Diablo Grande in No. Cal, NLE?

[Tim Leahy]

I just read a blurb in the Sac Bee that the 36 holes at Diablo Grande has been shut down and may be out of business. Nicklaus/Sarazin course was supposed to be pretty good, although I have never played either course. Does anybody know whats going to happen to this complex? It is quite out of the way, which is why I haven't played it, but I would think somebody like the Fry's guy or Trump would swoop in and buy this up and make it all private and exclusive since it is near the silicon valley.

[Mike Benham]

Funny you should mention this as this morning on one of the sportstalk radio stations I heard an advertisement for the home developer stating that new home prices were discounted by 50% !!!   (DR Horton for those interested ...)


And yes, there is a story from the Modesto Bee from Jan 30th:

"Diablo Grande, the luxury golf resort in the hills of western Stanislaus County, is in financial trouble and is closing both golf courses at the site.

The Ranch course closed last month, and golf members were told it would reopen in March. Members found out this week that the Legends course will close Saturday for at least a month.

Dwain Sanders, vice president of development at the resort, confirmed today that both golf courses and the club house are closing, due to the downturn in the housing market.

Banquets and weddings scheduled will be honored, Sanders said.

"We are in a temporary suspension mode. We don't know how long it will last," he said. "We are feeling the effect of the housing market, just like everyone else. We aren't getting enough revenue to keep them open during the down turn," Sanders said.

The resort is in default on a $900,000 loan from Oak Valley Community Bank, according to records in the Stanislaus County assessor's office.

Several mechanics liens have been filed in recent months, and members report that several employees, including golf pro Shane Balfour, have been laid off.

Oak Valley Bank CEO Ron Martin confirmed that the resort, owned by a partnership headed by pharmaceutical entrepreneur Don Panoz, is in default. Martin said he was aware of the Ranch course closing, but not the Legends course.

"I know it's been a tough project from the get-go," he said of the resort, which fought through environmental and water challenges for a decade and a half before the first house was built. "They've done an impressive job out there. The (housing) market downturn was the last thing they needed," Martin said.

The bank loans are secured with five home lots at the resort, Martin said. "If there is a problem, we will hang onto them and deal with them when the market turns."

Diablo Grande has about 400 houses completed and permits for 70 more, according to county assistant planning director Kirk Ford. The county approved architectural plans for a resort hotel, conference center and spa at Diablo Grande about two years ago, and the resort had plans to build a winery and tasting room at the entrance on Diablo Grande Parkway. No further plans have been submitted, Ford said.

Members contacted by The Bee said they have been frustrated with the lack of communication from Diablo Grande's management. Many have been hearing of the impending closure of the Legends course by e-mail from other members.

"They don't really tell anybody anything," said Doug Stephens of Newman, who was one of the first members of the golf club. Stevens said he is not worried about losing his $25,000 membership fee, because he feels members would get paid back even in the event of a bankruptcy.

"I am upset that they don't tell us," he said. "I'm member number 3. I was a member when it was a cow pasture. We deserve a little better treatment than that."

Sam Gardali, who along with his wife, Kay, bought a second home in the resort to take advantage of the golf courses, said he wasn't happy with how the course closures will affect property values at Diablo Grande. "Those are two beautiful golf courses; we love to play them," he said. "That's one of the reasons we decided to purchase a second home up there."

The closure of the Ranch course came with one day's notice, Gardali said. At the time, members were told the closure was due to a water shortage and the economic downturn, he said. When Balfour was let go a month later, members were told it was part of a series of cutbacks to keep the Legends course open, Gardali said.

Gary DeSantis, president of Legends West Board of Governors, the group representing the founding members of the golf club, remains optimistic about the resort, but feels an ownership change is necessary.

"Diablo Grande is a great facility with tremendous potential," he said. "The current ownership group, headed by Don Panoz, has done a tremendous amount of work to get it where it is.

"It's clear to me, it's time for new ownership, new investment and new enthusiasm to take it to the next level," DeSantis said. "There's no way it can miss if it is developed properly."

Sanders echoed the optimism.

"We are still bullish on the development. It is a great development and a great piece of property. It's like nothing else you can get in the valley," Sanders said.

Water and sewer service for the homes in the development will continue, Sanders said, and maintenance of the landscaping will continue, by the homeowners association.

Panoz, who made a fortune with the nicotine patch, has developed resorts in Georgia and Scotland and had ambitious plans for Diablo Grande. He and his partners invested huge amounts of money in the project, paying for all the infrastructure, including the $14 million to $17 million road that winds from Patterson to the resort.

The development was to be the first new town to move housing projects off the prime farmland in the valley and onto poorer soils of the foothills.

Panoz battled through two dozen lawsuits from environmentalists before home construction began in 2003. The development seemed on the verge of finally turning a profit 18 months ago, when the housing slump occurred.

Bee staff writer Adam Ashton contributed to this report.

To comment, click on the link with this story at www.modbee.com. Bee staff writer Tim Moran can be reached at tmoran@modbee.com or 578-2349."

[John Kirk]

I played Diablo Grande - Legends in the springtime about four years ago.  I thought it was very good but not great.  The development is tucked into the western edge of the Central Valley, nestled against distinctive, oak dotted foothills.  A very beautiful and remote place that would be very warm in the summertime.

Although this development is not terribly far from San Jose and the East Bay cities, it was quite difficult to get there, as there is no direct route there.  You had to take highway 580 out to interstate 5 south for 45-60 minutes, then drive 5 or 10 miles west.  My guess is a 2.5 - 3 hour drive from San Jose.

My interest in playing the course was based on the Legends' course high rating in Golf Digest at the time, perhaps 25th in the state, or something like that.  I don't remember much about the course, just the beautiful oak dotted foothills of central California.

[David_Tepper]

I have played both the DG courses, but have not been there in 5 or 6 years. I thought the courses were pretty darn good.  As I recall, they played the Cal State Open at DG for several years.

I always thought the project's chance to succeed financially was a long shot.  While not that far from the SF Bay Area as the crow flies, the property is not easy to get to and is very isolated. I wonder how much money the developers sunk into the project over the years. 

[JohnV]

The Futures Tour had an event there when I was working for them in 2001.  It was on the Ranch course.  I played the Nicklaus / Sarazen course on our day off.  Nice enough courses, but off the beaten path.  If they could ever get the road built to San Jose that they wanted it would probably become viable.

The Junior Golf Association of Northern California has a statement on their website that the course will be honoring tournaments that are booked there.  It says:

"FYI: Many of you have contacted the JGANC concerning the situation at Diablo Grande Resort in Patterson. Due to financial difficulties the golf course has temporarily closed for general play. Management is still honoring banquets and scheduled tournaments. This includes our JGANC/NCPGA Championship scheduled for June 24-27. We are continuing to accept entries and applications for Junior World qualifying at this site. Should the situation change, the Championships will change venue and all entered juniors will be notified. We will keep you posted on this website. Acceptance notices will not be mailed, but rather a list of players will be posted on this website along with tee times."

The NCGA has have a qualifier for the California Amateur booked there.  I haven't heard that we need to move it.

[Tom_Doak]

I was out there years ago with a friend.  It is a huge property, and the canyons in back include some great land for golf which hasn't been utilized yet.  My friend was trying to get me the job for course #2, but they decided on Nicklaus in order to help sell real estate and make the project successful financially ... I guess even Jack's name wasn't big enough to carry the day.

[Adam Clayman]

Is this the course where the owner was banking on a new freeway project heading southeast out of San Jose?

[David_Tepper]

Adam -

Yes, as the crow flies, this property is not that far from the South Bay.  A road at the west end of the valley would make this property WAY more accessible to the Bay Area.

DT 

[David_Tepper]

I just heard a radio advert on KNBR announcing a 50% reduction in new home prices at Diablo Grande. Maybe I'll buy two!

[JohnV]

Someone here at the NCGA told me that the state's new master plan for highways does include the road from SJ to DG.  No idea if that is a short term or long term plan though.

Perhaps they can hire the Senator from Alaska who got the bridge to nowhere funded to get funding for this project.

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