PALMDALE — Ritter Ranch, the giant planned community being developed on the outskirts of this desert city, is in foreclosure proceedings and could collapse in a tangle of bankruptcies and lawsuits if negotiations to save it fall through.
Foreclosure proceedings were triggered earlier this month, when the Bankers Trust Co. of New York filed a notice of default against the Ritter Ranch Co., citing $26 million in outstanding payments. The bank's action coincided with a decision by the city of Palmdale, which is unhappy with the slow pace of the project, to freeze payments to the developer from a municipal bond issue.
The dispute over the fate of these bond payments may now prove to be the make-or-break element in negotiations to avert foreclosure.
"We are still trying to keep this thing alive," said Paul Nadel, a director of the Ritter Ranch Co. "Our hearts are still in it, but you get kicked in the teeth enough, and you do start to wonder."
The troubles of Ritter Ranch, which was envisioned as home to 20,000 residents, stem from the bust in Palmdale's real-estate market, Nadel said. Palmdale just about exploded with the boom in the 1980s, then succumbed to a severe economic slide in the '90s, just as the Ritter Ranch project was supposed to get underway.
Hence, no firms have started building homes there, and although the company says it has builders lined up, it has exhausted its loans. "Many builders have no interest in going [to Palmdale] anymore," Nadel said.
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It will take three or four months for the bank to foreclose on the property.
During that time, Ritter Ranch's owners, Merv Adelson, the founder of Lorimar Telepictures, and Irwin Molasky, a former Lorimar executive, plan to press for an agreement that would allow the project to go forward. "We feel Palmdale is on the verge of a return to prosperity," Adelson said.
Adelson and Molasky's faith in the return of boom times is not so different from the feeling of scores of other developers, whose speculative dreams have carpeted Southern California's deserts with tract homes.
But if they are wrong and Ritter Ranch unravels, economically depressed Palmdale--already identified with one of the highest foreclosure rates in the nation--will become home to a foreclosure that dwarfs all the others.
The 18-square-mile Ritter Ranch property, which was put on the market at $27 million in 1988, was to be a master-planned community for 7,200 homes, schools, fire stations, golf courses, parks and trails. Six thousand acres were to be set aside as wilderness.
