Santa Clarita / Antelope Valley : Council, Water Agency OK Redevelopment Pact : Santa Clarita: City to cut $1.1-billion plan’s scope, safeguarding district tax revenues.

The City Council and Castaic Lake Water Agency have resolved their differences over the city’s $1.1-billion redevelopment plan.

The agency will drop its lawsuit against the city’s redevelopment plan in exchange for cutting the plan’s scope by one-fourth and safeguarding tax revenues the agency uses to pay bond debts, officials announced Friday.

The conceptual agreement, approved in closed-session votes by each agency this week, allows Santa Clarita to proceed with the 30-year plan that has been blocked in court for eight months. City Council members approved the plan in February to aid recovery from the Northridge earthquake, improve roads and other infrastructure, redevelop blighted areas and build affordable housing.

“This issue has been settled,” said Mayor George Pederson.

“We’ll take this agreement to our respective staffs and our attorneys and they will work together to hammer out the legal (details),” said water agency Board President Mary Spring.

City and water officials have been fighting over 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 for the redevelopment agency, but the water agency wants the funds to pay off bond debts incurred for various construction projects.

Both sides have agreed to cap the Community Recovery Plan at $854 million in projects, down from the originally proposed $1.1 billion.

Under the agreement, the redevelopment agency will collect portions of future general property taxes but will not receive any portion of special taxes that have been imposed to pay for special construction projects, such as the water district’s Rio Vista Water Treatment Plant.

Ironically, the agreement will settle the water agency lawsuit against the redevelopment plan but fails to address the legal action’s main contention--that the plan wrongly includes projects that go beyond earthquake recovery.

“No, we’re not dealing with that,” Spring said Friday.

An earlier agreement between Pederson and Spring nearly settled the legal fight last month. It too called for a scaled-back plan, but fell apart when the water district learned that redevelopment was to have been funded with money siphoned from special tax districts as well as general property taxes.

“This was the sticking issue,” Pederson said. The deal was struck when the city agreed to eliminate the special tax districts as a source of redevelopment funding.

Council members had reacted angrily last week when the water agency abandoned the earlier agreement, threatening to proceed with Santa Clarita’s full-sized redevelopment plan and to fight the water agency in court.

Negotiations resumed this week, however, and officials on both sides sound willing to forgive any harsh words uttered during the squabble.

“The Castaic Lake Water Agency and city representatives have worked diligently to fashion a fair compromise which meets the mission of both agencies and the needs of the citizens of Santa Clarita,” Spring said.