Santa Clarita / Antelope Valley : Talks Again Break Down Over Future Tax Revenues : Negotiations: Santa Clarita, water agency are unable to reach accord. Dispute will probably be resolved in court.

For the third time, negotiations between the city of Santa Clarita and the Castaic Lake Water Agency over millions of dollars in future tax revenues have dissolved into harsh words, making it likely that the battle will be resolved in court.

The matter started in Superior Court last year when the agency sued to stop the city from implementing its planned $1.1-billion improvements program. The lawsuit claims that the program, which would be funded by future property tax revenues, should be limited to earthquake recovery projects.

Agency officials say that so much revenue would go to the program, it might not have enough to make payments on bond debt incurred for various agency construction projects.

Negotiations to settle the suit have proceeded in fits and starts for 12 months. Two tentative agreements were announced--one of them got so far as to be signed by both the agency board’s president and Santa Clarita’s mayor, but it later fell apart over differing interpretations of its provisions.

Agency officials said the city broke off the latest round of discussions last week with no explanation. But city officials said that agency representatives have been stalling, and that the matter would be settled with more expediency in court.

“The discussions have been ‘Let’s stretch it out. Let’s not build a mechanism to resolve this,’ ” said Councilman H. Clyde Smyth, one of the city’s negotiators. “We are better off allowing the wheels of justice to move forward.”

No court date has been set to hear the suit. Attorneys for both sides are scheduled to meet with a Superior Court judge in early June to discuss their settlement efforts.

During the negotiations, the city did agree to cut its improvement plan by one-fourth and ensure that the agency got the revenues it needed to make bond payments. But no agreement could be reached on the legal guarantees the agency demanded.

City officials said a signed agreement, approved by a judge to resolve the lawsuit, would be sufficient. Agency leaders wanted state legislation to make sure the agency gets an appropriate portion of the revenues.

“We’re not saying the current city leaders will renege on the agreement,” said William Cooper, agency board president. “But there are future people to contend with in their Redevelopment Agency. This goes on for 30 years.”

Agency leaders say they are willing to resume discussions. City officials say it’s possible, but unlikely.

“This is the end of the line, folks,” Mayor Jo Anne Darcy said. “Unless they come up with a really good proposal, it’s the end of the line.”

Correspondent Mark Sabbatini contributed to this story.