MORE TIME SOUGHT FOR RITTER PLAN.

Byline: Jim Skeen Staff Writer

PALMDALE - A second extension will be needed to close out the bankruptcy recovery plan for the 7,200-home Ritter Ranch project, but officials said Monday that the project remains on track.

The difficulty in finalizing the plan lies in the vast amount of paperwork to go through - including 200-plus agreements between the original developers and other entities - and not from any inability of the third and latest developer to tackle the project, officials said.

``There is a mountain of things to go through,'' said Palmdale City Attorney Matt Ditzhazy. ``They've turned up problems with financing and problems with titles. They have been chopping those trees down one at a time as they come to them.''

The new developer, Sage Community Group, a Newport Beach company, the city, and representatives of Ritter Ranch project bondholders were negotiating a second extension that will have a deadline of Nov. 1.

Originally, the recovery plan was to close June 30, but that plan was later amended to extend the deadline to today.

A progress plan with the new extension date is expected to be filed with a federal bankruptcy court today.

In February, a federal bankruptcy court approved a city-backed plan for Sage to take over the project from Ritter Ranch Development LLC, which took over the stalled project in August 1998 only to file for Chapter 11 bankruptcy protection two months later.

The recovery plan calls for Sage to pay $7 million in cash to the bankruptcy estate and provide a letter of credit for $10 million to the Franklin Fund, which holds $33 million in bonds issued for improvements to the Ritter Ranch property.

Sage also would make the bond payments that Ritter Ranch Development missed, and would be responsible for future bond payments.

The Ritter Ranch project has been tangled up in lawsuits, foreclosures and bankruptcy for more than three years.

The project's original developer, Ritter Ranch Associates, was able to get the project approved by the city and fended off lawsuits from Leona Valley residents who feared the project would destroy their rural lifestyle.

However, before a single home was built, the developers lost the project in a foreclosure by their lender in January 1997.

Palmdale, which is administrator of the $50 million bond issue for the project improvements, began its own foreclosure proceedings in May 1997 against the lender, Bankers Trust.

In May 1998, a settlement agreement was reached to hold off foreclosure proceedings and allow Bankers Trust to find a developer to take on the project.

Ritter Ranch Development LLC took the project on in August 1998. However, that company filed for Chapter 11 reorganization protection in federal bankruptcy court in October 1998. That company also did not build a single home.