Sarkis Alleges Multiple Construction Defects


Tribune Business Editor


BAHA Mar's original developer yesterday revealed multiple alleged construction defects that could have endangered guests and staff at the $4.2 billion project.

Sarkis Izmirlian, in a $2.25 billion damages lawsuit against China Construction America (CCA) and its Bahamian affiliates, alleged that the development's main contractor failed to inform Baha Mar Ltd of these problems "accurately or at all".

As a result, the then-developer and his management team were never informed about how CCA was charging them (and their $2.45 billion construction loan) for problems it should pay to remedy. They were also unaware of work schedule changes required to fix these woes, which delayed the construction completion and helped to miss two opening deadlines.

This, Mr Izmirlian alleges, resulted in CCA earning potentially "hundreds of millions" that it did not deserve.

Among the problems alleged by Mr Izmirlian and his BML Properties in their lawsuit were:

  • Defective tower railings, which could result in them "snapping under minimal pressure, such as a human leaning on them 25 floors up".

  • CCA allegedly "improperly installed miles of fire alarm cabling" through the hotels without placing it inside a fire-resistant conduit, and tried to bill Baha Mar for this despite being in non-compliance with the Bahamas Building Code.

Mr Izmirlian alleged the contractor tried to overbill him for this work by $475,000, while the developer "incurred the expense of hundreds of man hours" to remedy the problems, costing it $130,000.

  • The original Baha Mar developer alleged that CCA's fireproofing work at the project was also "of poor quality". He referred to reports by Bahamian engineering firm, Graphite Engineering, that the contractor had failed to resolve defects in the sprayed fire resistant material at the convention centre. Fire alarm system testing for the elevators was another problem.

  • "Defective" interiors in hotel rooms and corridors. Mr Izmirlian alleged that CCA failed to properly seal the drainage connections for 200 bathtubs in the Rosewood property, "meaning that any water on the bathroom floor drains into the ceiling of the room below".

  • Bamboo strand flooring was installed in all guest bedrooms and suites without being properly acclimated and no environmental control, "resulting in warped flooring in 70 per cent" of the units.

  • In the Grand Hyatt, Mr Izmirlian and BML Properties claim that millwork was not installed with proper environmental controls, leading to "the louver detail of bathroom doors splitting in over 80 per cent of the rooms".

  • CCA allegedly "compounded" its original error in "incorrectly screeding" the SLS hotel's corridor floors by spraying water on the screed during curing, thereby allowing mould and other "microbial growth" to be absorbed into the baseboard and sheet rock.

  • Water intrusion issues impacted Baha Mar's development throughout construction, according to Mr Izmirlian's lawsuit, with "several substantial intrusions" occurring just prior to the project's ill-fated Chapter 11 bankruptcy filing. "For instance, on May 1, 2015, the project suffered water intrusion at the following areas: the Podium, casino hotel, and the Rosewood hotel," Baha Mar's original developer alleged.

"There were additional water intrusions on the project on June 3, 4 and 9 in the following areas: The Podium, SLS hotel, casino hotel, Rosewood hotel, and the spa. These intrusions resulted in substantial damage to the project. In one instance, the water damage was so bad that it caused a ceiling to collapse in the SLS hotel. In another instance, the mechanical rooms in the Rosewood hotel were completely flooded."

  • Mr Izmirlian alleged that CCA "caused, neglected and/or failed to remediate" water damage and mould throughout the project, and never reported the issues to Baha Mar.

"Beyond pervasive microbial growth and water-impacted materials, including in guest rooms and kitchen areas, AMRC (American Management Resources Corporation) observed major health hazards, including rodent infestations, mosquito larvae, and urine and human faeces that was then, in many instances, built over/closed in with finished work," he claimed in his lawsuit.

"The AMRC reports completed between March 21, 2014, and May 21, 2015 - all of which were distributed to CCA in an effort to compel CCA to develop an effective monitoring and remediation programme - revealed site-wide failures unreported by CCA, and concerning which Baha Mar Ltd was forced to incur enormous investigation and remediation burdens, incur extensive costs to simply investigate what CCA was not to have created in the first instance, and which all could have been avoided or mitigated."

  • Mr Izmirlian also accused CCA of failing to "successfully implement" an air conditioning system at Baha Mar. "The air conditioning system was defective in numerous respects, but primarily it was defective (as of July 1, 2015) because it was not controlling the humidity or temperature," he alleged.

"By way of example only, due to defects in the air conditioning system, the humidity in various areas - including the SLS lobby and the casino - was over 60 per cent. This level of humidity is in excess of the recommended guidelines of the US EPA (Environmental Protection Agency) and the American Society of Heating, Refrigeration and Air-Conditioning Engineers Inc.

"In addition to not complying with these guidelines, the high humidity caused the floorboards in the SLS's lobby to warp. Further, the high humidity also caused condensation to form on the casino's ceiling, which resulted in various areas of microbial growth and regular leaks," Mr Izmirlian and BML Properties continued.

"In addition to not controlling the humidity, the air conditioning system was not controlling the temperature. For example, the thermostat in room 721 of the SLS was set for 74 degrees Fahrenheit, but the temperature was actually 80 degrees Fahrenheit. This happened in many rooms throughout the various hotels and reflected that there were inherent defects in CCA's installation of the air conditioning."

  • There was a "lack of bonding" between the concrete and applied tile on SLS hotel room balconies "created a serious safety risk to anyone and anything in the vicinity below the balconies", Mr Izmirlian alleged.

However, he claimed that CCA continued to use "the same faulty method of construction" even after it was discovered by representatives for Baha Mar and BML Properties. The latter had to incur "substantial costs and expenses" to remedy the defects.

  • Hotel rooms allegedly suffered from "defective" sliding glass doors due to faulty rollers, and the contractor's failure to properly seal the sliders and attach anchoring hardware.

"That these defects posed serious health and safety risks cannot be overemphasised," Mr Izmirlian'a lawsuit alleged. "By way of example only, if any of the anchors failed, the sliding glass doors could be ripped from their frames and hurled on to the resort below.

"In addition to showering the property with glass, the flying doors could cause substantial injuries to guests and workers at the project, and damage surrounding property. Accordingly, all of these anchors, over three million, needed to be replaced and such was not complete as of July 1, 2015, even though CCA had already been paid for this installation, unsafe and defective as it was, many months before."

Mr Izmirlian alleged that these defects "resulted in tens of millions, (if not hundreds of millions)" of dollars being paid to CCA that it should never have earned. This, he added, ate up the shrinking $2.45 billion construction loan from the China Export-Import Bank at a time when Baha Mar needed every available cent to it to complete the project.

Revealing that the Government was aware of the construction defects, the original developer added: "On March 26, 2014, the Ministry of Works sent a letter to the project Architect of Record (Brent Creary), conveying from its deputy inspectors at Reiss Engineering something that CCA had entirely failed to report to BML Properties - that there was 'an alarming level of Mechanical, Electrical and Plumbing (MEP) deficiencies onsite.

"'[These] are being repeated at other locations onsite, despite having been previously identified as code violations'."

This letter, showing that the former Christie administration was well aware of CCA's alleged construction inadequacies, again raises questions as to why it sided so readily with the Chinese against Mr Izmirlian.

While Baha Mar now has its full occupancy certificate (CO), and all defects alleged by Mr Izmirlian presumably cured, his lawsuit could not have come at a worse time for the development and its new owner, Chow Tai Fook Enterprises (CTFE), as they seek to drive occupancies and ramp up visitor numbers.

Given that it is CCA which was responsible for completing the resort, some potential visitors are likely to question whether the deficiencies have been truly remedied.


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