City Backs Away From Redevelopment Plan

Attempting to throw in the towel after two years of bitter controversy, Santa Clarita City Manager George Caravalho agreed this week to drop plans for a $1.1-billion dollar redevelopment project inspired by the damage inflicted by the Northridge earthquake.

But despite that key concession, the region’s most powerful water agency, a longtime foe of the project, refused to make a deal that would avert a costly court battle.

Although Caravalho and Castaic Lake Water Agency General Manager Robert Sagehorn reached the general outlines of a deal earlier this week, lawyers for each side could not pin down a final settlement.

The city had sought to use property taxes over the next 30 years to finance the project. But the water wholesaler has a stake in those taxes, and claims it could lose millions if the project goes through.

City leaders, such as Councilwoman Jan Heidt, said Friday that they had tried to accommodate the concerns of the water agency, only to be snubbed at the last moment.

“I see them as trying to take their thumb and grind us into the ground,” Heidt said. “I don’t think you should stomp on people to the point of humiliation.”

The water wholesaler sued the city in April 1994, charging that Santa Clarita and its redevelopment agency failed to adequately address environmental concerns when it proposed a massive plan to correct damage suffered in the Jan. 17, 1994, Northridge earthquake.

Carl Newton, the city’s attorney, said Castaic has now insisted on a deal in which the city admits it was wrong.

R. Bruce Tepper Jr., the attorney for Castaic, countered that if the city had its way, the water wholesaler could be waiting months for termination of the redevelopment plan.

Tepper said a deal could be signed tomorrow, but his agency will not accept more of the talks that so far have not ended in a resolution.

“The water agency isn’t inclined to accept mush anymore,” Tepper said.

*

The earthquake inflicted at least $144 million in private property damage on the city, and civic leaders sought a massive redevelopment plan, which included roads and other amenities.

Castaic officials want any settlement to include a tentative court ruling released in January that indicated that the city’s recovery plan went beyond the scope of the disaster.

City officials object to that because the ruling was tentative, and never signed by the judge, Los Angeles County Superior Court Judge David A. Horowitz. It was only meant, city attorneys say, to focus argument.

“We can go ahead and put it in now, or wait until the judge does it himself,” said Bill Cooper, the president of the Castaic Lake Water Agency’s board. “We think it’s better if we just went ahead now.”

Cooper said he is concerned that if the redevelopment project choked off projected property tax revenues, the agency’s AAA bond rating could be endangered.

City officials are concerned that if they accept the Castaic deal, they will be precluded from any redevelopment agency at all.

City officials seemed prepared to fight on, saying that Castaic has lost sight of reasonable goals.

“They’ve been poisoned by their attorney,” Caravalho said. “He’s convinced them it is in their interests to do it this way.”