trying to force the other to get the job done.
The 69-unit project, at 301 West North Avenue, was supposed to take 18 months to build.
But the development — which is still not complete — has seen “minimal” construction work, “substantial” cost overruns and about $1.6 million in mechanics liens against it. That is according to HQ Capital Real Estate, which is suing its partner, an entity link to Sedgwick Properties.
The suit was brought in Manhattan Supreme Court by Recap Opportunity Fund, an entity tied to HQ Capital, an alternative asset manager.
HQ Capital wants Sedgwick Properties to finish the project, reimburse the cost overruns, adhere to zoning requirements and make any payments necessary to lenders and subcontractors. There are also pending lawsuits and zoning issues related to the project.
Sedgewick and HQ did not immediately respond to requests for comment.
The parties entered into an agreement to build the mixed-use project in 2014, with Sedgwick acting as development partner and HQ Capital as investment partner. The complex — which will have ground-level retail and parking — was supposed to be built by August 2018, according to the filing.
But HQ Capital alleges the project is nowhere near finished. As a result, the partners have had to pour in more money to prevent the lender from seeking to foreclose. They also have had to expend funds for attorneys to work out the zoning issues with the city, according to the lawsuit. The case does not detail the project’s budget or cost overruns to date.
The delay has had a cascading effect, according to the filing. The project lost an easement granted from a neighboring property that would have allowed tenants in the new building access to the parking area.
Meanwhile, there are two other separate legal actions at the site. One is a mechanics lien foreclosure case, and the other a lawsuit filed by the retail tenant. In that filing, the tenant alleges that improvements at the property haven’t been completed, in violation of its lease, according to the New York filing.
This isn’t the only legal action that has been filed against Sedgwick recently. The condominium board at the Marquee Chicago sued the developer in February, alleging shoddy construction work at the 25-story building. The case is pending.
As of the second quarter of 2019, HQ Capital has invested in 21 million square feet of commercial space and 70,000 residential units in the U.S.