Santa Clarita / Antelope Valley : Negotiations Stall Between City, Water Agency : Santa Clarita: Impasse over lawsuit blocking proposed redevelopment plan may delay 30-year quake recovery proposal.

SANTA CLARITA —  Negotiations to settle a lawsuit blocking Santa Clarita’s proposed $1.1-billion redevelopment plan have broken off between city officials and the wholesale water agency that filed the legal action.

The sudden impasse may reignite the acrimonious court battle between the two agencies and further delay the start of the 30-year plan that the City Council approved eight months ago to aid the recovery of the Northridge earthquake.

At issue are hundreds of millions of dollars in future tax increases that will occur here during the next 30 years as property values rise. The city wants the money to fund redevelopment, but the Castaic Lake Water Agency wants the funds to pay off bond debts the agency incurred for various construction projects.

The proposed settlement was initialed by Castaic Lake Water Agency Board President Mary Spring and Mayor George Pederson last week. Under the agreement, the CLWA would have dropped its suit and the city would have scaled back its spending plans from $1.1 billion to $854 million. The city also would have agreed to reimburse the water agency for half of the tax income it would lose once the redevelopment plan is in place.

The water board balked at the agreement Tuesday, saying the plan would divert more property tax revenue from the CLWA than first thought and could trigger tax hikes for certain Santa Clarita Valley residents.

“All we’re trying to do is understand it completely. We discovered it late in the process because we’re not redevelopment people,” said Robert Sagehorn, CLWA general manager. “What we’d really like to do is spend some time with some math models. It’s information the city should have provided a long time ago.”

Council members reacted angrily Tuesday night, threatening to proceed with Santa Clarita’s full-sized redevelopment plan and to fight the water agency in court unless the CLWA backs the proposed agreement within seven days.

“I’m very concerned that this (water) board is stalling,” City Councilman Carl Boyer said.

“We’ve got people who need help,” Councilman H. Clyde Smyth said. “We need to get moving.”

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It had appeared that Santa Clarita and the water agency had resolved their fight last week. Water board members now say they have since learned that the redevelopment agency would siphon away not only portions of general property taxes, but parts of special taxes established to pay for schools and water projects.

The water agency would have to raise assessment fees to make up for money diverted to the Redevelopment Agency, Sagehorn said. Residents living under the Redevelopment Agency and assessment fee area could find themselves paying many times what other residents do.

“What we’re trying to warn the city is that we think this might be a tax increase,” Sagehorn said.

Sagehorn, who described the city’s seven-day deadline as unrealistic, said the water board would like to prevent any of its future tax revenue from being diverted to redevelopment. Perhaps state legislation could be introduced to protect the agency’s tax funds, Sagehorn said, but the agency has yet to approach a lawmaker about proposing such legislation.

City officials insist the water agency must adhere to the proposed settlement or continue with its lawsuit, which alleges the redevelopment plan goes beyond fixing earthquake damage.

Mayor Pederson calls the CLWA’s argument irrelevant.

The proposed settlement between the city and water agency states the redevelopment plan will be implemented according to “any method authorized by current or future state law,” a condition that everyone agreed to no matter where the plan draws its funding.

“For them to ignore the agreement we have signed and to attempt to use this in the eleventh hour to torpedo it--this is the wrong,” Pederson said.