Stanislaus County collects $1.9 million on tax delinquencies in auction

MODESTO -- Stanislaus County collected more than $1.9 million in back taxes and proceeds Wednesday by auctioning off 30 tax-delinquent properties.

Most of that money came from two tracts of vacant land that were more than five years behind on tax payments:

• The 52-acre Legends development in Diablo Grande, where luxury homes were supposed to be built, sold for the bid minimum of $555,700. That was just enough to cover back property taxes. But the new owners will have to settle separately with the Western Hills Water District, which is owed nearly $215,000 in delinquent water fees.

That's a combined total of $770,700. That is a lot, considering the rural residential property's value was most recently assessed at only $316,011.

• About 23 acres on Seventh Street just outside Hughson sold for $510,000 after vigorous bidding by several would-be buyers. CEB Holdings LLC, which is affiliated with Modesto developer Bright Homes, was the high bidder.

Real estate firm made bid

In Diablo Grande, the Laurus Corp. of Los Angeles in partnership with World International LLC of Patterson placed the only bid for that land.

Laurus is a private real estate investment and development firm that promotes itself as having experience purchasing underperforming and bank-owned properties.

"World International together with Laurus Corporation has created a complete business plan for the entire Diablo Grande development," Laurus wrote in a statement released Wednesday afternoon. "Now that the housing market is starting to show signs of improvement, the master developers are in their initial stages of assembling financing to restart construction."

World International is Diablo Grande's developer. It purchased the community's golf courses and building rights in 2008.

"The acquisition of the Legends lots is further proof of the master developer's commitment to the project and to its vision," according to Laurus, which referred to itself as the "sponsor partner" in Wednesday's purchase.

Diablo Grande Legends was part of a development project that racked up more than $14.5 million in debt before being foreclosed on by a bank in 2009. Five months later, that bank went belly up. The land's unpaid taxes and fees have been increasing ever since.

The land near Hughson that generated multiple bids is designated for multifamily housing but is vacant today. It was owned by White Tail Crossings LLC, which filed for bankruptcy protection last year. It owed only $58,100 in property taxes, which hadn't been paid since 2004.

The land sold for more than the tax debt, but the government won't get to keep the extra cash. The excess proceeds will be held for one year, which gives the property's other creditors a chance to file claims and perhaps collect some of that what they're owed.

Bidding on that Hughson land surprised many in Wednesday's standing-room-only crowd in downtown Modesto because the property's assessed value is just $370,000.

Most of the parcels sold during the auction went for less than their assessed value.

A 1.5-acre commercial lot on Ward Avenue in Patterson, for example, garnered lots of bids that pushed its sales price to $67,000. That price still was substantially less than its $185,000 assessed value.

Paying cash on the spot

There were 86 registered bidders at the auction, and all of them came with enough cash or cashier's checks to pay for properties on the spot.

So much cash was at the auction, in fact, that county officials used a cash-counting machine to ensure the totals were correct. Uniformed law enforcement officers were on hand to keep the money and crowd safe.

Many people who traveled to Modesto hoping to acquire bargain-priced houses at the auction ended up leaving with nothing.

Ronald Starr of Oakland and his investment partner spent Wednesday morning visiting homes on the auction list.

"We looked at eight properties and decided not to bid on any of them because of the condition they were in," Starr said.

After slipping inside one of those houses on Kerr Avenue, which is in Modesto's airport neighborhood, Starr said he saw it had been stripped of all its wiring, wall board and mechanics.

That house ended up selling for $17,200, which was about double what was owed in back taxes.

Some bidders weren't deterred by the poor condition of the auctioned properties. One bidder, Daniel Leonard, paid more than $75,000 in cash for seven sub-standard homes and lots on Angle Lane in the airport neighborhood.

"You never know what people plan to do with these properties," said Gordon Ford, Stanislaus' tax collector and treasurer. "As long as we get this land back into use and paying property taxes, I'm happy."

Five of the tax-delinquent parcels Ford had hoped to sell Wednesday did not attract any bids, so they will be placed on next year's tax auction.

Bee staff writer J.N. Sbranti can be reached at jnsbranti@modbee.com or (209) 578-2196.