Reorganization Plan OKd for Bayside Village

SANTA ANA — A federal bankruptcy judge approved a reorganization plan Thursday for the Bayside Village mobile-home park, settling a long fight between homeowners and the leaseholder of the prime Newport Beach land.

DeAnza Assets Inc. will pay nearly $14 million to acquire the park, settle lawsuits and provide rent rebates to many of the park’s residents.

In addition, the Beverly Hills company will provide 30-year leases and rollbacks that on high-rent homes overlooking the 279-slip marina would drop monthly rates about $400 to the $1,400 range.

Most important, future rent increases are fixed and at lower rates than previously unpredictable hikes that pushed some rents up more than 40% per increase.

“Over the long term, all this represents a substantial savings to the residents,” said David Brownell, president of the Bayside Village Mobile Home Owners Assn. “The least amount of projected savings would be $60,000, and for some residents it could go as high as half a million dollars.”

Lawyers on both sides praised the reorganization plan, which was approved by all creditors and 55 of the 59 residents who are shareholders in the bankrupt Bayside Land Corp. that had bought the 56-acre park on Newport Harbor.

“We are thankful this is over,” said Richard Reynolds of Irvine, attorney for the bankrupt company. “We appreciate the cooperation of all the members of the board of directors, as well as DeAnza.”

Michael Silverman, attorney for DeAnza, said that the reorganization plan and settlement of litigation is a win-win situation.

“From the residents’ standpoint, they get long-term leases that are fully assignable and an end to market increases in rent,” he said. “For DeAnza, it leads to stability in the park and will give us a stable income increase. It’s a good deal for all sides.”

Bayside Village is one of a number of mobile-home parks in which residents tried to purchase the land to halt constant and unpredictably huge rent increases.

DeAnza, for instance, used a lease clause allowing it to set increases according to market rates, which it determined at what residents called arbitrarily huge amounts. Such raises led Bayside Village owners to buy the land from the Irvine Co. for $11 million and to sue DeAnza for raising rates above market prices.

However, the sale was subject to DeAnza’s 30-year lease on the property. The residents’ land company went bankrupt, in part because it couldn’t get enough investors to pay $50,000 each to keep it solvent.

Though the residents won their lawsuit at the trial-court level in 1994, DeAnza appealed, and the land company filed for bankruptcy protection a year later.

Silverman said DeAnza will complete the reorganization of the park in a refinancing package that will give it immediate ownership of the property.

DeAnza will pay off the land company’s loan amount plus some interest and will pay nearly $2 million more in rebates, lawsuit settlements, attorney fees and other expenses.

Silverman said DeAnza has no plans to convert the park into another use after the 30-year leases expire.