Proposition 13's legacy to California cities has been a destructive one. One ill effect of the tax-revenue shortfall has been the construction of many unnecessary office buildings, hotels, and shopping malls - all intended by local governments as a means to recapture lost revenues. The result has been overbuilding, a weakening of the real estate market, and regional competition where there might otherwise have been cooperation. All this is well known. But if, by some imaginary power, we had the power to let the "good" projects go forward, and stop the "bad" projects in their tracks, how would be would be able to sort them out? In other words, how would we determine which projects are worthwhile, that is, those that are both economically viable and serve a public purpose, from those that are wasteful and redundant cash cows that are not worth building? Call it the Santa Rosa Problem. As it turns out, it's not that easily solved. The City of Santa Rosa is a city of 120,000 people in Sonoma County, best known to tourists as part of Wine Country. The city's sole redevelopment area is an eight-acre parcel that easily qualifies as blighted: the former location of a tannery and a brewery, the land is currently a city-owned parking lot, with a negative assessed value. For this site, Santa Rosa's redevelopment agency recently selected a developer to build the Vineyard Creek Hotel and Conference Center, a 156-room hotel, together with a 18,000-square-foot conference center intended for business meetings. Even by redevelopment standards, the Santa Rosa hotel proposal has been slow going. The city formed a redevelopment project area in 1984, and cleared the site five years later. From 1990 to 1996 the city decontaminated the site. In 1995, a consulting report from PKF Consulting said a stand-alone conference center was not feasible, and recommended construction of a full-service hotel. The city's visitor and convention bureau concurred, reporting local hotel occupancies in the high-70-percent range, which is considered strong. The City Council certified a supplemental environmental impact report for the project in 1996. In January 1996, the city granted an exclusive-right-to-negotiate to a developer, Innkeeper Associates Inc. In January, the city and the develop signed a pre-development agreement in January. The financial agreement between the city and developer is a sophisticated deal that seems to contain many safeguards for the city. The construction budget is $18.5 million. The city's contribution to the deal consists of up to $6 million for the parking structure, the conference center, and miscellaneous costs. The developer, for its part, will invest a sum equal to 40% of the city's share in the deal, or a maximum $2.4 million. The developer will operate the hotel and lease the hotel site for 55 years, for $250,000 a year, which escalates to $500,000 in the 10th year. The developer has the option to buy the land for $3.2 million. The city is entitled to rent participation when total gross revenues hit $9.5 million, starting at 0.5% in the first year and rising to 3% in the sixth year. The developer will repay the Agency's contribution at an interest rate of 7.01%, starting the year after hotel sales pass the $9.5 million mark. The hotel is supported by long-standing public policy that seeks to buttress Santa Rosa's primacy as the business center of Sonoma County, according to Jocelyn Lundgren, assistant director of the city's Housing and Redevelopment Agency. This project looks worthwhile to me. But just before we pose for the ground-breaking pictures, let's look at the project from a regional perspective. It's a little scary. At least three other cities in the county - including Petaluma, Healdsburg and Sonoma City - are also proposing hotels. For that reason the cities are in a four-way race for financing. According to Lundgren, the first facility to be built will capture the market. And despite the current hot demand by Wall Street-backed investors and REITs for hotels, nobody is beating a path to Sonoma County yet. The area is considered a "secondary market" by investors, according to Lundgren. And possibly to Santa Rosa's detriment, the conference center is disproportionately large for a hotel of 156 rooms, at least by standards of conventional lenders, and that variance may prove to be a hindrance to obtain a construction loan. The ultimate question, of course, is would the Santa Rosa hotel and conference center have been built without Proposition 13? Lundgren's answer is an unequivocal yes ``With or without Prop 13, there is still such a thing as blight," she says. More than that, with out without Prop 13, most center-city areas need public investment and public subsidies to survive and prosper. And that's the point where it gets hard to separate the "good" projects from the "bad". I have not researched the competing proposals in depth. But let us assume, for the sake of argument, that their need for development is as compelling as that of Santa Rosa's, or nearly so. If that is the case, we have four proposed hotels that make good sense from a local perspective, but do not make sense from a regional perspective, if all are built. True, it's not hard to find bad projects that seem unrealistic, have unqualified developers, or otherwise have little reason to exist. And it is undeniable that Prop 13 plays some role in the motivation of local governments to pursue these projects. But I suspect that a great many projects, perhaps a majority, are like the Santa Rosa hotel: carefully thought-out projects that represent investment in declining downtown areas-in other words, the things cities would, or should, do with or without Prop 13. I suppose the whole exercise of trying to figure which projects are worthwhile, and which are not, is fruitless. One city's redevelopment is another city's overbuilding. It's that simple and that complex. There are too many projects; some of them would not get built even if Proposition 13 did not exist, but perhaps not as many. If you can figure out how to discourage the unworthy projects - other than the obvious ones, like the power centers and the Wal-Marts - please write me a letter and let me know, because ,I can't figure it out. And if an ordinary citizen can't figure this out, what are all those former used car dealers in the California Legislature going to do? I'm going home and wrapping my head in a hot towel.