Boys checking out camouflage caps and striped boxers at the Gap Kids store in Westfield’s Valley Fair Shopping Center would be fine if the girls’ section on the other side of the store – with its frilly frocks and pink pants – were located on a different planet.

Little do they know, it’s actually in another city. Really.

That’s because Valley Fair straddles San Jose and Santa Clara, with the border splitting through Gap Kids and a few other stores. The two cities not only share the mall’s coveted sales tax, but also the headaches of hosting a major shopping center – the traffic, the noise, the frequent street maintenance and extra police surveillance.

But in the case of the growing mall’s latest expansion plans, Santa Clara doesn’t think its getting its share of the spoils.

As part of Valley Fair’s proposed 650,000-square-foot expansion, 17 new shops are slated for Santa Clara while two new anchor stores and 40 shops would be added in San Jose. Because cities keep sales tax money that falls within their borders, Santa Clara leaders have been working with mall managers to see whether more stores can go on their side of the border.

“I don’t have a problem with Valley Fair expanding. It’s a very successful development and that’s positive,” said Santa Clara Councilwoman Jamie McLeod. “I’m frustrated about missed opportunities for Santa Clara.”

The expansion – which was targeted for completion as early as 2008 – will push Valley Fair to more than 2 million square feet, making it the Bay Area’s biggest mall. But it’s also exposing some of the uneasiness that comes with any major development plopped near city borders.

The two cities have also sparred over San Jose’s development plans in the North First Street corridor, with San Jose recently agreeing to pay $12.5 million for road improvements and other work after the cities of Santa Clara and Milpitas and Santa Clara County sued San Jose.

7 percent of growth

In Valley Fair’s case, more than one-fourth of the mall site is in Santa Clara but the city will only get about 45,000 square feet – or 7 percent – of the new commercial development. That includes moving two banks from San Jose to Santa Clara and the expansion of an existing grocery store, which won’t provide much more in sales tax, said Santa Clara planning director Kevin Riley.

The last expansion, completed in 2002, added a glitzy new wing of upscale stores such as Tiffany & Co.’s, A/X Armani Exchange, Louis Vuitton and Tommy Hilfiger. None of the new shops was built in Santa Clara.

Valley Fair’s sales tax revenue has more than doubled since 1999, before the expansion. But last year Santa Clara received about $1.4 million – the same amount it received in 1999.

San Jose is leading a review of the effects of this latest project because a bigger portion of the mall is on its side. Although Santa Clara might not have much leverage because the project doesn’t require rezoning or major permits, city leaders have approached mall representatives to see what can be done. They were told the shopping center can’t build in Santa Clara because Macy’s lease guarantees nothing will block views of Macy’s Men’s & Home store in – where else? – Santa Clara.

McLeod, a planner for the city of Sunnyvale, said she hopes the city and mall can work together “to explore options and think creatively.” For instance, she said, if Macy’s is more concerned about their sign being in full view as opposed to their building, the city may be able grant a variance on the height of the sign.

Mall managers say they’re open to ideas but will ultimately make decisions based on what’s best for business. Westfield spokeswoman Katy Dickey pointed out that Santa Clara’s shops will jump from 33 to 50 – or by 52 percent – while San Jose will go from 200 to 240, a 20 percent increase.

“The ultimate goal is that everyone benefits from new shopping, dining and entertainment options at the center,” Dickey wrote in an e-mail.

Mall success helps all

Nanci Klein, manager of corporate outreach for the city of San Jose, said Valley Fair’s success has helped the economic development of both cities.

“San Jose is very supportive of the mall doing well wherever it is,” she said.

Since California voters passed Proposition 13 in 1978, cities have worked to draw more retailers to try to use sales tax to replace what they lost in property tax. Expansions are generally good for cities and Valley Fair has had several over the years. From its roots a half-century ago as an open-air mall with rooftop carnival rides on Macy’s, Valley Fair has grown into a mammoth with more than 200 shops.

The expansion means more stores, more shoppers, more traffic and more pollution, according to a draft of the environmental impact report, which the cities’ planning commissions will review in the next few months. The expansion is also expected to put a strain on Santa Clara’s power and sewer systems.

San Jose resident Jenny Shain, who was shoe shopping at Valley Fair recently, said she feels for Santa Clara but it may be too late.

“It’s what agreement they had when they planned the whole thing and whether they can renegotiate some of the details,” said Shain, a city of Sunnyvale employee. “They probably had no idea back then how phenomenally successful the mall was going be.”

Although Santa Clara residents aren’t likely to a buy a pair of boots from Shoe Palace over Nine West just because the former is in their city, some serious shoppers are known to cross county or state borders to shop at outlet malls clustered in areas with lower sales tax rates.

With stores that fall in both cities like Gap Kids, it won’t matter anyway whether a shopper snags a boy’s polo shirt from one side or a sparkly tank top from the other: The sales tax is divided proportionally by the percent of the store in each city.

On the Santa Clara side on a recent weekday evening, San Jose State University seniors Nicolas Castaneda and Brett Weakley inspected a mall directory looking for the General Nutrition Center – which moved about two years ago to the San Jose side of the mall.

“Oh, it’s far,” Castaneda said. “It used to be here.”

That didn’t stop the pair from crossing the border in search of vitamins.