CITY VOTES TO OPPOSE BUYOUT OF WATER FIRM; COUNCIL FIGHTS CASTAIC AGENCY'S RETAIL EFFORT.

Byline: Jason Takenouchi Daily News Staff Writer

A roiling water struggle took a sharp turn late Tuesday when the City Council voted to oppose another public agency's proposed purchase of the valley's largest retail water company.

The council also voted to dedicate up to $80,000 to study and publicize the city's effort to purchase the same firm, Santa Clarita Water Co.

The two votes, both 3-2, put the council on a collision course with the Castaic Lake Water Agency, the public organization that controls water supplied from the State Water Project. The agency sells that water wholesale to four valley retailers, including Santa Clarita Water Co.; those retailers then sell the water to consumers.

The water agency is in exclusive negotiations to purchase Santa Clarita Water Co., but city attorneys say that sale could be illegal under state law and the agency charter. Several council members have supported a city purchase of the company.

Mayor Jo Anne Darcy joined Councilwomen Jill Klajic and Jan Heidt in supporting the resolutions; council members Frank Ferry and Laurene Weste voted against both.

``We had to do something to show them we're serious,'' Darcy said Wednesday. ``The action (Tuesday) night should have told them we are.''

Officials with the water agency and the Santa Clarita Water Co. said the council votes would not affect ongoing negotiations.

``If they were a judge, I guess that would mean something, but they're not,'' said William Manetta, president of the water company. ``I don't see it as having any major effect on what's going on.''

The vote to oppose the agency's attempted purchase reaffirmed a City Council policy that the sale ``would constitute a conflict of interest and would be a violation of California State Law'' because the agency, a wholesaler, would sell retail water. Agency officials say they are not legally barred from purchasing a retail water company.

Critics of the agency say the sale would give it control over most of the valley water supply.

While the split vote was a victory for those opposed to the agency purchase, it also revealed that Ferry, a key swing vote, might not support an attempt to take the water company through eminent domain. The council would need four votes to approve such a move.

Ferry said he supported a city purchase only if the company's current owner, the Bonelli family, was willing to sell to the city. Talks between the family and the city ended in late January when the water agency revealed that it had exclusive negotiating rights for the company.

Ferry had been instrumental in delaying a council vote on the matter while he and Klajic negotiated with the agency over the proposed purchase. Last week he presented the agency with a compromise agreement that would have given the agency and the city joint control, and ownership, of Santa Clarita Water Co.

At the time, Ferry warned water agency board members that ``I was the fourth vote for the last eight months, and I can be that fourth vote again.''

The joint control proposal was rejected by the agency's 11-member board.

``Based on the lack of progress in the negotiating, I think it's the only way we could go,'' Darcy said of the council vote.

``We'd rather be partners in this,'' she said. ``We don't want to litigate, but if that's the only way the city could go, we'd be prepared to do it.''