Last year, Jim Barbour thought the purchase of a lot off Jamieson Canyon Road was a sound investment for his wine management consulting business.

Barbour figured he would build a large enough building on the 1.5-acre parcel off of Jamieson Canyon to have his offices and his machinery in one central location. That would allow him to give up his $5,500-a-month office in St. Helena.

The 7,000-square-foot, one-story stucco building in the industrial zone off North Kelly Road would house the tractors he drives to the vineyards he manages in the Napa, Sonoma and Lake counties.

Barbour's plans were on track until last fall, when he and other property owners near Napa County Airport received a notice from the city of American Canyon saying the city would not provide a hookup to its municipal water system unless Barbour's property became part of the city. Instead of a water hookup, he was advised, one option was to drill a well.

"When I bought the property, nobody told me there was going to be a problem hooking up to water," said Barbour, adding the land is too far from American Canyon to be annexed into the city.

He paid a company $10,000 to put in a well, but found no water after drilling down 400 feet. He said he now hopes that the county will allow him to install a 10,500-gallon tank and truck water to the site. "Otherwise, I'm stuck."

Barbour is among several property owners in unincorporated Napa County since last fall who have been denied "will-serve" letters, agreements to provide water service, from the city of American Canyon.

Napa County Planning Director Hillary Gitelman recently said a half-dozen property owners in unincorporated Napa County have been denied water service letters unless they agreed to annex into the city.

Growing too fast?

According to city records, however, American Canyon has not rejected that many claims.

The city has not acted on two water service requests for properties in unincorporated Napa County, city Public Works Director Robert Weil said this week.

Three other water service requests in the Napa Valley Gateway subdivision are being written. "We are drafting the conditions at this time," he said. At least one property owner in the Napa Valley Gateway, developer Zapolski and Rudd LLC, still has not received a service letter for its' site, a representative said this week.

"We are still waiting on it," said Jon Bowman, whose company plans to construct a 34,510 square-foot building.

In the meantime, in letters and at public meetings, county representatives have said American Canyon is obligated to provide water to properties in unincorporated Napa County south of the Soscol Ridge. That's because the city assumed the responsibilities of the former American Canyon Water District when it incorporated in 1992. The district's boundaries extended to the Soscol Ridge, near the Napa County Airport.

American Canyon officials dispute that assertion, saying they need to protect American Canyon's water resources for its residents and businesses within the city limits.

American Canyon City Attorney Bill Ross, in a March 5 letter to the Napa County Local Agency Formation Commission -- the agency that approves jurisdictional boundaries and updates water, sewer and fire service areas -- reiterated the city's position that its primary obligation is to provide water and sewer service to properties within its boundaries or to those slated to be annexed into the city.

City Manager Rich Ramirez said "hundreds of thousands" of square feet of building is planned north of American Canyon. The city has to make sure water resources are not being depleted, he said.

The properties outside city limits use about 16 percent of the city's water supply annually, Weil said. That demand is estimated to increase to 20 percent by 2025, he said.

All told, the city is entitled to 4,700 acre-feet of water annually under a 1967 contract between the former water district and the Napa County Flood Control and Water Conservation District. American Canyon's water allocation will increase to 5,200 acre-feet of water in 2015, Weil said.

The city and the county each say the other is growing too fast and using too much water.

American Canyon added more than 4,800 residents and 1,600 homes between 2000 and 2005, according to the Association of Bay Area Governments, a regional planning agency. Between 1995 and 2005, an estimated 2.4 million square feet of industrial buildings were constructed in American Canyon, according to the county.

In the same period, construction within industrially zoned areas in unincorporated Napa County totaled 2.9 million square feet.

Citing an American Canyon study, Gitelman also noted that the city's water demand increased from 917 acre-feet per year to 1,979 acre-feet per year between 2000 and 2005.

Napa County supervisors Bill Dodd and Mark Luce recently said that land-use control -- not water availability -- is the reason the city has refused water service to properties near the airport.

"We don't believe water is the issue," Luce said. "We just believe it's a tactic to expand their boundary."

Ramirez said the city wants to "control" water mitigation measures. For instance, the city could require that properties use recycled water or low-flow toilets, he said.

"We're just trying to be good stewards of the limited amount of water we have left," Ramirez said.

Bring in the lawyers

The debate over "will-serve" letters comes as American Canyon and Napa County officials joust over the location of the city's boundary line.

At stake, among other properties, are about 350 acres of industrial land north of the city.

The county's proposed general plan update -- the document guiding future growth of the Napa Valley -- shows American Canyon's ultimate boundary line a short drive south of Fagan Creek, which crosses Highway 29 near La Strada restaurant.

City officials, including Ramirez and Mayor Leon Garcia, have repeatedly said that the city's northern boundary line should be Fagan Creek, as it is under the city's 1994 general plan. City officials said they plan to ask LAFCO to amend the city's sphere of influence -- the ultimate urban boundary line -- to match the one in the 1994 general plan.

"We can't figure out how to plan for the area if we cannot control the land uses that are going on in that area," Ramirez said.

Board of Supervisors Chairman Harold Moskowite, who represents the south Napa County, including American Canyon, expressed hope that the disagreements between the Napa County and American Canyon will be resolved.

"I think we'll work it out," he said. "It's very important for American Canyon and Napa County to work together."

Yet, Dodd, who finds the city's refusal to provide water service to Barbour "distasteful," said he is annoyed that American Canyon has failed to recognize previous agreements signed with the county.

In the meantime, both sides are preparing in case the dispute should end up in court.

Napa County has retained an attorney, Alan Lilly of Sacramento, to study the issue. Another Sacramento attorney, Iris Yang, will consult for American Canyon on the water issue, Ross said.

"We're close to going to court, without a doubt" Luce said.