Simi to Discuss Payment Options for 32 Acres : City Hall: Council will consider ways to pay the $3.5-million cost. Officials hope to lure a mall developer to the site.

The Simi Valley City Council on Monday will discuss ways to pay for 32 acres of prime hillside property that the city agreed to buy last week for $3.5 million.

Officials hope city ownership of the site, near the northeast corner of 1st Street and the Simi Valley Freeway, will make the area more attractive to prospective mall developers.

“It’s a tremendous business deal and a tremendous deal for the community,” said Councilwoman Judy Mikels, who helped negotiate the agreement. “If a mall developer is looking at this site and we own this property, it is going to send the message that ‘yes, we are serious about bringing a mall here.’ ”

The Simi Valley Community Development Agency is purchasing the land from the Lucille Estes Trust, managed by former Councilman Bill Baker, Estes’ widower.

Under conditions of the agreement, the city will put $2.5 million down and pay the rest over four years.

The council Monday will consider funding the purchase with $1 million from the city’s Lighting Maintenance District, $500,000 each from the sanitation and waterworks districts, and $500,000 from the Community Development Agency.

Development agency funds will also be used to pay off the outstanding $1 million in monthly installments.

The property adjoins a 126-acre privately owned site that the city has designated for a regional mall.

Mall developer Melvin Simon & Associates put a mall project on hold two years ago because of poor economic conditions. City officials said they hope the land purchase will encourage Simon or another developer to revive efforts to build a mall.

“I’m not expecting a mall developer to pop out of the woodwork immediately,” Mikels said. “It’s going to take some time, but I think this is heading us in the right direction.”

Michael Marr, who was the chief negotiator for Simon when the company was planning to develop the mall, said the Simi Valley hillside is still considered a prime site for a mall, and that city ownership of the adjoining property could make the land more attractive for developers.

“It is going to be an expensive site to develop because of the hilly topography,” Marr said. “If the city can help out by offering land at a preferred price, I think it makes it easier for a center to happen.”

The city initially tried to buy the property last year but was outbid by Wal-Mart developers, who planned to erect a store on the site.

When voters last month defeated a measure that would have allowed construction of a Wal-Mart, Baker offered to sell the city the property for $4.15 million.

The city whittled the price down to $3.5 million, substantially below market value, according to a staff report. Comparable land in the area is valued at between $4.50 and $11 per square foot.

City officials said they are eager to buy the land before the end of the month, because starting in January state law will prohibit city financing of commercial property purchases.

Under the Community Redevelopment Reform Act, signed into law by Gov. Pete Wilson in October, redevelopment agencies will be barred from offering financial assistance to commercial developments on previously undeveloped properties larger than five acres.