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Valencia Mall Developer to Advance $20 Million to Lure Nordstrom

Retail: Chain seeks the money to locate a store in expanded Town Center. City officials are undecided on plan to reimburse developer.

November 17, 1998|MICHAEL BAKER | SPECIAL TO THE TIMES

SANTA CLARITA — A Nordstrom store in Valencia would surely bring a touch of class to the Santa Clarita Valley, many residents agree, a golden step on the road from distant suburb to upscale enclave.

But is it worth $20 million up front?

That's the question the city's residents and government are asking since reports surfaced last week that the chic but pricey department store chain is considering opening its 21st Southern California location in the Valencia Town Center, which includes a mall, a hotel and other retail and office buildings.

The center is owned by the Newhall Land & Farming Co. Newhall Land is carrying out expansion work that will add about 60,000 square feet of retail space by the fall.

If a deal with Nordstrom can be worked out, then Newhall Land would build an additional store space onto the mall--now anchored by Robinsons-May, Sears and J.C. Penney.

Nordstrom offered to locate a store there in return for a $20-million advance payment, according to Newhall Land spokeswoman Carol Maglione.

Nordstrom also wants $8 million to $12 million worth of additional amenities, such as parking, building use and money toward operating costs. Newhall Land has already agreed to fulfill those requests, Maglione said.

After being approached by Nordstrom, Newhall Land contacted city officials about two weeks ago.

City officials confirmed that, among other options, they are considering a plan to use a portion of the additional city sales tax revenue generated by Valencia Town Center after Nordstrom opens to reimburse the developer for the $20-million payment demanded by Nordstrom.

A specific percentage of sales tax has not been discussed, and city officials said they are not sure when a detailed proposal would be ready for City Council consideration.

"The city would not have to come up with any money up front," Maglione said, and would lose none of the sales tax revenue it would otherwise collect if there were no Nordstrom in the mall.

Maglione said the sales tax revenue sharing option is just one option and that executives at Newhall Land are willing to work with the city. "The city's role is essential to bring Nordstrom to Santa Clarita, and there are a lot of different ways to do this."

Brooke White, a spokeswoman for Nordstrom Inc. in Seattle, would say only that Nordstrom has "a verbal agreement to explore the idea" with Newhall Land. City officials have cautioned that negotiations are far from over.

Despite their cautions, the coffee shops and lunch tables are abuzz.

"It would show that this is an attractive place to live, and it shows that Santa Clarita's status is going up," said Pam Harer, 43. "Santa Clarita has really improved a lot since the Newhall days," said Harer, who has lived in the area for 13 years.

While reactions like this are common among retail shoppers, city budget watchers worry that the $20-million price tag would sacrifice other programs.

Mayor Jan Heidt said she has heard on an almost hourly basis from people who worry the city would be shelling out too much money.

"I think it would be nice if Nordstrom came in and paid their own way," Heidt said. "I wouldn't want to sacrifice any sales tax to support Nordstrom. Right now, I think we need to spend the city's money on other parts of the community that could use it, such as parks and recreation."

In contrast to Heidt, council members Jo Anne Darcy, Frank Ferry, Jill Klajic and Laurene Weste all said they would be happy for Nordstrom to come to town, but were reserving judgment until they see specific numbers.

"Nordstrom being the class of retail store it is could bring in more upscale businesses, which could in turn bring in more revenue to the city," Klajic said. "But let's look at the numbers first. How would we as a city benefit?"

"It just depends on the deal," Darcy said. "If it's $20 million out of our pocket, it's doubtful."

One thing everybody seems to agree on is that the community has long desired a store like Nordstrom.

"When the city first did a strategic plan six years ago, one top priority people listed was bringing in a Nordstrom," City Manager George Caravalho said.

And in June, Santa Clarita residents surveyed listed Nordstrom as a favorite shopping venue, said Economic Development Manager Mike Haviland.

According to Haviland, nearly 40% of the 400 residents surveyed named Nordstrom when asked: "When you shop outside of the Santa Clarita Valley, what store or stores do you tend to shop at most frequently?"

Nordstrom finished at the top of the list, with the same percentage as Macy's.

"So you take that data and say, 'We need one of those,' " Haviland said. "There are a lot of sales dollars going outside the community."

Brenda Piccirillo, 41, a Santa Clarita resident since 1989, voiced a typical opinion.

"I would love to see a Nordstrom here; something a little more upscale, with better merchandise and service-oriented," Piccirillo said. "There's nowhere to shop here, and I have to go all the way to the San Fernando Valley. Sometimes, I have to trudge all the way to Sherman Oaks."

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