When a city is already $55 million in the red, the last thing it needs is for development in its fastest-growing neighborhood to come crashing to a halt.  But that’s exactly what awaits Sacramento.  In January, the federal government said it plans to designate Natomas a flood hazard zone.  That means every development project that has not been approved by the end of the year will be put on hold -- and residents throughout the city could suffer.

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This shopping center just off the Del Paso exit at Interstate 5 is a pretty typical Natomas scene these days.  The buildings are all new, and they’re surrounded by a mix of new homes, construction zones and lots of wide-open Greenfield.  A clear majority of the stores are chains: Safeway, Rite Aid, Wells Fargo, Allstate, Jamba Juice … and yes, there’s a Starbucks.  But several local businesses are mixed in as well: a hair salon, a dry cleaner’s, an eye doctor and a brand-new music store. 
 
Manly: “We just opened a couple of weeks ago.” 
 
Mike Manly owns Hot Dog Music here at the Natomas Town Center.  And the posters on the wall are as different as the customers Manly hopes to serve: From Paul McCartney to Hannah Montana, Enrique Iglesias to the Beastie Boys. 
 
Manly: “It may not be the music that we listen to personally, but that’s not the point.  The point is, it represents who we are and what we want.  Our sort of unofficial motto is, if you like music, we like you.” 
 
When the federal government said it would slap the flood hazard status on Natomas, Manly was hit twice.  He not only owns Hot Dog Music; he also owns a nearby home, which he bought a couple of years ago. 
 
Manly: “I’ve built my entire world around Natomas and invested everything I have in this area.” 
 
Manly says he’s poured at least half a million dollars into his store and house – but not without doing his research.  When he first moved here, the government said the Natomas levees only had a one percent chance of failing each year.  Now, it says, that’s up to three percent.  Manly says he’s worried about his family’s safety – and his business. 
 
Manly: “This area seemed to be continuing to grow and establish itself, bringing more people, bringing more business.  And if it gets to the point where that’s cut off, it’s something our business is gonna have to do the best we can under that situation.  But it wasn’t in our mind that things were gonna stop.” 
 
Kerridge: “If that activity stops, it’s gonna have an impact on the economic viability of the city.” 
 
Sacramento City Manager Ray Kerridge says the entire city is depending on the revenue from new businesses like Manly’s. 
 
Kerridge: “If you look at the sales tax, if you look at the property tax, these aren’t applied just necessarily to Natomas, but they’re applied across the city.” 
 
Sacramento’s already in a $55 million hole for the fiscal year that starts July 1st, thanks to the lousy economy and slumping housing market.  Kerridge has asked each city department to figure out how it would make 10 and 20 percent cuts.  The city council will then decide how to spread the pain.  Kerridge says the public will notice.  For example:
 
Kerridge: “The police department will be responding in their normal fast rate to major crime, violent crime, all those kinds of things.  But it does mean that if somebody breaks into your garage and they swipe your whatever, whereas now it might take them three or four hours to get a start, it’s gonna take longer.” 
 
And that has critics, like Alex Kelter with the Environmental Council of Sacramento, questioning the city council’s land-use decisions. 
 
Kelter: “The reason we’re in this budgetary problem is because we have gone down a path of very expensive development that we can no longer support.” 
 
Instead of focusing on developing neighborhoods that already have infrastructure, says Kelter, the city has chosen to grow in new areas.  That’s meant adding infrastructure and stretching services like police and fire.  Kelter hopes Sacramento will learn from this crisis and make smarter land-use decisions in the future.
 
So, has Sacramento become too reliant on development?  That’s what Mayor Heather Fargo recently told the Sacramento Bee.  But Kerridge disagrees. 
 
Kerridge: “I don’t think we are too dependent on it.  But it certainly is a feature.  And as the city continues to grow, we are gonna be reliant to a certain degree, and we always will be.” 
 
Sacramento now finds itself at the mercy of flood control officials who are in the middle of strengthening the Natomas levees.  The goal is to get the federal government to lift the flood hazard designation by 2010.  In the meantime, the city council will start wading through the big budget mess next month.