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Castaic Lake Water Agency General Manager Dan Masnada said the division has outgrown its current building on Soledad Canyon Road.
The new office will cost nearly $4 million. Retail Manager Mauricio Guardado said the division is finalizing the purchase of a Summit Pointe office. The agency could move in as early as June, Guardado said.
The bond will also pay for three new tanks for the division at a cost of $10 million. Together, the new tanks will hold 7 million gallons of water. A new well will take up another $1 million.
The rest of the $16.3 million will go toward administrative costs.
The agency may seek to compete for Build America Bonds, a program of the American Recovery and Reinvestment Act of 2009. Such bonds have a lower interest rate, but the agency has less control over them.
Twenty percent of the money will be paid back using pay-as-you-go financing, with cash divided out of rates or reserve funds, Masnada said. The bond would cover the remaining 80 percent.
"Debt is a very important element of this," Masnada said. "It's a benefit to the customers today, but also customers well into the future."
By paying off the projects over 30 years, customers both now and in the future pay a share of the project costs, Masnada said.
The Castaic Lake Water Agency board of directors approved the new debt in a 10-1 vote, with Director Ed Colley voting against.
"I just want to renew my concerns of having such a small percent of pay-as-you-go financing," Colley said. "I just don't think it's the best way to run a retail agency."
The new debt is already included in the retail rates through 2012.
The Castaic Lake Water Agency is a water wholesaler that provides water to most local users and owns the Santa Clarita Water Division, one of four water retailers in the Santa Clarita Valley.
