Santa Clarita / Antelope Valley : Redevelopment Plan Won’t Hinder Agency, Audit Finds

SANTA CLARITA —  The city’s proposed $1.1-billion redevelopment plan won’t hinder the Castaic Lake Water Agency’s ability to pay for the Rio Vista water treatment plan, according to a city-commissioned financial audit released Friday.

The agency filed a lawsuit March 31 to block the city’s Community Recovery Plan, saying it siphons off property tax revenue and hurts the agency’s repayment of $132 million in bonds issued to pay for the water treatment plant and other debts.

Santa Clarita City Council members adopted the plan in February to help the city recover from the Jan. 17 Northridge earthquake, improve its infrastructure, redevelop blighted areas and build affordable housing. The plan would be administered by a city community redevelopment agency.

A review of four years of financial reports shows the water agency is taking in more than enough property tax money to pay for the bonds even without funds lost to the redevelopment plan, according to James Regan, a financial consultant hired by the city.

“They’ve still got more than they thought they’d have, even with the Community Recovery Plan,” said Don Duckworth, the city’s community recovery manager.

“It’s like if I borrowed $100 from you and I for some other reason come up 30 to 40 cents short, I say I can’t pay you back,” said Assistant City Manager Ken Pulskamp. “It’s such a small amount it’s ridiculous.”

Any difficulty the water agency has in paying its debts is actually coming from a drop in water sales and connection fee revenues, according to Regan’s report.

Castaic Lake Water Agency officials haven’t seen the document yet, but said they strongly disagree with its findings.

“They are absolutely wrong,” said Bob Sagehorn, agency general manager.

Sagehorn said the $132 million in bonds cover only a third of the cost of the treatment plant. He added that the property tax revenue that would be lost to the redevelopment agency also would hinder the agency’s ability to obtain future financing.

The water agency’s lawsuit accuses the city of improperly declaring the recovery plan exempt from the California Environmental Quality Act because it’s an emergency plan that stemmed from the earthquake. The suit alleges that only 20% of the plan addresses earthquake-related needs.

“Why don’t they simply use the city share of the (property tax) they now receive . . . ?” said Sagehorn. “Why does the city have to go in and create this phony redevelopment agency based on the earthquake?”

The City Council is scheduled to review Regan’s report at its meeting Tuesday.

“We hope these programs don’t get held up for this minor amount of money for the water agency,” Pulskamp said.