Developer Strikes Deal With Santa Clarita on Road Bonds : Annexation: The pact frees the city from paying millions of dollars but reduces the amount of land that it had hoped to gain jurisdiction over.

The developer of Santa Clarita’s first regional mall has agreed to annexation of land the city government covets in exchange for permission to issue up to $20 million in city-approved bonds to pay for road improvements, city officials announced Monday.

The deal with Newhall Land & Farming Co. frees the city from having to pay millions of dollars for the road improvements, but reduces the amount of land it had hoped to annex under a previously negotiated agreement, City Manager George Caravalho said.

Under the agreement, Santa Clarita will gain jurisdiction over eight acres in Saugus. The land includes a Builders Discount store, now under construction, which is expected to generate about $400,000 annually in sales tax revenue.

The original agreement called for the city to get an additional 398 acres. The loss of that land was relatively unimportant to the city because it was undeveloped, Caravalho said.

“I think we should concentrate on positive things the city gets out of this agreement,” Caravalho said. “It’s really a win-win situation for everybody.”

Under the new agreement, Newhall Land has also agreed to provide about six miles of biking trails along the south fork of the Santa Clara River, between Lyons Avenue and Newhall Ranch Road, and to pay half the cost of a trail bridge over Bouquet Creek.

The company also gave the city $100,000 in cash for a center to help keep small businesses in the area.

In exchange, Santa Clarita will allow the developer to create a special assessment district to pay for road improvements near the Valencia Town Center mall, which is expected to open next fall. Under the state’s Mello-Roos law, Newhall Land needed the city’s approval to establish the district that will issue the bonds, said Marlee Lauffer, a spokeswoman for Newhall Land.

“It’s basically a cheaper way for us to borrow the money,” Lauffer said.

Santa Clarita had agreed last year to issue bonds on its own to pay for $9.95 million in road improvements needed for the mall. The bonds would be paid off with 16% of the sales taxes collected at the mall over 30 years.

In exchange for the financial aid from the city, Newhall Land had agreed to permit the annexation of 406 acres of land it owns south of Newhall Ranch Road and west of Bouquet Canyon Road, including the Builders Discount site.

Lauffer would not comment Monday on why that deal fell apart. But city officials have said it collapsed after Newhall Land learned that under state law, the bonds that the city would have issued under the previous agreement would have to be recertified annually by the City Council.

With two council seats and a slow-growth initiative on the April ballot, the company may have been reluctant to enter into an agreement that would depend in part on approvals from future councils, city officials have said. If the council failed to recertify the bonds, Newhall Land would have been responsible for repaying the bondholders, city officials said.

Newhall Land will now be responsible for paying up to $20 million, but will retain control over the 398 acres.

Newhall Land officials said last year that the $80-million mall project could not be built without financial aid from the city.

Lauffer said Monday that the firm will be able to finance the road improvements itself, partly because the recession has caused construction costs to plunge.