Club woes a continuing drag on local economy
Regular readers no doubt have followed the news about the financial woes of the Hermitage Club. From staff layoffs and unpaid vendors to bank foreclosures and lawsuits, the cash-flow difficulties faced by the club have been well documented.
But what hasn’t really been talked about is the wide-ranging fallout from the club’s financial flame-out, and how much impact that is having on the local economy.
The financial impact of the club’s meltdown may be more devastating than Tropical Storm Irene was in 2011. While that may seem to be a stretch, we think it’s every bit as bad and maybe worse, especially for the long term.
Just look at how widespread the impact has become. Wilmington village has more empty storefronts than the year following Irene. Dover and Wilmington have more beds in lodging properties taken off the market, tied up in foreclosure or litigation, than anything caused by the flooding.
Add in unpaid wages to staff and the debt being held by contractors, businesses, banks, and service providers and there is a serious financial and physical drain being suffered by valley towns, its businesses, and the people who work and play here. Locals and second-home owners alike have suffered because of the Hermitage Club’s problems, and those problems don’t appear to be getting better anytime soon.
Following Irene, there was a “can do” attitude. Friends, neighbors, second-home owners, and complete strangers asked “what can we do to help,” rolled up their sleeves, and pitched in to help rebuild. That kind of approach won’t really work here, although some are trying to do just that. But this is financial wreckage, not physical.
While there is talk of resolution, either by some individual or group purchasing the club or by the foreclosure process moving forward with an auction, the reality is every day the club and its properties are closed is another day the economy of the valley continues its slow downward spiral. It’s a huge negative drain. While that adverse effect is slow and somewhat imperceptible, it is there. It just adds to the currents many swim against every day.
As far as what can be done, a speedy resolution to selling off the club and cleaning up the books would be the most beneficial. Getting the club operational would be the best tonic for this malaise, especially with the summer golf season underway and winter not too far behind.
We’ve heard of a number of credible bids to purchase the club. We’ve also heard that club owner Jim Barnes won’t sell without recouping every dollar he has put into the club. Barnes’ position may have been a viable negotiating tool while the club was operational; it seems folly to hold tight to that position now. Anyone who is serious about purchasing the club, or even Barnes’ bank note, will wait for the receiver to take control of the club and attempt to make a purchase for pennies on the dollar. Barnes’ position was weakened the day the court issued its order allowing a receiver.
While Barnes negotiates or, more to the point, vacillates, the local economy stagnates. Which means every day the club sits idle, the very communities Barnes set out to lift up by developing the club continue to sink under the weight of the shuttered enterprise. It’s maddening to many that it got to this situation. But that is where things stand as of now, and it’s not a good situation for anyone to be in.
Also, a sale of the club may not necessarily help anyone who is still holding debt. The bank will get paid, of course. Banks generally do. But others may not, or may have to settle for less than the full amount. That will be another weight on the back of the community. Will vendors get paid? Will people who paid for condos and homes ever see them built, or be granted access to them? Those are the great unanswered questions.
At some point, the Hermitage Club logjam will break. When that happens, there may be another torrent that races through the valley. How hard that hits, and who is damaged from it, remains to be seen.
We can’t help but wonder just how much damage is left to be done.