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Sonoma County government leaders and state officials continue to tussle over the fate of two large redevelopment projects in the unincorporated area of the county.

After more than a month of back-and-forth letters from the county and responses by the state, the tug-of-war has turned on a new issue — whether the county can count on $2.4 million in future tax dollars to carry out the two projects.

One would transform a former shopping center in Roseland into a commercial and residential complex with a community plaza. The other would complete street, sidewalk and lighting upgrades to Highway 12 in an area north of Sonoma known as the Springs.

Both have been in limbo along with other county and local city projects since about 400 redevelopment agencies statewide were dissolved Feb. 1 as part of Gov. Jerry Brown's plan to use their revenues to help plug the state budget gap.

Local governments have been learning in recent weeks just how much money the state will let them keep to continue paying for existing projects and programs, and how much must be diverted back to underlying taxing entities, such as school districts.

Combined, the Highway 12 and Roseland projects account for $16.8 million in unspent funds, including accrued property tax revenue, bond funds and future tax proceeds.

All of the funding may still be in jeopardy.

The latest turn is the state's objection to the county's use of future tax collections to complete the projects. The combined $2.4 million, to be drawn from property tax revenue in the coming years, includes $1.9 million for Highway 12 and $500,000 for the Roseland project.

In a May 18 letter, Department of Finance officials said the funds constitute loans between the county and its former redevelopment agency and do not qualify as "enforceable obligations," the term for projects that can be continued with redevelopment dollars.

In a response letter <NO1><NO>May 24, county officials objected to that characterization, reasserting their claim that the funds are part of valid redevelopment contracts.

However, they also are saying the state's message could signal a shift that would allow them to resume the projects with just the $14.4 million of cash on hand.

"Maybe what the state is starting to do is just to worry about the future tax dollars," said John Haig, the county's redevelopment manager. "If that's the case, maybe there's room for us moving forward with just the cash we have."

A state Department of Finance spokesman said the agency was reviewing the county's response.

"Our position is ... these are not enforceable obligations," H.D. Palmer, a deputy director at the finance department, said of funding based on future tax collections.

Palmer also said the state's previous objection to the entire pool of project funding had yet to change. Any revision likely would come after the state finishes responding to the first wave of local government submittals.

The county's pushback is part of a rising tide of opposition by local governments to the diversion of redevelopment funds. Finance officials are countering with proposed legislation that would strengthen their hand in making final decisions over local redevelopment projects and funds.

The state's budget deficit, meanwhile, has swelled to a projected $16 billion — a shortfall that may force Gov. Brown to take an even harder line on the shutdown of redevelopment activities.

The standoff is likely to play out in court. Last Wednesday, a group of nine cities including Pasadena, Glendale and Hayward failed in their legal bid to prevent property tax money they want for redevelopment from being paid out to school districts and other entities.

The first disbursement for property tax that otherwise would have <NO1><NO>gone to redevelopment activities <NO1><NO>was Friday. A Sacramento judge turned down the cities' request.

Disputed Sonoma County redevelopment money does not appear to be affected by the disbursement, said Haig, the county's redevelopment manager.

Regardless, David Sundstrom, the county's auditor-controller-treasurer-tax collector, issued a memo May 25 to local governments saying his office would hold any disputed money until June 30 before distributing it as <NO1><NO>directed by state law governing the end of redevelopment.

The delay allows for guidance by the courts or clarification from the "appropriate authority," Sundstrom said.

Proponents of the two county projects have argued that their benefits, including cleanup of environmental contamination, safety upgrades to roads and boosted property tax revenue in supposedly blighted areas, outweigh any gains from halting the efforts and redistributing the money to other public agencies and services.

"We're hoping that by sitting down face to face and hearing from them (state officials) that maybe we can come to some common ground," Haig said.

You can reach Staff Writer Brett Wilkison at 521-5295 or brett.wilkison@pressdemocrat.com.