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San Juan Capistrano, CA – Deal pending for residents to buy mobile-home park
November 19, 2011 by parkguy1 · Leave a Comment
BY FRANK SHYONG / THE ORANGE COUNTY REGISTER
Residents and the owner of a San Juan Capistrano mobile-home park mired in bankruptcy proceedings are considering a deal that would allow the residents to purchase the park – potentially ending a years-long struggle over the property’s control and maintenance.
The approximately 300 residents of Capistrano Terrace Mobile Home Park will receive a letter this week explaining terms of the deal and offering an analysis of the financing plan, according to James Hinds, the bankruptcy attorney representing the residents.
Hinds declined to discuss specifics of the plan until the residents are notified.
The preliminary agreement, struck in late October, could end a saga marked by two attempted park closures, a failure-to-maintain lawsuit and a bankruptcy filing.
Capistrano Terrace Ltd. purchased the property in 2003 for $8.3 million. The company was formed as a limited partnership of Lake Forest-based Advanced Real Estate Services, which is developing Distrito La Novia/San Juan Meadows, a residential, commercial and equestrian project near the mobile-home park. The development’s approval by the city was contested and upheld in a June referendum.
Capistrano Terrace Ltd. tried to close the park in 2006 in the face of geological instability, deteriorating infrastructure and residents’ lawsuits.
Residents filed a failure-to-maintain lawsuit in 2007. In January this year, an Orange County jury awarded $1.1 million to 17 of the 127 plaintiffs. The award was to be replaced by a$4.85 million settlement in July covering all the plaintiffs.
However, the park owner filed for Chapter 11 bankruptcy protection two hours before its insurer met with the residents’ attorneys to talk about the settlement offer. At the time, a Capistrano Terrace partner called the filing “coincidental.” All payments and settlements are now in control of a bankruptcy court.
The new purchase deal was negotiated after the court decided to employ a mediator.
Residents have twice before attempted to purchase the park. In 2008, the park and residents agreed to an $11 million price. However, the failure-to-maintain lawsuit complicated the sale.
Hinds said this deal is different because everyone wants to avoid further lawsuits.
“We’ve turned the litigation time bomb off, but we’re working diligently to do the park purchase,” Hinds said.
Ray Poulter, a partner in Capistrano Terrace Ltd., said he is receptive to the agreement.
But Poulter’s signature appeared on a “notice of park closure” that was hand-delivered to all park residents last month. The letter contained a closure date of Oct. 15, 2012.
Poulter said the park owner was simply keeping its options open, since city law requires that mobile-home residents be given a year’s notice of a park closure.
“In bankruptcy proceedings, you have to anticipate and cover all the possible outcomes,” he said.
Poulter said he had had doubts about the financing underlying past attempts to purchase the park but that the current agreement is more promising.
“The residents have demonstrated a sincere desire to purchase the park, and they have greater means to put toward that effort than ever before,” said Poulter, referring to the settlement.
Financing is often the biggest hurdle for mobile-home residents trying to own and operate their park, said Maurice Priest, president of Resident Owned Parks, a nonprofit housing group that guides mobile-home owners through the process. Priest is helping in the Capistrano Terrace acquisition plan.
“Mobile-home owners have to make sure the financing they arrange is on terms and interest rates that keep the project affordable,” Priest said.
Hinds wouldn’t reveal the price of the Capistrano Terrace purchase, but he said the financing plan would keep residents’ rents stable for at least the next year.
A community meeting is planned for early December to answer residents’ questions about the deal, Hines said. If 80 percent of the residents ratify it, the deal would face final approval by a bankruptcy judge at a later hearing.
