Developer’s unpaid taxes lead North Valley water district to seize property for 2,300 new homes

Two developers controlling a hefty portion of Diablo Grande, a master-planned community in Stanislaus County, failed to pay taxes to their water district. Now, the district owns their property.

More than 75 mostly undeveloped properties at Diablo Grande, part of a foothills development project, are being taken over by the Western Hills Water District after the developers failed to pay Mello-Roos taxes.

An Aug. 3 property auction held in downtown Modesto allowed the district to take possession of the properties following foreclosure lawsuits earlier this year.


Driving the news: Diablo Grande developer Angels Crossing LLC failed to pay $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 auction, meaning the district is authorized to take ownership of the property on behalf of Mello-Roos bondholders. No other bids were made during the auction.
  • The auctioned tax-delinquent property is mostly made up of undeveloped land, segments of the two golf courses, the clubhouse, and residential lots. The two golf courses at Diablo Grande are currently closed.
  • Western Hills is responsible for providing water, sewer, and storm drain services for Diablo Grande’s 600-home community and serves as the custodian of the Mello-Roos bonds.

What they’re saying: Per Mark Kovich, the Western Hills board president, “We have been in a long, hard fight for the past three years. 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 stated that leaders at Diablo Grande are seeking a developer with “real assets,” knowledge, and experience to assume the project from Angels Crossing. Meanwhile, a committee of residents will work to formulate a plan for restoring the resort in the event that there is no buyer for the development.
  • Angels Crossing purchased the development from World International in 2020 but fell behind on financial obligations.
  • The larger development project, which consisted of plans for an additional 2,354 homes for Diablo Grande, was stunted following the original developers’ bankruptcy protection request in 2008.
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