Simi Urged to Pay to Lure a Key Business : Economy: City Council today will discuss whether to dole out $130,000 to attract Time Warner subsidiary. Proponents say potential gain would far exceed cost.

The city should provide about $130,000 to help a major music and videotape firm move its warehouse from Chatsworth to Simi Valley, city staff members urged in a new report.

The City Council today is scheduled to consider the aid request from Warner/Elektra/Atlantic Corp., a subsidiary of communications giant Time Warner Inc.

Despite the wealth associated with the parent firm, Simi Valley leaders said Friday that financial help is justified because Warner/Elektra plans to move about 160 jobs and a $4-million annual payroll to the city.

Councilman Bill Davis said the potential economic boost to the city far exceeds the amount Warner/Elektra is seeking.

“Would you stand on a street corner and trade a dollar for five?” Davis asked. “Every day, I would. . . . Even if the (Warner/Elektra employees) lived in the San Fernando Valley and drove here to work, they’d buy lunch here. They’d shop here.”

Last month, the Burbank-based company filed plans to build a $6.5-million, 200,000-square-foot warehouse and distribution center on Ward Avenue in a west Simi Valley industrial area.

Warner/Elektra representatives said the company-owned structure will replace a smaller building the firm rents in Chatsworth.

In a May 17 letter, Jacques Lee, Warner/Elektra’s national director of facilities, asked Simi Valley to defray the cost of building permits, utility connection fees and other relocation costs.

Although Simi Valley land is less expensive than that in the San Fernando Valley, the company could have saved even more by moving out of state, Lee said in his letter.

“Most of our competitors have relocated to Nevada, where land and construction costs are lower,” he wrote. “In addition, they have reduced permit fees and utility hookups. We, however, have chosen to remain in California, close to our customer base.”

Simi Valley leaders said the fierce competition among cities seeking new jobs has forced them to offer cash incentives to major employers.

Last year the council allocated $175,000 to Guardian Products Inc., a medical supply house that is moving from the east San Fernando Valley.

In addition, the council approved a complex aid pact with Countrywide Funding Corp., which will vary according to the number of workers the firm eventually employs in Simi Valley.

In an interview, Lee said Warner/Elektra purchased its Simi Valley acreage last year for half the cost of an equivalent site in the San Fernando Valley, long before it requested city aid.

“We never made any statement that we would not come to Simi Valley if they would not waive these fees,” he said. “This is not the way we do business. I think it’s obvious that we are committed to the site there.”

Lee declined to say why a subsidiary of Time Warner--which earned $86 million on revenues of $13 billion last year--was seeking relocation aid. City officials said Simi Valley needs to establish a reputation for helping companies move to the city, regardless of their financial clout.

Councilwoman Barbara Williamson said recently that she doesn’t want the city to cater only to big-name companies. “What do we do for the little company that doesn’t have the big bucks?” she asked.

City staff members said $140,800 of Warner/Elektra’s building and utility fees are eligible for reimbursement. Under a formula adopted earlier by the council, staff members recommended that $130,400 be allocated from redevelopment funds.

The figure is based on a percentage of redevelopment funds the Warner/Elektra project is expected to generate. After the warehouse is built, the property is expected to generate about $33,600 more annually in property taxes--money that will go to the city’s redevelopment agency.

In addition, staff members estimated that Warner/Elektra will return about $125,000 each year to the city in business tax revenue.

Steve Frank, a city activist who has criticized the council’s use of redevelopment funds for a new cultural arts center, said he does not object to using such money to lure new employers.

“We are in competition with other cities,” he said. “What we need is a state law to stop this competitive bidding by cities to buy jobs.”

But Frank added: “We can’t afford not to be involved in the process under the current rules.”