Healdsburg's bid to assume ownership of two downtown parking lots acquired by its defunct redevelopment agency has been rejected by the state.

In a bit of good news/bad news, the state Department of Finance determined the city is entitled to four properties formerly owned by the redevelopment agency, but not the downtown parking lots.

The ones granted to the city include City Hall, Giorgi Park, West Plaza at 17 Matheson Street and the Purity property on North Street.

But in a Nov. 14 letter, the state said the city can't keep the Mitchell Center parking lot at 434 Healdsburg Ave., or Center Street parking lot, located between 228 Healdsburg Ave. and 225 Center St.

"The Department of Finance said unless parking lots are attached to an existing government use like a park, or something like that, it's not for existing government purpose," said City Councilman Gary Plass, chairman of the oversight board for city's redevelopment successor agency.

"To me, it doesn't sound like a legitimate explanation," he said.

If the decision stands, it raises the possibility that the lots would have to be sold, along with uncertainty over whether they would remain for parking. Healdsburg officials are drafting a letter of appeal, according to Assistant City Manager David Mickaelian.

Among the arguments, he said, is that for decades business owners have paid into a downtown parking and improvement district with the expectation that the lots would exist into the future for public parking.

Plass said the city is reluctant to file a lawsuit against the state as some cities and counties have done in attempts to recover millions of dollars lost when redevelopment programs ended.

Redevelopment agencies were established more than 60 years ago to combat urban blight, but critics said they strayed from their original purpose. Gov. Jerry Brown dissolved more than 400 redevelopment agencies in 2011, redirecting the property tax revenue they generated to schools, counties, special districts and other taxing agencies to relieve pressure on the state budget.

In the state's assessment, the two properties should be sold and the proceeds delivered to the other taxing districts.

But Plass noted that the California budget is now running surpluses and said the state should consider helping cities, particularly for affordable housing programs that were lost with the demise of redevelopment agencies.

He said it's conceivable the state could attempt to sell the two downtown public parking lots, which opens up another possibility: "If the state puts it up for sale, we could buy it," he said.

The four other former redevelopment agency properties transferred to the city have parking but — except for City Hall — also have some use for park or recreation recreation activities, or as a demonstration garden.

Parks and some public buildings built with redevelopment funds can be transferred to cities and other agencies, Mickaelian said. But it's different for parking lots. "The state is asking cities to get rid of their parking lots," he said.

You can reach Staff Writer Clark Mason at 521-5214 or clark.mason@pressdemocrat.com.