When the Petaluma Neighborhood Association dropped its appeal of the Friedman's-anchored Deer Creek Village Shopping Center last week, it cleared the way for the project to begin construction in early 2013, weather permitting.

"We're very excited to keep the project going forward, not just past the appeal but also the possibility of a lawsuit," said David Proctor, chief operating officer for Friedman's, the popular home improvement store that got its start in Petaluma in 1946. "We're very excited about returning to our roots."

Construction on the first phase of 344,000-square-foot shopping center along North McDowell Boulevard at Rainier Avenue, which includes building Friedman's, will likely take 8 to 10 months to complete once it starts next year, according to the developer, Merlone Geier Partners.

The Petaluma Neighborhood Association has long raised concerns about the impacts of large-format retail development in Petaluma. In 2010, the association joined other groups in a lawsuit challenging the city's approval of the Target-based East Washington Place shopping center, which led to a $100,000 settlement later that year.

The developer and others pointed to that previous lawsuit as evidence that the association might try to sue the Deer Creek developer or stop the project completely.

The settlement, about $200,000, that put those concerns to rest came as a result of negotiations between the Neighborhood Association and Greg Geertsen of Merlone Geier Partners. In it, Merlone Geier agreed to pay $36,000 in attorney's fees to the association's law firm; donate $25,000 to the River Heritage Center and $10,000 to Heritage Homes of Petaluma; donate $30,000 to a city tree planting fund; contribute $30,000 to fund improvements to the Lynch Creek trail; contribute $30,000 to "traffic calming" measures including a crosswalk at Rushmore Avenue; and contribute $50,000 to fund crosswalks and crosswalk signals along Rainier Avenue.

Earlier, the developer also reached a separate settlement with former City Councilmember Janice Cader-Thompson, who lives near the proposed project and objected to many aspects of it, particularly traffic. In that settlement, Merlone Geier agreed to install a new wood fence along the east side of North McDowell Boulevard, from the north edge of Professional Drive to the Sandalwood Mobile Home Park; participate in the restoration of Deer Creek and maintain an oak tree on the property; and install a lit crosswalk at the intersection of Rushmore Avenue and Rainier Avenue.

While Councilmember Mike Healy said he was glad to see the project come to closure, he criticized the appeal. " I don't for a second think that the neighborhood association would have agreed to that settlement if they thought they would have been able to win the lawsuit," Healy said.

While Cader-Thompson acknowledged that she still has concerns that the project was too big for the proposed location, she said of her settlement, "we came up with an agreement that worked for my neighborhood." She said that Geertsen had made it easy to negotiate, adding, "I felt they did the job the city should have done."

That sentiment was echoed by Petaluma Neighborhood Association member Mary Glardon at Monday's council meeting. Councilmember Teresa Barrett also expressed similar feelings, asking why the issues in the settlement hadn't been addressed by the Planning Commission and City Council before the appeal.

Healy criticized those appealing for trying to "recast" their actions to make it sound like they were striving for modest improvements all along, while in fact, Healy contended, their intent was to stop to the project.