Santa Clarita / Antelope Valley : City to Consider Buyout of Auto Mall Developer : Economy: The builder faces foreclosure. The city expects the project to eventually generate more than $1 million a year in sales tax revenue.

The City Council on Thursday is scheduled to consider an estimated $6-million deal to buy out the private developer of the city’s struggling two-year-old auto mall and gain ownership of the remaining 37 undeveloped acres in the area.

The proposal calls for the city to more than double its prior $5.2-million investment in the 65-acre Antelope Valley Auto Center project. The deal has been under negotiation for the past 18 months, city officials said.

City Redevelopment Manager Danny Roberts said the city is being forced to act because William Royster, the mall’s managing general partner, faces foreclosure due to unpaid taxes and assessments on the undeveloped mall land that could otherwise stall any future development.

Although city officials originally had ambitious hopes for the auto mall, its May, 1991, opening coincided with the recession and several auto dealers who planned to relocate to the mall failed to do so, leaving the mall about half-developed. The city has already had to help subsidize the operating dealers.

The city has a keen interest in the project because the mall ultimately is projected to generate more than $1 million a year in sales tax revenue for Palmdale.

Under the proposal, the city will purchase the remaining 27 acres of undeveloped land in the mall owned by Royster’s partnership, its contractual share of future sales tax revenue from the mall and the right to acquire an additional 10 acres there owned by another party.

The proposal is not expected to affect the five auto dealers already operating in the mall who own their own sites. They include Antelope Valley Nissan-Volkswagen, Holiday Buick-Oldsmobile, Rally Chevrolet, Rally Pontiac-Cadillac-GMC and Robertson Honda.

Key financial elements of the proposal, Roberts said, include:

* The city paying Royster’s partnership $3.8 million for its assets, $1.5 million in cash up front and $2.3 million in notes due after 10 years. The city also would pay an additional $138,000 a year in interest until the balloon payment of $2.3 million is made.

* The city paying another $1.47 million: more than $1.2 million to pay off two years of delinquent property tax payments and assessment district payments owed by Royster and an additional $220,000 for assessment district payments owed by Frank Germano, the owner of the other 10 acres.

* The city assuming the obligation to pay any amount of the ultimate purchase price for Germano’s property beyond the $1.8 million already deposited by Royster’s partnership. That could cost the city $500,000 or more, since the price is now being contested in a court battle.

* The city agreeing to forgo $241,341 that Royster’s partnership owes the city, Roberts said. The amount stems from a judgment paid by the city in 1991 to settle a lawsuit by Susan Ko, a nearby property owner who claimed the mall project damaged her property.