County to Offer Tax Breaks to Newhall Land

Despite continuing financial woes, county officials are planning to share sales tax revenues for the first time in history with a retail development, according to documents obtained by The Times.

County officials, who wished to remain anonymous, said that tax breaks must be given to Newhall Land & Farming Co. to ensure that the county land on which the $80-million Valencia Marketplace mall is being built is not annexed by the city of Santa Clarita.

Officials cited the potential of competing tax breaks that the city of Santa Clarita could offer Newhall if it would agree to annex the mall site, which borders the city.

The plan to offer to share sales tax revenue with Newhall was outlined in a letter dated March 12 from county Chief Administrative Officer Sally Reed to Santa Clarita City Manager George Caravalho.

Sales tax revenue sharing is a common facet of municipal redevelopment in California, but the county has never entered into such an agreement, county officials said.

Reed’s letter was an update on continuing negotiations with Newhall, which might be completed within the next three months, a county official said. At that point, the revenue shift would have to be approved by the Board of Supervisors.

An aide said that Supervisor Mike Antonovich, who represents the area, would not support any deal unless it was beneficial to the cash-strapped county.

“We are not interested in subsidizing this development,” said Antonovich aide Dave Vanatta. “What we are interested in is the financial benefit to the county.”

John Edmisten, an assistant division chief with the county’s Chief Administrative Office who is involved with the negotiations, said that when a final agreement is reached, it will be good for the county.

“We feel that after we complete negotiations that it would be appropriate to recommend to the board to do this because of the amount of sales tax revenue we might not otherwise have,” Edmisten said.

Once the project attracts its complement of tenants, it could generate as much as $1.6 million annually in sales taxes, county and Newhall officials said. The current lineup of stores committed to the 763,000-square-foot development includes Wal-Mart, Circuit City, Toys R Us, Staples and a Vons supermarket.

One county official said it is the possibility that the Marketplace could turn to Santa Clarita for a better deal that was driving the tax-sharing negotiations.

In the past, Santa Clarita city officials have talked about moving to annex the facility to help generate revenue to cover the expected costs of handling additional traffic on city streets.

Further, small businesses in Santa Clarita have said that they will not be able to compete with the giant stores in the Marketplace.

On Thursday, Caravalho said that Santa Clarita is not considering annexation, calling the process too expensive.

Newhall spokeswoman Marlee Lauffer said that the company has not threatened to pursue an annexation deal with Santa Clarita. She said, however, that prospective retailers are seeking the best possible deal.

“They came to us and said they want that advantage,” Lauffer said. “They know local governments are getting very competitive, and retailers are more savvy and more aggressive.”

The Marketplace, approved by the Board of Supervisors in 1994, was originally scheduled to be completed last October.

The project was delayed by lawsuits filed by opponents, and it will not be finished until later this year, Lauffer said.

Newhall owns the Marketplace property; Los Angeles-based Riley/Pearlman is the developer.