RITTER RANCH SOUGHT SAGE GETS INTO POSITION FOR NEW TAKEOVER TRY.

Byline: Jim Skeen Staff Writer

PALMDALE - A Newport Beach company is positioning itself for a second try at taking over the stalled 7,200-home Ritter Ranch project, which has been mired for more than five years in lawsuits and bankruptcy proceedings.

Sage Community Group purchased $33 million worth of defaulted bonds issued in the 1990s to build flood control facilities, roads and other infrastructure for the project.

Sage officials did not return phone calls last week, but city of Palmdale officials and a court-appointed trustee for the project confirmed the bonds had been sold by the Franklin Group, an investment firm.

Details of the transaction have not been disclosed but city officials believe the bonds sold for 40 cents on the dollar.

Sage tried once before to take on the massive master-planned community project proposed in the foothills of west Palmdale, bordering rural Leona Valley. In February 2000, a federal bankruptcy court approved a city-backed plan for Sage Community Group to take over the project from the previous developer, John Musick.

Musick's Ritter Ranch Development LLC had filed for bankruptcy protection.

Sage, despite a series of extensions, was unable to finalize its plan and dropped its initial bid to take over the project last November.

Robbin Itkin, appointed last November as trustee of the project, said several parties have expressed interest in taking over Ritter Ranch. Itkin said she hopes to bring a proposal forward for the court's consideration in early 2003.

``I'll evaluate the offers and see what the interest of the bond purchaser is and proceed from there,'' Itkin said.

Itkin is a partner in the firm of Kirkland and Ellis, a law firm with such clients as General Motors and Motorola. Itkin was appointed as trustee after Musick was unable to obtain a $200 million-plus loan to revitalize the project.

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.

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.