The days are dwindling down to a precious few for The Cliffs Communities founder and mega-landowner Jim Anthony to maintain ownership of his developments.  A year ago he formed an entity called ClubCo to accept a $64 million bailout from more than 500 of his 2,000 members; he is now facing a default of an $8 million interest payment on the loan.  And, separately, his real estate company, Cliffs Communities Inc., is also facing default, according to some residents who spoke on condition of anonymity.  Behind the scenes, John Reed (he developed upscale golf communities in Bluffton, SC, including Colleton River, Berkeley Hall and Belfair) is reportedly bidding to pick up some or all of Anthony’s real estate interests; a second developer is rumored to be making a play for the land as well.  Regardless of who winds up bidding successfully for the property, the fetching price will be pennies on the dollar compared to what the lots were valued at just a few years ago. And it is likely to take a bankruptcy proceeding to force Anthony to turn his back on his legacy. His former staffers and residents agree the developer is a stubborn man, not given to accepting distasteful medicine, no matter how good for him.

Cliffs Valley (7th hole shown) is one of the most mature of the Cliffs communities and should be minimally affected by financial issues.

        It no longer seems a matter of if Anthony is forced out at The Cliffs, but when.  And after he goes, the question is how The Cliffs might reorganize to restore at least part of its lofty reputation and property values.  Much will depend on who buys the land and who buys the amenities, which include the six golf clubs (Gary Player’s Mountain Park would be #7).  That could be either one group of investors, or separate groups for the land and the amenities. Another possibility is that the communities -– some completed, some hardly formed and some in between –-will be bundled into smaller packages along geographic lines.  The communities adjacent to Lake Keowee, for example, might be consolidated into one group, those in the Greenville area (Glassy, Valley, Mountain Park) into another, and Walnut Cove near Asheville, NC, into its own.  Way up in the air, figuratively as well as literally, is High Carolina, the undeveloped site of Tiger Woods’ first American golf design and the symbol of Jim Anthony’s over-the-top investments in the Cliffs’ package of amenities; recently, a former Anthony senior staffer told us that the developer paid the unproven, architecturally speaking, Woods a $22 million fee to build the course, considerably higher than most published estimates.  Even if that overstates the true figure by, say, $10 million, it may explain why Anthony seemed to stalk the fallen star, showing up at Woods’ press conference confessional after disclosure of the star's adulterous behavior.  The religious Anthony may have forgiven Tiger, but he wasn’t about to forget how much he had invested in the golfer.

        Cliffs property owners are smart and wealthy folks but they face some daunting and perhaps divisive months ahead.  One-quarter of the clubs’ members provided Anthony with the $64 million loan, and there is worry that the interests of those with skin in the game and the 75% who sat on the sidelines may diverge substantially, setting up confrontations that will result in gridlock on some big decisions (an upstate South Carolina version, perhaps, of the U.S. Congress v. White House model).  Any differences are likely to be exacerbated by foreclosure proceedings that affect the operations of the clubs, which could close a few days a week or for longer periods; in that case, expect some battles over which clubs close and when.  Given the rural locations of some of the clubs, especially in the Keowee area, furloughed Cliffs employees could spike local unemployment numbers; don’t expect any help from the state, which is currently governed by a strong Tea Party supporter.

The Cliffs renowned portfolio of amenities include six golf clubs, wellness and fitness centers and an equestrian center.

        Property owners who have waited for things to clarify before building a home at The Cliffs may see clearly that their future is somewhere else, and they may join the numerous other owners who already have their home sites on the market.  That, of course, could further depress prices in the unformed communities, although The Cliffs at Glassy, Cliffs Valley, and perhaps Walnut Cove and Keowee Vineyard should remain fairly stable.

        Of course, some investors always seem to benefit from carnage in the markets and, at The Cliffs, the big winners could be whatever investor group steps in to buy all the available land and/or amenities at a deep discount, as well as those individuals looking for an upscale place to retire or build a second home at a bargain basement price.  Proceed with caution now, but expect some substantial deals in the coming months.

Cliffs developer Jim Anthony took the most beautiful piece of property at his Glassy development and built a chapel on it.

        Goodwin has close ties to the area, having chaired the board of the Darden School, the nearby University of Virginia’s graduate school of business, as well as having served two terms on the University’s Board of Visitors.  His worth is estimated in the hundreds of millions.

        I visited Keswick Hall and played its Arnold Palmer golf course almost five years ago. Its homes at the time were selling for $1 million and up.  The resort community’s focal point is Keswick Hall, which sits at the highest point in the development and can be seen from most points on the golf course.  Of the course, I wrote that it was “a pleasant routing but overwrought in a few places.” You can read my full review by clicking here (apologies for the absence of photos there).

Keswick Hall, the structure for which the golf resort is named, dominates most views from the Arnold Palmer golf course.

        The latest housing reports looked pretty good, and some economists are showing a bit more confidence in the real estate market for the coming year.  But the bottom end of the market –- where foreclosures and nagging unemployment will continue to preclude any strong recovery -– and the upscale end, where buyers have adjusted their expectations (Does a 6,000 square foot second vacation home really validate success?) and such former luminaries as The Cliffs Communities and

High-end communities like The Cliffs (Cliffs Valley par 3 shown) and Reynolds Plantation are suffering financial setbacks and will probably say goodbye in 2012 to their visionary developers and hello to more tightly run golf clubs and amenities.  Other changes could be in the offing for these and other southern golf communities, all to the likely benefit of buyers.  For more, sign up for our free monthly newsletter, Home On The Course, at the top of this page.

        We have other reasons to think this just might be the year that the southern U.S. golf community market reheats.   If we are right, then prices will begin to rise in the south at a faster rate than homes in the northern tier of the U.S., especially once the comparative cost-of-living ratios in the south become even more evident.  (Why golf communities don’t advertise the COL differences is beyond us?)  Interest from Europe, where the financial prospects for the continent’s wealthiest citizens are anything but settled, may also goose the U.S. golf community market along, especially in Florida (Europeans love Florida!).

        We cite other reasons we think prices will begin to rise in the South’s most stable golf communities, and then tie it all together in the January issue of Home On The Course, our free monthly newsletter.  To ensure you receive your copy to your email inbox, sign up now at the top of this column and join the 1,000 others who count on our honest –- sometimes brutally honest -– insights about the current state and future prospects of golf communities.

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Note:  I head south this week to the South Carolina coast and expect to make side trips to the areas between Wilmington and Charleston.  If you have serious interest in any communities between Landfall (Wilmington) and Briar's Creek and Daniel Island (near Charleston), let me know and I can arrange an on-site inspection.