NEWHALL'S NEW LOOK HELD UP : SUIT FORCES SCALED-BACK REDEVELOPMENT ZONE.

Byline: Patricia Farrell Aidem Daily News Staff Writer

In the end taxpayers paid $1 million to the lawyers battling the city's redevelopment proposal yet gained nothing in a decade-long drive to bring new life to decaying downtown Newhall.

Ambitious dreams of creating an ``Old Town'' corridor down San Fernando Road sit in limbo with the defeat of the city's huge $1.1 billion redevelopment/quake recovery plan, which was abandoned to settle a lawsuit brought by the Castaic Lake Water Agency.

``There's still tremendous possibilities for it, although the timetable may have changed,'' said activist Allan Cameron, who participated in community efforts to formulate the area's redevelopment.

Michael Freedman, of Freedman, Tung and Bottomley architects in San Francisco, has come up with Plan B, a comparatively modest $12 million redevelopment zone that would more precisely pinpoint Newhall.

Freedman, a city-commissioned consultant who drafted the first plan, is preparing to come back to the Santa Clarita City Council with the new proposal, said Assistant City Manager Ken Pulskamp. A date for the presentation has not been set.

``We've gone through this massive public effort soliciting opinions and everyone wants something there,'' Pulskamp said. ``We're probably looking at redevelopment on a smaller scale, but you can't just include the area where you need to spend the money because you don't generate enough.''

Under state law, municipalities may designate redevelopment zones that allow them to keep increases in property tax revenue that results from new construction, inflation or property changing owners. Without the redevelopment designation, the increase in tax revenue would have gone to other jurisdictions, such as Los Angeles County or the water agency.

Among the details that must be decided is how redevelopment revenue would be spent - be it in direct subsidies or general improvements to attract business.

The water agency objected to the larger plan, claiming it would lose a huge chunk of revenue over the years the redevelopment zone was active.

Month after month the city-commissioned consultants met with local business owners and the community to draft plans to redevelop old Newhall. The hope was to pump life into the boulevard, long ago rejected by newcomers who preferred the shiny new strip centers in their cul-de-sac neighborhoods.

What they came up with was a plan along the lines of Old Town Pasadena where nondescript storefronts would get new eye-appealing facades and tax money raised within the redevelopment zone would be used to draw trendy shops and cafes to coax Santa Clarita residents to spend money.

A few things have changed since the redevelopment talk began that could aid downtown Newhall's face lift.

San Fernando Road from the northern end has been widened, creating an attractive modern tree-lined highway to replace a sorry-looking narrow roadway crammed daily with traffic.

And the Canyon Theatre Guild, a nonprofit community theater group, has its eyes on a set of abandoned San Fernando Road buildings. On top of that, community organizations are looking to reopen the 1940s-era Newhall School auditorium to stage community productions.

The somewhat trendy Mitch's Java and Jazz coffeehouse is already there and combined with efforts to bring entertainment to the dying downtown, you have the embryo of a suburban night life, Pulskamp said.

``Those are the kind of things that would boost the business,'' Pulskamp said. ``Then we certainly need some community activity like a bank and more pedestrian-oriented shops and other businesses.''

For about 15 years, the local government - first the county and now the city - have seen a need to spruce up what once was the business pulse of the Santa Clarita Valley. A decade ago, attractive tile crosswalks were added and potted trees placed along San Fernando Road.

The Western Walk of Stars was expected to draw tourists to the sidewalk tribute and to local businesses. The problem has been that coin Laundromats, hardware stores and shops that cater to the local low-income population don't attract big spenders.

The way Pulskamp sees it, there is room for businesses to serve the local residents as well as those that would draw people from outside Newhall.

``A city doesn't go through and pick businesses,'' he said. ``If they're doing business and want to stay, that's great. If new business sees the possibilities and wants to move in, that's great, too.''