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Bankruptcy Afflicts 33,000 Acre Country Club/Housing Tract on East Side of Mount Hamilton, West of Modesto

http://www.sacbee.com/103/story/1307281.html

http://www.sacbee.com/static/weblogs/real_estate/archives/016072.html

3 posh projects go bust as Valley dreams bite the dust

By Dale Kasler and Jim Wasserman, Sacramento Bee

Oct. 12, 2008 | Page 22A

In the Central Valley these days, the bankruptcies and foreclosures don't just affect individual homeowners.

They swallow entire developments – and the people who conceive them....

Diablo Grande is located between the Mount Hamilton natural area and Modesto

Donald Panoz – pharmaceutical executive, land developer and owner of an auto-racing business – endured eight years of environmental lawsuits and spent $120 million bringing Diablo Grande to life.

His goal: a luxury hideaway in the dusty hills west of Patterson, the self-proclaimed "apricot capital of the world." A vineyard and winery, plus two 18-hole courses, became part of the vision.

But the 33,000-acre site was also geared to the Bay Area transplants flocking to Valley towns in search of cheaper housing.

That made it vulnerable. Once housing prices softened in the Bay Area, buying a home in the Valley made less sense, said Dean Wehrli of Sullivan Group Real Estate Advisors in Elk Grove.

Diablo Grande "was absolutely ripe to be hit hard by the downturn," he said.

More than 450 houses were built when the project sputtered earlier this year. Both golf courses closed temporarily. A Chapter 11 filing came in March.

The project is trying to get back on its feet. A Los Angeles developer named World International LLC bought it for $20 million and pledged to build a resort spa, equestrian center and Spanish-style shopping village. It said last week it plans to rename the development to give it "a fresh start."

Meanwhile, a rash of foreclosures among the finished houses lured bargain hunters.

East Bay couple Karen Cinfio and David Rose bought a million-dollar home with panoramic views out of foreclosure for $375,000.

"I kind of refer to the people who lived here first, they were kind of like the Donner Party," Cinfio said as she stood by her backyard pool. "They paved the trail."