Santa Clarita / Antelope Valley : City Offers to Cut Redevelopment Area : Lawsuit: Officials propose scaling back project 25% to end revenue dispute with the Castaic Lake Water Agency.

City officials Wednesday offered to slash the scope of their $1.1-billion redevelopment plan by one-fourth to settle a lawsuit filed by the Castaic Lake Water Agency.

If accepted, Santa Clarita’s Community Recovery Plan would be capped at $854 million in projects and exclude much of the Saugus community previously marked for redevelopment--a cut of about 25% of the original plan’s geographic area.

The offer was made Wednesday morning to water agency representatives. The water wholesaler has filed two lawsuits aimed at blocking the 30-year redevelopment plan, which would use future property tax increases the agency wants to pay off bond debts, including $132 million for its new Rio Vista Water Treatment Plant.

“We made a proposal to them that we feel addresses the concerns expressed by them,” Santa Clarita Mayor George Pederson said. “We think, we hope, this will resolve the lawsuit.”

The City Council adopted the Community Recovery Plan in February to help the city recuperate from the Jan. 17 Northridge earthquake, improve its roads and other infrastructure needs, redevelop blighted areas and build affordable housing.

Water agency officials, expecting to lose $60 million or more in potential property tax revenue over the life of the plan, alleged in two lawsuits that the plan goes far beyond fixing earthquake damage. A Los Angeles Superior Court judge in July rejected one suit, but the other is pending and prevents the city from moving forward with the projects.

Board members of the water agency haven’t responded to the city’s offer, but praised council members for seeking a compromise.

“I think it’s a very substantive proposal,” said Mary Spring, president of the water agency’s board. She called the offer a “good faith effort” on the part of Santa Clarita officials.

Spring estimated that water agency representatives will respond to the offer within a month.

Mayor Pederson and Councilman H. Clyde Smyth, who helped negotiate the proposal after a series of six meetings with water agency personnel, are optimistic.

“I have a good feeling about this morning. I have a feeling great strides were taken,” Smyth said. “I look forward to an early and positive response from the agency.”

“We are open to all suggestions they make,” Pederson said.

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Water agency officials in August asked Santa Clarita to cut the redevelopment plan to $770 million and limit the agency’s loss of revenue to $21 million, in exchange for dropping the lawsuit. The city’s counteroffer Wednesday doesn’t go that far, but is still much smaller than the initial plan.

About 60% of Santa Clarita’s land was encompassed in the original plan, whereas about 45% of city property is covered in the smaller plan.

Santa Clarita officials say that the redevelopment plan can still accomplish its goals, even if the monetary value and project area are both slashed by a fourth.

“What you’ve got to do is establish priorities,” Smyth said. “There’s never enough money to do what you want.”