Hughes Corp. sues over alleged deficiencies in Waiea tower
As the first residential tower in a proclaimed model 21st-century urban Honolulu community, the ultraluxury Waiea high-rise was supposed to be a showcase for Ward Village.
Mahalo for reading the Honolulu Star-Advertiser!
You're reading a premium story. Read the full story with our Print & Digital Subscription.
Already a subscriber? Log in now to continue reading this story.
As the first residential tower in a proclaimed model 21st-century urban Honolulu community, the ultraluxury Waiea high-rise was supposed to be a showcase for Ward Village. Instead, it’s a blight on the reputation of the project’s developer, according to a lawsuit.
Ward Village developer Howard Hughes Corp. filed the suit Tuesday against Waiea general contractor Nordic PCL Construction, complaining that the more than $300 million tower — where units sold for an average $3.6 million — has voluminous deficiencies and isn’t even finished despite initial residents moving in nearly a year ago.
Hughes Corp. is seeking damages “well in excess of $75 million.”
Nordic, in a statement, denied the allegations and said it will defend itself in court.
Mike Betz, the construction firm’s district manager, said Hughes Corp. filed the lawsuit because Nordic threatened to place a lien on the tower after not receiving payments it claims are almost a year overdue.
“While Nordic PCL is disappointed that Howard Hughes has taken this step, Nordic PCL intends to vigorously defend against the lawsuit and to take all necessary steps to ensure that it and its subcontractors get paid for the work that they performed,” Betz said in the statement.
Hughes Corp. said in a statement Tuesday that it wanted to handle the dispute privately but needed to file the lawsuit to protect itself and Waiea homeowners.
“Despite the fact that the contractor’s performance failed to meet our standards, we have worked tirelessly to fulfill and exceed our own as well as our homeowners’ expectations and are proud of the standard the building is setting for the community,” the company said.
Waiea is the first of 16 towers that Hughes Corp. intends to develop at Ward Village under a master plan to turn 60 acres of mainly retail and industrial space into a residential community with up to 4,300 homes and
1 million square feet of retail space.
The initial tower, designed with a wavy glass curtain wall and two penthouses priced at $35 million and $36 million, was intended to be what Hughes Corp. described as a stunning contribution to Honolulu’s skyline and a showcase for quality and attention to detail.
But the building has problems, and Hughes Corp. claims its reputation as a high-quality luxury developer has been damaged. The company also said in the complaint that Waiea’s cost ballooned over budget, condo sales were delayed and residents in the tower have had to put up with ongoing work and defects.
As of Sept. 30, 158 buyers had completed purchases in the 171-unit tower, and another seven sales had yet to close.
Among what the suit said are “voluminous instances” of deficient and defective work is the glass curtain wall. Around December when initial residents began moving in, Hughes Corp. said it learned that loud noises “fairly described as resembling sonic booms” were coming from the glass facade, particularly in the evening and overnight, according to the lawsuit.
“The popping noises can be clearly heard inside numerous units in the building, and create a tremendous disturbance to the homeowners,” the complaint said.
Hughes Corp. said in the suit that it believes substandard workmanship and materials are to blame. Nordic tried to mitigate the problem, but noises remain above nuisance levels, the lawsuit claims.
Rain flooding units because of unfinished facade work was another alleged problem along with an incomplete lobby, amenity areas and parking floors after construction was supposed to be finished.
Nordic began building Waiea in mid-2014 and was obligated to finish the 36-story tower by the end of last year.
Hughes Corp. claims that Nordic allowed a “leisurely pace” of work and is still not finished with construction that includes fixing defects.
Waiea’s initial maximum agreed-upon cost was
$275 million, according to the complaint, which also said that approved changes increased the cost to
$303 million. Yet Hughes Corp. contends that Nordic caused a “massive” budget overrun. In a recent financial report, Hughes Corp. said it expects Waiea’s development cost to be about $417 million, which includes $12.6 million in marketing costs. There could be other costs outside of construction in the
$417 million figure.
Hughes Corp. said it has paid Nordic $284 million and is withholding $19 million as permitted under its construction contract. Nordic, the suit said, claimed in May that Hughes Corp. was wrongfully withholding more than $39 million from the contractor and subcontractors.
Nordic, in turn, threatened to file a mechanic’s lien against the property, which could inhibit pending sales. Hughes Corp. further contends that Nordic threatened to notify subcontractors about the dispute and cause them not to work on other Hughes Corp. projects.
At Ward Village, Hughes Corp. finished a second tower called Anaha last month and has two other towers — A‘eo and Ke Kilohana — rising.