Construction liens filed against Alluvion’s Rocky Mountain project; agency still working on financing

Several construction liens have been filed against Alluvion for the Rocky Mountain Building downtown.

In October, Sletten Construction filed a construction lien for $3,434,462.97 for their work for the property listed as 3 6th St. N.

According to the lien filed in the Cascade County Clerk and Recorder’s Office, Sletten began providing services and materials under a construction contract on or after April 22, 2022 and last furnished materials and services on Aug. 4.

In late October, William M. Kronmiller and Company, or WMK, placed a construction lien on the Rocky Mountain Building project for $752,102.12 of unpaid bills under their contract, plus interest at the rate of 18 percent per annum from and after Nov. 19, 2023.

WMK was contracted for labor and materials for steel and steel erection, according to the filed lien.

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WMK began providing services and materials on April 7, 2020 and last provided services on Aug. 3, according to the lien.

In early November, Liberty Electric, as a subcontractor on the project, filed a construction lien on the property for $252,631.07 for unpaid bills for services and materials.

According to the lien, Liberty was hired for labor and materials for electrical and fire alarm work that they began on April 12, 2022 and last provided services and materials on Oct. 3.

In August, SouthernCarlson filed notice of its right to file a lien for unpaid services as a subcontractor to Sletten.

Over the summer, Alluvion suspended construction on the Rocky Mountain Building.

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Alluvion Health purchase the building several years ago and is planning to renovate it into a full-service clinic.

Alluvion’s initial budget was set around $22 million, but has since been revised to more than $40 million to account for inflationary impacts, LaSalle told The Electric last month.

“With the expanded budget, we are experiencing a brief funding gap, which is not uncommon for a project of this scale,” Alluvion spokeswoman Maia LaSalle said. “As we all know, businesses go through various cycles, and it is essential to adapt to those changes and be nimble. Alluvion Health is no different. Right now, we are in a position where we need to strategically assess our financial commitments and prioritize our spending.”

Alluvion pauses Rocky Mountain Building construction

The funding gap suspended the Rocky Mountain Building project until financing is “aligned and secured,” and the timeline for that depends on many factors, LaSalle said.

A significant piece of the funding package for the 601 Central Avenue is new market tax credits and the allocation for the next round of those tax credits won’t be released until later this fall, LaSalle said in September.

“Unfortunately, that means our project work at 601 Central will not likely resume until early in 2024,” LaSalle told The Electric in September.

The tax credits were released this fall to community development entities, which Alluvion is not.

Trista Besich, Alluvion’s executive director, told The Electric that they work with those entities to be approved for funding those those entities.

Those entities have an application and assessment process to determine which products to fund, then typically partner with an outside investor who claims the New Market Tax Credits in exchange for a capital investment to the entity, Besich said.

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“It’s a complex process that, due to the size of our project, will involve multiple CDE’s, potentially several capital investors, and an institutional lending partner. It can take three to six months to close the financial package on New Markets and with the added complexity of Historical Tax Credits, it likely will.  We continue to work to navigate the process with our financial partners and look forward to resuming work in the future,” Besich told The Electric.

Besich said that they have identified partners they’re working with for the tax credits and lending partners, but “it would be inappropriate to disclose them until the completion of the funding package. The construction liens will not impact that process and the total costs associated with the project have been accounted for in whole.”

She said she wasn’t sure what plans were for the crane or whether the currently closed lane of traffic on 6th Street North would reopen during the construction pause.

City planning staff said they’d approved the lane to remain closed and the crane and staging area in the city parking lot behind the building during the pause, based on Alluvion telling them that construction would restart in January or February.

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In October, Alluvion closed the Adlera Lab, laying off nine of 16 employees.

The lab, which is a separate legal entity, has been experiencing billing and reimbursement issues similar to Alluvion, Maia LaSalle, Alluvion’s spokeswoman told The Electric.

“Although Alluvion has been financially supporting lab operations for some time now, the ongoing challenges and lack of clear resolution to the claim processing problems for both Alluvion and Adlera has led to the decision to close the lab in its entirety,” LaSalle told The Electric.

In September, Alluvion eliminated 12 positions, which caused five employees to lose their jobs. Besich told The Electric that some of those other positions were created from resignations or retirements and they opted not to fill some vacancies. Most of the eliminated positions were management level, she said.

Besich said that the staff cuts and furloughs were due to significant delays in the state Medicaid system processing their claims and contracts that have significantly impacted their cash flow for operations.

She said that about 50 percent of Alluvion’s patients are on Medicaid and those reimbursements make up about 70 percent of the organizations patient revenue.

Besich said they started cost cutting measures earlier this year such as canceling marketing contracts and they’re looking at least agreements and real estate to consolidate their physical footprint, but it came to a point that they needed to make bigger cuts.

This month, Besich said the issue with the state Medicaid claims processing was still the same as it was in September.

“Both contract payments and claim processing remain backlogged and we haven’t seen any significant resolution. Despite significant efforts on our part and other agencies throughout the state, we haven’t seen much progress in resolving the problems,” she said.