Tradition Hilton Head defaults on loans, agreement with Hardeeville

The developer of Tradition Hilton Head, a 5,500-acre, mixed-use development in Hardeeville, has defaulted on financial obligations to lenders and the city of Hardeeville, according to a regulatory filing its parent company made earlier this month.

Core Communities defaulted on loans for $113 million and is negotiating with its lender, the company disclosed. It also is negotiating with two other lenders for loans totaling $38.7 million.

Core cut 20 employees and was notified it has defaulted on a development agreement with the city that obligates the company to pay $1 million toward a new fire station. Core is in discussions with one of its lenders to fund the payments. If Core can't remedy the default, it could lose entitlements for the project.

Tradition Hilton Head, located on U.S. 278, has permits for 9,500 homes and is planned to include a town center of retail and office space. As of May, about 30 homes had been built.

Core's parent company -- BFC Financial Corp. of Fort Lauderdale, Fla. -- lost $54 million in the third quarter. Core became part of the company when BFC merged with Woodbridge Holdings Corp. in September.

Core also is the developer of Tradition Florida in Port St. Lucie, Fla.

Core has tried to minimize spending at both developments but continues to be hurt by the downturn in the residential and commercial real estate, according to the filing.

"The negative impact of the adverse real estate market conditions on Core, together with Core's limited liquidity, have caused substantial doubt regarding Core's ability to continue as a going concern if Woodbridge chooses not to provide Core with the cash needed to meet its obligations when and as they arise," the filing states.

Under its development agreement, Core is to fund the fire station in three installments. The first installment of $100,000 was due Oct. 21 with another installment of $450,000 due Jan. 1 and the final installment due April 1.

Core also is obligated to pay $200,000 for city staffing. That money was to pay for planning, zoning and building officials, Hardeeville interim city manager Ted Felder said.

Core has not made the first installment or the staffing payment, the filing stated.

City officials want the Hardeeville development to succeed and will try to work with Core to keep it from losing entitlements, Felder said.

"It's not something we want to happen," Felder said. "If we can find a way to work with them, we want to."

Felder expects Core to respond to the city's notice of default by mid-December.

Attempts Wednesday to reach Bob Swift, general manager of Tradition Hilton Head, were unsuccessful.

In May, Swift said company officials had "complete confidence" in the long-term viability of both developments.