COUNCIL OKS INCENTIVE FOR CITY HALL PLAN : LOAN MEANT TO DRAW VAN NUYS BID.

Byline: Patrick McGreevy Daily News Staff Writer

A project important to Van Nuys revitalization plans got a boost Wednesday when the City Council approved a $75,000 incentive for a developer willing to build a new Van Nuys City Hall and then lease it to the city.

The vote clears the way for the city to ask developers to submit competitive proposals for a 200,000-square-foot office building that would anchor the city government work force in the Valley.

With Councilwoman Rita Walters objecting, the council voted 10-1 to offer a $75,000 predevelopment loan that would be converted to a gift to the developer to cover expenses if the city later backs out of the project.

The $75,000 loan approved by the council would help the winning developer pay for design costs, obtaining permits and other predevelopment costs. The money is being offered because of the uncertainty involved in the project.

Councilman Marvin Braude said he sees no risk in the offer, which he said will help make possible the revitalization of the San Fernando Valley's center of government.

``This will provide a move towards more services for Valley people in the Valley,'' Braude said. ``It will revitalize the Van Nuys Boulevard commercial area and will build confidence for additional investment in the area.''

The proposed office building, which is 2-1/2 times the size of the current Van Nuys City Hall, would be incorporated into development plans that also call for retail shops and additional parking.

Once a developer is picked, the city and development team will attempt to forge a rental agreement that will allow the developer to make a profit while reducing the city's current leasing costs in the Valley.

``It will consolidate offices spread inefficiently around the Valley,'' Braude said.

Construction would then begin next summer.

The council still could decide it is cheaper to keep existing leases than build a new structure, depending on what the real estate market does, said Dan Rosenfeld, assistant general manager of the city General Services Department.

``This is all being done as a speculative project,'' Rosenfeld said.

The city has been sued for $25 million by the developer of a similar project called First Street North, which was supposed to provide office space in downtown Los Angeles but was scrapped just before groundbreaking because of a drop in rental costs for downtown office buildings.

Walters said it was inappropriate for the city to approve $75,000 that might be kept by a private developer at a time when the city is suffering budget problems.

``I just think we don't have that kind of money to take out of the reserve fund,'' Walters said.

However, Rosenfeld said he believes the project will be worth the city's investment, serving as a ``catalyst'' for the revitalization of Van Nuys Boulevard and returning much more money in efficiencies.

``We believe we'll need fewer square feet by co-locating multiple offices in the same building,'' Rosenfeld said.