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Home My WebLink AboutStaff Report 5.C 02/25/2019DATE: February 25, 2019 TO: Honorable Mayor and Members of the City Council through City Manager FROM: Eric W. Danly, City Attorney SUBJECT: Proposed settlement of Dispute with the Department of Finance over $8.7 million in Obligations of the Fonner Petaluma Redevelopment Agency RECOMMENDATION It is recommended that the City Council sign the attached letter addressed to Governor Newsom and Attorney General Beccera proposing settlement of the City's dispute with the Department of Finance so as to restore to the City and Successor Agency $2,629,200 in affordable housing funding of Petaluma's former redevelopment agency, and providing for recovery by the State of $6 million that the City's former redevelopment agency had allocated to economic development. BACKGROUND In June, 2011, the Legislature enacted legislation providing for the winding -down and dissolution of redevelopment agencies throughout the state. The dissolution legislation prohibited redevelopment agencies from issuing new debt or malting new loans. During the statutory wind -down period, successor agencies to the former redevelopment agencies were permitted to incur expenses only for recognized obligations of the former agencies pursuant to payment schedules approved by the Department of Finance. The dissolution law invalidated cooperative agreements between former redevelopment agencies and the cities that created them, but allowed successor agencies to the former redevelopment agencies to reenter the otherwise invalidated agreement upon approval of a successor agency's oversight board. In September, 2015, the Legislature enacted legislation retroactively prohibiting successor agencies from reentering agreements of former redevelopment agencies as of June 27, 2012. 11 In January, 2011, prior to dissolution of redevelopment agencies, the City and its former redevelopment agency entered a cooperative agreement obligating the agency to pay $45 million for various redevelopment projects. In January, 2012, the City elected to serve as successor agency to its former redevelopment agency. On April 16, 2012, the Successor Agency adopted a recognized obligation payment schedule including $2,629,200 in affordable housing funding and $6 million in economic development fielding, among other obligations. On April 25, 2012, the oversight board to the successor agency approved the payment schedule and approved reentry of the cooperative agreement obligations, again including $2,629,200 in affordable housing funding and $6 million in economic development funding, among other obligations. On May 7, 2012, the City as Successor Agency approved a subsequent payment schedule, which the oversight board approved on May 9. On May 11, 2012, the Department of Finance disallowed the affordable housing and economic development obligations in the first successor agency payment schedule. On May 23, 2012, the Department of Finance rejected the same obligations in the second payment schedule. On June 18, 2012, the City in its own capacity and in its capacity as Successor Agency to the former redevelopment agency authorized execution of an amended and restated cooperative agreement between the City and the Successor Agency. Therefore, the City maintains that as of June 18, 2012, nine days before the retroactive, statutory deadline, the City and City acting as successor agency had reentered a cooperative agreement obligating the affordable housing and economic development funding in accordance with the dissolution law. The City's position is supported by long-standing rules of public agency contract formation that hold that the time a public agency in California enters a contract is the time the contract is approved, not the time the contract is executed. Transdyn /Cresci JB v. City and Couno) of San Francisco (1999) 72 Ca1.App.4th 746, 754. DISCUSSION The City as Successor Agency filed an action with the Superior Court seeking an order that the affordable housing and economic development obligations were validly reentered in accordance with the dissolution law. The trial court held the dissolution law required a two-step process to reenter obligations of former redevelopment agencies. The City appealed the ruling and the Court of Appeal upheld the lower court's ruling, notwithstanding the City's timely approval of the reentered agreement. As was announced in accordance with Brown Act requirements at the February 4 City Council meeting, the City Council has directed that outside counsel representing the City in the successor agency litigation petition the California Supreme Court for review of the Court of Appeal's decision. At the same time, the City Council also directed that staff prepare an agenda item for the February 25, 2019 City Council meeting so that the Council could offer a written settlement proposal to Governor Newsom and Attorney General Beccera to resolve the litigation. In accordance with the Council's proposal, attached, the City would agree to dismiss its petition for review in return for the City being permitted to retain the $2,629,200 in affordable housing funding. The City would also abandon its challenge concerning the $6 million in economic development funding that was also reentered on June 18, 2012. FINANCIAL IMPACTS The litigation settlement proposed by the City Council if accepted by the State would preserve $2,629,200 in affordable housing funding and relinquish the City's demand for $6 million in economic development funding from the City's former redevelopment agency. ATTACHMENTS City Council letter transmitting settlement proposal. Teresa Barrett Mayor D'Lynda Fischer Mike Healy Gabe Kearney Dave King Kevin McDonnell Kathy Miller Councibnembers City Manager's Office 11 English Street Petaluma, CA 94952 Phone:(707) 778-4345 Facsimile: (707)778-4419 cilymkrgci. petahtma. ca. us Economic Development Phone: (707) 778-4549 Facsimile: (707) 778-4586 Housing Division Phone: (707) 778-4555 Facsimile: (707) 778-4586 tnforumtion Technology Division Phone: (707) 778-4417 Facsimile: (707) 776-3623 ORIO RTVR�ti POST OFFICE BOX 61 PETALUMA, CA 94953-0061 February 25, 2019 Honorable Gavin Newsom Honorable Xavier Beccera Governor's Office ' Attorney General's Office 1303 10" St., Suite 1173 1300 I Street Sacramento, CA 95814 Sacramento, CA 95814-2919 Re.: Cio) of Petalwna, et al, v. Bosler, et al. (Third District Court of Appeal Case No. C-082339) Dear Governor Newsom and Attorney General Beccera: The Petaluma City Council has directed outside counsel to file a Petition for Review with the California Supreme Court in the above -referenced case. We write to propose terms of settlement that we believe are mutually beneficial to the City of Petaluma and the State of California. This is a redevelopment dissolution case. At stake is some $8.7 million in assets of Petaluma's former Redevelopment Agency, of which $2,629,200 was required to be used to build affordable housing. The Court of Appeal ruled against Petaluma, holding that we failed to take procedural steps that were not prescribed in the dissolution law to reinstate the previous obligations. Petaluma contends that in order to reach such a result, the Court created procedural requirements that the Legislature left out of the dissolution law, and ignored longstanding rules of formation of government contracts. (See Transdyn/Cresci JV v. City and County of Sale Francisco (1999) 72 Cal.App.4'h 746, 754, "an enforceable contract is formed at the time the contract is awarded ... rather than at the time the contract is executed by the public entity.") As you know, the Legislature abolished redevelopment agencies at a time when the State was in extreme financial crisis. Now, the State faces a $16 billion budget surplus. Also, the State generally and the Bay Area in particular face a critical shortage of housing affordable to low and moderate income households. Petaluma has a proud history of meeting our Regional Housing Needs Assessment targets in all affordability categories in the past, prior to the dissolution of redevelopment agencies. In the current housing needs assessment cycle, we are meeting our targets in the aggregate, but not in the low and moderate income sub -categories. The reason is not a lack of willingness to build such housing, but rather a lack of funding. Accordingly, we propose settling this case on the basis of Petaluma retaining the $2,629,200 in affordable housing funds, and the State recovering the remaining balance of $6 million. Petaluma would promptly put those fiends to use creating affordable housing. Honorable Gavin Newsom Honorable Xavier Beccera February 25, 3029 Page 2 As one example, currently "shovel ready" is a 54 -unit apartment project sponsored by the non-profit Petaluma Ecumenical Properties, with all units reserved for either low income seniors or low income senior veterans. The project has all its needed approvals but lacks funding. PEP currently has 712 seniors on its wait list for low income apartments, with a wait time exceeding four years. Allowing the City to put the $2,629,200 in former redevelopment housing funds to work would be a win-win for the City and the State, and would avoid the terrible optics of confiscating critically needed local affordable housing funds at a time when the State has a record budget surplus. Thank you for your attention to this matter. Sincerely, Teresa Barrett Mayor D'Lynda Fischer Councilmember Gabe Kearney Councilmember Kathy Miller Councilmember cc: State Senator Bill Dodd Assembly Member Marc Levine Kevin McDonnell Vice Mayor Mike Healy Councilmember Dave King Councilmember Agenda -_'-' .. .-..~ f � niTePyy/ (07- r 17 waom 04d (10 in, Mok I -W oo -?r Teresa Barrett Mayor D'Lynda Fischer Mike Healy Gabe Kearney Dave King Kevin McDonnell Kathy Miller Councilmembers City Manager's Office 11 English Street Petaluma, CA 94952 Phone: (707) 778-4345 Facsimile: (707)778-4419 cilymQr0aci. pelah ona. ca. Its Economic Development Phone: (707) 778-4549 Facsimile: (707) 778-4586 Housing Division Phone: (707) 778-4555 Facsimile: (707) 778-4586 Information Technology Division Phone: (707) 778-4417 Facsimile: (707) 776-3623 1z POST OFFICE BOX 61 PETALUMA, CA 94953-0061 February 25, 2019 Honorable Gavin Newsom Governor's Office 1303 101h St., Suite 1173 Sacramento, CA 95814 Honorable Xavier Beccera Attorney General's Office 1300 I Street Sacramento, CA 95814-2919 Re.: City of Petaluma, et al. v. Bosler, et al. (Third District Court of Appeal Case No. C-082339) Dear Governor Newsom and Attorney General Beccera: The Petaluma City Council has directed outside counsel to file a Petition for Review with the California Supreme Court in the above -referenced case. We write to propose terms of settlement that we believe are mutually beneficial to the City of Petaluma and the State of California. This is a redevelopment dissolution case. At stake is some $8.7 million in assets of Petaluma's former Redevelopment Agency, of which $2,629,200 was required to be used to build affordable housing. The Court of Appeal ruled against Petaluma, holding that we failed to take procedural steps that were not prescribed in the dissolution law to reinstate the previous obligations. Petaluma contends that in order to reach such a result, the Court created procedural requirements that the Legislature left out of the dissolution law, and ignored longstanding rules of formation of government contracts. (See Transdyn/Cresci .IV v. City and County of San Francisco (1999) 72 Cal.App.4th 746, 754, "an enforceable contract is formed at the time the contract is awarded ... rather than at the time the contract is executed by the public entity.") As you know, the Legislature abolished redevelopment agencies at a time when the State was in extreme financial crisis. Now, the State faces a $16 billion budget surplus. Also, the State generally and the Bay Area in particular face a critical shortage of housing affordable to low and moderate income households. Petaluma has a proud history of meeting our Regional Housing Needs Assessment targets in all affordability categories in the past, prior to the dissolution of redevelopment agencies. In the current housing needs assessment cycle, we are meeting our targets in the aggregate, but not in the low and moderate income sub -categories. The reason is not a lack of willingness to build such housing, but rather a lack of funding. Honorable Gavin Newsom Honorable Xavier Beccera February 25, 2019 Page 2 Accordingly, we propose settling this case on the basis of Petaluma retaining the $2,629,200 in affordable housing funds, and the State recovering the remaining balance of $6 million. Petaluma would promptly put'those funds to use creating affordable housing. As one example, currently "shovel ready" is a 54 -unit apartment project sponsored by the non-profit Petaluma Ecumenical Properties, with all units reserved for either low income seniors or low income senior veterans. The project has all its needed approvals but lacks funding. PEP currently has 712 seniors on its wait list for low income apartments, with a wait time exceeding four years. Allowing the City to put the $2,629,200 in former redevelopment housing funds to work would be a win-win for the City and the State, and would avoid the terrible optics of confiscating critically needed local affordable housing funds at a time when the State has a record budget surplus. Thank you for your attention to this matter. Sincerely, Teresa Barrett Mayor D'Lynda Fischer Councilmember Gabe Kearney Councilmember Kathy Miller Councilmember Kevin McDonnell Vice Mayor Mike Healy Councilmember Dave King Councilmember Honorable Gavin Newsom Honorable Xavier Beccera February 25, 2019 Page 3 cc: State Senator Bill Dodd Assembly Member Marc Levine �L e; �t e; r' It o, Gi ou r►�i o; r,(t�,t o rnme y rG mi nn f rPF%fP P��P4gria(P;h (re;_n1,oVA e,dJ r Teresa Barrett Mayor D'Lynda Fischer Mike Healy Gabe Kearney Dave King Kevin McDonnell Kathy Miller Councilmembers City Manager's Office I1 English Street Petaluma, CA 94952 Phone: (707) 778-4345 Facsimile: (707)778-4419 cihnngrnci. pelaluma.ca. us Economic Development Phone: (707) 778-4549 Facsimile: (707) 778-4586 Housing Division Phone: (707) 778-4555 Facsimile: (707) 778-4586 Information Technology Division Phone: (707) 778-4417 Facsimile: (707) 776-3623 CITY OF PETALUMA POST OFFICE BOX 61 PETALUMA, CA 94953-0061 February 25, 2019 Honorable Gavin Newsom Governor's Office 1303 10th St., Suite 1173 Sacramento, CA 95814 Honorable Xavier Beccera Attorney General's Office 1300 I Street Sacramento, CA 95814-2919 Re.: City of Petaluma, et al. v. Bosler, et al. (Third District Court of Appeal Case No. C-082339) Dear Governor Newsom and Attorney General Beccera: The Petaluma City Council has directed outside counsel to file a Petition for Review with the California Supreme Court in the above -referenced case. We write to propose terms of settlement that we believe are mutually beneficial to the City of Petaluma and the State of California. This is a redevelopment dissolution case. At stake is some $8.7 million in assets of Petaluma's former Redevelopment Agency, of which $2,629,200 was required to be used to build affordable housing. The Court of Appeal ruled against Petaluma, holding that we failed to take procedural steps that were not prescribed in the dissolution law to reinstate the previous obligations. Petaluma contends that in order to reach such a result, the Court created procedural requirements that the Legislature_ left out of the dissolution law, and ignored longstanding rules of formation of government contracts. (See Transdyn/Chesci JV v. City and County of San Francisco (1999) 72 Ca1.App.41h 746, 754, "an enforceable contract is formed at the time the contract is awarded ... rather than at the time the contract is executed by the public entity.") As you know, the Legislature abolished redevelopment agencies at a time when the State was in extreme financial crisis. Now, the State faces a $16 billion budget surplus. Also, the State generally and the Bay Area in particular face a critical shortage of housing affordable to low and moderate income households. Petaluma has a proud history of meeting our Regional Housing Needs Assessment targets in all affordability categories in the past, prior to the dissolution of redevelopment agencies. In the current,housing needs assessment cycle, we are meeting our targets in the aggregate, but not'in the low and moderate income sub -categories. The reason is not a lack of willingness to build such housing, but rather a lack of funding. Honorable Gavin Newsom Honorable Xavier Beccera February 25, 2019 Page 2 Accordingly, we propose settling this case on the basis of Petaluma retaining the $2,629,200 in affordable housing funds, and the State recovering the remaining balance of $6 million. Petaluma would promptly put those funds to use creating affordable housing. Allowing the City to put the $2,629,200 in former redevelopment housing funds to work would be a win-win for the City and the State, and would avoid the terrible optics of confiscating critically needed local affordable housing funds at a time when the State has a record budget surplus. Thank you for your attention to this matter. Sincerely, Teresa Barrett Mayor D'Lynda Fischer Councilmember Gabe Kearney Councilmember Kathy Miller Councilmember cc: State Senator Bill Dodd Assembly Member Marc Levine Kevin McDonnell Vice Mayor Mike Healy Councilmember Dave King Councilmember IWO-1— t er r' tva'. A (G' ---'n e r ay$ S'— 0i MIM as U`ersio,n I Oxceptrefiere,nc.e oto c I(Q-PtJ C,51 �r�e m,oue,dl Teresa Barrett Mayor D'Lynda Fischer Mike Healy Gabe Kearney Dave King Kevin McDonnell Kathy Miller Councilmembers City Manager's Office 11 English Street Petaluma, CA 94952 Phone: (707) 778-4345 Facsimile: (707)778-4419 citvmnra,ci.oelahana.ca. us Economic Development Phone: (707) 778-4549 Facsimile: (707) 778-4586 Housing Division Phone: (707) 778-4555 Facsimile: (707) 778-4586 Information Technology Division Phone: (707) 778-4417 Facsimile: (707) 776-3623 t POST OFFICE BOX 61 PETALUMA, CA 94953-0061 February 25, 2019 Honorable Gavin Newsom Honorable Xavier Beccera Governor's Office Attorney General's Office 1303 10th St., Suite 1173 13,00 I Street Sacramento, CA 95814 Sacramento, CA 95814-2919 Re.: City of Petaluma, et al. v. Bosler, et al. (Third District Court of Appeal Case No. C-082339) Dear Governor Newsom and Attorney General 'Beccera: The Petaluma City Council has directed outside counsel to file a Petition for Review with the California Supreme Court in the above -referenced case. We write to propose terms of settlement that we believe are mutually beneficial to the City of Petaluma and the State of California. This is a redevelopment dissolution case. At stake is some $8.7 million in assets of Petaluma's former Redevelopment Agency, of which $2,629,200 was required to be used to build affordable housing. The Court of Appeal ruled against Petaluma, holding that we failed to take procedural steps that were not prescribed in the dissolution law to reinstate the previous obligations. Petaluma contends that in order to reach such a result, the Court created procedural requirements that the Legislature left out of the dissolution law, and ignored longstanding rules of formation of government contracts. (See Transdyn/Cresci JV v. City and County of San Francisco (1999) 72 Cal.App.4th 746, 754, "an enforceable contract is formed at the time the contract is awarded ... rather than at the time the contract is executed by the public entity.") As you know, the Legislature abolished redevelopment agencies at a time when the State was in extreme financial crisis. Now, the State faces a $16 billion budget surplus. Also, the State generally and the Bay Area in particular face a critical shortage of housing affordable to low and moderate income households. Petaluma has a proud history of meeting our Regional Housing Needs Assessment targets in all affordability categories in the past, prior to the dissolution of redevelopment agencies. In the current housing needs assessment cycle, we are meeting our targets in the aggregate, but not in the low and moderate income sub -categories. The reason is not a lack of willingness to build such housing, but rather a lack of funding. Honorable Gavin Newsom Honorable Xavier Beccera February 25, 2019 Page 2 Accordingly, we propose settling this case on the basis of Petaluma retaining the $2,629,200 in affordable housing funds, and the State recovering the remaining balance of $6 million. Petaluma would promptly put those funds to use creating affordable housing. As one example, currently "shovel ready" is a 54 -unit apartment project sponsored by the non-profit Petaluma Ecumenical Properties, with all units reserved for either low income seniors or low income senior veterans. The project has all its needed approvals but lacks funding. PEP currently has 712 seniors on its wait list for low income apartments, with a wait time exceeding four years. Allowing the City to put the $2,629,200 in former redevelopment housing funds to work would be a win-win for the City and the State, and would avoid confiscating critically needed local affordable housing funds at a time when the State has a record budget surplus. Thank you for your attention to this matter. Sincerely, Teresa Barrett Mayor D'Lynda Fischer Councilmember Gabe Kearney Councilmember Kathy Miller Councilmember Kevin McDonnell Vice Mayor Mike Healy Councilmember Dave King Cou,ncilmember Honorable Gavin Newsom Honorable Xavier Beccera February 25, 2019 Page 3 cc: State Senator Bill Dodd Assembly Member Marc Levine ILLI(oluthe-arr, too, 1Av u-sm-TrFni, e n-flnerroaril yy (G $ o I 7m1qre as WV o �, Fri, � S-7 40, anit om x-ocre r0formeTric .cc re Ic 1�1�107,00KC351i" ream, Teresa Barrett Mayor D'Lynda Fischer Mike Healy Gabe Kearney Dave King Kevin McDonnell Kathy Miller Councilmembers City Manager's Office 11 English Street Petaluma, CA 94952 Phone: (707) 778-4345 Facsimile: (707)778-4419 cilvrngra ci. petahuna.ca. us Economic Development Phone: (707) 778-4549 Facsimile: (707) 778-4586 Housing Division Phone: (707) 778-4555 Facsimile: (707) 778-4586 Information Technology Division Phone: (707) 778-4417 Facsimile: (707) 776-3623 0 POST OFFICE BOX 61 PETALUMA, CA 94953-0061 February 25, 2019 Honorable Gavin Newsom Honorable Xavier Beccera Governor's Office Attorney General's Office 1303 10th St., Suite 1173 1300 I Street Sacramento, CA 95814 Sacramento, CA 95814-2919 Re.: City of Petaluma, et al. v. Bosler, et al. (Third District Court of Appeal Case No. C-082339) Dear Governor Newsom and Attorney General Beccera: The Petaluma City Council has directed outside counsel to file a Petition for Review with the California Supreme Court in the above -referenced case. We write to propose terms of settlement that we believe are mutually beneficial to the City of Petaluma and the State of California. This is a redevelopment dissolution case. At stake is some $8.7 million in assets of Petaluma's former Redevelopment Agency, of which $2,629,200 was required to be used to build affordable housing. The Court of Appeal ruled against Petaluma, holding that we failed to take procedural steps that were not prescribed in the dissolution law to reinstate the previous. obligations. Petaluma contends that in order to reach such a result, the Court created procedural requirements that the Legislature left out of the dissolution law, and ignored longstanding rules of formation of government contracts. (See Transdyn/Cresci JV v. City and County of San Francisco (1999) 72 Ca1.App.4m 746, 754, "an enforceable contract is formed at the time the contract is awarded ... rather than at the time the contract is executed by the public entity.") As you know, the Legislature abolished redevelopment agencies at a time when the State was in extreme financial crisis. Now, the State faces a $16 billion budget surplus. Also, the State generally and the Bay Area in particular face a critical shortage of housing affordable to low and moderate income households. Petaluma has a proud history of meeting our Regional Housing Needs Assessment targets in all affordability categories in the past, prior to the dissolution of redevelopment agencies. In the current housing needs assessment cycle, we are meeting our targets in the aggregate, but not in the low and moderate income sub -categories. The reason is not a lack of willingness to build such housing, but rather a lack of funding. Honorable Gavin Newsom Honorable Xavier Beccera February 25, 2019 Page 2 Accordingly, we propose settling this case on the basis of Petaluma retaining the $2,629,200 in affordable housing funds, and the State recovering the remaining balance of $6 million. Petaluma would promptly put those funds to use creating affordable housing. Allowing the City to put the $2,629,200 in former redevelopment housing funds to work would be a win-win for the City and the State, and would avoid confiscating critically needed local affordable housing funds at a time when the State has a record budget surplus. Thank you for your attention to this matter. Sincerely, Teresa Barrett Mayor D'Lynda Fischer Councilmember Gabe Kearney Councilmember Kathy Miller Councilmember cc: State Senator Bill Dodd Assembly Member Marc Levine Kevin McDonnell Vice Mayor Mike Healy Councilmember Dave King Councilmember Teresa Barrett Mayor D'Lynda Fischer Mike Healy Gabe Kearney Dave King Kevin McDonnell Kathy Miller Councilmembers City Manager's Office 11 English Street Petaluma, CA 94952 Phone: (707) 778-4345 Facsimile: (707)778-4419 cilyin r ici.pelahnna.ca.us Economic Development Phone: (707) 778-4549 Facsimile: (707) 778-4586 Housing Division Phone: (707) 778-4555 Facsimile: (707) 778-4586 Information Technology Division Phone: (707) 778-4417 Facsimile: (707) 776-3623 9 1111111111 1 W§ ff POST OFFICE BOX 61 PETALUMA, CA 94953-0061 February 25, 2019 Honorable Gavin Newsom Governor's Office 1303 10t1' St., Suite 1173 Sacramento, CA 95814 Honorable Xavier Beccera Attorney General's Office 1300 I Street Sacramento, CA 95814-2919 Re.: City of Petaluma, et al. v: Bosler, et al. (Third District Court of AUbeal Case No. C-082339 Dear Governor Newsom and Attorney General Beccera: The Petaluma City Council has directed outside counsel to file a Petition forReview with the California Supreme Court in the above -referenced case. We write to propose terms of settlement that we believe are mutual=ly beneficial to the City of Petaluma and the State of California. This is a redevelopment dissolution case. At stake is some $8.7 million in assets of Petaluma's former Redevelopment Agency, of which $2,629,200 was required to be used to build affordable housing. The Court of Appeal ruled against Petaluma, holding that we failed to take procedural steps that were not prescribed in the dissolution law to reinstate the previous. obligations. Petaluma contends that in order to reach such a result, the Court created procedural requirements that the Legislature left out of the dissolution law, and ignored longstanding rules of formation of government contracts. (See Transdyn/Cresci JV v. City and County of San Francisco (1999) 72 Cal.App.4t' 746, 754, "an enforceable contract is formed at the time the contract is awarded ... rather than at the time the contract is 63cecuted by the public entity.") As you know, the Legislature abolished redevelopment agencies at a time when the State was in extreme financial crisis. Now, the State faces a $16 billion budget surplus. Also, the State generally and the Bay Area in particular face a critical shortage of housing affordable to low and moderate income households. Petaluma has a proud history of meeting our Regional Housing Needs Assessment targets in all affordability categories in the past, prior to the dissolution of redevelopment agencies. In the current housing needs assessment cycle, we are meeting our targets in the aggregate, but not in the low and moderate income sub -categories. The reason is not a lack of willingness to build such housing, but rather a lack of funding. Honorable Gavin Newsom Honorable Xavier Beccera February 25, 2019 Page 2 Accordingly, we propose settling this case on the basis of Petaluma retaining the $2,629,200 in affordable housing funds, and the State recovering the remaining balance of $6 million. Petaluma would promptly put those funds to use creating affordable housing. Allowing the City to put the $2,629,200 in former redevelopment housing funds to work would be a win-win for the City and the State, and would avoid confiscating critically needed local affordable housing funds at a time when the State has a record budget surplus. Thank you for your attention to this matter. Sincerely, , - Teresa Barrett evin McDonnell Mayor Vice Mayor D'Lynda Fischer `--- Councilmember athy MAler Councilmember cc: State Senator Bill Dodd Assembly Member Marc Levine Mike Healy Councilmember Dave King Councilmember