Mall Expansion Tax-Sharing Plan Debated

It is the key ingredient of a $50-million expansion plan for the Buenaventura Mall and the target of a March ballot initiative.

And Wednesday night, the multimillion-dollar tax-sharing plan proposed between the city and owners of the Buenaventura Mall was the topic of a lengthy and often heated community meeting at City Hall.

About 40 people attended the city-sponsored workshop, held to ease residents’ concerns and answer questions about the proposal, which has been dubbed an “irresponsible sales tax giveaway” by some and a risk-free investment by others.

Despite its intentions, however, the meeting frequently deteriorated into a shouting match. A handful of residents sharply criticized the proposed agreement, and financial planners, hired either by the city or the developer, attempted to counter their attacks.

“What I am hearing a lot of tonight is a P.R. pitch for this project,” said Bill Baker, a Ventura accountant. “You’re giving $32 million away.”

The tax-sharing proposal under consideration calls for mall owners to pay for $12.6 million in street improvements up front and to be repaid by 85% of the city’s portion of increased annual sales tax revenue over 20 years.

If sales tax revenue does not surpass the current $1 million generated by the existing mall operation, however, the city would not have to pay back the improvements that year, city officials said.

Factoring in 3.5% in annual interest over 20 years, city officials estimate it could cost Ventura a total of $32.3 million by 2016. City leaders can elect to repay the $12.6 million sooner, to reduce the interest.

City officials and a financial consultant hired by the mall developer said the proposed agreement is a savvy investment that puts no risk on the city.

“All of the performance risks rest with the developer,” said Jim Rabe, a financial consultant for the developer, MCA Buenaventura Associates. And, he added, the tax-sharing deal is absolutely necessary for the project to go through.

“There is no one who will undertake this project . . . without the assistance of the city,” Rabe said, arguing that the developer is already taking a sizable risk on the proposed $50-million project.

In fact, Rabe said, the deal before Ventura is far better for the city than most mall developments in Southern California. With the Glendale Galleria and Santa Barbara’s Paseo Nuevo, for example, developers required those cities to pay for public improvements in advance, Rabe said.

In a presentation to the audience, Walter Kieser, a Berkeley-based consultant hired by the city, highlighted the project’s estimated benefits, including 1,000 new jobs, up to $40 million in additional future sales tax revenue, and a list of public improvements, such as road widening and the construction of a three-level parking garage.

But not everyone agreed with his assessment.

“My concern is that we are saying a public parking structure is a public improvement,” said Scott A. Weiss, a Ventura accountant. “I see that as an improvement for the developer.”

Bill Fulton, a Ventura-based urban planning expert who attended the meeting, has criticized such rebates to developers for years. But, he said outside the meeting, such tax rebates are becoming standard between cities and developers.

“I don’t like the way the game is set up,” he said. “But if that is the way the game is set up, that’s the way you play the game.”

The workshop was organized in advance of next Monday’s public hearing, where the City Council is scheduled to formally consider the tax-sharing agreement for the first time.

The mall’s owners want to add two department stores and a second level of shops to the 30-year-old shopping center in mid-city.

Robinsons-May and Sears have already agreed to leave The Esplanade in Oxnard for the renovated Ventura mall, according to city leaders who recently met with the stores’ senior management.

Council members are set to make a final decision Jan. 20 on whether to approve a draft development agreement with mall owners, an agreement city officials say is critical to the mall expansion. Without the expansion, city leaders fear the aging shopping center would become less profitable.

The agreement, along with a package of zoning and other changes, has already been approved by the Planning Commission.

If the project is approved by the City Council this month, construction would begin this year and continue through 1999, city officials said.

But if the March ballot initiative--which seeks to prevent any such tax-sharing deals--is approved by the voters, city leaders predict the project could be held up by lawsuits for years.