Mission Viejo OKs Funds to Expand Mall : Redevelopment: The $35-million plan would also improve streets. However, city’s attempt to raise special tax funds could be challenged by county.

A $35-million plan to overhaul city streets and help finance a major renovation of the Mission Viejo Mall was approved Tuesday by the city’s Redevelopment Agency.

“Our mission . . . is to improve our quality of life,” said Councilman Robert D. Breton. “This step tonight is one that will improve it.”

More than $6 million in redevelopment funds would help finance the mall expansion. City officials said they hope their contribution will persuade the mall owner, the Edward J. DeBartolo Corp., to follow through with a $110-million effort to overhaul the mall.

DeBartolo officials on Monday revealed plans to increase the 999,000-square-foot shopping center by an additional 450,000 square feet. The company is also in negotiations with the prestigious Nordstrom department store chain to provide a new anchor store to the 134-shop mall.

The plan, approved by a 3-2 vote, with council members Robert A. Curtis and William S. Craycraft voting against it, also calls for the investment of about $29 million in renovating city thoroughfares. In addition, it calls for the development of a commuter rail station and an auto mall.

The city’s action establishes a ceiling of $35 million for the improvements. The projects must be approved individually by the Redevelopment Agency, which is the five-member City Council. Included in the redevelopment plan would be funding for a commuter rail station and a 49-acre auto mall near Pacific Parkway.

However, the city’s attempt to raise special property tax funds could be challenged by the county, which is considering legal action against Mission Viejo.

County officials say they could lose $146 million over 30 years if the city proceeds with its plan to overhaul the street system and renovate the mall. The proposed street renovation would increase the value of the surrounding property, a portion of which the county maintains it is entitled to. However, the city wants to use the increased tax revenues to fund redevelopment projects.

In particular, county officials are criticizing the rationale the city is using to determine blight in the redevelopment area. Mission Viejo officials say worsening traffic conditions at several major thoroughfare qualify the city for redevelopment money under blight standards required by the state.

Typically, cities use physical distress--aging housing and retail districts, for example--to satisfy the state’s redevelopment requirements.

Mission Viejo’s method is “certainly a novel way of approaching the blight question,” said County Administrative Officer Ernie Schneider. “It would be a dangerous precedent. It’s a case that could be made in any city. Bottom line is, we don’t think it’s appropriate for county general fund money to be utilized for city purposes.”

Schneider said his staff is preparing a legal challenge to the Mission Viejo redevelopment plan that could go to the County Board of Supervisors in the next few weeks.

City officials concede that they are breaking new ground, but insist that so-called “traffic blight” is a valid way to interpret state redevelopment law.

“You ask anybody that sits in bumper-to-bumper traffic, and they’ll tell you that it’s blight,” said Councilwoman Susan Withrow.

“For (the county) to think that traffic congestion isn’t a major threat for economic viability of any city is totally unrealistic. The county isn’t facing up to the fact that they helped overdevelop the area.”

City officials also dispute the amount that the county says it will lose. Frank Spevacek, a city consultant, said: “I have no idea how they arrived at those figures. I asked (the county staff) and they told me they couldn’t give me an answer because the matter would probably be in the courts.”