NORTH BAY - Funding, the primary obstacle of the mixed-use Railroad Square project in Santa Rosa, no longer stands in the way.

The project was approved to receive $15 million in state bond and federal stimulus funds.

The multi-phase, multi-use rail side infill project will include affordable for-rent housing, market rate for-sale condos, a 40,000-square-foot public market, 40,000 square feet of office space, the Sonoma County Food and Wine center, a 263-space parking garage and several restaurants.

Santa Rosa Mayor Susan Gorin, City Manager Jeff Kolin along with the developers, representatives from the affordable housing arm of the project, Burbank Housing, Sonoma Marin Area Rail Transit, the redevelopment agency and the housing department spent 11 hours in a hearing June 29 in Sacramento, where projects from all over California were evaluated to qualify for Proposition 1C funding.

Prop. 1C is the housing bond California voters passed in 2006 allocating $2.85 billion to infill, transit-oriented communities and Brownfield projects.

"This was a hugely positive event," said John Stewart, chairman of the John Stewart Co. of having Mayor Susan Gorin and City Manager Jeff Kolin present at the hearing.

There were 300 people present and 77 projects up for the funds. After the hearing, the Railroad Square project walked away with $11.4 million of the state funds, and the city was awarded $3.65 million of federal stimulus money.

The developer of the project, New Railroad Square LLC, is comprised of Creative Housing Associates, The Santa Rosa Canners, Equity Community Builders and developer John Stewart. In February of this year, they signed a series of documents giving the company the option to buy SMART's land on the west side of the railroad tracks. That option, key to the project moving forward with funding, is valid for another seven and a half years.

The whole project is expected to run just shy of $200 million.

Phase one will cost $67 million and consists of the commercial, retail parking and affordable housing units.

"We are just ecstatic," said Michael Dieden, principal of Creative Housing Associates.

"This has been a long time coming, trying to procure the funding and having this in hand, it is a wonderful feeling," he said.

Mr. Dieden said the goal is to create a model transit village for SMART to set the bar for other projects like it.

"All of Santa Rosa should be very proud because we are going to be able to hire a great number of people who wouldn't otherwise have work, and most jobs will go to locals," he said.

Ms. Gorin said while job creation is one of the positives of the project getting under way, it is hard to estimate how many jobs will be created immediately.

However, she said, "When you think about the project being phased out over a number of years and the multiplier effect of having people living downtown, it is all a very happy scenario for the West End.

"This is going to be a catalyst for Railroad Square and downtown," she said.

Mr. Kolin said the project will begin with the removal of a tank leftover from a cannery, and the soil contamination will be cleaned. This is where the $3.65 million of federal funds will be first put to use. Regardless of what project would go into that space, it would be the first step.

The rest of the money, including the $11.4 million, will go to infrastructure for phase one.

There is some opposition to the project. Concern has been raised by some neighbors in the West End District that once the affordable housing piece of the project is complete, that coupled with the state of the economy will make market-rate housing difficult to fund and more affordable housing will go in instead.

"In our opinion," said West End District resident and investment property owner Allen Thomas, "There is already affordable housing here. There is a homeless shelter a few blocks away."

Mr. Thomas said he is not against affordable housing but feels it would be a better scenario if the market-rate and affordable projects could be built at the same time.

He is afraid that phase one will tie the hands of the planning commission and the long-term vision will be altered. John Nemeth, planning manager for SMART, said the board specifically put agreements into the contracts they signed with the developers to avoid such things happening.

"We [SMART] are generating revenue from the condo sales," he said. "So beyond the agreements, we have a financial incentive to keep them at market rate."

Every time a condo is sold, SMART gets 0.66 percent of the sale price. Also in the contract with the developers is a requirement for them to enter into a community benefits agreement with the Accountable Development Coalition.

While the development is officially called infill, eventually it will be considered a transit-oriented community because of the train, the target date still being fall of 2014, according to Mr. Nemeth.

One of the noted aspects of this project is the interest not only from the developers and neighbors but the city itself.

"Of all the cities that had projects represented at the meeting on Monday, only Santa Rosa and Sacramento had mayors present," said Mr. Stewart. "It shows the dedication the city has to the project. It was a very good day."