The Sycamore North project is woefully underfunded and the council hopes no one points fingers.

The details may be murky, but the consequences are clear: The financial status of the Sycamore North project–and the city council’s actions that allowed it to happen–has placed all future city projects at risk, including the long-awaited waterfront and Intermodal Transit Center.

At Tuesday evening’s city council meeting, interim City Manager Charles Long presented a sobering reality to the community: the Sycamore North project is underfunded by $42 million, a remarkable 60 percent of the project cost. The total cost is $13 million more than was expected, and the city has not yet secured $29 million in necessary financing. The fate of the project–halfway to completion–is now in the balance.

Fortunately, Long presented a series of potential fixes–all of which are workable–including drastically reducing the number of affordable housing units (from 74 to 29). Another alternative is selling the project to a non-profit affordable housing corporation. In any case however, there would be a permanent hit to the Redevelopment Agency budget on the order of $10 million. The result? The elimination or indefinite delay of future projects. How did it come to this?

The city council unanimously approved the now-underestimated construction budget for Sycamore North at $56 million in a meeting in June 2009. The item was included in the consent calendar that was approved without discussion. Any discussion on the subject that did take place came at the finance subcommittee meeting the week before. As was the supposed policy at the time, there was neither an agenda nor minutes recorded from that meeting.

We don’t know what the council members actually knew of the project’s finances when they approved it–we may never know–but we do know it was not enough. The council repeatedly insisted on Tuesday evening that the community not look to place blame for the costly mistake but to look forward and help fix the problem. It seems the council does not want to be held accountable for their actions.

Why should residents believe that this city council is equipped to fix the problem? The council did not make the effort to ensure the funding stream was in place prior to approving construction. They made this decision based on the limited information they were provided, but they did not seek additional information. They did not do their job as stewards of the public’s money.

In the year since construction started, the council had not asked for a status report on the project or the $29 million loan that was necessary for the project to be funded (not including the $13 million difference between the estimated and actual cost). If they had cared to ask these questions, the community could have begun to deal with the difficult reality sooner. The council took a backseat to City Manager Nelson Oliva–whose former company NEO managed the project at city hall–and it took an outsider to investigate and discover the problem.

As residents scratch their collective head over the issues surrounding the Sycamore North project and the potential domino effect on other projects in the city, the council needs to reexamine its role as representatives of the community. The council is not simply about being cheerleaders or advocates of civic pride; the council has been entrusted with the public’s money and are responsible for executing a fiscally solvent government. They must also be accountable. That is a novel idea for this council.

The city promised 500 acres and a sports complex but will only deliver 77 and a financial burden.

In the past two years, the City of Hercules has spent nearly $1.9 million in an effort to annex 500 acres north and south of Highway 4 on the eastern edge of town. The fruits of the expensive effort, however, will be the annexation of a meager 77 acres, now known as the “Panhandle Annexation,” which was recommended for approval by the planning commission on Monday evening.

The city’s quest for annexation of the greater 500 acres began with a city council resolution in March 2009. In 2008, the city had signed two agreements with Big League Dreams, totaling $1.2 million, for an exclusive license agreement and the planning and design of a sports complex, which would be the centerpiece of the annexed property.

The city touted the plan for the future sports complex, which would include little league sized replicas of famous ballparks, such as Fenway Park and Wrigley Field.

At the 2009 Community Update event, the City hosted two former baseball greats–Vida Blue and Bill Russell–who signed autographs for residents and trumpeted the benefits of the city’s plans. But it was all for naught: Without warning, the city reduced the proposed annexation area from 500 acres to 77 acres this past summer.

The reasons to annex the 77 acres are unclear. At Monday’s meeting, Planning Director Dennis Tagashira noted that owners of a few of the parcels (seven parcels in total are being annexed) seeking to expand their facilities face a rather draconian ban on new building permits from the county. The city has promised that they would approve such permits, which would be an awfully generous gesture if it were the only reason to annex the parcels.

The principal reason for annexation appears to be the relocation of the Caltrans yard on Willow Avenue to make room for Transit Town, a future phase of the New Town Center project. The city acquired the Yellow Freight property–which is slated to be annexed and lies between the east and westbound lanes of Highway 4–in 2009 for that purpose. But it is not clear why the city could not lease the property to Caltrans without annexation. Whether or not the property is within the expanded city limits of Hercules, or remains in unincorporated Contra Costa County, should not matter to the State of California.

The biggest cause of concern is the cost of annexation. The city has spent $1.9 million and the 77 acres may simply never return that investment. As Tagashira noted on Monday, the city would receive permit fees from the proposed expansion of existing facilities, and future expansions, but that fee revenue will not come close to dent the exorbitant cost of annexation.

A fiscal analysis states that at full build-out, “the assessed value on the property is projected to increase to $33.5 million [and] the city would then receive $17,200 in total property tax.” That additional property tax comes at a cost however, in terms of services, mainly police and government administration. And the cost is alarming. In fact, the annexation would “generate a net negative fiscal impact of $436,600 per year” at full build-out.

Planning Commissioner and councilmember-elect Myrna de Vera asked on Monday why this annexation makes sense considering the negative fiscal impact. The city’s consultant said it is assumed that the city would annex adjacent property–presumably the remaining 423 acres–which would improve the economics of the annexation. The consultant described the Panhandle Annexation as an “icebreaker” with the Local Agency Formation Commission (LAFCO).

But Tagashira stated that the city has no current plans for further annexation, and considering the costs involved, residents can understand why. The fact is that annexation is no guarantee. LAFCO does not extend boundaries without a lengthy courtship, it seems.

As of right now, there is no legitimate plan for Big League Dreams to come true in Hercules. In hindsight, it was another costly misstep by a city manager and city council that failed to focus on priorities.

Previous mismanagement leaves projects throughout the city at risk.

The organizational changes that have been proposed by interim City manager Charles Long and approved by the lame-duck City Council this week illustrate just how troubled the city was under previous leadership. It should be noted, however, that the council, too, is part of that leadership, and only two of five will be replaced next month following the results of last week’s surprise election of challengers John Delgado and Myrna de Vera over incumbents Joe Eddy McDonald and Kris Valstad.

Just how unstable the city was prior to reorganization efforts remains to be seen, but the biggest issue that residents now face is the possibility that the city simply may not be able to afford to build all the promised projects the city has been planning and presenting to the community for years. That includes the long-promised train station, which was planned to break ground next April, but will likely suffer further delays.

Long mentioned his concerns over the city’s financial state in his third weekly report published last Friday, lamenting that the city’s “five-year projection of capital projects totaling $233 million does not show sources of funding.” That sounds like a problem.

The first task for the newly-appointed Finance Director, Liz Warmerdam, will be to develop a five-year projection so the city can evaluate “how to allocate [the city’s] resources over the long term.” In her introductory remarks to the city council on Tuesday evening, Warmerdam stated that it was her intent to bring the Finance Department into “a more prominent position in the city” and to have a more integral role in directing “how and when” projects occur.

With a seemingly endless list of ambitious projects consistently advertised by the city as being “just around the corner” at the annual Community Update event—including the Waterfront, New Town Center, Sycamore Crossing, Hilltown, the annex, the redevelopment of the former Walmart property and the vacant parcel adjacent to Victoria by the Bay, as well as smaller in-fill projects, such as the Palm Center Auto Center project—the city has only done itself a disservice by creating an undesirable scenario of failing to deliver on its promises. And it is now apparent that those promises may be unrealistic from a financial perspective.

The massive reorganization being implemented by the city is meant to improve how the city plans, manages and pays for projects. In hindsight, the previous organization could best be described as a house of cards, and although it is easy, and even appropriate, to place blame squarely and solely on City Manager Nelson Oliva—currently on indefinite medical leave—for not addressing the fiscal aspects of the planned projects, it is also the city council’s responsibility to question the city manager on those issues. That does not appear to have happened.

Residents now await the fallout of the reorganization and its impacts on projects citywide. Will the Waterfront development be at the top of the City’s priorities, as the city has contended it always has been? Will the city continue to pursue the purchase of the Hilltown property, which would place further financial strain on the city’s redevelopment projects?

Long has already hinted that the city will abandon the Palm Center Auto Center project, which is either a positive sign that priorities are being straightened or a negative one that signals the city’s inability to fund scheduled projects. Time will tell, and it will be uneasy.

Challengers win by promising change in the city, but who on city council will join their plight?

Sixty percent of votes cast in Tuesday’s city council election went for the two change candidates, but the winners—John Delgado and Myrna de Vera—will only make up forty percent of the newly-formed governing body.

In order to bring about the change they’ve promised in their candidacies, they’ll need at least one sitting councilmember to join them and establish a change caucus.

Some elements of the changes proposed by the challengers are underway already, specifically with respect to delivering a more transparent and accountable government: Interim City Manager Charles Long has ripped up the controversial $1.1-million no-bid contracts with NEO to run the affordable housing department and other municipal functions. In his second weekly report, Long said that he has asked NEO to develop a revised scope of work “to more accurately reflect current organizational needs.”

Long has also cancelled all subcommittee meetings until the city can determine the best way to include the public in on pertinent city discussions.

Until very recently, subcommittee meetings had no agenda and were not noticed, and meeting minutes are still not recorded. These meetings have been a sore spot for many residents who have claimed the city is conducting business behind closed doors and in defiance of open meeting laws.

The principal issue with the subcommittee meetings was that they were an avenue for items to be lost within the consent calendar and approved at subsequent city council meetings. Although the consent calendar is intended for items that are considered to be routine, it wasn’t unusual for multi-million dollar contracts to be swept under the rug in one fell swoop by way of the consent calendar.

It went like this: a subcommittee member would state that all items were discussed in the finance subcommittee meeting—a meeting that was not noticed, and had no agenda or minutes—and the items would then be approved by a unanimous vote; there was no discussion.

So here we are. Hercules voters demanded change on Tuesday, and Delgado and de Vera arguably have a mandate to make at least portions of their platforms a matter of council and city policy. But which councilmembers will join that coalition, if any?

Councilmember Don Kuehne was elected under the guise of change in 2008, but his time in office has been largely defined by passivity. Councilmembers Ed Balico and Joanne Ward are long-time officeholders—both entering their eleventh year in the position—but their respective styles couldn’t be any more different. Balico is rather outspoken, and Ward is more subdued in her presence on the council.

There is certainly room for common ground for the new council. One of the platforms the two challengers campaigned on was elevating the long-awaited waterfront development as a top priority. Balico has long been an ardent supporter of redevelopment and may seize the opportunity to be the project’s champion at city hall.

Long, as part of his duties as interim city manager, has also re-started negotiations with the waterfront developer, AndersonPacific, as the two sides aim to forge a public-private partnership. This provides a golden opportunity for the two new councilmembers–on the heels of their impressive victory–to push the development as a top priority.