Council to Compare Tax-Rebate Projects

They swear it is a good deal.

And to prove that the tax rebate brokered for the Buenaventura Mall expansion is not squandering public money, city staff members will give the City Council a list of comparable--if not riskier--tax-sharing deals negotiated by other cities.

Thousand Oaks used the technique for the Janss Marketplace project. And Oxnard offered similar incentives to lure car dealers to the Oxnard Auto Mall, according to the report to be presented Monday night.

“We are trying to get an understanding of the playing field both in and out of Ventura County,” said Steve Chase, assistant to the city manager. “This debate is not about public finance, it is about market capture.”

Ventura must “capture,” or bring in, retailers to secure future sales taxes, which pay for the public services such as police patrols, Chase said.

As part of that strategy, the council last month approved a $50-million expansion project for the Buenaventura Mall that includes a much-debated tax rebate to the developer, MCA Buenaventura Associates.

Under the agreement, MCA Buenaventura will pay $12.6 million in public improvements to be reimbursed by the city’s share of increased sales tax revenue over the next 20 years.

Including interest, the payback will be $32.3 million by 2016, an amount that only has to be repaid if the renovated mall turns a profit.

A group of Ventura citizens and tax advocates are calling the deal a tax giveaway. And with the financial backing of the owners of The Esplanade mall in Oxnard, they have placed an initiative on the March 26 ballot aimed at scuttling the agreement.

The Esplanade would lose its two major department stores if the Buenaventura Mall expansion goes through.

As the election approaches, debate over whether Ventura’s tax-sharing deal is savvy or senseless is beginning to show up in campaign mailers and newspaper advertisements.

City officials now feel the need to prove their development agreement is a smart investment for the city.

“We wanted to draw attention back to the core of the debate, which is market capture,” Chase said. “I think you want a factual response.”

Monday night, Chase will walk the council through a $14,500 report conducted by an outside consultant that examines tax-sharing arrangements for shopping centers and other projects built both in and out of Ventura County.

The report analyzes tax breaks given to developers in Oxnard, Thousand Oaks and Camarillo as well as Riverside, Montclair and Moreno Valley.

Ventura officials say the deals, which all involve bonds or other types of upfront municipal financing, are far riskier for cities than the deal Ventura has negotiated.

For example, Chase points to two bonds issued by the city of Thousand Oaks to help pay for the Janss Marketplace.

Under that agreement, the city raised nearly $30 million by taking out two long-term bonds to pay for public improvements, such as a parking structure and street modifications.

The bonds will total more than $100 million at the end of 20 and 30 years, respectively.

The report also states that four cities--Thousand Oaks, Montclair, Moreno Valley and Riverside--each paid for a public parking structure to help build shopping centers.

Critics of Ventura’s financing plan have argued that an $8.2 million parking structure included in the city’s payback to the developer is not a public benefit.

City Council members said the report shows that tax rebates and other incentives paid to developers are common practice--and necessary tools to secure key projects.

“I think that it shows that we are not doing something new,” Councilman Jim Monahan said.

Given the kinds of deals other cities have negotiated, which typically require risking some amount of public money, Councilman Steve Bennett says Ventura’s arrangement is unique.

“No city has probably come up with as risk free a plan for its taxpayers as Ventura has,” Bennett said.

But Eric Lambert, campaign manager for Citizens Against the Sales Tax Giveaway, the group fighting the mall’s tax-sharing plan, isn’t buying the city’s rhetoric.

“Just because people are doing it doesn’t mean we should do it too,” Lambert said.

“Of course this is going to look favorably on what they are going to do,” he said of the council report, suggesting that it was created more as a campaign tool than a study of municipal financing. “It does smell very campaign-like in nature.”