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  • Writer's pictureBrent Malili

When Everything That Can Go Wrong In Development...

There is something satisfying about watching a building, that you have shed blood, sweat and tears over, finally make it over the finish line. The process to get it to that point can be long and difficult. To make a project successful, you must work with planning commissions, city councils, state agencies, architects, engineers, utility companies, residents, neighbors, tenants, contractors, lenders, and investors. It’s not easy getting everyone to row in the same direction, which makes it that much sweeter when the project is done, and everybody is happy. While I would love to say that every project has gone smoothly, today I want to talk about one that pushed us to limits.

In 2019, we were able to pick up a .62-acre parcel from a state auction. The auction was through the Utah Department of Transportation and after winning the auction at a big discount we thought that everything would be smooth from there and this would be one of our best projects to date. It’s a great site located next to a busy state road. We decided to construct a 2,044 SF stand-alone building and leased it to a national coffee user. We went through the entitlement process without much fanfare. We selected an experienced general contractor and moved forward with construction. That's when we realized how wrong we were about the project running smoothly and the hurdles for the project started to come at us fast.

Our team's reaction to having the winning bid on the site

Hurdle 1 – Not So Friendly Neighbor

As an operator, anything that disrupts you from making money is bad for business. Having your power go out is an obvious disruption to that goal. That’s why it is standard practice for neighboring businesses to create a loop with their transformers. This is done so that if power goes out in one transformer, the tenant can still pull power from their neighbors, while their transformer is being repaired. On this project our neighbor did not want to create a loop. There was no reason given, other than they did not want to participate. We even had the power company push them to try and get this done. At the end of the day, they refused to play ball, so we ended up creating a loop with the neighbor on the other side of our pad.

Hurdle 2 – RTU’s Stuck at the Border

RTU stands for “roof top unit” and is the type of HVAC that sits on top of a retail building. It’s a self-contained unit that provides both heat and air conditioning. Knowing that this would take a while to get to us, we ordered the units well in advance of construction. Unfortunately, the RTU’s got stuck at the Mexican Border with no ETA on when they would arrive. We looked everywhere for new units but couldn’t find any that matched our drawings or the specifications that we needed. Luckily the client knew about our dilemma and approved RTU’s that weren’t up to specifications. We made the changes to our drawings and quickly ordered them. As the replacement RTU’s were being loaded at the supply house, a forklift driver unintentionally (supposedly) drove a fork through the middle of the one units. No RTU’s…again. We were stuck waiting for the RTU’s at the border, which were eventually released 7 months passed the original delivery date.

Hurdle 3 – Gas Riser Shortage

During construction, we were informed there was a national shortage of gas risers that are part of the gas meter system. Thousands of companies around the US were looking for them. The utility company couldn’t give us any kind of ETA. They told us they could only fill orders when a shipment came in. These shipments were both irregular and unpredictable. This caused a 6-month delay for us. We decided to convert the store from natural gas to propane. We converted all the RTU’s to propane and poured a concrete pad for the large propane tank that was delivered soon after. Everything was ready to go and then the unexpected happened. The gas risers magically showed up onsite! We had to convert everything back to natural gas.

Hurdle 4 – No Water

The building is finally complete. The contractor goes to turn the water on… there is no water! We were told that the utilities we had tied into were stubbed to the site, had been tested and were in working order. This was not the case. Due to road construction on the state road, it turned out all the utilities that were stubbed to our site were damaged and now considered deadlines. More on that later. We had to tear up the brand-new approach and go searching for the actual waterline. 3 days later, we found it and got water to the building.

Hurdle 5 – Sewer Issues

After dealing with bad neighbors, RTU’s stuck at the border, gas riser shortages and no water, we finally breathed a sigh of relief as the tenant finished their work and the store opened. We had scarcely put this project behind us when we received a call from the tenant. The sewer lines were backing up and waste was coming out of the manhole cover and grease trap. We dispatched a plumbing company to vacuum pump the line. At the same time, they sent a camera to see what we were dealing with. We were told there was a blockage in the middle of the state road. The plumbing crew sent a hydro jet and blade to free up the blockage. Everything looked good until we received a call from the tenant two weeks later. The sewer was backed up again. We followed the same process as before, with another plumbing company. This time, the camera showed something different. It looked like the sewer line had collapsed in the middle of the state road. We contacted the sewer district to find out what was going on. No one ever gave us a straight answer, but the sewer district believed that months before our project, the line was killed during construction on the state road. Our only option was to tear up the road and fix the problem. That meant applying for an encroachment permit with the department of transportation. Besides navigating the slow application process of a government agency, we also had to contend with winter approaching and a moratorium on the road that was fast approaching. It took us almost 2 months before the department of transportation gave us the greenlight to even apply for the permit. Meanwhile, we had a plumbing crew pumping the sewer line every week to the tune of $18k a month. We needed to come up with a solution now! We found an engineering company that could bore under the road, install a new pipe and connect us to the city sewer. We weren’t sure if this would work, but we had limited options. It worked! High fives all around.

Completed Starbucks in Syracuse

Thankfully today the tenant is happy with the store, and all is well. This all happened during the pandemic, plus we had work through 3 different site superintendents, 2 project engineers, 2 project managers and a shortage of sub-contractors. I am proud of our team, because we had to think out of the box to find solutions to problems that we had never dealt with before. At the end, everything turned out fine and we were able to deliver this great looking building to the tenant. Development is great when everything goes well but be prepared when things don’t. Not every project will be sunshine and rainbows and this one certainly had more than its share of rainclouds.

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