NEWHALL

When Newhall Land & Farming Co. sold its profitable Valencia Marketplace shopping center to an Arcadia businessman in June 1998, the developer insisted on an unusual clause in the contract language. The $111 million deal was structured so that Newhall Land retains voting rights on whether the center remains in unincorporated Los Angeles County or is annexed to the city of Santa Clarita. Representatives of Newhall Land say the company simply wants to preserve a traditional boundary that has kept L.A. County on the west side of Interstate 5 and Santa Clarita on the east side. But others say it was a brilliant stroke on the developer’s part. Control over a 720,000-square-foot retail outlet that generates more than $1 million a year in sales tax revenue for L.A. County gives the developer tremendous bargaining power especially at a time when Newhall Land is pushing to get county approval for its 21,600-home Newhall Ranch project and Westridge Golf Course project. Newhall Land is also talking about expanding Six Flags Magic Mountain, which also would require county approval. “The point is that (the mall) represents a lot of money to whatever jurisdiction controls it,” said Tom Jirovsky, senior vice president with Kosmont and Associates. “The fact that they sell it (the Marketplace) and get to keep it as a bargaining chip, to think that far ahead, is brilliant.” On the west side of Interstate 5, just outside Santa Clarita’s city limits, the Marketplace is home to such stores as Wal-Mart and Circuit City. City officials have long resented the Marketplace, feeling it has lured away many national chains such as Linens and Things and Wal-Mart that otherwise might have set up stores within the city’s borders, said Santa Clarita city spokeswoman Gail Ortiz. “Frankly, it’s sucked the life out of local businesses in the city,” Ortiz said. Newhall Land spokeswoman Marlee Lauffer denied that the developer is using the Marketplace as a bargaining chip to win approval of its pending projects in unincorporated L.A. County. In fact, Newhall Land has projects pending approval in Santa Clarita as well, she pointed out. But those projects are much, much smaller than the L.A. County projects. Dave Vannetta, chief planner for county Supervisor Michael Antonovich’s office, insisted that the whatever position Newhall Land takes on the annexation of the Marketplace would have no bearing on whether or not the county approves its pending projects. “We’ve treated Newhall Land & Farming Co. and its Newhall Ranch project on the basis of the merits of the project,” Vannetta said. “We didn’t grant any bonus points because they didn’t annex the Marketplace into the city.” Still, Vannetta concedes that the center is a significant revenue source for county coffers. Newhall Land officials have said they would agree to allow the Marketplace to be annexed if that’s what the county wants. While that seems unlikely, given the revenues it supplies the county, Antonovich has said he would support annexation if that’s what Stevenson Ranch residents living just west of the center decide they want. Ever since its incorporation in 1987, the city of Santa Clarita has pushed to annex businesses and homes west of Interstate 5. But city officials say they can’t take on the burden of providing services to residents of the 4,000-home Stevenson Ranch area without receiving some tax revenue from the Marketplace in return. Besides, any annexation of Stevenson Ranch would require the Marketplace to also be annexed because, under state law, any area being annexed must be contiguous to the city. And in this case, the Marketplace physically stands between Stevenson Ranch and the Santa Clarita city limits. Stevenson Ranch residents remain divided on the annexation issue. Some want to be annexed, some prefer the status quo and others would like to incorporate as a separate city. Antonovich has said he is not convinced that a majority of the residents want to be annexed. The residents’ association is now working with Santa Clarita city officials to determine what the boundaries of the annexed area would be. However, a vote by residents on the issue remains at least a year away, according to several sources involved in the discussions. Keith Pritsker, president of Stevenson Ranch Town Council, an advisory board to Antonovich, said Newhall Land may very well be afraid of losing an important ally in the county, if annexation goes through. Also, he thinks Newhall Land may be concerned about the city gaining additional power west of I-5, one of the developer’s strongholds. “If the city of Santa Clarita were immediately adjacent to areas of new development, they’d have a greater stake in watching every aspect of development,” he said. Newhall Land spokeswoman Lauffer refuted that assertion, pointing out that the developer had worked with the city in its annexing of the Castaic area west of I-5, a Newhall Land stronghold. Meanwhile, Santa Clarita is hoping to use a bargaining chip of its own to convince Newhall Land to allow the Marketplace to be annexed to the city. Newhall Land very much would like to lure a Nordstrom department store to its Valencia Town Center, which is within the city of Santa Clarita. Nordstrom has requested $35 million in incentives, of which Newhall Land and the city have jointly agreed to provide $15 million in non-cash incentives. Newhall Land has offered to pay the remaining $20 million in advance to Nordstrom, if the city would agree to reimburse the developer over several years out of incremental tax revenues generated by the Nordstrom store. The city has thus far refused to go along with that plan, but continues to negotiate with Newhall Land and Nordstrom. Lauffer said Newhall Land refuses to make the annexation of the Marketplace a part of the Nordstrom talks. “We have just said that we’ll discuss a myriad of subjects, but we’re not willing to get into any discussion of annexation west of the 5,” she said.