WatchSonoma Watch

UPDATED: State again rejects county, Santa Rosa redevelopment plans


State finance officials again have rejected bids by Sonoma County and Santa Rosa to continue with several high-profile redevelopment projects, a move that may trigger them to join the growing list of local governments suing the state.

The old Albertson’s Supermarket in Roseland. (Kent Porter / The Press Democrat)

The latest rejections from the Department of Finance will likely prompt the county to proceed with its lawsuit against the state, a county attorney said.

“At this point, I don’t think we have any choice but to move forward with it,” said Steve Shupe, a deputy county counsel.

Meanwhile, Santa Rosa leaders met behind closed doors Wednesday to consider their city’s legal options after again being rebuffed by the state. Officials declined to say what was discussed, but said they will not be complying with a state order to turn over $6.3 million in unused housing development funds by today.

“We are in the process of evaluating the letters from the DOF, and we will not be releasing any money until we have completed that analysis,” City Attorney Caroline Fowler said.

The county had held out some hope that its negotiations would clear the state’s previous objections to the county’s bid to continue with its two signature projects: street and sidewalk improvements along Highway 12 north of Sonoma and overhaul of a former shopping center in the Roseland area of Santa Rosa.

The multimillion dollar projects and other smaller county efforts along the Russian River, as well as dozens of city redevelopment proposals in Sonoma County, were thrown into limbo after the state legislature shut redevelopment agencies in February.

The county had argued on several fronts that it could continue with the projects and keep more than $16 million in accumulated or anticipated tax funds associated with them.

Before this week, state finance officials three times rejected those arguments, deeming that contracts between the county and its former redevelopment agency did not meet the requirements of the state legislation. Their letter Tuesday did not budge from that stance, according to John Haig, the county’s redevelopment manager.

A similar ultimatum is going out to cities and dozens, if not hundreds, of the 400 local governments that once had redevelopment agencies statewide.

“My understanding is that they’re saying no to pretty much everybody,” said Shupe, the county attorney.

Santa Rosa received two letters recently from the state rejecting its appeals and largely upholding previous rulings finding that the city couldn’t hold onto $35 million in funds for projects that were not “enforceable obligations.”

“We have exhausted our administrative process on this,” said Dave Gouin, the city’s director of economic development and housing.

At issue was whether the city had the right to hold onto property taxes for several projects because the city re-entered into funding agreements for those projects after the state passed laws dissolving the state’s redevelopment agencies.

The law was written in a way that appeared to create a path for the city to keep the money for projects that gained the approval of the local oversight board.

But the Department of Finance ruled that it retained ultimate authority over such decisions, and the oversight board shouldn’t have approved projects that conflicted with the definition of an enforceable obligation.

The low-income housing funds the state is demanding by today include $4 million that had been earmarked for a long-delayed housing project in Railroad Square.

San Francisco-based developer John Stewart still hopes to build 93 units of affordable housing on the site of a former cannery near West Third Street and Santa Rosa Creek.

The redevelopment funds were supposed to help kick-start the project and leverage millions more in state and federal funding, much of it aimed at supporting transit-oriented housing projects.

City officials and Stewart both argued that the project should be allowed to proceed because of the city’s former redevelopment agency signed agreements with the state and with Stewart promising to provide the funding for the project.

“That theme is not unique to Santa Rosa,” Gouin said, noting that Petaluma, which already has sued the state, and Sonoma County both maintain that they struck agreements with third parties and should be allowed to consummate them.

There could be consequences for Santa Rosa to failing to turn the money over to the state by today. The Department of Finance letter points out that not paying the money “may result in offsets” that would reduce future sales and property tax distributions to the city.

But Gouin said that doesn’t appear likely in the short term.

“We’ve concluded that there isn’t an immediate consequence for Friday, and were taking a little more time to evaluate our options,” Gouin said.

The Sonoma County Board of Supervisors in October authorized a lawsuit challenging the state ruling. That complaint is in the final stage of preparation and would join at least two dozen others that have been filed in Sacramento by municipal governments challenging the redevelopment shutdown.

In the meantime, Sonoma County supervisors last week authorized the use of $450,000 in general fund money to complete engineering and design plans for the Highway 12 project.

Supervisors argued that allocation, which was the first use of county discretionary money for a former redevelopment project, was warranted to keep the effort alive and make it competitive for state and federal funds.

You can reach Staff Writer Brett Wilkison at 521-5295 or brett.wilkison@ pressdemocrat.com. You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com. On Twitter @citybeater.

12 Responses to “UPDATED: State again rejects county, Santa Rosa redevelopment plans”

  1. Kay Tokerud says:

    Will, actually the Sebastopol Rd. property has laid dormant for many years because of actions by the city of Santa Rosa and the County. Rezonings made the property non-conforming, it was declared blighted and became a redevelopment area, and another sebastopol road plan called for a new street running right through buildings on the site. These interventions meant that no businesses could occupy those buildings or fix them up. Businesses wanted to come in but were not allowed.

    Redevelopment first creates “blight” by rezonings, then the property sits vacant until a “preferred developer”, (crony) wants it and will build what they have determined should go there. Then our property tax dollars are given to the developer to build something. Since redevelopment is no longer possible, all the re-zonings and General Plan changes should be rescinded so the private market could resume use of that property. But that would make sense so they probably won’t do it.

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  2. 0 Representation says:

    Jerry Brown told all cities of the state of CA that there would be no redevelopment funds. All funds would have to be sent to the state to help with the budget. All the cities in Sonoma County obviously ignored what was said and added it to their budgets. Why were these funds added to the budgets when EVERYBODY knew for a fact they weren’t going to be there? Now Santa Rosa is thinking about filing a lawsuit against the state… like Petaluma. What a waste of our tax dollars. I think if the city of Petaluma and the city of Santa Rosa want to sue the state of CA how about it coming out of your own pockets city council people? Where is the common sense these days?!

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  3. Snarky says:

    Latest California state parks audit finds more mystery money

    By Matt Weiser
    Published: Saturday, Dec. 22, 2012 – 12:00 am | Page 3A

    “” Another audit of the California Department of Parks and Recreation found yet more mystery money: $3.9 million in a fund for donations that had no assigned purpose.”"

    Read more here: http://www.sacbee.com/2012/12/22/5071204/parks.html#storylink=cpy

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  4. R. B. Fish says:

    @ Brown Act Jack. Politicans following the Brown Act is a joke. Follow the money. Who is close to a BOS and a supporter then follow that to the state level. THey are just playing games know the public will not pay attention to the confusion and when time is right a deal will struck. Amen.

    What’s interesting is that all the counties are complaining about the state taking re-devoplement funds yet all the representatives are liberal Democrats voting for liberal Democrats (Jerry Brown)so they can screw them. Makes sense to them.

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  5. Brown Act Jack says:

    Honorable people would obey the state order, and then sue to have it returned.

    Failure to obey a state order that is lawful is something that will result in a lack of credibility to the organization that is disobeying a state order.

    I am fairly sure that such a tactic will result in a heavy expense to the city in the court costs and penalty for the failure to pay on time, and all so that you can keep the money in your hands, where you can not use it if you need it anyway!

    Unless, of course, they commingle the funds in violation of the law and use it for something else!

    Honesty is the best policy!

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  6. Brown Act Jack says:

    OK, who were the city officals meeting behind closed doors and why was the meeting closed to the public.

    City hiding stuff from the public?

    Why not tell us who was there and what , exactly, was discussed, and what were the decisions.

    Doesn’t anyone know that the Successor Agency is not the City of Santa Rosa, and should not be meeting in secret with the City?

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  7. Annie Erving says:

    Please take ACTION to FIX…..Sonoma County now!

    While our community’s roads are deteriorating, parks going unmaintained, and county workers have been laid off (579 positions gone) please keep in mind that …. only “3” MANAGEMENT positions have been lost.

    Management positions have been protected. In fact, there is LESS than 6 lines staff for EACH manager – and it is commonly accepted that there should be between 9 and 11 line staff per manager. (Please check out Oregon and other state government systems out on line).

    Oregon has FOUND a better way – PLUS MORE services are AVAILABLE to the BOTH the public and taxpayers.

    Sonoma County CAN maintain, preserve and protect public services through SMART budget decisions.

    It CAN reform structural inefficiencies and invest in OUR roads, libraries, public and mental health services, and law enforcement.

    In these though economic times, I URGE…you… to invest in OUR community by stopping the structural MISMANAGEMENT.

    Please visit http://www.FIXSONOMA.ORG

    We want and NEED to hear from YOU.


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  8. Brown Act Jack says:

    Wait a minute here, folks, The City may not have any reason to sue the STATE, as the problem lies with the Successor Agency who was turned down by the State.
    The City has no dog in the fight, as the Successor Agency is not the City, but a separate agency who sole job is to close up the Redevelopment Agency.

    The Successor Agency and the Oversight board recommend that the deal and the D of Finance turned it down.

    Now it is the job of the Successor Agency and not the City to get it changed.

    Why would the City spend any court cases for something that has been approved by the Successor Agency, submitted to OB, and turned down by D of F.

    It is the successor agency who needs to pay for the suit!

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  9. Nora Gonzales says:

    The government axiom is when in doubt, sue and appeal. Of course, all of this is done in the name of the humble taxpayer who pays for all of this foolishness.

    If the project is such a good idea, why isn’t it funded by the private sector?

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  10. Will says:

    Most people frown upon the idea of immanent domain but in situations like this dilapidated raggedy strip mall on Sebastopol RD which has been in decay for decades it has to be done. Offer fair market value and then auction it off to a PRIVATE developer and let them put the $$$ into redeveloping the area.

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  11. Snarky says:


    Sniveling public employees who lost their cozy gig in government work are suing to try and recover that cozy gig.

    Why drive a cab when you can do nothing for half of every “work” day working for the government ?

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  12. Brown Act Jack says:

    I wonder how many rejections will it take, and court costs, for the B of S and the public to realize that the state needs the money more than the County does, and will not give it up very easily.

    You will have to change the darn law to make any headway as no State Employee is going to violate the law to ensure that the Counties get the money they want.

    Get real, lay down, and work with what you have!

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