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Entrepreneur Donald Panoz Soon to Add Hotel and Spa to Diablo Grande,
a Planned Resort Community Near Patterson, California
By Tim Moran, The Modesto Bee, Calif.McClatchy-Tribune Business News

Oct. 23, 2006 - After negotiating a minefield of 24 lawsuits, environmental and water battles, a community is growing in the western hills of Stanislaus County. Diablo Grande, west of Patterson, is home to about 600 people and growing fast. Vice President of Development Dwain Sanders said nine to 12 homes are selling each month. Since residential development began in 2003, 240 homes have been sold. Sanders said 160 more building permits have been issued.

The development plan calls for 2,300 homes, which would bring the population of the resort community to about 6,000. A pair of championship-level golf courses attracted many initial residents to the remote site about nine miles from the nearest city, Patterson. The growth rate likely will accelerate as amenities are added -- a hotel and spa are in the planning stages. Stores, tennis and swimming clubs, condominiums and a winery also are planned.

That Diablo Grande even got off the ground is a testament to the tenacity of its creator, entrepreneur Donald Panoz. Panoz, who made a fortune in the pharmaceutical industry and then developed resort communities in Georgia and Scotland, also became prominent in auto racing in recent years. But turning Diablo Grande into reality required monumental patience as well as a mountain of cash. In addition to fighting through environmental and water supply challenges over the course of a decade and a half, Panoz and his partners have paid for all public improvements at the resort community. That ranges from the eight-mile road to the resort, Diablo Grande Parkway, to the fire station under construction.

"They've built all the improvements, the water lines, roads. To my knowledge, no county money has been spent for any improvements," county deputy planning director Kirk Ford said. Sanders declined to put a number on the investment. "It's been a lot of sweat, blood and money. An awful lot of money," he said. Profitability has been elusive, Sanders said, but will come. "It's been a struggle. No one else in Northern California has gone outside an existing town, and gone into the hills.

We are pioneers," Sanders said. "It's been a rough row to hoe. There aren't many people who would continue as long as Don (Panoz) has," Sanders said. "It's fragile, but it is getting closer." The hotel and spa will be a catalyst for residential growth at the resort, and once the population reaches a critical mass, shopping, sports club, pubs and restaurants will follow, he said.

Diablo Grande residents say they love their new homes even without the extras. "I couldn't imagine living anywhere else," said Chad Pometta, a landscaper and architect who moved to Diablo Grande from Modesto a year ago with his girlfriend. "I've never been in an area so beautiful. We live right on the fairway. There are deer up there, animals," Pometta said.

"Working down in the valley, once you get to I-5 and start up into the hills, you just start breathing a sigh of relief," he said. "You don't hear sirens, or a lot of dogs barking. It's so quiet up there." Joe Valentino agrees. He and his wife moved to Diablo Grande early this year from the East Bay, where he owns a plumbing products company. "There are two wonderful golf courses. You go 10 minutes off the road, and you are in the canyons. It's 10 degrees cooler, and winter is wonderful," Valentino said. "Last year there were only 15 days we didn't get to play golf."

Shopping involves some driving There are drawbacks, they admit. Shopping, for instance, entails a drive to Patterson or farther. "We had to condition ourselves to call each other to ask what we needed on the way home," Valentino said. "It is kind of weird. Once you are up here, you're here. You might have a beer instead of milk for dinner," he said. Pometta noted that "You can't order out pizza and stuff like that," but added that the drive to Patterson is just 10 minutes, about the same as it would be negotiating traffic lights and congestion in Modesto or the East Bay.

Sanders said developers hope to attract an upscale grocery store such as O'Brien's or Trader Joe's when the population justifies it. Being farther from medical services is a concern, residents admitted, but not a major problem. The nearest hospitals are in Modesto and Los Banos, Pometta said, and there is a health services center in Patterson.

Valentino was philosophical about it. An ambulance takes 12 minutes to get to Diablo Grande, he said. "But if I'm going to go, I'm going to go. At least I'll be on a golf course," Valentino said. "I'm OK. I'm 54, and my wife is 48. If we were in our 60s, it might be different." Marty Johnson, who moved to Diablo Grande in March after living in Livermore for 25 years, said he changed his primary care doctor to Patterson and his cardiovascular doctor to Modesto. "I haven't had any concerns yet. It's not that far," he said. A small clinic might be included in the retail space planned at Diablo Grande when the population justifies it, Sanders said. Residents said they were pleased with the response to theforest fire that threatened the resort this summer. The California Department of Forestry and the West Stanislaus Fire District were the primary responders, with other departments joining in.
DiabloGrande developers have set up a temporary fire station at the resort, with West Stanislaus Fire District volunteers living nearby. A permanent station is being built, Sanders said.

Residents: Crime not a problem

Crime hasn't been a problem either, residents said. The development is remote and has only one entrance. The Sheriff's Department responds to problems, but Diablo Grande has security guards and will be going to a round-the-clock presence within a month or two, Sanders said. Home prices in the development range from patio homes on small lots for just under $400,000 up to custom homes on hilltops in the $2 million range.

Valentino, who is renting a smaller house, is building a $1.5million customhome, which he feels is a bargain. "We couldn't do it in the Bay Area. It would cost us $5 million," he said. "And we've got the views. They are worth the money." Development in the hills on either side of the valley was at one time touted as a way to save prime farmland, and as Sanders noted, Diablo Grande has been a pioneer. But the development ran into heavy opposition early from environmentalists who feared development would despoil the rugged canyons and threaten endangered species such as the San Joaquin kit fox.

They also challenged the development's water source for thearid terrain. Diablo Grande owners have reached settlements or prevailed in court on those issues. The county Board of Supervisors is on record opposing development outside existing cities, but Diablo Grande is an exception. Supervisor Bill O'Brien has expressed concern about public safety issues at the remote development, and he still worries about fire protection and funding for future sheriff's patrols.

"Sheriff's operations are very costly, and it will require more coverage as it grows," O'Brien said. He favors charging an annual fee to residents of Diablo Grande for public safety. The West Stanislaus Fire District relies heavily on volunteers, O'Brien said. "They doa great job, but there has to be questions. They need the sametrainingasfull-time firefighters." O'Brien said he likes the homes being built in Diablo Grande. "I love the area. It boils down to the philosophy of the board, whether we allow growth outside the cities or not," he said. Supervisor Jim DeMartini, whose district includes Diablo Grande, said the development seems to act as its own city.

"They have paid their own way with fees to the school district, the fire district and the health care district," DeMartini said. "Generally you want to direct growth into cities to preserve farmland, but Diablo Grande is not farm ground," he said. "It's a really nice development. It's not a burden to the county at all," DeMartini said.

While Diablo Grande appears to have overcome opponents and turned plans into reality, it's not likely to spur other development in the western hills, county officials say. The issues of water supply and endangered species make the cost of development too high for anyone without the money and tenacity of a Donald Panoz, Ford said. DeMartini agreed. "I don't see the hills going into housing. Sewage systems are expensive,"he said. Diablo Grande hooked into the Patterson sewage plant, at considerable expense, in running lines down the hill. Future growth questionable Whether Diablo Grande grows beyond the 2,300 homes planned also is questionable.

The developers own more than 30,000 acres surrounding the development, and the initial plans called for 5,000 houses. But a second phase of development would require a new environmental report, Ford said. And that likely would trigger another round of legal challenges over the same issues. For now, the developers are focused on selling homes in the existing subdivisions. "We haven't marketed it yet; we weren't selling until 2003," Sanders said. "Now we are cutting our teeth. We understand the demographics, where they are coming from, the age group. In 2007, we will start a marketing program for Diablo Grande." Bee staff writer Tim Moran can be reached at 578-2349 or


Copyright (c) 2006, The Modesto Bee, Calif.

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