Monday, December 01, 2008

Owners planning big changes, new name for property

By Tim Moran
tmoran@modbee.com

last updated: October 09, 2008 01:38:35 AM

Diablo Grande has a new owner with ambitious plans, and will get a new name as well.

World International LLC, a company formed to acquire and develop the 28,500-acre property in the hills west of Patterson, bought Diablo Grande from the bankrupt partnership headed by entrepreneur Donald Panoz. The $20 million deal closed Tuesday, several days after the planned closing on Oct. 2.

A news release from Los Angeles-based Laurus Corp. said the partners behind World International are real estate developers who have been involved in the development of office buildings, shopping centers and residential projects.

They will be working with Laurus Corp. to develop Diablo Grande, which will get a new name to give the property "a fresh start." The new name will reflect the surroundings and heritage, according to the news release.

The new owners plan to continue residential building at Diablo Grande, and carry through many of the plans of the original owners. That includes a convention center, a "five-star amenity driven resort," and a low-rise shopping village with grocery store, dining, banking and office suites.

Residential development will include Spanish-colonial villas, townhouses and single-family homes on large lots. Plans still call for 2,100 homes. About 400 have been built.

Some elements have been added, including an equestrian center. A similar facility was included in the original plans in 1991, but later was removed, according to Stanislaus County planner Rachel Wyse.

Wyse said some of the things described in the news release go beyond the specific plan approved by the county, and would need an amendment to the plan approved by the Planning Commission and Board of Supervisors. Wyse said agents for the new owners had contacted the Planning Commission before the sale became final.

Moving forward

In the news release announcing the sale, Panoz said, "I know the principals (of World International) will move forward to make the development a success and will follow through on the vision that started 20 years ago -- to make this the best development in California."

"This is very good news for all the people who live there," said Michael Ahrens, an attorney representing the bankruptcy estate. "It will be business as usual. They will assume the water contract and the conservators contract."

The conservators contract deals with environmental issues.

"This is a big deal, like the sale of a city," Ahrens said. "(World International) got themselves a good deal. The market really is awful."

The bankruptcy proceedings will continue, with a reorganization plan to be filed so money can be distributed to unsecured creditors, Ahrens said. The Marshal-Davis parcel, a separate property, still must be sold, and a lot of loose ends with contracts have to be tied up, he said.

But the sale of the main property was the key element, Ahrens said.

"If it had not sold, there would have been tremendous damage claims against the estate, and that's been avoided," he said.

Gary DeSantis, a homeowner in Diablo Grande and the president of the Board of Golfers at the resort, said he was happy with the new ownership.

"This company seems like a top-notch company. Speaking for myself and my wife, this is the change we've been waiting for," DeSantis said. "We've been in limbo while the property was mismanaged. ... Now it's ready to move towards realizing some of the dreams of the residents and owners that purchased the property," he said.

DeSantis blamed Panoz for many of the problems.

Panoz and his partner, Morton Davis, invested more than $120 million in the property over two decades, fighting through several environmental lawsuits before finally starting home construction three years ago.

The collapse of the housing market last year doomed the development, and the partnership filed a Chapter 11 bankruptcy in March. The property initially was listed for sale at $150 million and put up for auction when no buyers could be found.

Ahrens said the remainder of the bankruptcy should be wrapped up in two to three months.

Bee staff writer Tim Moran can be reached at tmoran@modbee.com or 578-2349.

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