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Owners of Troubled Capistrano Terrace (Orange County CA) Mobile Home Park File Bankruptcy

By Jonathan Volzke

The owners of Capistrano Terrace Mobile Home Park in San Juan Capistrano have filed bankruptcy, the latest twist in the saga of the 60-year-old park where residents already faced the prospect of losing their homes.

In a news release issued Friday, owners of the park, Capistrano Terraces Ltd., said they were forced into bankruptcy protection by the city’s rent control ordinance, lawsuits by residents and other issues.

They had already notified the city they intended to close the park, triggering public hearings and in-depth study of the homes there.

An Orange County Superior Court Jury awarded more than 100 plaintiffs $1 million in a 2007 lawsuit by residents alleging park owners had not maintained Capistrano Terrace. The previous owner paid more than $1.5 million in a similar suit before Capistrano Terraces purchased the Valle Road park.

“Adding to the mounting burdens, the City of San Juan Capistrano’s rent control ordinance makes it extremely difficult to even raise the rents to allow replacement of major park systems, such as new sewer lines or upgraded electrical systems,” the release says. “The inability of the owners to raise rents ($51 per month per the city’s rent control ordinance) to cover these additional expenses as well as the rising costs of insurance, property taxes and improvements have created an untenable situation resulting in the need to file for bankruptcy protection.”

Park owners had already started the process of shutting down the 17.5-acre park on Valle Road park, home to 143 occupied units.

The park began as a trailer campground in the 1950s, evolving to a permanent mobile-home park over the years. It is terraced into a hillside above the San Diego Freeway, and some units have ocean views.

The aging park has struggled for years, as the hillside has slipped. Sewage at times ran though the streets, and the power to the entire park has failed for days at a time.

Over the last dozen years, the city has tried to facilitate residents’ purchase of the park at least three times.

In the late 1990s, LINC Housing Corporation of Long Beach worked with park residents and city staff for a year to create a resident-owned park, but failed to get support from a majority of the residents in the park.

Several years later, Resident Owned Parks Inc. of Sacramento took another run at converting the park to resident ownership, but again failed to get resident support, according to a city report.

The owners, managed by the same group that owns the Distrito La Novia/San Juan Meadows, bought the property in 2003.

About two years ago, a councilman tried to broker a resident purchase, again coming up short.

In November 2006, the owners notified the city they intended to close the park. A city official again tried to broker the deal, but residents thought the landowners wanted too much money. When that effort failed in 2008, the park owners restarted the effort to close Capistrano Terrace.

The city requires park owners who want to close a park pay for a study that looks at how much each coach is worth, where it can be relocated, if at all, and develop a plan to compensate residents.

The study valued the coaches from $20,000 to $154,000.

The city’s Housing Advisory Committee held an exploratory meeting on the closure last month, drawing more than 30 residents who want the park to remain.

It is unclear what impact, if any, the bankruptcy will have on the closure plan.

Here is the park owners’ news release:

Capistrano Terrace Ltd., a California limited partnership and owner of the Capistrano Terrace Mobile Home Park announced today that it has filed for Chapter 11 bankruptcy protection. The mobile home park, purchased in 2003 has seen mounting liabilities caused by geological issues, deteriorating infrastructure, lawsuits by tenants over park issues, and failure of insurers to handle resolution of those claims.

The Capistrano Terrace Mobile Home Park was built as a temporary travel trailer park in the 1950s. It was never intended to be a full-time mobile home park, but over the years, has become just that.

Since its purchase by Capistrano Terrace Ltd. in December 2003, several improvements have been made, such as employing a professional management company, hiring full time maintenance staff, annual tree trimming, refurbishing the clubhouse and pool, buying new furniture, and scheduling regular sewer line cleaning.

Park tenants had indicated an interest in purchasing the park, which the owners had agreed to on two occasions (once under the old owner and most recently under Capistrano Terrace Ltd.), but the tenants failed to place the minimum of $100 per coach in a good faith deposit to open Escrow.

Adding to the mounting burdens, the City of San Juan Capistrano’s rent control ordinance makes it extremely difficult to even raise the rents to allow replacement of major park systems, such as new sewer lines or upgraded electrical systems. The inability of the owners to raise rents ($51 per month per the city’s rent control ordinance) to cover these additional expenses as well as the rising costs of insurance, property taxes and improvements have created an untenable situation resulting in the need to file for bankruptcy protection.

Geological studies and notices from the city required after the illegal dumping of dirt by residents resulted in slides and red tagging of homes, warned of potential danger to residents due to slope slippage.

The park pool has been closed for the past three years as a result of geological issues. With the heavy rains of December 2010, the park spent over a hundred fifty thousand dollars trying to repair damage to the park including electrical, plumbing, and cleaning up mud and debris. During one storm, the fire department recommended evacuation of several residences due to the situation.

The recent Failure-To-Maintain lawsuit resulted in a verdict for the residents (that we anticipate will be appealed). The costs and obligations required by the City’s park closure ordinance also contributed to the unfortunate need to file for bankruptcy protection. Capistrano Terrace, Ltd. will continue to work with the residents to help with relocation efforts.

Chapter 11 bankruptcy provides the opportunity to stay the claims of creditors while a plan of reorganization can be presented to the bankruptcy court over the next few months. Bankruptcy protection is intended to assure fair and pro-rata treatment of all the tenants in the relocation and claims process.

Huntington Beach CA Mobile Home Park – Council strikes down mobile home park’s subdivision plan

A proposal that would have allowed a mobile home park at Huntington Street and Atlanta Avenue to convert from rentals to for-sale units was denied this week by the Huntington Beach City Council.

With a 6-1 vote, the council upheld Monday a Planning Commission recommendation to stop the park from subdividing the land. Councilman Devin Dwyer dissented.

The commission denied Pacific Mobile Home Park’s request to subdivide the park once before because the conversion would encroach on public property. City administrators recommended denial in both hearings.

 

Capitola CA Mobile Home Park – Council Approves Sale of Castle Mobile Estates

Written by Daniel Wootan

At Thursday’s meeting, the Capitola City Council approved the sale of Castle Mobile Estates to Millenium Housing for $8.25 million from owner Abraham Keh.

Millenium is a nonprofit organization that offers affordable housing to people throughout California by purchasing and rejuvenating mobile home parks and apartment buildings. It owns 17 parks in the state.

“This gives an opportunity to restore homeowners’ dignity and pride where they live,” Castle resident Ken Cook said. “Millenium respects their tenants. The bottom line is that [under the current owner], we couldn’t sell or get a loan to buy new homes.”

The agreement ensures the park will be a haven of affordable housing for 55 years.

The terms of the plan, known as a Tax Equity and Fiscal Responsibility Act, were more than 570 pages long, prompting some on the council to admit they had not been able to go over every page. Mayor Dennis Norton, though, gained assurances from city staff more familiar with the resolution, that the city and residents were getting a fair deal.

In exchange for certain rent control exemptions, Millenium has agreed to a fixed rate of $650 per month for middle- and low-income residents, with those classified as “extremely low-income” paying $325 per month, with the help of rental assistance provided by the city. This will cost the city more than $100,000 each year.

Rent increases will be limited by the cost of living index, which is based on annual inflation, but Millenium president George Turk said that in years of high inflation, rent would not likely jump at the maximum rate, because the money goes into a trust instead the pockets of any one person.

Rental assistance will not apply to tenants who move in after the Millenium purchase, because as Turk said, “it’s only to transition people already in the park now.”

Cook said Keh, who has been suing the city for several months to get around rent controls, would not let people move new homes into the park, also often raising rent for spaces when new tenants moved in. These and other practices plaguing residents are not allowed under the agreement between the city and Millenium.

Just before the vote, Norton asked residents in the audience if they were in favor of the agreement, receiving several replies of “yes,” and the final approval decision was showered in applause.

 

California Mobile Home Park Conversion Bill to watch this week

SB 444 (Evans) – Allow Counties to Stop Mobilehome Park Subdivisions Based on Resident Input

Oceanside Mobile Home Park Rent Control

Vacancy control is abolished in Oceanside as should be case throughout California.

Read article here.

Mobile Home Park Owner Loses Appeal – COLONY COVE PROPERTIES, LLC V. CITY OF CARSON

Ninth Circuit affirms lower court ruling.

COLONY COVE PROPERTIES, LLC v CITY OF CARSON

Santa Rosa, CA – Proposed Mobile Home Park Condo Conversion

By BRETT WILKISON
THE PRESS DEMOCRAT

Sonoma County government’s latest stance on disputed condo-style conversions of mobile home parks is expected to come today in a Planning Commission vote.

For the second time, commissioners will take up a plan to subdivide the 191-unit Sequoia Gardens Mobile Home Park off Fulton Road, a county-controlled area within the city of Santa Rosa.

Under the change, tenants would have the option of buying the land beneath their homes or continuing to rent.

But park residents, who packed a Feb. 17 Planning Commission hearing, are opposed to the conversion, saying high purchase prices and rent increases will push them out of their homes.

“If I am forced to move out of the park by these rent increases then I will lose everything,” 17-year Sequoia resident Mary Lynne Nicholas, 72, told commissioners.

The park owners, an out-of-the-area investment group, claim the conversion would not adversely impact residents. Low-income tenants would be covered by state rent control until they move while market-rate rents for all other tenants would be phased in over five years, according to a report submitted by the group, Sequoia Park Associates.

But because that report did not use actual rent figures or disclose possible purchase prices, the owners’ assurances aren’t credible, critics said.

“They’re just playing a game,” said William Constantine, the residents’ attorney.

Don Jurow, an owners’ representative, declined to provide rental and purchase figures in an interview, saying the report “spelled out all the facts.”

Similar disputes between mobile home residents and park owners have cropped up around the county and the state.

Critics say the conversions are an end run around local rent control rules that govern parks, which make up one of the state’s largest blocks of affordable housing, especially for seniors.

Separate county and Santa Rosa city ordinances that sought to limit owner-driven conversions were struck down in 2009 in a court challenge by Sequoia Park Associates.

Commissioners are set to deliberate and vote today. Public comments were taken until Feb. 17.

County planners have recommended denial on two grounds:

– A required survey showed residents overwhelmingly oppose the conversion, with 164 against it and two for it.

– The park’s well water has been off-limits to drinking since 2009 because of higher-than-allowed levels of arsenic. Owners have provided bottled-water vouchers. A bid to join the city’s water system remains in funding limbo.

Any decision will likely be appealed to the Board of Supervisors.

Monning bill lets cities recover costs of mobile home suits

By JASON HOPPIN – Santa Cruz Sentinel

Assemblyman Bill Monning, D-Carmel, introduced a bill Wednesday that he hopes shifts the balance in frequent and often long-running disputes between mobile home park owners and communities seeking to protect residents from eviction and rent hikes.

The bill, AB 579, allows governments that prevail in court to recover attorney’s fees in mobile home cases, something they aren’t currently allowed to do. Monning said the bill should particularly help small cities that can’t afford to pursue pricey litigation.

“Our current legal system is tilted against a local government’s ability and willingness to defend their mobile home rent control ordinances and AB 579 will level the playing field,” Monning said.

Monning said the bill provides parity for local governments, which can be ordered to pay the costs associated with litigation should they lose a case. Many of the suits focus on government efforts to control rents on the land beneath owner-occupied mobile homes. Shelia Day, of the Sacramento-based Western Manufactured Housing Communities Association, said mobile home park owners have a First Amendment right to argue their cases in court and that one industry should not be singled out by lawmakers.

But advocates for mobile home residents praised the bill.

“One of the strategies the park owners use is to bludgeon smaller communities with the threat of litigation expenses,” said Terry Hancock of Santa Cruz Senior Citizens Legal Services. “To defend these lawsuits takes a lot of money.”

Santa Cruz County has seen its share of mobile home park battles over the years. In December, the city of Capitola estimated that it’s spent nearly $1 million defending its mobile home rent law.

And the city of Santa Cruz waged – and ultimately gave up on – long-running battles over its mobile home laws following a protracted battles with the owners of De Anza Mobile Estates, situated on a picturesque bluff on the city’s Westside.

There are 89 mobile home and recreation vehicle parks in Santa Cruz County, many of them located in unincorporated areas, according to the California Department of Housing and Community Development.

Goleta California – Mobile Home Park Owner Hires Ted Olson

Ted Olson, former solicitor general under President George W. Bush and certified legal heavyweight, has been hired by landlord Daniel Guggenheim, owner of Rancho Mobile Home Park, to take his anti–rent-control case against the City of Goleta to the U.S. Supreme Court. Guggenheim, who contends Goleta’s mobile-home-park rent-control ordinance constitutes an illegal confiscation of private property, was recently shot down by a panel of 11 judges serving on the Ninth Circuit Court of Appeals. They argued that Guggenheim knowingly bought the property in 1997 when rent control was already in effect and that the purchase price he paid reflected the reduced rents the law enabled him to collect. If the law were struck down, they opined, it would constitute an unfair windfall for Guggenheim and shortchange mobile-home-park residents who purchased after the law went into effect to the tune of $100,000 per coach. (That’s the difference in sales price between a coach on a rent-controlled space as opposed to one not covered by rent control.)

Typically, the Supreme Court agrees to hear only a tiny fraction of the petitions submitted. By bringing in a high-profile appellate specialist, Guggenheim might be able to increase his odds of being heard. Olson argued the landmark voter recount case that gave the 2000 presidential election to George W. Bush over Democrat Al Gore. Most recently, he argued that California’s Proposition 8, which excludes gays and lesbians from marriage, was unconstitutional. Goleta City Attorney Tim Giles expressed skepticism that the Supreme Court would hear the case even with Olson involved. The facts of the Guggenheim case, he said, are so unique and narrow that they have minimal application to other mobile-home-park rent-control disputes. As for Olson, Giles said, “It’s like he’s coming in after the 10th inning and the game is already over.”

*This article is from The Santa Barbara Independent and written by Nick Welsh.

Judge backs mobile home park conversion – Chino CA

Chino, CA – The city is considering its next step after a judge granted a petition for the Lamplighter Mobilehome Park to convert its rental units into ownership lots. Read the full story here.

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