MUSKEGON, MI – The long-time New York owner likely will lose the Watermark building, including condos, banquet center and coffee shop, to a creditor, leaving in doubt how the city will get the rest of the crumbling former Shaw Walker building torn down.
Moses Gross of Brooklyn, New York, has entered a consent agreement giving the Muskegon property to creditor IGCFCO III to satisfy a $9.75 million loan for which payment was due nearly a year ago, according to court documents.
The undeveloped portion of the sprawling former Shaw Walker factory has been the subject of “many blight violations,” according to a city official who said the legal issues now leave up in the air who will eventually own the property.
A large marijuana grow and processing operation was Gross’s latest proposal for the old plant, located at 965 W. Western Ave. and 920 Washington Ave. Muskegon Development Services Director Jake Eckholm told MLive “it doesn’t appear there’s any intention to pursue that development at this time.”
Gross had told city planning commissioners he wanted to build 180 residential units there too, but those plans were sidelined by COVID.
Related: Large marijuana grow operation recommended for sprawling old factory in Muskegon
A motion to enter the consent agreement as a judgment is before 14th Circuit Judge William Marietti, who hasn’t scheduled a hearing on the motion. A lawsuit was filed in May 2021 against Gross to collect on the loan made to his P&G Holdings that was guaranteed by the Watermark building, including the Watermark 920 event center, the Coffee Factory restaurant and other property and assets.
Lance Zoerhof, Gross’s attorney in the Watermark lawsuit, did not immediately return a message seeking comment.
A mediated settlement reached in early January required an $8.4 million payment that had not been made, the motion states.
The motion seeks a $9.75 million judgment and awarding of the property at 1321 Division Street, 965 Western Avenue and multiple Watermark Lofts condo units at 930 Washington to IGCFO. The creditor would not seek to collect the judgment amount unless it sells the property for an amount less than the $9.75 million, the motion states.
A $6.575 million loan made in March 2019 to P&G was secured with a mortgage on the Watermark property and carried 16% interest compounded quarterly, according to the lawsuit against P&G, Gross and a company called Powerlend.
The lawsuit claimed Gross had ownership interest in Powerlend – an assertion Gross denied – which filed for bankruptcy in 2018.
Previous plans for the undeveloped property included a movie studio, restaurants, shops, a hotel and a gym. Later, developers proposed a full-scale entertainment center with activities like laser tag, go-karts, indoor mountain biking, a trampoline park and a bowling alley.
Gross, through his P&G Holdings, purchased the million-square-foot former factory about 20 years ago. A third of the property was demolished and about 175,000 square feet of what remains have been developed into 53 Watermark Lofts condos, the Watermark 920 event center and the Coffee Factory restaurant.
Nearly 500,000 square feet remain undeveloped.
Gross had listed the building for sale for $12 million in the summer of 2019 but took it off the market in 2020.
The crumbling old factory is across Western Avenue from the new Hartshorn Village housing development adjacent to Muskegon Lake and the city’s Hartshorn Marina. So far, two homes have been constructed at Hartshorn Village.
Eckholm said the city has sent warning letters and citations about the condition of that portion of the property, but it could take a judge’s order to get anything done there. He said poured concrete floors and columns in the structure are stable, though other portions are “obviously quite damaged.”
“We bargained in good faith repeatedly over the years with the existing owner and that hasn’t born fruit for some time,” Eckholm said.
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