Hercules caught by the Redevelopment aftermath and the Recession

San Francisco Chronicle/Carolyn Jones, 4/7/12. "Hercules teeters on brink of bankruptcy"

If there's a symbol of California cities' economic hangover, it's a pair of four-story, half-finished, plastic-wrapped apartment buildings in Hercules. The city sank $38 million into those buildings, a 144,000-square-foot redevelopment project gone awry. Last week, the City Council sold the buildings for $425,000.   "That project was a black hole. We couldn't stop putting money into it," said Hercules Mayor Dan Romero. "It would have doomed the city. We had to stop."But the buildings, called Sycamore North, are only a sliver of Hercules' woes.

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Street views of Hercules, CA

The quiet town on San Pablo Bay is awash in failed developments, lawsuits and pricey consultant bills for projects that were never built. The result is that Hercules has become the latest Bay Area city teetering toward bankruptcy.  Hercules officials used the dreaded "B" word last month during a legal battle over a missed bond payment. And although city officials say they have since dodged the immediate threat of bankruptcy, the city's financial problems are far from over.  


Emergency tax. The city placed an emergency half-cent sales tax on the June ballot in hopes of raising $450,000 a year - a move that, even if it passes, virtually everyone agrees will not solve the city's long-term financial shortfall. For example, this year the city expects a $1.6 million structural deficit even after cutting more than $6 million last year.  "We don't think (the tax) is enough to balance the budget. We're pretty skeptical," said Deputy City Manager Liz Warmerdam. "But it's better than nothing."

Hercules already has made deep cuts to its budget, hacking its general fund from $18 million to $12 million. Over the past year or so, the city has laid off 40 percent of its staff, slashed salaries by 15 percent, eliminated its farmers' market, Fourth of July parade and its annual Cultural Festival, cut library hours and raised prices for Parks and Recreation Department services, including day care.  Perhaps no department was hit harder than police. The city cut the number of officers from 30 to 20, bringing staffing levels to 1995 levels, when the city's population was about a third less than the 24,000 it is now.  Read more.

Reference -  City of Hercules Projects.
Article - Hercules, a Bay Area transit village -  Cool town Studios, 7/12/2006
Article - Bond downgrade -  Businessweek/Bloomberg, 2/5/12.

Submitted by Jim Alex

Posted by Kathy Meeh