Maui Sands waterpark is swimming in debt

PERKINS TWP. Just months after opening, the owner of a local waterpark may be in over his head.
Annie Zelm
May 24, 2010

PERKINS TWP.

Just months after opening, the owner of a local waterpark may be in over his head.

County records show at least 17 construction companies and subcontractors have filed nearly $4 million in liens against Maui Sands Resort for unpaid labor and material expenses since the project began in 2007.

An attorney representing several of the companies said the situation is so dire that bank foreclosure may be a possibility. In the past few days, it's even prompted protests from employees of one subcontracting company still awaiting payment.

"It's just turned into a real mess," Smith & Lehrer attorney William Smith said. "The owner (Scott Emerson) seems to be out of money."

Smith said he believes Emerson, who owns Brighton Manor Corp. and Mueller Electric, spread himself too thin trying to serve as the owner and general contractor of the Hawaiian-themed resort -- which led to a lack of coordination at the construction site. He also blames Erie County for allowing the project to move forward without the proper financing or infrastructure improvements.

Meanwhile, company owners left hanging for months are concerned they might never see their money.

The president of one company, owed $1.8 million, says he borrowed from his home equity loan to pay about 40 of his employees. Just one day after being assured he would receive his money in late June, he said, he received an e-mail from Emerson stating his contract was terminated.

Garrett Feig, president of Advantage Renovations, the Florida company that completed renovations to Holiday Inn and Holiday Inn Express on Milan Road, said Emerson added insult to injury by "cherry-picking" some of Feig's employees to finish additional work -- then refusing to pay them.

"He hired my employees, had them apply and asked them to sign affidavits saying (Advantage Renovations) performed poorly on the project," Feig said. "Most of these employees walked out at this point. They left after they were asked to give false testimony."

Citing unfair treatment of workers, attempts to rush construction by compromising quality and a lack of attention to building codes, Feig said the Maui Sands Resort renovations project was the worst he's seen during his 17 years in the business.

"It's just devastating for all of us," Feig said. "This has put a major dent in my company at a time when construction is already down. There are people who are going to lose their homes over this."

Several employees from A & M Tiles, a subcontractor for Advantage Renovations, stood outside the resort Tuesday morning to voice concerns over the more than $100,000 they have yet to receive for their services.

In August, the tiling company filed a $74,091 lien against the resort and made a second filing with the county recorder's office earlier this month for $42,820.

Maui Sands Resort spokeswoman Lexi Robinson said the resort and A & M are in an ongoing dispute, which the resort's owners have offered to resolve through binding arbitration.

As for paying the other companies, Robinson said the resort's owners are "working on a plan" but have no further details at this time.

Emerson financed the project with a $17.4 million loan from Charter One Bank in Cleveland. A July 2007 agreement between Brighton Manor Corporation and several construction companies states that any mechanics liens "may take priority over any mortgages filed and recorded on the property to secure the loan from Charter One."

In the meantime, the construction companies find themselves stretching their budgets to fill the void.

For small local companies, the impact hits especially close to home.

"It's kind of a hit we don't need to take," Huron Cement Products president John Caporini said. "The economy is bad enough, and having that out there doesn't make us feel any better."

Caporini, whose company filed a lien for $16,928 after failing to receive payment for providing colored concrete and other materials to lead construction company Mosser Construction, said his confidence in receiving his money dwindles daily.

"The banking crisis didn't help, and that brings a lot of question into our minds," he said. "We're keeping our fingers crossed."

Frank Fox Trucking & Excavating owner Frank Fox is still waiting for the $7,234 check he's owed. He said he was forced to pay a local quarry several thousands out of pocket to keep his own business from sinking into a hole.

Rick Kusmer, senior project manager for Mosser Construction, said although his company is still awaiting payments, he's paid all his workers and subcontractors weekly.

"Our president has been in touch with Mr. Emerson, trying to work out the specifics of payment," Kusmer said.

The payment predicament seems to have stalled other developments at the resort.

Though it remains open, portions are not complete, and it has yet to be approved for full occupancy.

Chief building official George Poulos, who performed at least six courtesy inspections of the site and several examinations to grant partial occupancy, said he asked the resort's owner to correct problems on numerous occasions.

"I was extremely disappointed on several occasions that the work was not as represented to me, not ready to be inspected," Poulos said. "The work was either incomplete or unsatisfactory."

Erie Regional Planning Commission director Alex MacNicol said the resort's financial issues could impede the progress of an entrance road that state transportation officials ordered the county to create.

The county maintains a tax-increment financing agreement with Maui Sands Resort that allows half of the property's increased value to fund public improvements -- in this case, creation of a public road to control traffic flow.

"Before we can work out the public tax agreement, all their public taxes have to be paid," MacNicol said. "For our concern, we want to make sure the companies getting paid doesn't affect the viability of Maui Sands."