Clearing the way for what could potentially be the biggest open space deal in the Santa Cruz Mountains in years, Gov. Jerry Brown on Thursday signed a bill that would streamline the sale of up to 6,500 acres of land owned by San Jose Water Company, allowing it to become a public open space preserve.

The bill would allow the sale of the land — which includes 1,100 acres of redwood forests and could easily eclipse $30 million in price — to the Midpeninsula Regional Open Space District without approval from the state Public Utilities Commission. The commission regulates San Jose Water, and its processes are often bureaucratic and slow-moving.

Talks are still in the very early stages. The water company says the land, which it has owned since the late 1800s, is not listed for sale. But company officials were told of the bill and did not oppose it and say they are willing to continue discussions.

“We are aware of their interest,” said Jayme Ackemann, a spokeswoman for San Jose Water Company, on Thursday afternoon. “But we aren’t actively seeking to sell the property.”

The sprawling, undeveloped property lies between Summit Road and Lexington Reservoir in Santa Clara County. Home to deer, mountain lions and other species, along with steep hillsides and redwood groves, it forms much of the headwaters of Los Gatos Creek, and includes Lake Elsman. The lands also include a property surrounded by El Sereno Open Space Preserve near Saratoga.

A decade ago, San Jose Water ran into a buzzsaw of controversy when it proposed to log the redwoods, which grow east of Highway 17. Neighbors in Aldercroft Heights, Redwood Estates and other mountain communities fought the plan, even enlisting the help of former Vice President Al Gore, and in 2007 state forestry officials rejected it.

The open space district, a government agency based in Los Altos, included $29 million in Measure AA, a bond measure passed by voters in 2014, to buy the property. Another $3 million that could be used for it is included in a parks bond heading for the June 2018 state ballot.

“If you look at a map, it’s a very logical thing that the water company sell this to the open space district,” said State Sen. Jim Beall, D-San Jose, who wrote the bill, SB 492.

“The open space district owns most of the land around it,” he said, “and it’s very logical in terms of resource conservation. It’s a valuable asset for the public, as opposed to logging or building more housing in the mountains.”

Beall said that if the open space district and the water company can agree on a price, the deal could eventually lead to a trail that connects Lexington Reservoir and Mount Umunhum, whose summit opened to the public earlier this month, over Summit Road and through the Forest of Nisene Marks State Park in Santa Cruz County, all the way to the Pacific Ocean.

San Jose Water, founded in 1866, provides drinking water to roughly 1 million people in San Jose and surrounding communities.

Steve Abbors, general manager of the open space district, said his agency is very interested in acquiring the land, and could add it to Sierra Azul Open Space Preserve. The property would be the largest and most expensive land deal the district has ever completed in its history, which dates back to 1972, he said.

One of the next steps would be an appraisal.

“We know it is going to be expensive,” Abbors said. “San Jose water is going to want to get top dollar. We have to make sure it’s fair market value.”

Ackemann said that if sale discussions move forward, there are complex issues that would need to be solved, including protecting the watershed, which is a key source of drinking water for Silicon Valley.

The bill allows the water company to retain possession of its water rights, a treatment plant and Lake Elsman. It was endorsed by the Bay Area Council, the Silicon Valley Leadership Group, the Nature Conservancy, the Santa Clara Valley Audubon Society, the Sierra Club, the town of Los Gatos, and the cities of Saratoga, San Jose and Campbell.

The bill also requires that proceeds from any sale be invested by the water company in capital projects like upgrading pipelines to reduce costs on ratepayers. It also requires that any money from the sale that the water company has not spent within eight years must be allocated to ratepayers.

“It seems to me a great opportunity,” Abbors said. “I really hope it can happen. We are fully committed.”