As owners of the historic Statler Hotel were throwing Mad Men-themed parties in February to show off a $250 million makeover, behind the scenes they were grappling with a construction nightmare.

The Dallas high-rise’s new fire-sprinkler system had been cracking and rupturing for weeks. Pipes on the 10th and 12th floors had burst, flooding rooms. Water seeped all the way down to the third floor. Repair crews raced to fix leaks.

The system defects are so widespread inside the 19-story landmark that the Dallas fire department has stationed personnel there round-the-clock for the last three months at a cost of more than $100,000 to the owner, Centurion American Development Group, The Dallas Morning News has found.

And the problem still isn’t fixed.

Such lengthy surveillance, intended to keep people safe in case of a blaze, is unusual. City fire officials could identify only a handful of other buildings that have been placed under extended fire watches that cost owners six-figure fees.

The faulty fire-safety system is the most recent setback for a project — financed with the help of tax breaks — that city officials have hailed as a symbol of downtown’s renaissance.

At least in the short term, it raises questions about the safety of a hotel that is welcoming guests without informing them of the problem, according to interviews with staff and people who have booked rooms there.

The effectiveness of the system remains in question. Neither the city nor the owner would discuss its functionality.

Mehrdad Moayedi, CEO of Centurion American Development Group, celebrates the Statler's renovation with Texas Lt. Gov. Dan Patrick at the hotel in March. Moayedi has declined to be interviewed about the hotel's sprinkler breakdowns. (Ashley Landis / The Dallas Morning News)

“I won’t stay in a building that doesn’t have a functioning sprinkler system, especially in a high rise,’’ said David Hague, principal engineer with the National Fire Protection Association. “It’s an ethical issue for management whether they want to come clean and let the public know they’re fixing it.’’

The hotel's owner also would not discuss details of the breakdowns, citing pending insurance claims. But one city official told The News that the wrong caulking was used to secure the plastic pipe where it passes through walls.

The caulk was “eating through the pipe like gasoline on Styrofoam,’’ said Ted Padgett, the city’s assistant fire chief. The damage the caulking had inflicted on the plastic piping was dramatic, he said. “Whoever did that really messed up.’’

“It’s eating holes in the piping so it will not hold pressure,’’ Padgett said.

The company says it is addressing the problem. “The owners are in the process of correcting all issues and are committed to provide a first-class hotel and residences,’’ Michael VanHuss, director of development and operations for the Statler, said in a statement.

Yet Centurion originally failed to report the sprinkler breakdowns to the city, in violation of fire codes, city officials said.

A city fire inspector happened to discover the system taken down for repairs on Feb. 15 — about a month after it started failing — according to officials and emails obtained by The News through open-record requests.

A Statler apartment undergoing sprinkler repairs. (Miles Moffeit / The Dallas Morning News)

City rules don’t require building owners to notify occupants or the public when fire safety systems fail, but they must inform fire officials right away.

The city said it chose not to penalize the Statler ownership, saying “education was the appropriate first step.’’ If it happens again, the city says, it will issue a citation to the owners.

The hotel provides 159 guest rooms on the lower five floors, and 219 apartments on the upper 11 floors. The News, headquartered in an adjoining building, reported in March that apartment floors needed repairs.

But since then, a Statler memo given to tenants showed that “fire protection replacement’’ also was scheduled for the hotel floors.

Statler executives told The News recently that repairs, including those to hotel room floors, should be completed in June.

Centurion, its CEO Mehrdad Moayedi, and officials with the fire marshal's office have declined interview requests with The News, providing answers only in written responses.

Statler executives said in a statement that city fire-watch crews — at least two fire inspectors at all times — have been monitoring floors on which the sprinkler system is being taken down for repairs.

They added that apartment floors are close to being finished.

But neither Centurion nor city officials would provide specifics about how sprinkler systems actually work on floors that have yet to be repaired, should a fire break out.

The hotel complex, which opened last year as one of the most expensive renovation projects in Texas, has been transformed into a busy Commerce Street hub. In addition to guest rooms and apartments, it contains corporate offices, restaurants, bars and music venues.

The U.S. Internal Revenue Service and the U.S. Securities and Exchange Commission have been investigating public financing for the hotel development. And a minority owner has alleged in a lawsuit that Centurion and its lenders fraudulently inflated the costs of renovating the complex to obtain millions of dollars in financing. Centurion and the lenders have denied wrongdoing.

Widespread breaks

After a city inspector first discovered the sprinkler failures on Feb. 15, a manager described the hotel’s safety measures in an email to the city.

Water to the 10th and 12th floors had been shut off after pipe breaks. A private security team had been monitoring the situation, she wrote. She also said she thought the contractor that installed the sprinklers had notified the city.

Remnants of pipe ripped out of a wall in one apartment shut down for sprinkler system repairs. (Miles Moffeit / The Dallas Morning News)

The hotel was 12 days from what it promoted as a “weeklong extravaganza with events every night throughout the property! A Mad-Men experience!’’ referring to the TV series.

Then, five days before the celebration, hotel officials wrote to the city that the pipes had burst again, flooding a 12th-floor apartment. Water had flowed between walls down to the third floor.

The same day, hotel management notified the city that it would promptly train its staff on fire safety, emails show.

The parties went on. Revelers and political luminaries from the city and across the state showed up to walk a red carpet, catch concerts such as a Tony Bennett show, and to sip martinis out of ice sculptures.

By early March, pipes had spewed water on two additional floors, emails show. Around the same time, apartment residents contacted The News about flooding, malfunctioning elevators, and a lack of clear communication from management about what was happening. Apartment residents were told they had to be relocated for weeks until repairs could be made.

At the time, VanHuss, the Statler executive, told The News that renters who wanted to permanently leave the building would have to break their leases to do so.

That stance rankled residents. Justin Cook, who had lived there since July, and has since moved out, said hotel management asked him to sign a non-disclosure agreement that prevents him from discussing details of his stay at the Statler.

“All I’m contractually allowed to say is that everything has been fixed to my satisfaction,’’ Cook said.

Tony Bennett returned to The Statler Hotel during the hotel's extravaganza week in March. The Grammy Award winner sang at the original grand opening celebration decades ago. (Ashley Landis / Staff Photographer)

At least two other tenants told The News they have signed or are entering into similar agreements.

By early April, as water flooded a 15th-floor unit and damaged others below it, even more apartment floors were targeted for repairs, emails show.

Problems with plastic

Plastic sprinkler piping such as that used at the Statler can be cheaper and easier to install than the more customary, heavier steel piping.

But, fire-safety experts say, it can be particularly vulnerable to degradation from sealants and other chemicals used in construction. Caulking is a sealant used to plug gaps, in this case around sprinkler pipes where they passed through walls.

Parties have gone on inside and outside the Statler Hotel over the last three months while it's been under a city-ordered fire watch. (Miles Moffeit / The Dallas Morning News)

Dallas fire codes echo national standards requiring contractors who want to install plastic sprinkler piping to take steps to test whether it’s compatible with other construction materials.

The multiple parties involved in assembling the Statler system would not talk about how they tested for compatibility before the system was installed. They include Merriman Anderson Architects of Dallas, which designed the hotel renovation, and Fire & Life Safety America of Carrollton, the sprinkler contractor.

Executives with the hotel’s initial general contractor, Hill & Wilkinson General Contractors, which oversaw the sprinkler work, said a different caulking probably should have been used on the piping.

“We thought we used the correct caulk,’’ said Paul Driscoll, chief executive of the company. “You either use steel [pipe] or you’re very careful about the products’’ used with the plastic.

He said internal investigations are underway.

Driscoll and others wouldn’t disclose the brands of the original caulking and piping.

Top fire officials told The News that they don't know of any other compatibility failures between sealants and plastic piping in Dallas buildings. Such failures are expensive to fix. Padgett, the assistant fire chief, said the Statler also will end up owing at least $120,000 to the city to pay for the fire watch.

Problems with breakdowns of plastic sprinkler systems have been reported in other parts of the country, including in Miami condominium towers.

A 2015 class-action lawsuit there accuses manufacturers and suppliers of providing faulty plastic sprinkler pipes that cracked and leaked when they came in contact with other building materials. A trial is expected this year.

Staff writer Tristan Hallman contributed to this report