Simi Banks on Mall to Halt Flight of Dollars

Last October, a month before Simi Valley voters were to decide a controversial ballot measure banning development on the city’s hillsides, Michael Marr entered the political fray.

Marr, an executive of Melvin Simon & Associates, the nation’s second-largest shopping center developer, called a press conference to announce that passage of the measure would end his company’s plans to build a $40-million to $50-million regional shopping mall.

The mall had long been sought by community leaders to generate both dollars and prestige for their fast-growing eastern Ventura County city.

“We had said that we would not announce our plans for the project before the election, but there was so much on the line, we felt that voters needed to know,” Marr said in a recent interview.

The firm’s efforts to sway public sentiment, which also included a $10,000 contribution to support an alternative hillside ballot measure, apparently were effective. Voters defeated the ban on hillside development in favor of the less restrictive ordinance.

Officials Optimistic

City officials, who eight years ago launched an aggressive campaign to lure commerce and industry to Simi Valley, are now optimistic that the shopping mall project will complete their vision of transforming the once-sleepy bedroom community into a city where residents can live, work and shop without leaving town.

“The mall means a great deal to the city,” said Simi Valley Councilwoman Ann Rock. “. . . Having a mall would recoup fugitive dollars, money that is being spent outside the city because goods and services are not offered here.”

Before that happens, however, Melvin Simon & Associates faces an estimated 18 months of closed-door negotiations and public hearings over the size and shape of the proposed shopping center. Last week, the firm agreed to purchase another 40 acres for the project, bringing to about 120 acres the total mall site, situated north of the Simi Valley Freeway between First Street and Erringer Road.

Before plans are final, city officials will be asked to make a range of policy decisions, including how to solve expected traffic problems created by the mall and how much the city should pay for road, storm drain and sewer improvements. At stake is creation of what could be Simi Valley’s largest single source of sales tax dollars.

Deputy City Manager Bob Hunt, in charge of Simi Valley industrial and commercial development, estimates that $4 million to $5 million is expected annually from the project.

Tax-Revenue Boost

That would double the city’s current sales tax revenue, projected at $4.8 million for the 1987-88 fiscal year. As in most cities, such revenues are Simi Valley’s single largest source of income to pay for such city services as street maintenance and fire and police protection.

Melvin Simon & Associates has already told city officials it expects the city to share some costs of building the shopping mall, said Marr, who is serving as project manager. Plans call for 500,000 to 700,000 square feet of stores, restaurants and movie theaters on two floors, he said. The mall would house three major department stores.

The City Council has already authorized setting up a redevelopment plan, the first step in creating a mechanism to help pay for the project. When the plan is completed early next year, the City Council will decide whether to declare the mall property a redevelopment project area.

Consultant Brice Russell, whose Claremont-based firm began work last week on the redevelopment plan, said city money will probably be used only to help defer estimated losses to the developer that might scuttle the project.

“Our job is to help the developer get what he needs to make the project work, but keep the public investment at a minimum,” Russell said. “. . . They’re not sure what they’re going to need, but they’re pretty sure they’re going to need something.”

City’s Contribution Unknown

Hunt, chosen by the council more than a year ago to bring a major shopping mall to the city, said it is too early to predict how much the city will contribute, if anything.

Still, public assistance for redevelopment projects has helped expand Simi Valley’s industrial space from less than 1-million square feet in 1980 to 5.3-million square feet in 1986, Hunt said. During that same time, commercial space has doubled to about 3.2-million square feet, he said.

City subsidies to private firms in industrial redevelopment projects are repaid through increases in the area’s property tax value, Hunt said.

“As industry grows and continues to grow, the next logical step is the shopping mall,” Hunt said. “Historically, as industry moves in, commercial follows.”

But several people in retail business, including representatives of the area’s two closest shopping mall competitors, have expressed doubts that Simi Valley’s 94,000 residents can support a major shopping mall.

Coldwell Banker’s Allen Young, who helped bring the Target Department store shopping center to Simi Valley, said he examined the possibility of building a regional mall, and talked with a number of shopping center developers and department store representatives.

“None of them expressed an interest in Simi because the population is about half of what is needed,” Young said. “You need about 250,000 people in your immediate trade area. If you expect people in the San Fernando Valley to shop in Simi, it’s just not going to happen.”

Barbara Teuscher, manager of the Oaks shopping mall in Thousand Oaks, said about 10% of the center’s estimated $180 million in annual sales comes from Simi Valley residents. The Oaks has about 1-million square feet of retail space and has the same five major department stores as does the Northridge Fashion Center, the other nearest mall.

Teuscher said she believes Simi Valley residents can satisfy their shopping needs at the malls outside their city.

But even those skeptical about the success of a regional mall in Simi Valley agreed that, if anyone can build a successful mall there, it is the Melvin Simon firm. “I find it difficult to believe that they would be proposing a mall that is not economically viable,” Teuscher said.

The Indianapolis-based corporation has developed 40-million square feet of retail space in 59 malls and 37 smaller community shopping centers in 26 states over the 27 years, company officials said. The firm is also the country’s largest manager of shopping malls.

“We believe that we’ve assessed the market up there correctly,” Marr said of the Simi Valley project.

With a median household income of $45,000 a year, Simi Valley has plenty of affluent shoppers who are spending their money outside the city, Marr said. “There is a mass exodus of spending money, plus there is a lack of competition; the closest regional center is about 19 miles away.”

Chamber of Commerce President Nancy Bender, a former city councilwoman, said she is convinced that growth in Simi Valley, the population of which is expected to reach 136,000 by the year 2010, as well as population increases in Moorpark and unincorporated areas north and west of the city, will make the mall a success.

“With the increase in our industrial base, you also have more and more people spending their money here during lunch and after work,” Bender said.

Some small retailers fear that the shopping mall would take business from their stores, Bender said. “But many of the successful businesses are eager for the project because it will keep shoppers in the city.”

Company officials won’t reveal which major department stores they are negotiating with for space in the proposed mall. But in the race for consumer dollars, “one of the major issues on this project is providing the type of stores that the community wants,” Marr said.

Marr estimates that the shopping mall, which will take two years to build, will eventually generate $125 million to $130 million a year in sales.

Without any marketing studies of its own, the city for now is relying almost exclusively on Melvin Simon & Associates’ belief that a Simi Valley shopping mall will succeed. The real test of the city’s commitment to the retail center will come when the development firm completes its final plans for the site, along with its request for city funding, consultant Russell said.

“What the city has done so far is . . . generally agreed that it might be a workable project and something that we want,” Russell said. “But I don’t want to convey that the city will do everything in the world to get this built because there are finite limits. We just don’t know what they are yet.”

Ed Sloman, a member of the citizens’ group that was defeated in its November ballot attempt to ban hillside construction, said there probably won’t be any organized opposition to the shopping mall until specific plans are unveiled during hearings likely to begin early next year.

“It’s hard to say what kind of traffic and other problems would be created until we see some plans,” Sloman said. “But the basic idea of cutting down hillsides to put in a mall is still a bad idea as far as I’m concerned.”