RFI SELLING BERMITE SITE COMPANY, CITY COUNCIL CITE INABILITY TO COMPLY WITH CLEANUP DEMANDS.

Byline: Heather MacDonald Staff Writer

SANTA CLARITA - For Remediation Financial Inc., the most difficult part of cleaning up the defunct Bermite munitions factory had nothing to do with toxic chemicals or unexploded ordnance waste.

The company claims it was stymied by local politics and decided last week to cut its losses and sell the polluted 996 acres near Soledad Canyon Road in the heart of Santa Clarita.

``The project needs a new face,'' said Gary Brown, the director of development for RFI. ``That's the only way it will happen.''

Over the past year, city officials have grown increasingly skeptical that the Phoenix-based company had the ability or the wherewithal to rid the property and its groundwater of toxic chemicals left over from nearly 50 years of Department of Defense contract work.

``RFI had the expertise to clean up the site, but didn't have the council's trust and the community's respect,'' said Mayor Frank Ferry.

Company representatives counter that the City Council's reluctance to amend the development agreement to include Golden Valley Road and take an active role in the cleanup doomed the project.

``We naively assumed that the council members would live by their word,'' Brown said.

The project could never gain traction because several local officials politicized the debate over the project for their own gain, Brown charged.

``There were agendas within agendas that we could never keep up with,'' he said.

A half-dozen companies are evaluating the site, which RFI purchased in 1999 for about $15 million, and has spent more than $25 million to clean, Brown said.

``The company that purchases this property has to do what RFI never could, and give the council a comfort level that they can clean up the property to a safe level,'' said Jeff Lambert, the city's director of planning and building services.

If the property is sold, the buyer is expected to ask the City Council for its blessing in the hopes of building a positive, collaborative relationship, officials said.

``We'll want to see a lot more of their books than we ever did of RFI's,'' Lambert said.

RFI's decision to bow out of the project affords the city a chance to re-evaluate the plan for the area, which had been expected to be developed into Porta Bella, a 2,911-home subdivision that includes a network of roads and a commercial/industrial business park, officials said.

``The city is in the best position we've ever been in to make process on this complicated issue,'' said Councilman Bob Kellar. ``There's been a new shuffle of the deck.''

City officials are exploring dozens of options to clean up the property's soil and water, including scenarios that do not include development of the hilly property, Lambert said.

``No one wants 3,000 homes on that site,'' Ferry said, suggesting that instead it should be developed into a business park. ``We have a unique opportunity now.''

Ferry said the council will mostly likely have to consider allowing the new owner to build on the property in phases, as each is certified as clean by the Department of Toxic Substances Control, the state agency overseeing the clean up of the site.

It might also be necessary to create a redevelopment zone and finance the development with a share of the taxes generated by new homes and businesses on the site, Ferry said.

However, a number of civic leaders, including Councilwoman Laurene Weste and most members of the Citizens Advisory Group keeping tabs on the cleanup, want the city to fence off the site and leave it vacant once the site is cleaned up.

To pay for the cleanup without any development of the site, the DTSC and the city would have to go to court to enforce a consent decree against the former owners of the property, Whitaker-Bermite, and their insurance companies.

``Unfortunately, you can't go to Whitaker-Bermite and punch a button and get the money to clean it up,'' Kellar said. ``It's not as easy as I'd like it to be.''

It is unclear how long a court challenge would take, what probability of success it would have, or the requirements to clean the property, Ferry said.

``It may cost us more than it's worth,'' Ferry said.

RFI's local development arm, Santa Clarita LLC, ran out of money earlier this year after the City Council refused to consider allowing phased development, and the company's capital and investments dried up.

As the dispute mushroomed, a half-dozen lawsuits between RFI, the city and the Castaic Lake Water Agency ensnared the project, and made progress all but impossible, officials agree.

Most of the council's discussions about the cleanup and development of the former Bermite factory have taken place behind closed doors, exempted from the state's open meeting laws because of the litigation surrounding the dispute.

Because of its financial woes, RFI is out of compliance with the agreement it signed last year with the DTSC that details the cleanup and scheduled progress. The state attorney general is considering levying fines or other penalties against the company.

In August, the Santa Clarita Planning Commission is expected to finalize its ruling that RFI failed to meet the terms of the development agreement, which was approved in 1995. The company has appealed the decision, which is expected to be considered by the City Council in October.

At that time, the City Council could decide to terminate the development agreement and wipe the slate clean, officials said.