Troubles are mounting for the out-of-town developer of the Monarch 716 student-housing project on Buffalo's West Side, as the lead contractor on the project and two vendors have filed liens against the owner totaling more than $3.7 million.
DHD Ventures, led by Thomas Masaschi of Rochester and Jason Teller of North Carolina, developed the 10-building complex over the last two years, mostly finishing it by the end of last summer. The project features nine residential buildings and a one-story clubhouse, with 176 suites and 592 beds in all.
It cost $25 million to build, and is aimed primarily at nearby Buffalo State College just a mile away, although its tenants also include students at other area schools.
But DHD - which put the project up for sale immediately after it opened in September - hasn't paid all of its bills from the construction, according to the liens recorded in the Erie County Clerk's office.
Now, that's coming home to roost, even as the complex remains on the market amid questions about DHD's overall business. DHD officials did not respond to requests for comment.
The Monarch 716 apartments - with two, three or four bedrooms - are fully furnished with stainless-steel appliances, granite countertops, in-unit laundry, full-sized beds, a shared kitchen and living area, private bedrooms with locks, and high-speed internet service.
Beside the leasing and management offices, the clubhouse includes a 24-hour gym, a two-lane bowling alley, a computer lab, a stand-up tanning bed, a breakfast nook and seating areas. Just outside in back are a swimming pool, basketball courts and fire pits, plus significant parking among the buildings.
General contractor Kulbacks Inc., which oversaw the months-long work on Monarch 716, filed a lien Feb. 23 against Buffalo State Ventures - the entity DHD set up to own the project - for $3.58 million.
The Lancaster-based firm, which has done similar work on other large-scale construction projects, says it is still owed money for the price and value of labor, materials and equipment provided from Jan. 11, 2016 through Feb. 14, 2018
The firm cited a total budget of labor and materials of $31.91 million and payments received of $28.33 million.
That means it's owed more than 11 percent of its bill.
"We have a strong working relationship with the principals of the development," said Kulbacks President Tom Barrett. "The cooperative lien that was filed last week is for the retention on the job. We are looking to resolve the outstanding monies quickly and are working closely with the developer to do so."
Whirlpool Corp. and a Grand Island subcontractor also filed liens against Buffalo State Ventures. Benton Harbor, Mich.-based Whirlpool is seeking $138,733 for appliances and other materials provided to the Monarch 716 complex.
The company said it delivered products valued at $427,811 between Jan. 18, 2017 and Sept. 5, 2017, when the complex opened. So the remaining debt equals 32 percent of the contracted value.
Meanwhile, WBE Walls & Ceilings, located at 195 Industrial Drive in Grand Island, says it's owed $55,343, out of a total original contract of $553,426 for installing the thin brick facade system on the exterior of the buildings. That's 10 percent of its bill, according to its lien against Buffalo State Ventures.
Not only is that "still unresolved right now," but WBE officials can't reach DHD to find out what is happening, said WBE project manager Chris Shores.
"The only way we can contact them is through the onsite management," Shores said. "We have no number for the corporate office."
Finally, in early January, Home Furnishings Resource Group of Hermitage, Tenn., filed a lawsuit against Buffalo State Ventures in state Supreme Court in Erie County, alleging that the DHD entity failed to fully pay for the "furniture, home and apartment furnishings, and related goods and merchandise" that it ordered and received from the supplier.
The list includes 592 full-size platform beds and mattresses, single-drawer desks, three-position chairs and three-drawer dressers - one of each for every student. It also includes 176 Balboa flex tables, swivel wing-back chairs and coffee tables - or one of each per suite. There's also 165 sectional sofas and 352 counter stools.
According to the lawsuit, Home Furnishings agreed on Feb. 23, 2017, to provide merchandise valued at $704,998. But Buffalo State Ventures still owes $269,975, or nearly 40 percent of the bill.
But in Home Furnishings' case, the company maintained a "security interest" in all of the products until it received full payment. So it's asking the court to authorize the Erie County Sheriff to seize and repossess the furniture, to be returned to the company. An attorney for Home Furnishings, Earl Cantwell of Hurwitz & Fine PC in Buffalo, said there's "been no answer or response" and the lawsuit is still pending, so "we will be moving forward on that."
DHD's Buffalo State Ventures project previously faced a $60,700 lien from Buffalo-based Stohl Environmental in December 2015 for hazardous cleanup work, but that was subsequently paid in July 2016.
The liens and lawsuits are the latest chapter in the saga of problems facing DHD at Monarch 716. The 235,948-square-foot complex was constructed on the cleaned site of a former pharmaceutical manufacturing facility that had been closed and later demolished. The site, which DHD took over after hometown rival Campus Crest Communities of Charlotte backed out of the project, is located near the intersection of the Scajaquada Expressway and Niagara Thruway.
Construction by Kulbacks and its contractors appeared to go smoothly and quickly, with the 10 buildings rising from the ground suddenly enough for many people to take notice. But the out-of-town developer incurred some ire from city officials after it abruptly changed its plans for the clubhouse to eliminate the second floor - without asking formal approval for the revision from the city Planning Board until after construction was completed.
Meanwhile, DHD hired a third-party property management firm, King Residential Group of Monroe, N.C., which actively began marketing the units more than a year ago, even setting up a temporary office a mile away on Elmwood Avenue while its representatives fanned out to promote the project.
As a result, when Monarch 716 opened in late August, it filled up quickly - albeit with the help of generous discounts and promotions offered as incentives to new tenants, such as two months' free rent, officials admitted at the time. Not all of the tenants are students, either.
King was later replaced by Coastal Ridge Real Estate of Columbus, Ohio, which also now manages DHD-built student-housing developments for Coastal Carolina University in Conway, N.C., and East Tennessee State University in Johnson City, Tenn.
But the project has also proven to be a source of consternation for DHD and its managers, with disgruntled tenants complaining about problems and seeking to get out of leases. Additionally, Buffalo police officers have responded multiple times over the last few months to various incidents on the sprawling site, including fights, harassment, a shooting with no injury, and damage to cars. Most recently, an employee was arrested on Feb. 15 for stealing six Visa debit gift cards valued at $1,050 from the management office safe over two weeks, and then using them at various times to make purchases.
DHD is a commercial and residential real estate development and management firm that has been actively engaged in various construction and development efforts. Most of its current projects are in Rochester and its suburbs, including the Columbus, Alliance, Terminal, Gannett and Hiram-Sibley buildings and 88 on Elm in the city of Rochester, as well as the Renaissance Mill and Cotton Flats in Waxhaw, N.C.
But it has also owned self-storage and mobile-home properties. And its pending projects include the Maple Street Business Center in Rochester, 5 and 15 Flint St. in Rochester, 1290 Blossom Drive in Victor, 10 Chapin St. in Canandaigua, and a new hotel planned for Springfield, Mass.
The Buffalo State development also isn't the only DHD project facing liens. Ajay Glass Co. of Canandaigua, with an office in Orchard Park, filed suit in state Supreme Court in Monroe County, alleging DHD failed to pay $356,472 for Ajay's work on 88 Elm St. in Rochester. Ajay CEO Jim G. Stathopoulos declined to comment, citing pending litigation.