Now in Bankruptcy, Capistrano Terrace's Plans to Shut Mobile Home Park on Hold

A controversial plan to close a mobile home park on Valle Road is getting the yellow light from the city, which is owed thousands of dollars by the park's owners.

Capistrano Terrace Ltd.—which recently filed for —cannot pay the $7,548 in administrative fees it owes San Juan Capistrano. Because city policy mandates that all developer accounts be in good standing, the application to close the park is on hold until city officials determine their next course of action.

"The applicant [has said] that due to the bankruptcy, funding is not available and cannot be deposited with the city. Therefore, processing of the project must be suspended," city staffer Laura Stokes wrote in a report dated July 27 to San Juan Capistrano's Housing Advisory Committee.

City staffers are assuring residents that it will ask Capistrano Terrace to either move forward with its plans for the closure or withdraws its application. They told residents that their position is that the applicant not be allowed to indefinitely suspend processing of the closure application.

The Housing Advisory Committee was slated to make a decision Wednesday about the closure. The city hired an outside consultant to draft a report identifying the impacts of the closure on its residents,

In total, Capistrano Terrace Ltd. owes its creditors more than $3.7 million, according to paperwork filed in bankruptcy court July 12.

The debt, its owners say, is keeping it from making much-needed improvements to the park, where residents were recently offered a $4.85-million settlement in a suit that accused Capistrano Terrace of not maintaining the sewer, water and utilities.

"It is my understanding that any proposed settlement would need approval from the bankruptcy court," said Daniel T. Rudderow, the attorney representing Capistrano Terrace in the failure-to-maintain lawsuit.

On Tuesday, Rudderow filed a stay in the failure-to-maintain proceedings because of the bankruptcy filing. Although Orange County Superior Court Judge Nancy Wieben Stock has ruled in favor of the residents, Capistrano Terrace has filed appeals and, according to court documents, has "refused to respond" to the plaintiffs' mediation statement.

On July 12—the same day as the bankruptcy filing—attorneys representing Capistrano Terrace and the residents, along with a court mediator and insurance company representatives, met to discuss a settlement in the case. Residents say that's when they were offered a $4.85-million settlement.

The bankruptcy filing is "clearly an effort to do an end run around the city's park-closure ordinance that requires the owner to pay residents fair value for the homes they're so heavily invested in," said resident Rus Calisch.

Calish said the owners are "taking extreme measures to avoid compensating those of us who have our financial lives tied up in Capistrano Terrace Mobile Home Park."

Capistrano Terrace Ltd. is registered with the state as a limited partnership and has shared at least one partner with a Lake Forest-based developer, Advanced Real Estate Services, which is building a next to the mobile home park. 

The mobile home park is managed by the developer's management arm, Advanced Management Co. Capistrano Terrace owes the management company $4,500.

Advanced Real Estate Services and Advanced Management Co.'s president is Rick Julian, who until recently was the president of Capistrano Terrace Ltd., according to partner Ray Poulter.

In June, Julian "felt the press of other business would not allow him to devote the time to the matters concerning Capistrano Terrace, so he sold me his interest," said Poulter. "I am now serving as the president."

Calisch speculated that there's a connection between Capistrano Terrace closing the park and adjacent "massive developments going on all around us," but Poulter bristled at that idea.

"ARES and its properties known as San Juan Meadows-Distrito La Novia is a completely separate partnership," he wrote in an e-mail. "ARES does not have any ownership in Capistrano Terrace. ARES is concerned with developing its own project and has no obligation or interest in solving problems at the mobile home park."

The City Council will discuss the closure application Aug. 16 in a meeting not open to the public.