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Home My WebLink About1990-09-25 - AGENDA REPORTS - VALENCIA MALL FINANCING (2)• AGENDA REPORT City Manager,Approval Item to be presented UNFINISHED BUSINESS Ken Pulskamp DATE: September 25, 1990 SUBJECT: Valencia Mall DEPARTMENT: City BACKGROUND On July 24, 1990, the City Council directed staff to proceed with negotiations with Newhall Land and Farming for a City investment in the Valencia mall. Additional direction was then provided to staff to continue these negotiations on August 14. Negotiations have concluded and a settlement has been reached which is supported by Newhall Land and Farming and endorsed by City staff. The major components of the agreement are as follows: - City would finance $9.95 million of public improvements funded through the sale of bonds. - These public improvements would be financed exclusively from sales tax revenues generated from the mall. (A list of the improvements is found on Attachment 1.) - The City would pay.the present value of $9.95 million over not more than 20 years by contributing sales tax dollars received annually by the City as a result of sales in the mall. Based on the conservative pro forma, this is estimated to amount to 162 of the sales tax revenue over 30 years. (Detail of the financing is found on Attachment 2.) - The balance of the sales tax dollars received annually by the City as a result of sales in the mall would be put in the General Fund and used at the Council's discretion. - Newhall Land and Farming would annex 406 acres of land east of McBean, south of Newhall Ranch Road, west of Bouquet and north of the current City boundary. - Annexation would require an annexation agreement yet to be negotiated but would include the site proposed for Builders Discount. Newhall Land and Farming and the City would use their best efforts to ensure that annexation be complete within two (2) years. - Staff estimates the value of.the land to be annexed, once developed, to be in excess of $100 million. - The City would sponsor a Community Facilities District for at least $20 million to finance infrastructure requirements related to the mall. The debt service for that portion over $9.95 million would be completely the• responsibility of Newhall Land and Farming. - The mall would be called the Valencia Town Center. APPROVED agenda Item Page 2 i Newhall Land and Farming agrees to develop an MOU calling for deeding certain Santa Clara River property between Bouquet and McBean, subsequent to completion of environmental processing, as well as necessary easements along the south fork of the Santa Clara River from Lyons.to the main fork of the River and Bouquet Creek from Bouquet Canyon Road to the main fork of the Santa Clara River. - Newhall Land and Farming would provide up to $100,000 to assist small businesses with their relationship to the mall. The staff is convinced this is a lucrative arrangement for the City. The following chart describes what the City would receive. - Total sales tax collected over 30 years from mall $ 126,0211784 - Debt service to be paid on bonds (20,429,252) - Sales tax to be received from Builders Discount 32.370.664 * - Net amount to be received by City over 30 years $ 137.963.196 * From this net amount there would be recurring cost to the City to provide services to the mall. This would amount to $75,585,956 over 30 years. If these were deducted from the net amount, the City would still receive $62,377,240 over the 30 years directly from this investment. In addition, the citizens would receive a regional mall which, from all indications, is greatly desired. The funds generated from this business will, according to the economic reality of the multiplier effect, generate many fold additional revenue dollars for this area which are currently spent elsewhere. During this negotiation process, this proposal was rigorously scrutinized by a team made up of City staff, professional financial consultants, attorneys, and bond counsel. As a result of this analysis, staff is convinced.that without this level of economic support of this project, this mall would not come to fruition in the City. This point is mentioned because of the controversy which has surrounded this proposal. As with all matters of public policy, there are two sides to any issue. On balance, however, the tremendous economic return for the City's investment, the opportunity to enhance our local economy, the recreational opportunities provided to our citizens, the opportunity for greater revenues to provide much needed services, the.annexation of valuable lands, the development of a program to enhance small businesses, and.the ability to provide greatly desired retail in the area more than offset theuseof public funds for this venture. It is recommended that the City Council approve this proposal and.that the City Manager be directed to draft and execute an agreement with Newhall Land and Farming -to include the items described in this memorandum. * Does not include -funds to be received from balance of area to be annexed. KRP/spk 1517 00 0 0 VALENCIA TOWN CENTER PUBLIC OFF-SITE INFRASTRUCTURE Intersection Signals Edison/Telephone Water, Gas, Sewer, TV Street Improvements Fencing, Landscape, Walkways Survey, Eng., Soils, Geology Bonds, Fees Bridges (Pedestrian) Storm Drain Relocation & Construction Utility Relocation Signal Phasing Magic Mountain Parkway Magic Mountain Bridge Bouquet Canyon Road Bridge McBean Parkway Bridge SUBTOTAL: JEM:gmm 09/20/90-1 ATTACHMENT 1 TOTAL PUBLIC BENEFITS MALL BENEFITS COST COST COST $ 1,080,000 $ 100,000 $ 9801000 390,000 0 390,000 460,000 0 460,000 1,8350020 827,000 1,008,020 390,000 0 390,000 272,000 0 272,000 1750000 0 175,000 540,000 270,000 2709000 740,000 200,000 500,000 1,515,000 5,500,000 1,700,000 3,200,000 0 0 0 1,515,000 5,500,000 500,000 1,238,000 740,000 200,000 500,000 0 0 1,200,000 1,962,000 $180482,000 $ 9,950,000 $ 8,547,020 'IELDMAN, ROLAPP 8 ASSOCIATES )9/20/90 3CMALL6 CITY OF SANTA CLARITA PROPOSED MALL PROJECT ESTIMATED PERCENTAGE OF ANNUAL DEBT SERVICE (1) (2) ... (3) (4) (5) (6) (7) (8) ESTIMATED ESTIMATED MALL SUGGESTED ESTIMATED ESTIMATED ESTIMATED B.D. TOTAL ESTIMATED GROSS MALL RECURRING REPAYMENT MALL NET SALES TAX FRbM RECURRING NET MALL $ B.D. YEAR SALES TAX SURPLUS * ON $9.95 M REVENUES ** BUILDER'S DISCOUNT ......... I........ SURPLUS * .......... REVENUES '** ................... ......... 1991 ............. f0 ............ SO ......... s0 ............. SO $0 s0 $0 1992 0 0 0 0 0 0 0 1993 982,491 428,940 428,940 0 331,191 252,134 252,134 1994 1,267,660 679,986 570,447 109,539 614,497 415,496 525,035 . 1995 1,349,253 790,487 607,164 183,323 697,969 436,271 619,594 1996 2,334,122 1,123,083 1,022,893 100,191 743,660 458,084 558,275 1997 3,115,990 1,889,738 1,074,037 815,701 780,843 480,989 1,296,689 1998 3,284,096 1,984,225 1,127,739 856,486 819,885 505,038 1,361,524 1999 3,448,301 2,083,436 1,184,126 899,310 860,879 530,290 1,429,600 2000 3,620,716 2,187,608 1,243,332 944,276 903,923 556,804 1,501,080 2001 3,801,752 2,296,988 1,305,499 991,490 949,120 584,645 1,576;134 2002 3,953,822 2,388,868 1,370,774 1,018,094 987,084 608,030 1,626,124 2003 4,111,975 2,484,423 1,425,605 1,058,818 1,026,568 632,352 1,691,169 2004 4,276,454 2,583,800 1,482,629 1,101,171 1,067,630 657,646 1,758,816 2005 4,447,512 2,687,151 1,541,934 1,145,217 1,110,336 683,951 1,829,169 2006 4,625,412 2,794,638 1,603,611 1,191,026 1,154,749 711,310 1,902,336 2007 4,764,175 2,878,477 1,651,720 1,226,757 1,189,392 732,649 1,959,406 2008 4,907,100 2,964,831 1,701,271 1,263,560 1,225,073 754,626 2,018,188 2009 5,054,313 3,053,776 1,087,531 1,966,245 1,261,825 777,267 2,743,512 2010 5,205,942 3,145,389 0' 3,145,389 1,299;680 800,585 3,945,974 2011 5,362,120 3,239,751 0 3,239,751 1,338,671 824,603 4,064,354 . 2012 5,522,984 3,336,943 0 3,336,943 1,378,831 849,341 4,186,284 2013 5,688,674 3,437,052 0 3,437,052 1,420,196 874,821 4,311,873 2014 5,859,334 3,540,163 0 3,540,163 1,462,802 901,066 4,441,229 2015 6,035,114 3,646,368 0 3,646,368 1,506,686 928,098 4,574,466 2016 6,216,167 3,755,759 0 3,755,759 1,551,886 955,941 4,711,700 2017 6,402,652 3,868,432 0 3,868,432 1,598,443 984,619 4,853,051 2018 6,594,732 3,984,485 0 3,984,485 1,646,396 1,014,157 4,998,642 2019 6,792,574 4,104,019 0 4,104,019 1,695,788 1,044,582 5,148,601 2020 6,996,351 4,227,140 0 4,227,140 1,746,662 ............ 1,075,920 ..... _...... 5,303,060 ............ TOTALS ............. $126,021,784 ............ $75,585,956 ............ $20,429,252 ------------- $55,156,704 $32,370,664 $20,031,315 $75,188,019 * - Source: Stanley R. Hoffman Associates, Inc., Sep. 19, 1990. (estimated -figures only.) ** _ Column 4 subtracted from column 3. *** - column 5 added to column 7. L