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For years the joke in Petaluma was that there was no place in town to buy a 2-by-4.

But with Friedman's Home Improvement set to open its third Sonoma County store in Petaluma this month, that has changed.

Couple that with the Target center's opening last year, home goods, sporting goods and home improvement supplies — among the chief products Petalumans used to leave town to buy — are now a short drive away.

Of course, there is Orchard Supply Hardware for smaller lumber orders and Kohl's for affordable clothing.

But the proposals that yielded Petaluma's two largest shopping centers, both anchored by big-box chains, created heated disagreements among the community and the City Council on what size and style of development were appropriate for Sonoma County's second-largest city.

The Target project sparked two lawsuits and a $150,000 settlement with an opposition group, while developers of the Friedman's project agreed to fund nearly $200,000 in amenities opponents wanted in order to head off threatened litigation.

Now that the nastiest development battles of the past decade are over, with Target's East Washington Place already open and Friedman's Deer Creek center well underway, what's next for development in Petaluma?

Developers and critics alike suggest the smaller scale of future projects means that disputes are likely to take place at the neighborhood level rather than drawing in the whole city.

"Infill projects usually have a much higher component of acceptability for people, because they see there is less impact on the infrastructure," said Matt Maguire, a former city councilman who challenged the Target center and other developments as inappropriate for Petaluma.

At the same time, changes in or near established neighborhoods can create passionate opposition from those directly affected.

The City Council, meanwhile, has shifted to a more development-friendly majority.

Currently, applications for commercial projects with the city's planning department are outnumbered by housing projects or mixed-use projects with a residential component.

Much of that is driven by a renewed faith in the housing market, post-recession.

"No one would do much for a long time," said Petaluma city planner Tiffany Robbe. "We are seeing interest in people actually looking to build something, which people were too scared to do for a few years."

The city has applications for more than 1,000 new housing units, which are in various stages of evaluation. About half of them have been approved or are in active review by city planners and could receive public scrutiny this year.

Others — including a 282-unit apartment complex along the Petaluma River about a mile south of the Petaluma Village Premium Outlets mall — are in the early phases of environmental analysis.

Commercial or retail project applications are few. Those that have been sought are tiny compared with Deer Creek and East Washington Place.

"Two of the biggest available properties have been developed, so from here on out anything that happens is going to be lesser in size and impact," Maguire said.

Among the current proposals: the Petaluma Health Care District wants to build a Walgreens on land it owns across from Petaluma Valley Hospital, Safeway has proposed a gas station and Lagunitas Brewing is seeking permission to build a 20,000-square-foot distribution building.

Two hotels are in the works and a third — renovation of the historic Silk Mill — has been approved, but developers halted progress during the economic downturn.

With fewer large, open properties available, developers are being forced to look for smaller, infill projects.

"Petaluma has substantially matured, from a developer's perspective," said Paul Andronico, senior vice president of Basin Street Properties, the developers of downtown Petaluma's Theatre District. "As far as large tracts of undeveloped land in the growth boundary, it's limited now. You're not going to build another big shopping center."

The largest single project in the pipeline is Basin Street's Riverfront, with 273 housing units, a 120-room hotel, 60,000 square feet of office space and 30,000 square feet of retail space on an undeveloped 7.5 acres on Hopper Street along the Petaluma River.

That project is in final environmental review and has garnered little criticism except from trade unions that want the construction jobs for their members.

"We believe there are still some significant opportunities to do something for the benefit of the community, but it's within the confines of the UGB and infill," Andronico said.

Petaluma's urban growth boundary and adoption of more city-centered growth priorities has put the focus on two potential projects near downtown — the area surrounding the planned SMART train station and the fairgrounds.

The 60-acre fairgrounds on East Washington Street just off Highway 101 is leased to the Sonoma-Marin Fair district for $1 a year through 2023.

But city officials and district representatives have met several times to discuss revenue-generating ideas for the state-governed property. Ideas include a convention center or sports facility.

The plan for the area around the train station includes a walkable mix of housing, commercial and retail tenants and perhaps a public events venue, that could bring train users to downtown Petaluma.

"That's the blueprint we want in that area," Councilman Mike Harris said. "We've done a lot of the bureaucratic pieces to set up a whole discussion. Now we need to attract an investor."

A potential project at the former Haystack Marketplace area, on three acres between the river and the train depot, is moving forward, Robbe said.

No official application has been submitted, but developers have said they may include condominiums or multi-family units on the upper floors and mixed-use retail on the ground floor.

A few other "opportunity sites" have been identified for redevelopment, City Manager John Brown said.

One such site is River Plaza, formerly the Golden Eagle shopping center, near the Haystack site.

City planners expect that the center, which backs to the river's turning basin and faces a parking lot, could be reoriented to take advantage of the riverside setting and Petaluma's historic connection to the water.

Infill development on underused parcels is generally more cost-effective since most of the infrastructure is already there, Brown said. But, he cautioned, that doesn't necessarily mean smaller projects will sail smoothly through the public screening process.

"The intention is to be more efficient with the use of the land," he said. "But that represents a change in whatever neighborhood it goes into. There is still a significant amount of compromise that has to take place."

Whatever development happens in Petaluma in the next few years, water has to be a major piece of the discussion, Maguire said.

"If we have another winter or two like these last couple, we're not going to be taking baths, let alone building new projects," he said. "If that happens, the city should put a moratorium on new development until we can get a better handle on the water situation."

(You can reach Staff Writer Lori A. Carter at 762-7297 or lori.carter@pressdemocrat.com.)

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