DEVELOPER FILES FOR BANKRUPTCY; RITTER RANCH PROJECT AGAIN ON HOLD; NO HOMES BUILT YET.

Byline: Jim Skeen Daily News Staff Writer

An Aspen, Colo., developer who took on the failed 7,200-home Ritter Ranch project filed for Chapter 11 bankruptcy protection, putting the revival of the project in a holding pattern.

Ritter Ranch Development LLC filed for Chapter 11 reorganizing protection in federal district court in Los Angeles. John Musick Jr., president of the company, listed assets at $73 million and debts at $64.8 million, records showed last week.

``Chapter 11 kind of stops everything where it is right now,'' said Palmdale City Attorney Matt Ditzhazy. ``It pretty much brought everything to a halt.''

Calls to Musick were not returned.

In August, Musick entered into an agreement with the city to try to revive the 10,625-acre project. The agreement required Musick to show that he could make good on delinquent bond payments on the project.

In February 1995, the Palmdale City Council authorized the issuance of $50 million in revenue bonds to pay for streets, waterlines and other improvements for the project. To date, about $18 million has been spent, officials said.

A bond payment of $1.8 million is due in February.

City officials said they believe Ritter Ranch Development will make good on the payment.

In the meantime, Musick has made progress on the project, reaching agreements to resolve a number of claims against the project. The last major hurdle is to reach an agreement with RPC Liquidating Trust, which holds the first mortgage on the property, said Mayor Jim Ledford.

Musick has also recently launched a billboard campaign for the project.

``He's starting to market Ritter Ranch,'' Ledford said. ``He probably won't be able to do anything (building) for another year. He's gone further than any of us thought he would.''

Musick has some history with the Ritter Ranch project. He negotiated the water agreement for the project's original developer, a company formed by Lorimar Telepictures executives Irwin Molasky and Merv Adelson.

What was envisioned as a state-of-the-art, master-planned community turned into a muddled legal mess. In January 1997, Bankers Trust of New York, the lender to the original developer, foreclosed on the project.

Palmdale, which is the administrator of the bonds but is not responsible for the payments, began foreclosure proceedings in May 1997 against Bankers Trust, RPC Liquidating Trust and a number of contractors.

RPC Liquidating Trust filed a cross-complaint against the city and the original developers.

In May, a settlement agreement was reached to hold off foreclosure proceedings to allow Bankers Trust to find a developer to take on the project.

The settlement calls for the city to hold off pursuing foreclosure action until 1999 for delinquent tax payments on bonds issued to finance improvements for the project.

In exchange, the owner agreed to a stipulated judgment allowing for the foreclosure sale in the event that required tax payments are not made on schedule.

The settlement called for RPC to drop its cross-complaint and for the contractors who worked on the project to be paid with bond proceeds.

Ritter Park Associates had started construction on the improvements, including an earthen dam, but the developer suspended work before any homes were built. The city has finished the dam on Amargosa Creek and other work, including a new alignment for Elizabeth Lake Road.