RITTER OVERSEER NAMED JUDGE INTERVENES AFTER DEVELOPER FAILS TO OBTAIN FUNDING.

Byline: Jim Skeen Staff Writer

PALMDALE - With the developer yet to get his loan funded, a federal bankruptcy court judge has appointed a trustee to oversee the recovery of the 7,200-home Ritter Ranch project.

Federal Bankruptcy Court Judge Geraldine Mund appointed Robbin Itkin as the trustee of the Ritter Ranch project. Itkin is a partner in the firm of Kirkland and Ellis, a law firm with such A-list clients as General Motors and Motorola.

Mund made the appointment Tuesday after developer John Musick was unable to obtain a $200 million-plus loan funded for the project by the deadline Tuesday - a deadline that had been extended twice before.

Musick's attorney did not return phone calls Wednesday.

The appointment does not rule out the possibility of Musick continuing with the project's recovery plan. However, it does open the door for other developers to step in with deals of their own.

``In terms of making creditors whole, John's plan is still the best in town,'' said Matt Ditzhazy, Palmdale's city attorney.

Musick plans to use the loan to fund the development of Ritter Ranch, including paying off the debt owed on a $50 million bond issued for the project.

The city of Palmdale has been reimbursed by Musick for the more than $1.2 million spent in administering the project.

Under an agreement between the city and the developer, Musick's Ritter Ranch Development also must honor a requirement in the project's original development agreement calling for a $3 million contribution toward a new City Hall, which has since been built.

Under the new agreement, Ritter Ranch Development would make payments in increments of $1,500 for each of the building permits issued on the first 2,000 homes.

Musick, who worked on water issues for the original developers, had tried to take over the project in August 1998. That bid ended a few months later when Musick filed for Chapter 11 bankruptcy protection.

In February 2000, a federal bankruptcy court approved a city-backed plan for Newport Beach-based Sage Community Group to take over the project from Musick's Ritter Ranch Development LLC.

Initially arguing that his agreement with the city gave him exclusive development rights to the project, Musick dropped his opposition to the Sage plan with the understanding that if the company failed to perform, he would get another opportunity to put together a recovery plan.

Sage, despite a series of extensions, was unable to finalize its plan and notified the city in a Nov. 30 letter that it was dropping its bid to take over the project.

The Ritter Ranch project - envisioned as a state-of-the-art, master- planned community in the hills of west Palmdale and south of Elizabeth Lake Road - has been entangled for years in lawsuits and bankruptcy proceedings.

The project's original developer, a company formed by Lorimar Telepictures executives Irwin Molasky and Merv Adelsen, was able to get the requisite approvals for the project and fend off lawsuits from neighboring homeowners concerned about the loss of their rural lifestyle. The company, however, lost the project in a foreclosure by its lender in January 1997.

Palmdale, which is the administrator of $50 million in bonds issued for improvements to the project but is not responsible for the payments, 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. That led to Musick's first attempt to take over the project.

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