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Two construction supply companies have asked a state court to foreclose on a set of properties associated with the developer Q Factor, its owners and a web of their affiliated companies that abruptly closed last month.
Those buildings include Industry SLC, the marquee project credited as catalytic for redevelopment in the Granary District, and a number of buildings that are still under construction throughout Salt Lake City and the Wasatch Front.
Documents in a separate lawsuit filed earlier this year also include allegations of “gross negligence” within the Industry building structure itself.
The filings are only the latest sign that trouble continues to mount for the owners of a development company at the center of the slate of Salt Lake City construction companies that failed last month.
Multiple creditors have filed suit seeking payment for work they’ve done in recent months but say they haven’t been paid for by Makers Line, the general contracting company that was owned by H. Jason Winkler, who also owns Q Factor.
In two lawsuits filed Thursday and Friday, construction supply companies Altaview Concrete and H&E Equipment Services said Winkler and his wife owed them over $1 million combined.
They mark only the latest court filings seeking money from the Winklers’ companies but the first to name Winkler and his wife and business partner Ellen Winkler as individual defendants.
The two companies said in their complaints that the Winklers signed personal guarantees for payment if Winkler’s companies failed to make payments outlined in their contracts.
H&E alleged that the Winklers owe $771,365.64 for rental equipment provided at a handful of properties controlled by the couple. H&E said it will charge an 18 percent annual interest on the debt.
Altaview Concrete said the couple owes over $393,000 plus 2 percent interest per month for materials provided between last December and October, the court documents state.
Kilgore Companies, which owns Altaview, included in its complaint a copy of the personal guarantee signed by Jason and Ellen Winkler, in which the couple “absolutely and unconditionally guarantee payment” to Kilgore.
Kilgore has claimed construction liens on Bueno Apartments, the 10-story Alta Terra building in Sugar House, Industry SLC and Industry Office SLC, a smaller office building around the corner from the larger Industry co-working building.
H&E said it has claimed liens on townhomes at 4186 S. Main, Forge Campus at 3120 W. Haun Dr. in West Jordan and three other properties that didn’t include addresses.
Several of those buildings are majority owned by other parties rather than Q Factor or the Winklers, so it’s not immediately clear how the foreclosure proceedings would be settled. Several are also under construction and will likely suffer from delays as a result of the Makers Line collapse as owners find new partners and settle new construction liens that continue to be filed by the day.
Attorneys in the cases declined to comment. Alta Terra, the development company behind Bueno Apartments and the building in Sugar House, hasn’t responded to requests for comment.
Jason Winkler also declined to comment for the story and didn’t respond to a list of questions about his businesses and the status of money that numerous employees told Building Salt Lake they haven’t been paid for work they conducted before Winkler’s companies folded in late October.
Creditors lining up
The lawsuits filed late last week are only the latest in a growing list of companies seeking payment for work, materials and services provided to the Winklers’ companies.
Q Factor made its debut in Salt Lake City by developing Industry SLC, a coworking space retrofitted out of an old foundry at the heart of a neighborhood that had been long marked for redevelopment but which had struggled to get footing before Q Factor’s marquee project.
In their five years operating in Utah’s capital city, the Winklers began adding more companies under the Q Factor umbrella. In many ways, Makers Line was the heart of the operation, responsible for carrying out construction on more than 100 projects and ballooning to more than 400 employees before collapsing last month.
Soon, the web of companies associated with the Winklers were offering labor and materials from any number of companies all providing services required to construct buildings. From sheetrock to concrete to steel to general construction, placemaking and design, the Winklers’ companies became a one-stop shop for investors who were looking to capitalize on the low-rate environment fueling Utah’s commercial construction boom over the past decade.
Companies affiliated with or owned by the Winklers
- Q Factor (development and property management)
- Makers Line (general contracting)
- JAG Equipment (construction equipment)
- Titus Concrete (concrete)
- Titus Shotcrete (concrete)
- Forge Metals (steel and other metalwork)
- BHS Rockers (metal studding, drywall and insulation)
- Drumbeat (architecture and placemaking)
That construction boom came to an abrupt end when the Federal Reserve raised borrowing rates to their highest level in over two decades, bringing new commercial real estate development to a near standstill.
During that construction slowdown, bills began to mount, according to the new filings in Utah’s Third District Court, plus other filings made by creditors who say the Winklers or their companies owe them money.
Creditors suing for payment
- Boulder Landscaping: $65,287 (Sept. 20, 2023 complaint against Makers Line)
- Bingham Plumbing & Mechanical: $106,173 (July 20, 2023 complaint against Makers Line)
- LG Concrete: $104,194 (Oct. 30, 2023 complaint against Makers Line)
- Allied Painters: $33,663 (Nov. 1, 2023 complaint against Makers Line)
- H&E Equipment Services: $771,365.64 (Nov. 2, 2023 complaint against the Winklers)
- Altaview Concrete: $393,515.41 (Nov. 3, 2023 complaint against the Winklers)
- Total: $1.47 million
Harper Brothers, a company that worked with Makers Line on the Alta Terra buildings in Sugar House filed construction liens alleging it was owed over $207,000 for work and materials it has already completed for the projects.
More liens have been filed at the Bueno Apartments site, as well, an indication that the bills will continue to mount.
The issues were perhaps compounded when two projects Makers Line was constructing in Ogden were framed using wood that wasn’t code compliant for fire-resistance, the developer of that project has said in public statements.
One of those projects, Hunter’s Landing, has since found a way to treat the wood for fire resistance and is under construction again by another contractor. The second, Union Walk, has yet to receive approval from the city of Ogden to treat the errors and move forward.
But it was another lawsuit filed by Industry Offices that sheds new light into more possible defects at Industry SLC.
Trouble at Industry?
In February 2021, Industry SLC landed a major tenant with the expansion of the biotech firm Recursion, which had outgrown its space in the Gateway.
Industry agreed to effectively create a shell that Recursion would then customize to its specific needs. The shell was supposed to be done by May 31, 2022.
After delays and allegations of construction defects, Recursion told Industry’s majority owner — an investment firm called Catalyst — that it would no longer occupy the building. That led Catalyst, through Industry Office, to sue Recursion in state court.
Catalyst, now the landlord seeking to enforce the lease in court, fired Makers Line from working on the building, according to Recursion’s motion to dismiss the case.
Recursion representatives told Catalyst that there was no way they’d be able to rectify the issues they said they discovered within the Industry SLC building.
“Nowhere does [the lease] require Recursion to occupy the building — much less one riddled with defects and built by a general contractor that Industry Office fired for gross negligence,” Recursion wrote in its filing.
A list of letters that Recursion submitted to the court as evidence in the case point to the alleged construction defects within Industry SLC.
Jess M. Krannich, an attorney at Kirkland & Ellis who represented Recursion, wrote in a May 2023 letter that Recursion found bowed steel beams, improper welding, bolts missing from structural components and a firewall that wasn’t built to the specifications within the lease agreement.
Krannich wrote that “a more in-depth inspection would reveal the project to be the disaster that one would expect based on Landlord firing its General Partner for gross negligence, as it has acknowledged.”
Adrienne J. Bell, an attorney with Holland & Hart representing Recursion, wrote in March that the company had discovered the construction issues at Industry on a brief inspection.
Bell wrote that it was “highly likely” that a more detailed inspection would find more issues.
“In light of what Recursion has already discovered in terms of construction defects and irregularities,” Bell wrote, “the actions of Landlord’s general partner may rise to the level of gross negligence and willful misconduct.”
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