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Library, SCC funds are safe

The $2.5 million in redevelopment bond money committed to renovation of the Sonoma Valley Library, along with the $2 million budgeted for renovation of the Sonoma Community Center, is safe from seizure by the state, as is bond money committed to construction of an affordable housing project on Sonoma Highway. That was the word from City Manager Linda Kelly during Wednesday night's City Council meeting.

But sale of the old Patten Street fire station, for which the City Council was scheduled to hold a public hearing Wednesday night, has been pulled out of consideration until more is known about legal challenges to the state's budget decision to kill redevelopment agencies.

"Kill" may be too strong a word to describe the state's action - although even stronger language has been used by critics of the plan - but the result of two budget bills signed by Gov. Brown July 1 is to force redevelopment agencies to either close down or pay the state large percentages of bond revenue to stay in business.

Redevelopment agencies, like Sonoma's Community Development Agency (CDA), have until Oct. 1 to "opt-in" or "opt-out" of existence. Agencies wanting to opt-in will be required to pay substantial one-time "agency transfers" to help the state balance its 2011-12 budget. For Sonoma, that transfer has been estimated at $1,793,445 and would be due by Jan. 1, 2012. Subsequent annual payments will be required for agencies that opt-in to continue doing business, but the payments will be lower.

Kelly told the council it is impossible to accurately predict yet what that figure would be for Sonoma if the city decides to opt-in, but she indicated there is a good chance it will make financial sense to continue the CDA.

"The formula is so complicated, we don't have payments projected for the long term," Kelly reported. But, she added, "We do feel we would be able to operate our redevelopment agency."

The fate of the fire station must await a decision on that question and further clarification about what will and will not be allowed by the courts when the promised litigation challenges the state's redevelopment decision.

Doug Wiele, with Foothill Partners, a Sacramento-area real estate development company that has been negotiating with the city to purchase the Patten Street property, assured the council, "Our intent hasn't changed, our position hasn't changed. We're prepared to (complete the transaction) if the state will allow us, before the first of the year.

Numerous other issues are raised by the RDA decision, among them the fact that the city currently covers some $250,000 in staff wages from redevelopment funds.

If that money can't be directed to city staff working on redevelopment projects, it will have to come out of the general fund, or the work will be eliminated.

Kelly said that a detailed analysis of the redevelopment picture would be available by the council's first September meeting.