From the U-T:

A water agreement between Carlsbad and San Diego County will mean clean drinking water for residents but could ultimately defer some of the city’s redevelopment dreams.

City Council members Tuesday approved a contract with the San Diego County Water Authority to ensure that Carlsbad will keep receiving property taxes from the long-anticipated desalination plant set to be built on its south coast if the county takes over operations within the next 10 years.

A stipulation of a prior contract, however, has been thrown out and the guarantee of a $5.5 million payment from the county to the city’s redevelopment agency has gone by the wayside.

A contract signed in 2005 required the county to contribute nearly $6 million to the city’s redevelopment agency in exchange for some of the rights to the purified water. The terms of the contract approved Tuesday could mean the delay of street enhancements like the realignment of Carlsbad Boulevard, studies into how to lessen the effect of power plants on the coastline and improvements and additions to the city’s boardwalk.

Debbie Fountain, Carlsbad’s housing and neighborhood services director, said the city has not yet decided which projects will have to be halted.

“The city is losing a good degree of those benefits, and it still is a favorable project for the city,” said Mayor Matt Hall during Tuesday’s meeting. “But I am saddened that we lost a lot of the things we had anticipated to be benefits for the city.”

Like other California cities, Carlsbad relies on property taxes to fuel its redevelopment agency, the organization charged with defining blight and eliminating it. That money typically goes toward low-income housing, revitalization of the Carlsbad Village and other beautification projects that dot the city’s landscape.

Poseidon Resources, the San Diego-based company that has worked for more than a decade to establish itself on Carlsbad’s coast, is poised to own the plant for at least the first 10 years of its operation and pay taxes to be funneled into the city’s redevelopment coffers.

The county, however, could decide to take over the project before those 10 years are up. Without the contract approved Tuesday, it would be able to avoid paying any taxes to the city. Such a move would mean that up to 25 percent of Carlsbad’s redevelopment money could dry up.

While the contract requires the county to pay between $1 million and $2 million per year if it opts to buy the plant from Poseidon, it’s a disappointment to some council members who were around to sign the old contract that required the county to pay $5.5 million for redevelopment projects.

“This looked really good for the city a few years ago,” said Councilman Keith Blackburn. “Now it just looks OK for the city.”

Councilwoman Ann Kulchin shared Blackburn’s disappointment but said she could live with the decision.

The city’s original contract with the county was thrown out when the county backed out of the desalination plant project in June 2010 because of an unrelated lawsuit against the region’s water wholesaler, the Metropolitan Water District of Southern California, over rates.

Talks of the new contract began in July 2010 when the county opted to give the project another try and approved an agreement with Poseidon that allows it to buy water and deliver it to nine county cities.

Carlsbad first signed onto the project in 2006 when it approved Poseidon’s environmental impact report.

Glenn Pruim, director of Carlsbad’s utilities department, said the plant should be operating within 36 months after construction begins. A start date for construction, however, has not yet been determined.

The plant is expected to clean about 100,000 gallons of ocean water and produce enough drinking water each day to serve 300,000 households across the county.