As Healdsburg Wades Through Redevelopment Muck, Candidate Criticizes Losses

While cities throughout Sonoma County grapple with the apparent inevitability that redevelopment monies seized by the state may not come back, Healdsburg is still in a state of denial, one City Council candidate said this week.

"The money is gone," said one of six candidates for three council seats in the Nov. 6 elections, said after Monday's City Council meeting. "Let's stop keeping our heads in the sand.

"City Council needs to wake up and move on," Meinken added. "It's like a black hole."

With his comments, Meinken apparently has thrust the redevelopment issue into the campaign arena.

That arena, however, is separate from city staff's efforts to follow state guidelines for reclaiming the redevelopment money or for using bond proceeds to pay for the projects, said Assistant City Manager David Mickaelian.

"I am unaware of those comments, nevertheless, I am happy to discuss what we have been doing and what process we need to follow per AB 1484," Michaelian said, referring to Assembly Bill 1484,  legislation issued earlier this year to "clean up" the redevelopment situation the state Supreme Court created when it abolished California's redevelopment agencies effective Feb. 1.

“This has been and extremely frustrating process for everyone," Mickaelian added.  "I have never experienced anything like this in my career.”

Mickaelian said there is a dual track of possible financing that he and City Manager Marjie Pettus are following that stretches back to late 2010, when Healdsburg issued about $17 million in municipal bonds.

"There are approximately $13.5 million in bond proceeds from the 2010 issuance and an additional $3.5 million for previous bonds," Mickaelian said.

"There are approximately $29 million in projects identified in the 'Validation Judgment,'" he added, referring to a January 2011 document produced by Healdsburg and accepted by the state that testifies to the worthiness of the city's projects.

"Even if we are able to eventually utilize some of all of the bond proceeds, there will be a significant gap between the approved projects and funding," Mickaelian said.

Healdsburg could gain permission to use that money for projects such as Downtown Streetscape improvements, rehabilitation of Memorial Bridge or a roundabout at the five-way intersection at Healdsburg Avenue and Mill Street.

Alternatively, Healdsburg could convince the state to return some redevelopment money for the project, Mickaelian said. He is still awaiting a reply from the state Department of Finance for the third request Healdsburg's Oversight Board submitted earlier this year.

Requests Numbers 1 and 2 were denied, Mickaelian, but the city has added a series of new arguments that staff hopes will convince the state the projects are worthy.

"It is staff’s understanding that the argument that was provided to DOF for the ROPS I and II  regarding the Validation Judgment was received but not considered," Mickaelian said. ROPS stands for "Recognized Obligation Payment Schedule," or projects already committed to financing by the city.

"It is our understanding, based on a meeting we had with DOF in August, that the argument will be considered in this [third] submittal," he said.

"We need to wait and see," Mickaelian added. "I'm not overly confident.

"But at the end of the day, if we follow A.B. 1484, and if we do all the things the state is telling us to do, we should be able to use the bond proceeds," he said.

"Our ultimate goal, aside from the Validation Judgement, is to obtain a 'Finding of Completion,'” Mickaelian said. "There are a number of things we must do to receive that finding. 

"Once that is accomplished, we will be able to tackle the issue of Successor Agency owned property and if/how we can spend bond proceeds," he added.   "What is frustrating is that many of the projects on the ROPS III would use bond proceeds to fund."

Meanwhile, with the election only a few weeks away, Meinken, proprietor and winemaker of Gordian Knot Winery in Healdsburg, has apparently thrown out a campaign challenge on the redevelopment issue.

Mayor Gary Plass and City Councilman both seeking re-election, have said repeatedly that they are continuing to seek alternative financing -- mostly through public-private partnerships -- for some of the $26 million in projects the city previously slated for redevelopment money.

Three other non-incumbent candidates -- Dennis Brown and Vern Simmons -- did not attend Monday's meeting. but so far have not expressed specific opinions on the redevelopment losses.

On Monday, Mickaelian announced that $5.5 million in non-bond funds held by the Healdsburg's former redevelopment agency would be returned to Sonoma County for redistribution to school districts and other taxing entities. The money was supposed to have subsidized low- and moderate-income housing, he said.

"That was the amount provided by the auditor and accepted by the [city] Oversight Board after the public hearing process was completed," Mickaelian said.

Elsewhere around Sonoma County, cities are getting similar bad news.
According to an article in the Press Democrat, the state is rejecting a Sonoma County request to keep more than $16 million in redevelopment money for projects in Sonoma Valley and Santa Rosa.

Click here to read the Sonoma County story.

Also, the Press Democrat reported this week that Petaluma is considering suing the state regarding its redevelopment funding situation.

Click here to read the Petaluma story.

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