Mall Rebate Fuels Debate : Many Support Expansion but Oppose Tax Break for Developer

The way longtime Ventura resident Jack Biller sees it, city leaders have no choice but to approve a giant $50-million expansion plan for the Buenaventura Mall.

For years, Biller has watched the 30-year-old shopping center slide from its once-prominent position as the top mall in the county to a place shoppers bypass for factory outlet centers and The Oaks mall in Thousand Oaks.

But with a project in the wings that would bring two department stores from Oxnard and add a second level of shops to the mall, financial analysts, city officials and some residents like Biller see a million-dollar phoenix rising from the old mall.

“Historically, we are almost forced into doing this,” said Biller, a Ventura resident since 1947. “We are trapped into making a decision.”

And that, other residents say, is exactly the problem: They feel trapped by the tax-sharing arrangement city leaders want to strike with mall developers to help finance the expansion. The result is that a project most agree would be a major economic boon has pitted resident against resident over just how far the city should go to get it.

Tonight, the City Council will consider the expansion proposal for the first time and will hold a public hearing. Council members will cast a final vote Jan. 22.

Billed as one of the most important developments in recent city history, the project would create about 1,000 jobs and potentially double the mall’s sales tax revenue over the next 20 years, city officials say.

At the heart of the proposed expansion is a tax rebate the city would give the developer for completing $12.6 million in public improvements, such as street widening and the construction of an $8-million parking garage.

Because the city has no money to pay for the road improvements, city officials have brokered a deal in which the developer would pay for the projects and be reimbursed by the city’s increased share of sales tax money.

At the end of 20 years, the payback is estimated to be $32.3 million, factoring in interest and inflation. The city could pay the amount earlier to reduce interest.

The proposed tax-sharing deal has been criticized by some residents who believe the developer, MCA Buenaventura Associates, should pay for all improvements without city reimbursement.

“I don’t see that there is a big public benefit here,” said Scott Weiss, a Ventura accountant who last week attended a city-sponsored workshop on the proposal. “It looks like the benefits are going to the developer.”

But city officials say the tax-sharing deal presents little risk for the city and paves the way for millions in long-overdue street improvements.

“It is a procedure that is used commonly among many cities in California today,” Councilman Jim Monahan said.

Urban planning expert and Ventura resident Bill Fulton said the tax-sharing deal is not risk free, but is a much better deal than most cities get.

“In the context of that game, this is a pretty good deal,” he said. “But what a lot of people are saying is, they don’t like the game.”

Indeed, Ventura furniture repairman Lary Reid dislikes the game so much that he helped qualify a March ballot measure aimed at killing the tax rebate.

With the financial backing of the owners of The Esplanade in Oxnard, Reid helped gather 14,105 signatures in three months to place the measure before Ventura voters.

“Being a local businessman, I am all for the expansion of that mall,” Reid said. “But I don’t see why the city of Ventura has to get involved with these mega-mall developers and kick back money to them.”

The initiative, known as Measure S, would prohibit the city from engaging in the proposed tax rebate with Buenaventura Mall developers and prevent officials from engaging in any future tax-sharing plans.

Reid and other initiative supporters have argued that mall owners are wealthy enough to not need city money to help pay for the project.

MCA Buenaventura Associates is a subsidiary of La Salle Partners, the third largest real estate investment advisory firm in the nation.

“They don’t need our money,” Reid said. “Ventura needs that money more than they do. We can’t keep our libraries open.”

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But the developer has argued that a public-private partnership is necessary to make the project attractive to investors and to stay competitive in the retail market.

“I think it has to be clear that without the city’s participation, this project will not move forward,” said David A. Jones, vice president of La Salle Partners. “The private sector cannot invest $50 million for the incremental return it would get--plain and simple.”

The tax rebate has been the project’s key point of contention. While some residents like Reid adamantly oppose the plan, others say it is worthwhile just to get the mall expanded.

“I think Ventura needs this,” resident Jeri Tranby said, browsing the mall with a friend last week. “These developers have to have a perk. They have to have some incentive to come to Ventura.”

Although Biller said he is leery of the tax-sharing plan, he also supports it if it means the mall would be improved.

“It is a big thing for Ventura to think about and we better think about it seriously,” he said. “But we are trapped into making a choice.”

City leaders say that if the mall is not upgraded, Ventura runs the risk of watching the shopping center--and its tax base--deteriorate.

“The bottom line is that people have got to understand that in our competitive society, if we do not improve our mall we are going to lose it,” Councilman Jim Friedman said.

In their sales pitch for the mall expansion, city staff and financial analysts have pointed to exhaustive marketing studies and economic forecasts that indicate the mall’s current sales tax base will remain stagnant or slide if the proposed improvements are not made.

In 1992, for example, sales tax revenue from the mall totaled $1,081,783. In 1993, sales taxes totaled $1,082,235--an increase of just $452. A year later, tax revenue jumped to $1,170,906, an increase of $88,671.

But even that increase fails to keep pace with the city’s growing expenses, such as a $365,000 salary increase this year for Ventura firefighters.

“You’re not seeing any growth,” budget director Mike Solomon said. “We can pretty much stay at $1.1 million, but that is not what a vibrant community needs.” Mall retailers and their employees don’t need spreadsheets to see that the aging shopping center needs a shot in the arm.

“The mall is always empty,” said Lizette Salinas, who has worked a quiet cash register selling 1996 calendars through the holidays.

“They need more major department stores here,” she said. “I work here, but I never shop here.”

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City officials fear that retailers who are struggling will eventually leave the mall for other shopping centers if improvements are not made.

Some employees agree and say they are counting on renovations to boost business.

“It’s getting better than it used to be,” said Adam Medina, who has worked for three years at various mall stores, most recently the Sweet Factory candy shop.

“But with the expansion, there will be even better stores,” Medina said. “It would be better for us.”

Better for Ventura, maybe, but officials in Oxnard say the mall expansion would critically hurt business in their city.

The project has reignited a long-standing retail war between Oxnard and Ventura, since Sears and Robinsons-May have agreed to leave The Esplanade for the improved Ventura shopping center.

Oxnard leaders say the departure of two stores will cripple their economy and create blight. They have contested an environmental impact report on the project, and asked Ventura leaders to scrap the plan in favor of a regional mall where both cities could share sales tax dollars.

“We have gone and offered what they call olive branches,” Oxnard Councilman Andres Herrera said. “You have got to put yourself in our position.”

According to Fulton, who is writing a book examining the retail wars between Oxnard, Camarillo and Ventura, a joint sales-tax plan is exactly what both cities need to protect their financial base in the future.

“In the long run, we need to find a way to even out the sales tax dollars,” Fulton said. “They have got to share the sales tax revenue or they are going to destroy each other.”

But Ventura officials like their mall plan. After two dozen public meetings and years of planning, they are ready to move ahead, and say the time has long since passed for talk about a joint development.

“What are we going to do, turn our backs and completely abandon the Buenaventura Mall?” Friedman said. “That is ridiculous.”

As the mall project has raced toward a conclusion in the last month, Oxnard city officials sat stone-faced in the back row of at least three public meetings at Ventura City Hall.

They will attend tonight’s meeting and the meeting Jan. 22, Herrera said. And if the project is approved, Oxnard will file a lawsuit contesting the environmental study, he said.

At that point, Herrera said, “the only option available to us is a legal option.”

Lawsuits, city leaders agree, could be the fatal blow for the long-awaited project.

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Ventura leaders are already planning how to defend against litigation from the city of Oxnard and Esplanade owners.

And if the March ballot initiative is approved, the city and the developer plan to jointly file a lawsuit contesting the measure.

The initiative is written in a way that would negate the agreement if the council approves it in January. The city’s lawsuit would argue that the measure cannot retroactively affect their decision.

It is for that reason that initiative supporter Jere Robings said Friday that he wants the City Council to postpone the mall decision until after the March election.

But Councilman Monahan said the city has dragged its feet on the mall plan long enough, and postponing the decision now would be out of the question.

“Gimme a break,” he said. “I think that is part of their plan, to delay. . . . I think that is the first time this council has united behind an issue, and I think we should stay on our track.”