Five Charlotte-area golf courses are headed into foreclosure, their owner said Tuesday, after a tumultuous year of unpaid tax bills, lawsuits from lenders and complaints from employees about back wages.
Jeff Silverstein, owner of the Carolina Trail courses, told the Observer that the foreclosure process will be followed by a bankruptcy filing. The group’s debt includes more than $1.2 million worth of federal tax liens, according to court records.
“They’ll be part of the bankruptcy,” Silverstein said of the liens. He said the foreclosure and bankruptcy filings could come within a week.
Silverstein declined to identify the lenders who will take possession of the courses. “I have an agreement with them. I’d rather not say,” Silverstein said.
The Carolina Trail courses are Birkdale, Highland Creek, The Divide, The Tradition and Waterford Golf Club in Rock Hill. The Tradition Golf Club is owned by Mecklenburg County but is operated by Carolina Trail under a ground lease arrangement.
Two other Carolina Trail courses – Skybrook and Charlotte Golf Links – were taken from Silverstein’s company and placed in receivership in August, after they failed to repay millions of dollars worth of loans. The courses remain open and are being operated by Virginia-based Billy Casper Golf Management.
The golf industry has found itself in the rough since the recession. The Edwin Watts chain of golf-supply stores went into Chapter 11 bankruptcy in November, citing slumping sales and a drop in the number of golf rounds played.
Last year, 154.5 golf courses closed in the U.S., measured in “18-hole equivalents,” according to the National Golf Foundation. At the same time, only 13.5 courses opened.
Silverstein said he expects the five remaining Carolina Trail courses to remain open during the foreclosure and bankruptcy process.
“Everything will be status quo or better,” he said. But Silverstein said he didn’t know what will happen to current memberships. “That will be determined by the new owners,” said Silverstein.
Some golfers paid thousands of dollars to purchase lifetime memberships to the Carolina Trail courses.
Scott Chapin said he paid $18,000 in late 2007 for a membership. Chapin, who is retired, said he golfs with a group of friends four or more times a week.
“I’m a lifetime member, but I don’t really know what that means at this point,” said Chapin. He said he had received a letter from the receiver now administering the Skybrook and Charlotte Golf Links courses that said his membership would not be canceled, but that the price and associated policies would be adjusted.
A separate company has been brought in to manage and run the five remaining Carolina Trail golf courses. Virigina-based Traditional Golf Properties has been managing the courses since Nov. 18, while Silverstein’s company retains ownership.
Two employees of Carolina Trail golf courses contacted the Observer last week to complain they are still owed unpaid wages. They asked for anonymity because they still work there and are hoping to be paid.
Silverstein acknowledged there are wage issues at his courses.
“There’s a disagreement,” he said. “There’s a legal discussion going on involving the payroll.”
The N.C. Department of Labor’s Wage and Hour Bureau has received one complaint each about unpaid wages from employees at Birkdale and Highland Creek golf clubs since August, and two complaints from The Divide, a spokesman said.
Paul Mauk, the president of Traditional Golf, said the clubs are current on payroll since his company took over their management.
“All employee obligations since becoming involved with the clubs commencing Nov. 18have been paid timely,” he said. “I cannot comment on the period prior to my involvement.
“We are excited to be involved and look to help bring stability to the situation.”
Problems pile up
Silverstein, who formerly owned or managed dozens of golf courses in several states through his company IRI Golf, first ran into high-profile trouble locally in January. That’s when the U.S. Department of Labor announced that Carolina Trail had agreed to pay $758,465 worth of back wages to employees following an investigation.
In July, Birkdale Golf Club was briefly closed down by the state over $64,990 worth of unpaid taxes. The course also owed $128,879 to the Internal Revenue Service.
Several of the clubs were sued by lenders demanding repayment, or homeowners associations trying to get the company to improve its upkeep of golf courses.
The Birkdale Homeowners Association is still pursuing a legal claim against the course for allegedly failing to maintain its facilities and falling into disrepair. Court records also show a $39,574 lien against Highland Creek Golf Club filed in November by the Highland Creek Community Association.
Silverstein said Tuesday he expects the Carolina Trail golf courses to sell quickly once the foreclosure and bankruptcy processes are formally initiated.
“They should be sold pretty quickly,” he said, “Within 60 or so days.” Staff researcher Maria David contributed