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State of South Carolina Fines Daufuskie Island Resort $6,900
 for Failing to Pay 69 Laid-off Employees $130,000
 In owed Vacation Time
By Michael Welles Shapiro, The Island Packet, Hilton Head Island, S.C.McClatchy-Tribune Regional News

December 30, 2008 --A state agency has fined the Daufuskie Island Resort & Breathe Spa $6,900 for failing to pay 69 laid-off employees more than $130,000 they are owed in vacation time.

Jim Knight, S.C. Labor, Licensing and Regulation spokesman, said a citation was sent last week to the resort, one of Daufuskie's largest employers.

The agency investigated the resort after a number of laid-off workers complained they didn't receive accrued vacation time.

In addition, several vendors said they haven't been paid for providing services at the resort. Bob Rindt, who owns Lowcountry Outfitters, which provided pots, pans and dishes to the resort, said if he can't recover the $8,000 he claims he's owed, "it's going to hurt me badly."

Russ Brown, chairman and CEO of RBC Enterprises, which develops and sells real estate for resort owners Bill and Gayle Dixon of San Francisco, said the money problems are "real," adding that the debts were a temporary result of a management overhaul that ultimately will make the struggling resort profitable.

Hotel management company West Paces Hotel Group had been managing the golf, tennis and fitness facilities, a spa, an equestrian center, restaurants and the Melrose Inn since 2005.

But after years of losing money, the Dixons decided they needed to scrap their management structure, said Brown.

Under the plan, the Dixons will sell off various pieces of the property, including the inn and the tennis facility, to other companies that have experience running those types of properties, said Brown.

Meanwhile, more than 100 employees have been laid off. In a normal winter, the resort reduces staff, but this year laid-off workers aren't sure they'll have jobs at the resort when tourist season picks up in the spring.

Brown said the jobs will be back.

"There will be job opportunities," he said. "They're going to need people with experience on Daufuskie."

As far as debts to resort employees and vendors, Brown said those can be taken care, too, as long as litigation between the resort's owners and its members can be resolved.

Members of the resort have sued the Dixons, arguing a contract the Dixons signed when they bought the resort in 2002 prevents them from selling the resort's assets without consulting the members. The courts have prohibited such sales until the lawsuit is resolved.

It makes it so "you can't pay the bills," Brown said. "But it just takes one strategic sale," and that would be enough to take care of the debts, he said.

Meanwhile, the Dixons are negotiating with possible buyers of the inn and other assets in the hopes an agreement with resort members can be reached, said Brown. He said a hotel group is touring the inn today, and he's confident the Dixons will be able to find a buyer.


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