Council Tentatively OKs Road Funds to Keep Mall On Track : Santa Clarita: The city says a request for $12.8 million in aid is too big, but orders planners and finance officials to begin negotiations.

The Santa Clarita City Council has tentatively agreed to help finance road improvements needed for an 80-acre regional mall in Valencia planned by Newhall Land & Farming Co.

Newhall Land, the largest developer in the Santa Clarita Valley, had asked the council to earmark $12.8 million for the road improvements, insisting the long-awaited Valencia Towne Center would be doomed without the city’s help.

Newhall Land officials said they cannot afford the high cost of road improvements and do not want to pass them on to some of the mall tenants, saying it could drive away desirable stores.

“The project, as it stands now, is not economically feasible,” said Michael Levin, an executive vice president with JMB Urban Development Co. The firm is helping Newhall Land plan and design the $180-million project.

The May Co. has agreed to become the first major tenant in the mall, set to open in spring 1992. If Santa Clarita does not contribute money to keep the project moving according to May Co.’s construction schedule, that deal could unravel, Levin told the council Tuesday night.

“My concern is that, if we falter, May Co. will go to Palmdale,” he said. “They’ve already told us that.”

Councilwoman Jan Heidt said: “I think the people here want a mall. I think we can work this out.”

But the council, saying that the request was too large, ordered city planners and finance officials to begin negotiating with the developer. The council members, meeting late Tuesday night, did not say how much money they would be willing to contribute for the roads.

Earlier that night the council, bowing to public pressure, killed a controversial proposal that would have required a developer to pay for millions of dollars in road improvements in exchange for city approval of a condominium project.

Some citizens supported Newhall Land’s request Tuesday, but others attacked the plan.

“If they can’t afford the project, they shouldn’t build it,” said Mike Lyons. Susan McGrane noted that Newhall Land has promised potential home buyers for decades that a mall would be built some day.

“The promise has been misused, abused and now, it seems, it’s being held hostage,” she said.

Newhall Land is not asking for an outright $12.8-million grant from Santa Clarita. The city would issue bonds to raise the money and then pay off the bonds with sales tax revenue generated by the mall over 20 years. Sixty percent of the sales taxes collected would go toward retiring the bond debt.

Newhall Land officials said the city should view the deal as a long-term investment. After the bond payment is deducted, the city would still earn $134 million in sales taxes over the 20 years.

Ironically, Newhall Land is asking Santa Clarita to pay for road widening and other improvements the city Planning Commission had ordered the company to build when the commission approved a tentative tract map for the mall site in February.

Newhall Land agreed to the changes at the time, but later realized the prohibitive cost involved, Marlee Lauffer, a company spokeswoman, said Wednesday.

The City Council suggested that, in exchange for city support, Newhall Land should allow the city to annex company property west of the Golden State Freeway. Such a move would give the city its first foothold west of the freeway, setting the stage for future annexations in the vast unincorporated area.

But Gary Cusumano, chief operating officer of Newhall Land, flatly rejected annexation, saying anti-growth sentiment in Santa Clarita could jeopardize his company’s interests. “There’s a considerable amount of unrest in this community,” he said.

Cusumano offered to let the city annex 150 acres of company property east of the freeway. The council agreed not to push for annexations west of the Golden State.