A Ventura County Superior Court judge ruled Tuesday that the city of Camarillo's agreement to refund up to half a million dollars a year in taxes to the developer of a planned factory outlet mall was illegal.
In a decision that may jeopardize the future of the planned Koll Leonard mall, Judge Melinda Johnson ruled that the rebate approved by the city in January would amount to a gift of public funds.
Representatives of the developer, the Koll Leonard partnership, have previously said they needed the tax rebate to afford to build the project, which is slated for a 22-acre site on the south side of the Ventura Freeway between Las Posas Road and Carmen Drive.
With a projected 70 stores, the mall was expected to generate half a million dollars in annual tax revenues for the city even after the planned rebate.
Camarillo City Manager J. William Little said the city won't consider the outlet mall dead as long as Koll Leonard is still interested in the project.
Koll Leonard officials could not be reached for comment Tuesday.
Little said city officials plan to meet with the developer and city attorneys Tuesday to discuss whether to appeal Johnson's decision and, if not, whether to proceed with the project.
Camarillo officials said they have grounds for appealing the ruling.
"I think the decision was wrong," Assistant City Atty. Lisa Kranitz said.
Kranitz said Johnson's ruling may throw into question tax rebates offered by other cities around the state, including Oxnard, which has approved a tax refund for a developer planning an outlet mall there. Oxnard's mall is planned for a site south of the Ventura Freeway, between Rice and Rose avenues.
In her decision, Johnson ruled in favor of Stephen J. Maulhardt and Richard Lundberg, who complained that Camarillo sidestepped state environmental laws by not completing a full-scale environmental report on the project.
Johnson also ruled that the city's planned sales tax rebate amounted to a gift of public funds, a decision that could affect other cities.
Maulhardt, who brought the suit that was later joined by Lundberg, is not a Camarillo resident. He lives in the Las Posas Estates neighborhood just outside Camarillo. He owns a 40-acre industrial center seven miles from the Koll Leonard property.
Maulhardt said Tuesday that he sued the city because the Koll Leonard site includes a planned industrial center that would compete with his business.
Although the city of Oxnard has been racing with Camarillo to build Ventura County's first factory outlet mall, Maulhardt--who is president of the Oxnard Chamber of Commerce--said he was not initially opposed to the mall's construction.
"I felt the only way to keep the rebate from hurting me was to stop the project," he said. "That's an unfortunate result, but it meets my end."
Camarillo's rebate to Koll Leonard guaranteed that the city would pay the developer either half of the total sales taxes generated by the outlet mall, or all of the special property taxes levied against land in that section of the city. The special property taxes pay for infrastructure improvements.
But Maulhardt said the tax break gave Koll Leonard an unfair business advantage.
With the rebate, the developer would be able to offer lower rents to lure tenants to both the outlet mall and industrial center, he said.
Johnson agreed with Maulhardt, saying that although the rebate may eventually benefit Camarillo residents by increasing the city's tax base, the deal primarily benefited the developer.
But Kranitz and other city officials said many California cities have offered tax rebates to lure developers to build in their areas.