In an early Christmas present, Healdsburg officials have been notified the state will allow the city to hold onto two downtown parking lots acquired by its defunct redevelopment agency.

The state Department of Finance reversed its earlier decision that the parking lots did not meet the definition of a government use property, which would have forced the city to give up possession.

"It was really good news," said Assistant City Manager David Mickaelian, who helped persuade state officials to change their earlier position.

"It's great we got the properties back," said City Councilman Gary Plass. "We were persistent."

California officials in November told the city that it was not entitled to two properties formerly owned by the redevelopment agency — the Mitchell Center parking lot at 434 Healdsburg Ave., and the Center Street parking lot, between 228 Healdsburg Ave. and 225 Center St.

The decision came in the aftermath of the state's decision in 2011 to eliminate more than 400 redevelopment agencies, redirecting the property taxes they generated to schools, counties, special districts and others taxing agencies as a way to relieve pressure on the state budget.

Healdsburg was allowed to retain title to some property acquired through its former redevelopment agency, including City Hall, Giorgi Park, the West Plaza Park and the Purity site.

But the state initially rejected Healdsburg's claim on the two downtown parking lots, saying the lots weren't typical assets constructed and used for government purposes, like police and fire stations, parks, libraries and administrative buildings.

The city disagreed, arguing that the lots, located in the central business district, "serve the important and necessary government function of maintaining a vibrant and viable commercial retailing and office environment."

The lots, Healdsburg officials insisted, are absolutely essential for the city's downtown to remain competitive, especially against shopping malls.

They provide free parking and are operated and maintained through an annual assessment on local businesses.

The free parking serves a governmental purpose, Mickaelian stated, because it ensures that the downtown remains economically viable, providing necessary revenue to the city in the form of increased property, sales, business and other taxes.

If the state had persisted in its initial opinion, Councilman Plass said it would have forced the sale of the lots. The proceeds would have been divided among various taxing agencies, but the city would have received just a small fraction.

Plass said as a result of the state's decision, the parking lots may be kept for public use in the future, "but it also gives us some wiggle room. It gives us some options."

He said the lots could be "leveraged" to help pay for a parking garage that Healdsburg is considering for the future.

Whether a parking structure will be built has not yet been decided, but Plass said a likely site would be the West Plaza parking lot where the farmers market meets on Saturdays, or across the street next to the Purity building.

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