Ritter ranch/garcia/24″/LK1st/mark2nd

By SHELLY GARCIA

Staff Reporter

Ritter Ranch is back on the map again.

Plans for the ambitious, self-contained community in Palmdale have been resurrected by a new owner who purchased the property in August.

If it goes through as planned, Ritter Ranch will have 7,200 homes, schools, a library, swimming pools, a community center, an 18-hole championship golf course, parks and 4,000 acres of equestrian trails.

But the development, which fell into the hands of its financiers when the last owners went belly up in the mid-’90s, is not quite out of the woods yet.

Almost immediately after acquiring the 11,000-acre site, the new owner, Ritter Ranch Development LLC, was forced to file Chapter 11 reorganization in an attempt to control runaway debt on the $325 million development.

“We inherited a project that had existing debt structure that had to be reworked,” said John Musick, president of Ritter Development Inc., the company that is managing the project on behalf of its private owner. “We filed the 11 to stabilize the financing so we could move forward.”

When the development was first conceived in the late ’80s by Merv Adelson, founder of Lorimar Telepictures, and Irwin Molasky, a former Lorimar executive, boom times had hit the Antelope Valley. Full employment in the thriving aerospace industry promised a ready market of home buyers and land was cheap and plentiful.

But it took more than five years for Ritter Ranch to wind its way through the entitlement process, and by the time it did, the real estate market had collapsed. Citing $26 million in outstanding debt, what was then Bankers Trust Co. foreclosed on Ritter Ranch Co., and the company declared bankruptcy a few months later.

Musick, an attorney who served as counsel to the former owners, said he is committed to completing the project, which he said was forced into reorganization by one skittish creditor.

In its filing, Ritter Ranch claimed assets of $73 million and debts of about $65 million. Musick still expects to break ground in May and begin building the residential component by the end of 1999.

“The decision to stop (the development) was made at the bottom of the market by two men in their 70s,” said Musick. “I came in in 1998, the market is coming out of foreclosure, declining prices are firming up and the fundamentals of the project are still there.”

The original idea for Ritter Ranch, a lower-cost alternative for first-time and move-up home buyers, remains sound, said Musick and others associated with the project. With homes expected to be priced at half the cost of those in the San Fernando and Santa Clarita valleys, Ritter Ranch could be an attractive market for first-time homeowners who have been locked out of those other communities.

“The original developers were right,” said Musick. “They were just a few years too early.”

Nestled between the eastern portion of Palmdale, which contains most of the city’s development, and the Angeles National Forest to the west, Ritter Ranch originally was a winery and became a cattle ranch during Prohibition.

The area has more in common with the Old West than the high desert, according to Musick, and the developers intend to capitalize on that atmosphere. The homes, built on wide streets rather than cul de sacs, will be designed to resemble the Victorian architecture of Monterey and the ranches of Frank Lloyd Wright.

The expansion of the Lockheed Skunkworks plant from 2,500 to 5,800 employees and the opening of several large distribution centers have helped boost the market for new homes. But perhaps more important is the rapid recovery underway in the San Fernando and Santa Clarita valleys.

“In Santa Clarita, homes are selling for twice the price (of the Ritter Ranch development),” said Musick. “I don’t think people would mind driving 15 miles to save $150,000.”

The median price of a single-family home in the San Fernando and Santa Clarita valleys reached $253,990 for the third quarter of 1998, according to the Meyers Group Real Estate Information LLC. In the Santa Clarita Valley alone, the median price of a home hit a record high of $213,500 in October, a 14 percent increase over the same period last year, according to the Southland Regional Association of Realtors.

By contrast, Ritter Ranch homes will average $150,000, with starter homes selling for under $120,000 and luxury homes going for $200,000 and up.

Musick said he also expects to attract a growing number of affluent families who are eschewing city life in favor of “the country.”

“My wife talks to her friends around L.A. and they say, ‘We’ve bought ourselves a little horsey place in Santa Clarita,’ and they’re doing it in droves,” he said. “There are thousands of people making these decisions.”

That may sound like wishful thinking, but it’s borne out by other researchers, like Korek Land Co., which tracks land markets closely.

“We think the market in the Antelope Valley will recover, and prices will go back up to the prices that were in existence in the late 1980s by the second half of next year,” said Bill Korek, chief executive of Korek Land, a Van Nuys firm that buys and sells land to merchant builders.

Korek said it usually takes between one and one-and-a-half years from the time a market recovers for home buyers looking for lower prices to begin migrating to outlying areas. The recovery in the San Fernando and Santa Clarita valleys is nearing that milestone, and the Antelope Valley is the next point on the map.

“The San Fernando Valley is built out,” he said. “There’s only one place to go for entry-level housing and that’s the Antelope Valley.”