Lancaster Redevelopment Agency Goes Shopping for Factory Outlet Mall : Retail: A complex financial aid package would allow the developer to buy land from the city for $2.27 million.

City officials are negotiating to bring a factory outlet mall to a 24-acre site, saying the project could create 340 new retail jobs and return $19.5 million in sales tax revenue to the city over the next 20 years.

The deal hinges on a complex financial aid package that would allow Woodland Hills-based California Factory Stores to buy the land from the city’s Redevelopment Agency and build a mall containing 50 to 60 stores.

A proposed development agreement will be considered by City Council members--who double as the Redevelopment Agency board--at their meeting Monday night.

“We’re not giving away the store,” Councilman Frank Roberts said of the assistance proposal. “What incentives the city will provide will be more than repaid.”

Mayor Arnie Rodio said, “I don’t think there’s a city in the state of California that wouldn’t give its right arm to get these stores right now.”

At outlet centers, merchants generally sell overstocked, discontinued, slightly flawed and first-quality goods at discount prices.

The centers traditionally generate a large amount of sales tax revenue for the city in which they are located.

The proposed mall would be built on land owned by the Redevelopment Agency, just west of the Antelope Valley Freeway on the north side of Lancaster Boulevard. The location is across from the busy Valley Central Shopping Center.

The outlet mall proposal calls for California Factory Stores to buy the land for $2.27 million.

The Redevelopment Agency would pave the way for the purchase by giving California Factory Stores a 20-year loan at a 5% interest rate.

The developer would have to pay $113,503 in interest annually, but the principal would not be due until the end of 20 years.

The agency would also make a separate $555,000 “pre-development loan” to California Factory Stores, which would be forgiven over time as the mall generates an equivalent sum in sales tax revenue.

In addition, the Redevelopment Agency would pay $739,927 in fees that the city normally charges to developers. Finally, the city would construct a new road alongside the outlet mall.

City officials said the financial aid is justified because of the jobs and sales tax dollars the mall will bring to Lancaster.

“I’m very excited about the project,” Rodio said. “You have to look at the overall program, the return to the city over a period of time.”

Councilman Roberts said his main concern is “the impact that this type of attraction will have on small businesses in the valley.

As we bring in these big operations, we hurt the market share of the small-business owner.”

But Rodio said small-business owners will benefit from the influx of shoppers drawn to Lancaster by the outlet mall.

He also said the city plans to work with the Lancaster Chamber of Commerce on a program to help retain existing business.

“It doesn’t do us any good to bring someone in and put someone else out of business,” the mayor said.

Yehuda Netanel, president of California Factory Stores, said his firm has constructed outlet malls in Bishop, Calif., and St. George, Utah, and is building a third in Atascadero, Calif.

“Factory outlets are a proven retail concept throughout the country,” he said.

If Lancaster officials approve the project Monday night, Netanel said he could break ground within a few months.

In addition to the outlet mall, the council will consider two related store projects at the meeting.

Under one proposal, the Redevelopment Agency would swap land with a local Costco store, allowing the warehouse retailer to build a larger store next to the proposed outlet mall.

In a second move, the agency would lease most of the original Costco store to Burlington Coat Factory.