District takes possession of tax-delinquent parcels at Diablo resort in Stanislaus County
The Western Hills Water District is taking possession of more than 75 mostly undeveloped properties at Diablo Grande after developers did not pay the Mello-Roos taxes.
The Aug. 3 property auction was held in downtown Modesto after the district prevailed in foreclosure lawsuits in Stanislaus Superior Court in January. The sale was a step in cleaning up a mess with tax-delinquent parcels at the resort development in western Stanislaus County.
Diablo Grande developer Angels Crossing LLC owed $12.6 million in taxes on 13 parcels and $668,910 on 63 other properties, while former developer World International owed $219,200 on another parcel.
The civil division of the Stanislaus County Sheriff’s Office accepted Western Hills’ “credit bid” at the Aug. 3 auction, giving the district authority to take ownership of the property on behalf of Mello-Roos bond holders.
No one else made formal bids during the auction at the courthouse steps.
“We have been in a long, hard fight for the past three years,” said Mark Kovich, Western Hills board president. “They owed the tax money and they didn’t pay it, and we had to go through these court actions to foreclose on the properties.”
Kovich said leaders at Diablo Grande, a resort development in the hills southwest of Patterson, hope to find a developer with “real assets,” knowledge and experience to take over the project.
He said a committee of residents will discuss ideas for reviving the Diablo Grande resort and come up with recommendations in the event there is no buyer for the development. The Western Hills district provides water, sewer and storm drain services for what’s now a 600-home community and also is custodian of the Mello-Roos bonds.
Angels Crossing acquired the financially troubled development from World International in 2020 but fell behind on financial obligations.
The tax-delinquent property placed on the auction block mostly included undeveloped land, pieces of the two golf courses, the clubhouse and bare residential lots. Both of the dried-up golf courses at Diablo Grande are closed.
The foothills resort is part of a larger development project that fizzled when previous developers sought bankruptcy protection in 2008. World International acquired the development in a bankruptcy court sale. A county-approved amendment to the development plan six years ago would allow for 2,354 additional homes at Diablo Grande.
“We have a lot of work cut out for us,” Kovich said.
