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A Petaluma group agreed Friday to drop its opposition to the Friedman's-anchored Deer Creek Village shopping center in exchange for nearly $200,000 in concessions from the developer.

The six-figure settlement is the second the Petaluma Neighborhood Association has achieved in its opposition to large-scale developments in Sonoma County's second-largest city. The money is earmarked for street, bike, pedestrian and traffic improvements, three community groups and the PNA's legal costs.

In 2010, the loosely organized group forced a three-way settlement with the city and developers of the Target shopping center, which netted the two leaders of the group $100,000 and paid $50,000 toward their legal fees. It also required the developer, Regency Centers, to pay the city's legal fees related to the PNA suit and another one Regency had filed.

Merlone Geier Partners said the $191,000 settlement announced Friday will head off an expected lawsuit that would have further delayed the project and cost perhaps several hundred thousand dollars in legal fees.

During the planning process, a law firm hired by the PNA, headed by Petaluman Paul Francis, filed several letters of opposition in connection with various aspects of the Deer Creek proposal.

The latest settlement, reached Friday afternoon, calls for the PNA to drop its appeal, scheduled to be considered at Monday's City Council meeting. The group was asking the City Council to overturn the Planning Commission's latest approvals of the project's design.

The City Council had already approved the main planning hurdles, including an environmental impact report for the 36.5-acre, 344,000-square-foot shopping center along North McDowell Boulevard at Rainier Avenue.

When completed, it will be the city's second-largest shopping center, slightly smaller than the Target center currently under construction on East Washington Street along Highway 101.

"In this tough economy, no one stands to benefit from project delays and a lawsuit," Greg Geertsen, managing director of Merlone Geier, said in a written statement.

"An agreement has been reached that ensures Friedman's returns to its hometown, 800 jobs and millions of dollars in additional city revenue that can help rebuild Petaluma's roads and help protect its neighborhoods and schools."

Francis said he and Geertsen had been negotiating for about two weeks on the agreement, which calls for Merlone Geier to fund $110,000 in improvements to the Lynch Creek bike and pedestrian trail, traffic calming measures on Rushmore Avenue, and crosswalks and pedestrian signals at Rainier Avenue and Maria Drive.

"Greg brought some really good ideas to the table, and after talking with a few of the neighbors, we came to an agreement that we feel is a win-win for all parties involved," Francis said in an email.

The basic premise of the final agreement was "to make the project more pedestrian accessible, hence more viable in the long-term for our community," he said, while "at the same time lessen the impacts on the surrounding neighborhood."

It also obligates the developer to pay $36,000 to the PNA's law firm, $30,000 to a city tree planting fund, $25,000 to the Petaluma River Heritage Center and $10,000 to Heritage Homes of Petaluma.

Part of the 2010 agreement between the PNA and Regency called for Regency to make a few minor changes to its project, including some traffic mitigations on East D Street.

City Councilman Mike Healy, a longtime supporter of Deer Creek Village, said he was pleased the project can start construction but worries the PNA's success in obtaining settlements with developers damages the city's reputation in business circles.

"I am concerned that Petaluma now has a situation where a project proponent can spend years getting their city approvals and then face a gauntlet of private litigants with their hands out," he said.

"It made perfect business sense for Friedman's and Merlone Geier to cut this deal and avoid a year of litigation and lawyer's fees, but it doesn't help Petaluma's reputation as a place to do business," he said.

Some supporters of East Washington Place and Deer Creek Village have called the PNA's methods extortion.

Francis declined to address those charges.

"I have nothing to say about those who persistently want to put a negative spin on citizens who choose to be engaged in the public process," he said. "We have a lot of support from the neighborhood and those in the community who support our actions."

Janice Cader-Thompson, a former councilwoman, also challenged the project through land-use lawyers.

She, too, reached agreements with Merlone Geier on neighborhood improvements, including a fence that will shield neighbors from the shopping center.