Flags emblazoned "JTS" fly over the sales office at Castle Oaks subdivision in Ione. The crashed economy caused the developer to default temporarily on a bond payment. Photo by: Roger Phelps

A sizable money default is being made good for an Ione special-assessment district.

JTS Communities, a major Sacramento-area builder, missed a payment in April to a Mello-Roos improvement district that contains the company's Castle Oaks subdivision in Ione. The amount was $453,000 and was to have paid special taxes due on only part of the 99 lots the company still retains in a crashed housing market. In concert with several partners, JTS officials had options to pay cash to the improvement district or to surrender bonds in the delinquent amount.

"Inclusive of the statutory 10 percent delinquency penalty of $45,318.74, the total due the district by June 30 is $498,506.11," wrote L. William Huck, managing director of JTS partner Stone & Youngberg LLC of San Diego in a letter to Ione officials. "We hereby request that $490,000 in par (face value) of bonds representing an approximate value of $501,338.06 (including accrued interest value from 3/1/09 - 6/30/09) be tendered prior to June 30 to satisfy the $498, 506.11 total due to the district by that date."

A Mello-Roos district assesses a special property tax, often to pay for streets, sewers and other essential residential services that a builder must install, as is the case in the Castle Oaks subdivision.

"Improvement area No. 3 will be taken care of," said Kim Kerr, city manager. "They tendered bonds in the amount of $498,000 to the Mello-Roos district. That leaves areas 2 and 1."

Ione gets a share of revenues that the district raises, distributed by the county Tax Collector's Office.

Kerr has said that for the remaining improvement areas for which JTS is responsible, the company and its partners might find themselves in a position where land as well as bonds would need to be surrendered in order to meet Mello-Roos debt.

JTS met a 45-day deadline to deal with the debt in order to avoid initiation of foreclosure proceedings by the city of Ione.

The company has ranked consistently in the top 10 Sacramento-area builders in recent years. Its houses average a sale price in excess of half a million dollars, according to research by housing analyst Greg Paquin. In Castle Oaks, JTS is partnering with two southern California companies and a Woodland company.

The default now being cured is the second on bonds for the lots that compose Castle Oaks. JTS bought the bonds from a previous defaulter.