Diablo Grande Community Facilities District no. 1 (CFD No.1)

Frequently Asked Questions (FAQs) – 2026 Edition
The following FAQs are designed to help residents, property owners, and interested parties better understand the
Diablo Grande Community Facilities District No. 1 (CFD No. 1), its purpose, governance, and current
activities.

1. What is Diablo Grande Community Facilities District No. 1?
Diablo Grande Community Facilities District No. 1 (CFD No. 1) is a California Community Facilities District formed under the Mello-Roos Community Facilities Act of 1982. It was created to finance public infrastructure and certain public services within the Diablo Grande community.

2. Is CFD No. 1 the same as the Western Hills Water District?
No. CFD No. 1 is a separate legal governmental entity. While the same Board of Directors currently governs both organizations, they are separate public agencies with separate responsibilities and finances.

3. What laws govern CFD No. 1?
CFD No. 1 operates under:
California Government Code Sections 53311 through 53368.3 (Mello-Roos Act)
California Constitution
Brown Act (Open Meetings)
Public Records Act
Applicable California Special District laws.

4. Why was CFD No. 1 created?
The District was established to finance public improvements and infrastructure needed to support the planned Diablo Grande development.

5. Who governs CFD No. 1?
The District is governed by a five-member Board of Directors that conducts public meetings and makes policy decisions.

6. Are CFD No. 1 Board meetings open to the public?
Yes. All regular meetings are open to the public unless an item qualifies for a legally permitted closed session under California law.

7. Where are Board meeting agendas posted?
Agendas are posted in accordance with the Brown Act and are also made available on the District’s website before meetings.

8. What is the primary mission of CFD No. 1?
Its mission is to responsibly manage District assets, meet legal obligations, protect public investments, and encourage future development opportunities.

9. Does CFD No. 1 provide water service?
No. Water service is provided by the Western Hills Water District, not CFD No. 1.

10. Does CFD No. 1 maintain roads?
Generally, no. Road maintenance responsibilities depend upon ownership and jurisdiction of the roadway.

11. Does CFD No. 1 own property?
Yes. The District owns numerous real estate assets that were acquired through foreclosure proceedings and other legal actions.

12. Why does CFD No. 1 own land?
The District acquired certain properties to protect bondholder interests and preserve community assets after developer defaults.

13. Can CFD-owned property be sold?
Yes. Property sales must generally be approved by the Board and comply with applicable California laws and District policies.

14. Is CFD No. 1 trying to attract a new master developer?
Yes. One of the District’s long-term objectives is to facilitate responsible development that benefits the community.

15. Why is additional development important?
Additional residential and commercial development can increase the customer base supporting community infrastructure and utilities.

16. Does CFD No. 1 collect taxes?
The County collects special taxes authorized for the CFD through annual property tax bills, consistent with the Mello-Roos Act.

17. What are Mello-Roos taxes?
They are voter- or landowner-approved special taxes used to finance public facilities and infrastructure.

18. How are CFD funds used?
Funds are generally restricted to purposes authorized under District formation documents and applicable bond agreements.

19. Can CFD money be used for any purpose?
No. Public funds must be used only for legally authorized purposes.

20. Is CFD No. 1 subject to annual audits?
Yes. Like other California public agencies, the District maintains financial records and complies with applicable financial reporting requirements.

21. How can residents attend Board meetings?
Residents may attend meetings in person and, when offered, through virtual meeting platforms identified in the meeting agenda.

22. Can residents speak during meetings?
Yes. Public comment opportunities are provided during Board meetings in accordance with the Brown Act.

23. Where can residents obtain public records?
Requests may be submitted under the California Public Records Act to the District.

24. What role does CFD No. 1 play in future community growth?
The District works to preserve assets, support infrastructure planning, and encourage investment that can help complete the long-term vision for Diablo Grande.

25. Is CFD No. 1 involved in bankruptcy proceedings?
The District has previously utilized legal proceedings when authorized by the Board to protect public assets and fulfill its fiduciary responsibilities.

26. Does CFD No. 1 maintain parks or recreational facilities?
Only if such facilities are owned by the District or specifically assigned to its responsibility.

27. Does the District coordinate with other government agencies?
Yes. The District regularly coordinates with county, state, and regional agencies, including infrastructure and utility providers.

28. How can someone contact CFD No. 1?
Residents may contact the District office using the contact information published on Board meeting agendas and the District website.

29. How can I stay informed about CFD activities?
Residents are encouraged to:
Attend Board meetings
Review posted agendas and minutes
Visit the District website
Subscribe to District announcements when available.

30. What are the District’s current priorities in 2026?
Current priorities include:
Protecting public assets.
Supporting responsible development.
Managing District-owned properties.
Maintaining transparency.
Working with regional partners.
Strengthening the long-term financial stability of Diablo Grande.

31. Does CFD No. 1 have authority to issue bonds?
Yes. Community Facilities Districts may issue bonds when authorized under the Mello-Roos Act and applicable proceedings to finance eligible public facilities.

32. How does CFD No. 1 benefit the Diablo Grande community?
The District helps preserve public infrastructure investments, responsibly manages community assets, supports long-term planning, and works toward creating conditions that encourage sustainable future development and economic stability.
These FAQs reflect general information about Diablo Grande Community Facilities District No. 1 and current public information available as of 2026. They are intended for informational purposes and do not replace official District documents, Board actions, or legal advice.

33. Why did Diablo Grande Community Facilities District No. 1 file for Chapter 9 bankruptcy?
On November 25, 2025, CFD No. 1 filed a voluntary petition for relief under Chapter 9 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of California. The Board determined that a Chapter 9 filing was necessary to protect the District’s assets, preserve public infrastructure, and provide an orderly process for addressing the District’s financial obligations while continuing governmental operations.

34. What is Chapter 9 bankruptcy?
Chapter 9 is a specialized section of the U.S. Bankruptcy Code available only to municipalities and certain governmental entities, including eligible California Community Facilities Districts. Unlike corporate bankruptcies, Chapter 9 allows a public entity to continue providing governmental services while restructuring its financial obligations under court supervision.

35. Does Chapter 9 mean CFD No. 1 is going out of business?
No. Chapter 9 is intended to allow governmental entities to continue operating while developing a plan to adjust debts. CFD No. 1 continues to exist as a public agency and continues performing its governmental responsibilities during the bankruptcy proceedings.

36. Why didn’t the District simply sell its assets instead of filing bankruptcy?
The Board concluded that an uncontrolled liquidation or tax sale of District-owned property could significantly reduce property values, impair future development opportunities, and adversely affect bondholders and residents. Chapter 9 provides an orderly legal process to preserve public assets while pursuing long-term financial stability.

37. Did the bankruptcy stop the Stanislaus County tax sale?
One of the principal reasons cited by the District for filing Chapter 9 was to halt the threatened tax sale of District-owned properties through the automatic stay provided under federal bankruptcy law, allowing time to pursue a comprehensive restructuring strategy.

38. Does the bankruptcy affect residents’s daily services?
No. The Chapter 9 filing by CFD No. 1 does not interrupt the day-to-day governmental functions of the Community Facilities District. Water, sewer, and other utility services remain the responsibility of the Western Hills Water District.

39. Does Chapter 9 eliminate all of the District’s debts?
No. Chapter 9 does not automatically eliminate debt. Instead, it provides a legal framework for negotiating and obtaining court approval of a Plan of Adjustment that restructures debts in accordance with federal bankruptcy law.

40. Is the bankruptcy intended to protect taxpayers?
The Board has stated that one of its objectives is to maximize the value of public assets, avoid distressed sales, preserve opportunities for future development, and achieve a more sustainable long-term financial outcome for the benefit of the community and creditors.

41. Who oversees the Chapter 9 bankruptcy?
The bankruptcy case is being heard in the United States Bankruptcy Court for the Eastern District of California before Judge Jennifer E. Niemann. Major actions taken by the District during the bankruptcy process are subject to court oversight.

42. Can CFD No. 1 continue selling District-owned property during the bankruptcy?
Potentially, yes. However, depending on the circumstances, significant transactions may require Bankruptcy Court approval in addition to any approvals required under California law and Board policy.

43. Is the Chapter 9 bankruptcy related to the Western Hills Water District’s operations?
The bankruptcy filing is specific to Diablo Grande Community Facilities District No. 1. Although the same Board governs both entities, they are separate public agencies with separate finances, legal responsibilities, and governing powers. The Chapter 9 case does not place the Western Hills Water District itself into bankruptcy.

44. Where can the public obtain information about the Chapter 9 case?
Court filings, hearing dates, and important case documents are publicly available through the District’s claims and noticing website and through the United States Bankruptcy Court docket for Case No. 25-26635.

These additional FAQs complement the original set and explain the Chapter 9 filing in a factual, neutral manner
consistent with the public court record.