Tax OKd for Plan to Renovate Shopping Center : Thousand Oaks: City Council approves creative funding scheme for Janss Mall, Sears project. Up to $35 million in bonds are to be issued.

With more fumbling than fanfare, Thousand Oaks City Clerk Nancy Dillon unsealed an envelope and began tallying ballots cast in a special election to determine whether the city should levy new taxes.

The result was unanimous.

Every affected property owner had voted to accept the assessments.

Unusual? Surely. Surprising? Not at all.

For this election involved only two property owners--those holding title to Janss Mall and the Sears department store. And both had asked the city to impose the new tax as part of a creative financing scheme to pay for renovating the aging shopping center.

Approved by the council in a 4-1 vote late Tuesday, the financing plan will work this way:

The city will issue up to $35 million in bonds, selling them to investors to generate a pot of cash.

Mall developers will use that money to pay for part of the mall’s extensive face lift. Earmarked exclusively for public facilities, the bond money will cover the cost of landscaping, street improvements and a new parking garage to serve both Janss Mall and the nearby Sears store.

The developers will then pay off the bonds over 30 years through the special taxes, levied through a “community facilities district.”

This form of financing should be cheaper than taking out a conventional loan, experts said, because interest rates on municipal bonds generally run several percentage points lower than bank rates. The potential savings prompted the Gregson Trust, which owns the Sears parcel, and Merged Centers, which owns Janss Mall, to seek city help.

A majority of council members approved the plan after experts assured them that the city would carry no liability if the developers default on payments to bond-holders.

Janss Mall and the Sears building, which are worth at least three times as much as the bond issue, will serve as the city’s collateral, according to bond counsel Paul Thimmig. The city will also own the soon-to-be-built parking garage, although Janss Corp. will pay to maintain and operate it.

“We all would like to see a (renovated) Janss Marketplace replace what was once a vibrant Janss Mall,” Councilwoman Judy Lazar said. “This is one way we can help with minimal liability--really none, in fact.”

But holding the mall as collateral did not sit well with Councilwoman Elois Zeanah, who cast the only vote against the proposal.

Zeanah noted that the city already owns several large parcels, such as the former city hall on Hillcrest Drive, and has been unable to sell them for cash. “We have mega-million-dollar surplus properties that we can’t place,” she said.

In her critique of the proposal, Zeanah also suggested that the city’s bond rating could drop if the mall developers fail to repay investors.

And indeed, Thousand Oaks’ name will be on the bond issue documents, so the city’s reputation could suffer in case of default, underwriter John D. McAllister told the council.

“Of course, whenever you have a bad experience--be it with a ride at Magic Mountain or a bond issue--your perception will be tainted,” McAllister said, explaining that some investors might shy away from Thousand Oaks bonds in the future if the Janss Mall issue turns sour.

But most municipal bonds are purchased by institutional investors, such as mutual fund managers, who have the experience to look beyond the city’s name and focus on the parties truly responsible for the bond issuance, McAllister said.

Renovations on Janss Mall are expected to start this summer after the landowners wrap up negotiations with a handful of tenants whose stores will be demolished during the construction.