Petaluma is preparing to sue the state in an effort to retain millions of dollars in redevelopment funds the city targeted for three major road projects — including one under construction.
At stake is about $38 million the city had been counting on from property taxes collected through its former Redevelopment Agency. The Legislature abolished redevelopment agencies throughout the state last year and has staked a claim to the tax receipts to supplement the state budget.
Former redevelopment agencies locally and statewide have been arguing with the state Department of Finance for the past several months over which planned redevelopment projects constitute "enforceable obligations." Funding for those the state deems not under contract is taken by the state.
In Petaluma, the state has denied about $15 million in funds directed toward two Highway 101 interchange projects: East Washington Street, which has been under construction for weeks, and Old Redwood Highway, which is ready for bid.
It also denied $7.5 million that Petaluma earmarked for the Rainier Avenue cross-town connector project.