Millions of dollars worth of redevelopment projects in the Sacramento region have come to a halt as the public agencies working on them decide whether to dissolve themselves or pay to stay in operation.

The Sacramento Housing and Redevelopment Agency is in limbo on several projects that were on the drawing board when state legislation – trailer bills to the recently approved state budget – put the kibosh on moving forward.

The laws, which took effect June 29, call for dissolution of 400 redevelopment agencies statewide by Oct. 1. However, the agencies may continue to operate if they pay a portion of their tax increment funds each year to schools and other local jurisdictions.

Tax increment money is the share of taxes above a base amount that goes to a redevelopment agency to help fund improvement projects.

The California Redevelopment Association and the League of California Cities are expected to petition the state Supreme Court to block implementation of the laws and to overturn them.

"There are projects being killed or delayed all over the state," said John Shirey, executive director of the association. "The situation is not good. We plan to sue. In the meantime, agencies need to plan, to figure out how to survive."

The policy shift away from redevelopment agencies has been brewing for years, fed by sometimes rich tax increment funds in times of larger government shortfalls, by reports of eminent domain abuse and by projects that aimed to deliver cash cows instead of combat blight.

Folsom City Manager Kerry Miller agrees there have been problems. But he said these are exceptions, not the rule.

"We have some instances where a redevelopment authority has been abused," he said, adding, however, that the entire program has been unfairly tainted.

Statewide, if all redevelopment agencies choose to pay to stay in business, the cost would be $1.7 billion in the first year, according to the redevelopment association.

For the 18 agencies in Sacramento, Yolo, Placer and El Dorado counties, the tab would be $50 million.

For the Sacramento Housing and Redevelopment Agency alone, the first-year cost would be $22 million. "We're going through an analysis to see how we would generate $22 million," said La Shelle Dozier, SHRA executive director.

Stalled projects include the 800 block of K Street in Sacramento. Late last month, the financing plan for a project on that block was still being ironed out.

Also on hold are 180 units of affordable housing in line for redevelopment funding for Township 9, a $1.7 billion project on 65 acres in the River District north of downtown, Dozier said.

The question some are pondering, in the absence of court action: Will their redevelopment agency suffer a slow death? Or a quick death?

"Obviously, if you're winding down, that's the quickest death," Dozier said.

If an agency pays and moves ahead, she added, there's no guarantee the state won't come back later and up the ante on staying in business.

In Galt, the new law came well into lengthy efforts to revitalize Old Town's Fourth Street corridor.

At one end of the block, the Brewster Building has been rehabilitated and has a restaurant. At the other end stands the new Galt Place, an 81-unit senior project with retail businesses on the first floor.

But 10 parcels in between, intended to become an entertainment venue with a movie theater, bowling alley and restaurants, are at a standstill.

The estimated, one-year payment for Galt's redevelopment agency to stay in business: $1 million.

"First, assuming the $1 million payment in order to continue to exist, that's an enormous sum for a community of this size," Galt City Attorney Steven Rudolph said. "If we're not able to contribute the money, then all of the (redevelopment) activities within the Old Town area stop. There is no other pot of money available."

In Woodland, city leaders are assessing whether the projects they approved shortly before the laws took effect can fly under the law.

The Woodland Redevelopment Agency on June 21 allocated about $4.8 million in bond funds for various projects, City Manager Mark Deven said.

"We need to know more about the state legislation before we can say with certainty that we can go forward with those," Deven said.

In Rancho Cordova, the cost to continue as an agency would be $1.1 million – more than double the tax increment funds that go to the agency each year, said Micah Runner, economic development manager for the city.

And in Folsom, the city has taken the initial steps – including transferring property ownership – for an affordable housing project on Sibley Street, south of Bidwell Street.

The multifamily housing is to be geared for low to very low income tenants.

"It was coming to fruition," said Miller, then the bills became law.

Folsom's cost to stay in the game: $3.1 million.

Editor's Note: This story has been changed from the print version to note that only affordable housing units in Township 9 are in jeopardy. Corrected on July 11, 2011.