BILL TARGETS FIGHTS TO LURE BUSINESSES.

Byline: Charles F. Bostwick Staff Writer

PALMDALE - Cities like Lancaster and Palmdale could be barred from offering tax breaks, reduced prices on land and other financial incentives to entice big stores and vehicle dealers out of neighboring communities.

Legislation that passed the state Senate last week is intended to stop businesses from playing one city against another to boost profits and to deter cities from chasing sales tax revenue at the price of preserving air quality and open space or improving transportation, supporters said.

``It's a bad idea. It's bad policy. It's not real economic development,'' Senate Local Government Committee Staff Director Peter Detwiler said about city subsidies to attract businesses. ``If relocation is a good business decision, it is a good business decision. These kinds of subsidies distort market forces.''

Authored by Sen. Tom Torlakson, D-Antioch, Assembly Bill 114 would bar cities from offering any financial incentive to get a vehicle dealer or store larger than 75,000 square feet to move from elsewhere in the same market area - defined as up to 25 miles for stores or up to 40 miles for vehicle dealers.

The bill, however, would not stop cities from offering incentives to keep a business, as Lancaster did by providing land for Costco at Lancaster City Park.

It also would not stop cities from providing help to stores or vehicle dealers that want to expand, as Palmdale has done by letting local auto dealers pay for Palmdale Auto Mall land with a portion of their sales tax revenue.

The bill also doesn't prohibit aid to other types of businesses, such as supermarkets that won't move into a poor neighborhood without a subsidy, Detwiler said.

Palmdale Mayor Jim Ledford said he doubts the measure, if passed by the Assembly and signed into law by the governor, will have much effect.

Business executives could find a way around it, he said - as by moving out of a city and waiting for a year to pass before moving into a neighboring city where a subsidy is offered.

For example, a Lancaster recreational vehicle dealer, turned down 3 1/2 years ago by Palmdale for a subsidy, simply closed his Lancaster dealership, Ledford said. That was one of the proposed deals that prompted a local anti-piracy accord, signed in 1999 by Lancaster and Palmdale officials who pledged not to try to lure away each other's businesses with subsidies.

``He just left the market altogether,'' Ledford said. ``That RV dealer could come back in, and there would be no penalty whatsoever.''

Ledford complained that state laws have already severely restricted cities' ability to collect taxes while Sacramento officials eye city revenues each time there is a state budget crisis, he said.

``Cities rely on sales tax,'' Ledford said. ``I believe the legislature has totally screwed up their own finances. For them to have the audacity to meddle in local government - it's just totally out of their realm. At least we are able to balance our budgets.''

The League of California Cities, the California State Association of Counties and the California Redevelopment Association are supporting the bill.

Lancaster officials have not taken a position.

``I think a lot of what's in the bill is good public policy,'' said Mark Bozigian, Lancaster's assistant to the city manager on redevelopment. ``There may be some erosion on local control.''

The bill would not affect efforts by Lancaster's redevelopment agency to bring in new employers, Bozigian said - such as the Countrywide Home Loans service center that is in an expansion to add up to 700 jobs.

``That's where our main focus is going,'' Bozigian said.

State Sen. W.J. ``Pete'' Knight, R-Palmdale, Antelope Valley's representative in the Senate, voted against the bill.

``I think the cities ought to be allowed to compete in any way they can. If they put together a better deal for a big-box store or an auto dealer, they ought to be able to do that,'' said Knight, who was Palmdale's mayor when it outbid Lancaster to build a mall and recruited Lancaster auto dealers to a Palmdale auto mall. ``I think it's all about competition.''