By LORI A. CARTER
THE PRESS DEMOCRAT
Until last week, Petaluma was planning to pay $5.1 million to the state to keep its redevelopment agency alive, allowing several building and affordable housing projects to move forward.
But a state Supreme Court order threw that all up in the air.
Now Petaluma, like every other city in the county, is treading water and trying to safeguard its planned projects, waiting for the court to issue a final ruling that will dictate the future of redevelopment agencies throughout the state.
As part of the state budget passed in June, the Legislature and Gov. Jerry Brown dissolved redevelopment agencies but gave them the option to continue if they agreed to pay specified amounts for distribution to schools and other taxing entities.
Some agencies called the fee a ransom or a “pay to play” scheme.
The California Redevelopment Association filed suit to block the legislation and the state Supreme Court issued a partial stay on the law’s implementation until the issue is heard in court.
Several Sonoma County cities, including Santa Rosa, Healdsburg, Cloverdale and Windsor, and the county, had already agreed to make payments to keep their redevelopment programs going. Sonoma was poised to do the same until the court order came down.
In a special meeting set for next Wednesday, Petaluma will likely pass an “enforceable obligation payment schedule,” which is essentially a documentation of all of the city’s planned redevelopment commitments and their costs. Every redevelopment agency in the county must approve a similar list if it wants to protect its projects, Alverde said.
“If some reason there were a dissolution of the agency, that serves as a basis for what would be implemented in the future,” Economic Development Manager Ingrid Alverde said.
Redevelopment agencies have been around for decades with the purpose of helping rebuild blighted areas. Cities raise money for improvement projects by selling bonds that are repaid with the portion of the tax revenue generated as property values rise in the redevelopment area. The dissolution of the agencies would place more tax money into the state’s coffers instead of city redevelopment zones.
Much of the city of Petaluma lies within two redevelopment districts. The downtown makeover in the past decade was funded in large part with redevelopment monies. Numerous planned or ongoing building projects — including the Rainier Avenue cross-town connector, the East Washington Street interchange with Highway 101 and Old Redwood Highway projects — are dependent on millions of dollars of redevelopment funds.
Until the court issues a final ruling, anticipated by Jan. 15, agencies cannot enter into any new agreements or take on any additional debt and are limited to activities included in an approved list, Alverde said.
“We’re sort of in a holding pattern,” she said.
Councilman Mike Healy, a lawyer, has been following the Supreme Court’s orders on the issue.
He said the partial stay the court issued may be cause for optimism for redevelopment agencies.
“It looks really positive,” he said. “But it blows yet a bigger hole in the state budget.”
By law, 20 percent of redevelopment proceeds must go toward affordable housing programs.
Several nonprofits, including the Petaluma People Services Center, the Salvation Army and Committee on the Shelterless homeless programs and Rebuilding Together housing assistance program, rely on the agency for annual funding.
The council will meet at 7 p.m. Wednesday at City Hall, 11 English St.