While redevelopment may no longer be front-page news, the battle between local governments and the state continues to rage. It may soon spill over into the state’s court system.

In Petaluma, the State Department of Finance denied city claims to roughly $38 million in redevelopment money. In the opinion of the state, that money is not contractually or bond-assured indebtedness and is subject to the state’s claw-back. Procedurally, the City is required to continue its appeal through the Department of Finance, but that process is not expected to bear much fruit.

Instead, the city manager says that the City is very close to filing a lawsuit.

At stake is funding for projects that are either currently underway or are ready to go to bid. Other projects, including one that has been approved by the City since 2005, could be left on the drawing table.

Among the list of projects that could be shelved or cancelled are freeway onramps, cross-town connectors, and other infrastructure improvements.

Read the full story at Petaluma 360.com.