Pendulum’s Still Swinging : North county: Signs of prosperity revisit Palmdale, Lancaster and Santa Clarita. Programs to attract business deserve part of the credit.

Four years ago, economist Ron Halcrow had some bad news for Palmdale and Lancaster, the dusty desert towns that had become two of California’s fastest growing cities almost overnight.

At the northern edge of Los Angeles County, where dozens of spanking-new housing tracts had sprouted in the old alfalfa fields during the mid- to late 1980s, he saw dark clouds on the horizon.

The bad tidings applied as well to the scenic Santa Clarita Valley, sprawling ranchland that had become a bustling suburban hideaway for San Fernando Valley residents who were tired of rising home prices, growing crime problems and thickening smog.

In these spacious north county communities, new “affordable” houses couldn’t be built quickly enough to meet the demand. In some tracts, young families were forced to camp overnight or enter lotteries for a chance to buy one.

Yet in the midst of this explosive growth, Halcrow, a professor at Antelope Valley College, issued a grim forecast: The boom was about to go bust. He pointed to a glut of new, unsold homes and imminent defense and aerospace cuts.

He predicted that the downturn would last four years. Local business leaders, still counting their profits, turned a deaf ear to the message--and aimed their wrath at the messenger.

“I caught quite a bit of flak for it from the business community,” the economist recalled, “because things were still going like gangbusters at the time.”

But then home sales slowed dramatically, prices plummeted and several leading developers went belly up.

Today, four years into the recession that he predicted, Halcrow sees the clouds of gloom finally beginning to part.

“I think it is ending now,” he said. “I would say the area is stabilizing and forming a base for mild but consistent economic growth for the next five years.”

During this period, the recovery may be somewhat more robust in Santa Clarita than in its neighboring cities to the north, Halcrow believes. The far shorter commuting time between Santa Clarita and Los Angeles, he said, will make it more appealing to new home buyers.

This time, many local government officials and business leaders agree with Halcrow’s upbeat economic outlook. Although no one expects a quick return to the boom years, several key indicators give them reason to be optimistic.

Plunging home prices appear to have leveled off, and housing sales are picking up. Local unemployment claims have flattened out. Sales tax revenue--a measure of shopping activity--is expected to be up this year in Lancaster, Palmdale and Santa Clarita.

In the Antelope Valley, despite the tough economic conditions, the populations of its two cities grew during 1993, thanks to new arrivals and land annexations.

As of Jan. 1, 1994, Palmdale had 98,134 residents--up 9.6% from the previous year. Lancaster’s population jumped from 107,675 to 115,524. Omitting the portion of the increase attributed to inmates at the new state prison, Lancaster’s population grew by 3.6%, city officials said.

Signs of a recovery are particularly evident in new retail projects. Palmdale officials gathered recently to help break ground for a new Saturn auto dealership. A similar ceremony was just held in Lancaster to kick off construction of a new factory outlet mall that is expected to have about 40 stores open for holiday shoppers later this year.

“In terms of the region’s economic health, I feel we have turned a corner,” said Gary Hill, finance director for the city of Lancaster.

A key indicator will be the pace of new home construction, which almost ground to a halt after the late 1980s building boom.

Ira Norris, president of Upland-based INCO Homes, was one of the Antelope Valley’s most active builders during the boom period. But he moved elsewhere when the recession set in.

Recently, Norris began putting up model homes again in east Palmdale--his first Antelope Valley project in more than four years. “I think there is a market in the Antelope Valley now,” he said. “I just don’t know how deep it’s going to be. . . . I’m willing to stick our toe in the water and see what happens.”

Local real estate agents say the water looks more inviting these days. In the resale market, Antelope Valley agents sold 1,378 dwellings during the first six months of 1994, according to preliminary figures compiled by Robert M. Schaff, ast president of the Antelope Valley Board of Realtors. That compares to 1,128 sales during the same period last year--a 22% jump.

For each of the past 23 months, in fact, home sales figures have surpassed the number sold during the same month in the previous year, Schaff said.

In the new-home market, sales figures have been flatter. Just more than 600 new homes were sold in Palmdale and Lancaster during the first quarter of 1994, about the same as in the previous year, according to the Siracusa Co., which tracks these sales.

Even so, developers have seen an increase in visitors to their model homes in recent months, and the market for finished lots has become more brisk, said Kirk M. Lazaruk, a home builder who is president of the Antelope Valley Building Industry Assn. In addition, the area’s surplus of finished but unsold homes is dwindling.

Lazaruk said all of these indicate that new home sales will pick up in the coming months.

Business and government leaders in the neighboring Santa Clarita Valley are also cautiously optimistic that the long-awaited economic recovery has begun.

Unlike the Antelope Valley, which suffered no damage in the Jan. 17 Northridge earthquake, the Santa Clarita Valley endured widespread destruction, including the collapse of bridges on two key freeways serving the area.

Ironically, some analysts say, the quake may have provided a spark for Santa Clarita’s sluggish economy.

“To some extent, it may have set up the recovery a little bit, in that people had to replace items and do home repairs,” said Marlee Lauffer, a spokeswoman for Newhall Land & Farming Co., the Santa Clarita Valley’s largest landowner and developer. “My husband and I have spent a lot of time at Home Depot.”

In addition, she said, damage to the freeways and to major San Fernando Valley shopping malls caused many Santa Clarita residents to change their buying habits--and spend their dollars locally instead of in Los Angeles.

Shoppers in Santa Clarita generated about $12.3 million in sales tax revenue for the city during the fiscal year that ended June 30. Steve Stark, the city’s finance director, expects that figure to grow slightly during 1994-95.

The city is banking on its bustling auto center to continue revving up $2.4 million annually in sales tax revenue. And the city’s shopping mall, Valencia Town Center, will probably generate another $750,000 this year.

The mall, which opened in October, 1992, is about 95% leased, and several smaller shopping centers will soon be built nearby, said Lauffer, whose company developed the mall.

In the center of the city, near Saugus Speedway, an Atlanta-based company recently broke ground to build Mountasia, a family amusement complex featuring batting cages, miniature golf and other attractions.

Just last month, Newhall Land unveiled an ambitious plan to build a new community of nearly 25,000 homes between Six Flags Magic Mountain and the Ventura County line. The project, called Newhall Ranch, is envisioned as a home for 70,000 residents.

If approved by county officials, the community is expected to unfold over 25 years adjacent to the city of Santa Clarita, which incorporated in 1987 partly to control what some residents viewed as unrestrained development.

Even so, like Palmdale and Lancaster, Santa Clarita’s population continued to grow last year, from 123,900 to 128,800. To lure still more home buyers and to provide local jobs for current residents who commute elsewhere, local leaders are trying to bring more industrial employers to the area.

The U. S. Postal Service will soon move its regional mail processing operations, involving about 1,800 jobs, from Van Nuys to the Valencia Commerce Center, near the Golden State Freeway and California 126.

ITT Aerospace Controls plans to consolidate workers from its Burbank and Chatsworth plants into a new building being constructed in the same industrial park. The move, scheduled to begin in October, will involve about 400 jobs.

The creation of local jobs is an even greater concern in the Antelope Valley, where an estimated 40,000 residents commute every day to distant workplaces in the San Fernando Valley and other parts of Los Angeles.

Palmdale and Lancaster recently renewed their joint business attraction program, which offers $2,000 a job to employers who bring at least 25 manufacturing or distribution jobs to the high desert.

Last year, Lancaster lured Saugus-based Rexhall Industries, a motor-home manufacturer, to the city, in part by selling the firm a 10-acre parcel for $1.

Palmdale is aggressively pursuing Packard Bell, the computer maker, which is considering a move outside of the San Fernando Valley.

The two cities have been competing for new retailers because of the lucrative sales tax dollars they generate. The new 24-acre factory outlet mall will be built across the street from the city’s busy Valley Central shopping complex, which includes major retailers such as Costco, Circuit City, Marshall’s and Staples.

The factory outlet center alone is expected to generate $19.5 million in sales tax revenue over the next 20 years.

It was Palmdale, however, that won the bidding war in the 1980s to become the home of the area’s only enclosed shopping center, the Antelope Valley Mall.

Despite the recession, sales have continued to climb since the mall opened in September, 1990.

“We’ve never actually gone down in sales on an annual basis,” said Brian Pearson, the mall’s general manager. “This year we’re experiencing our largest increases, which would tend to indicate that consumer confidence is up and that people are willing to spend more of their disposable income.”

Palmdale officials expect sales tax revenues to grow 2% this year in their city, while Lancaster anticipates a 5.8% jump.

City officials in the Antelope Valley have tried to downplay the impact of the recession, pointing to the continuing population growth and sparkling new civic amenities such as the Lancaster Performing Arts Center and a smaller community theater nearing completion in Palmdale.

Yet, signs of the recession remain. Both cities laid off employees in recent months, in part because of a slowdown in development. Boarded-up, half-finished tract houses, left behind by builders who went broke, can still be seen in some neighborhoods. Numerous vacant storefronts are visible in many of the smaller retail strip centers.

While they don’t believe the boom time will be back anytime soon, Antelope Valley officials are optimistic, however, that the worst of the recession is over.

“I don’t think you’ll ever have the fever pitch you had (in the 1980s),” said Jim Gilley, city manager of Lancaster. “I think it will pick up significantly. But I don’t think you’ll see housing prices jump $10,000 in a week.”

Santa Clarita Home Prices

Average prices for single-family detached houses in the Santa Clarita Valley (resale market only) ‘81: $115,050 ‘82: $120,400 ‘83: $121,900 ‘84: $122,900 ‘85: $129,800 ‘86: $145,600 ‘87: $162,700 ‘88: $191,200 ‘89: $232,900 ‘90: $234,800 ‘91: $235,300 ‘92: $229,885 ‘93: $216,300 ‘94: $204,752* ***

Number of single-family detached houses sold annually in the Santa Clarita Valley (resale market only) ‘85: 1,488 ‘86: 1,917 ‘87: 2,166 ‘88: 2,470 ‘89: 2,443 ‘90: 1,755 ‘91: 1,511 ‘92: 1,583 ‘93: 1,572 ‘94: 443* * ’94 figures through April.

Source: Santa Clarita Valley Assn. of Realtors