Contractor Sues ELK Development for Construction Payments

by John Carlucci - January 17, 2023


ELK's Evan Kasper with 1410 North Highland Avenue (ELK Development, Google Maps, Getty)
ELK’s Evan Kasper with 1410 North Highland Avenue (ELK Development, Google Maps, Getty)

The general contractor on a project in Hollywood has sued ELK Development, claiming the company has failed to pay about a quarter the $23 million in general contractor and construction fees for a six-story apartment complex, according to a lawsuit filed last week in Los Angeles Superior Court.

Angeles Contractor alleges ELK owes about $5.9 million for labor, services and materials used for the project, located at 1410 North Highland Avenue, the suit said. The developer also owes interest, which is accruing at a rate of 10 percent per year. Angeles and ELK signed a contract in October 2020 with a $23 million budget.

“The defendants have failed and refused, and still fail and refuse, to pay the outstanding balance,” the general contractor said. ELK did not respond to a request for comment.

ELK, through a joint venture with real estate investment firm Sixty West, started building the project in early 2021, after scoring a $41.1 million construction loan from Acres Capital.

The project includes 180 so-called “micro-units,” smaller than average studios up to 400 square feet in size. ELK also planned to fully furnish each unit, according to press releases at the time the firm obtained its construction loan.

Angeles finished work at the site in December, after which ELK terminated its contract with the firm.

The construction loan was supposed to allow ELK to see the project “through to completion,” ELK Development CEO Evan Kasper said at the time, adding the development was “both aspirational and affordable.”

Construction costs have soared over the last two years, due to a confluence of global supply chain issues, inflation, pandemic restrictions and labor shortages.

Labor and material costs were estimated to rise 14 percent year-over-year at the end of 2022, according to CBRE.

California’s construction cost index — based on prices for select construction materials in San Francisco and Los Angeles — has jumped 30 percent from January 2021 to this month.



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