SANTA CLARITA / ANTELOPE VALLEY : Santa Clarita to Offer Incentives : Business: Council authorizes fee waivers to attract companies, and pays firm to develop an economic strategy.

Feeling the heat from Palmdale, Lancaster and other cities offering lavish perks to lure large businesses, economic officials here will soon offer incentive packages as well.

City Council members Tuesday authorized waivers of up to $20,000 in development fees to attract and retain firms within Santa Clarita. They also authorized the payment of $63,000 to Economic Strategies Group of Phoenix, Ariz., to develop an economic development strategy for the city that will include suggestions for additional business incentives.

Other cities have used fee waivers, tax breaks, loan programs, land donations and outright cash awards to persuade companies to locate within their borders.

“The ideal thing would be to design some incentives that other cities don’t have,” said Mike Haviland, city economic development director. “The product (Santa Clarita) isn’t so week we have to surround it with incentives.”

But at least one Santa Clarita company, Rexhall Industries, has been successfully lured away due to the aggressive efforts by neighboring Lancaster. The motor-home builder received 10 acres of land worth $500,000 to relocate its 170 jobs to the Antelope Valley community. And Palmdale is now trying to woo a 150-job company from the Valencia Industrial Park in Santa Clarita by offering a $2,000 cash payment per employee and low-interest loans and housing assistance to the workers.

“Palmdale/Lancaster is really throwing a lot of money at (businesses),” Haviland said.

The danger of offering incentives, city officials admit, is that they can be costly without showing obvious results. How does a city know when it is giving away too much, or whether their incentives will work at all?

Palmdale has by no means a perfect record. The city courted Packard Bell Electronics Inc., the nation’s third-largest manufacturer of personal computers, for nearly a year when the firm announced it had outgrown its six Chatsworth facilities. The city offered $7.5 million in land, $4 million in housing assistance for employees, $10 million in tax-exempt bonds, low-financing and even discounts on products from local businesses, only to be outbid by a $26-million loan package from Sacramento.

Santa Clarita business advocates, however, heartily approved of the city’s decision to get into the incentives game.

“It is tremendously important for economic viability,” said Gary Johnson, president of the Santa Clarita Valley Chamber of Commerce. “This is the first of its type. It’s long overdue because it’s going to benefit the entire valley.”

“I’m not suggesting in any way that we give these businesses any money,” said Johnson, “but it is vital that we have some sort of economic incentive rather than just sand and sun and surf.”

Economic Strategies Group is scheduled to return in six months with its economic development strategy and list of business incentives.