CASTAIC LAKE WATER AGENCY BOARD WILL FLOAT MORE BONDS.

Byline: Jason Takenouchi Staff Writer

The Castaic Lake Water Agency will issue more bonds to pay for its controversial $63 million purchase of the valley's largest retail water provider.

The agency's board of directors voted 7-2 Thursday to announce its intention to sell up to $70 million in bonds over the next three years. The debt would replenish the agency's reserve fund, which was drawn down Sept. 3 to pay for the Santa Clarita Water Co.

The purchase gave Castaic Lake - a public agency that sells imported, state water to retailers - control of its largest customer.

Board President Bill Cooper, a supporter of the purchase and the debt plan, said the agency will issue the bonds well before the three-year deadline.

``We'll go out for the financing before that,'' he said. ``Those ($63 million) are unencumbered funds from Castaic Lake Water Agency, but it's money that (the agency) will need for future projects.''

The collateral for the debt offering likely will include the revenues of the Santa Clarita Water Co., Cooper said. Those revenues include rates paid by the retailer's roughly 21,000 customers.

Board members Ed Dunn and Mike Kotch voted against the move. Director Don Froelich was absent.

Kotch said he voted against the proposal because he did not have time to examine it.

He also said he generally opposes the concept because the reserve funds used for the water company purchase included connection fees that are supposed to pay for projects related to new growth.

``There's a shell game going on here,'' Kotch said.

The board on Thursday also received a resignation letter from board member Bill Manetta, president of Santa Clarita Water. Manetta, who became a Castaic Lake employee when the agency purchased Santa Clarita Water, stepped down to avoid a conflict of interest, Cooper said.