Lancaster to Spend $100,000 to Promote New Auto Mall

Lancaster will spend $100,000 in public funds to advertise the city’s new auto sales mall, following a decision by Palmdale earlier this year to spend nearly $2.5 million in much broader aid to that city’s rival auto center.

The Lancaster program, approved by the city’s Redevelopment Agency on Monday night, is a legitimate use of public funds, according to outside experts. But, they said, the costlier Palmdale program raises the question of whether that city engaged in an illegal giveaway.

Lancaster officials plan to pool their $100,000 with contributions totaling about $100,000 from the three dealers committed to the 45-acre Lancaster Auto Mall. The money will be spent to promote both the mall itself, which is not yet fully developed, and the individual dealers.

Lancaster City Atty. David McEwen said the city’s expenditure, even though it will benefit private businesses, is appropriate because it also will promote the entire mall and increase the city’s chances of selling the remaining 15 acres it owns that have no committed dealers.

Palmdale officials in February decided on a larger and more unilateral aid program for their Antelope Valley Auto Center, which has five dealers in a 40-acre area. Palmdale agreed to spend $1.2 million in redevelopment funds for advertising and another $180,000 for upkeep of the privately owned mall.

But in the most debated component of the deal, city officials agreed to contribute an additional $1.25 million in the form of a low-interest $250,000 loan to each of the five dealers. The money must be repaid by 1998, but the dealers can spend it for any business purpose they choose.

Palmdale officials defended the legality of that aid, although they acknowledged the purpose of the funds is to help the dealers--most of whom are new to the mall--survive the strain of the recession. However, other redevelopment attorneys questioned that kind of expenditure.

For instance, Joe Coomes of the Sacramento law firm of McDonough, Holland & Allen, which represents many redevelopment agencies, said he does not think state law permits a redevelopment agency to loan money to businesses to stave off failure or cover their operating expenses.