Healdsburg continues to spar with state over $27 million for redevelopment

Healdsburg is pressing ahead in its attempt to salvage more than $27 million in redevelopment projects, despite being rejected by the state the first time around.

Healdsburg is pursuing a different approach than most cities, arguing that a judge previously upheld the validity of its projects and that they are "enforceable obligations."

So far, the state Department of Finance has rebuffed the city.

"We are frustrated with the state. Every time we turn something in, they turn it down," Mayor Gary Plass said Thursday. "They don't even take time to review it."

At stake are several dozen planned projects. They include street and infrastructure upgrades, $6 million to help pay for a recycled water irrigation system; $6 million to extend utilities south of the city; and $2.4 million to improve the Healdsburg Avenue five-way intersection.

Another big ticket item is the city's $6 million purchase of the old Foss Creek School for use as community center.

Also in play are another $3 million in projects that the city recently completed. The state potentially could ask Healdsburg to reimburse the money, according to Finance Director Heather Ippoliti.

They include work that was done on the Railroad Depot; Badger electrical substation; Recreation Park improvements; the Healdsburg Avenue Bridge; and a neighborhood revitalization program.

For decades, redevelopment agencies relied on property tax revenues to help stimulate economic development and create affordable housing.

But they were dissolved this year by Gov. Jerry Brown and the Legislature in an effort to help the state budget.

In Healdsburg and other communities, oversight boards have been set up to review the debts and in some cases dispose of former redevelopment agency assets so they can go to other taxing entities such as schools and fire districts.

Healdsburg has more than $13 million on hand from previous bond sales intended to finance redevelopment projects. It also has several pieces of agency property intended for affordable housing or mixed use development that it could be forced to sell to satisfy the state.

Healdsburg is in a different position from most other cities in that it went to court last year to get a judge to validate its projects, anticipating the state might eliminate redevelopment agencies.

On Thursday, the city's oversight board voted to resubmit to the Department of Finance its schedule of "recognized obligations" and to informally appeal the state's decision, based on the court's previous validation of the city's programs.

The oversight board also increased the allocation for its legal expenses from $10,000 to $20,000.

Besides Plass, the board is made up of three former City Council members - Jason Liles, representing the county; Lisa Schaffner, representing the public; and Eric Ziedrich, representing special districts.

Scott Ward is the employee representative; Steve Herrington represents the county office of education; and Ricardo Navarrete is the community college representative.

"All we can do is the best job we can to convince the state these (projects) are important to the community," Plass said.