Hercules, California is an unassuming community in Contra Costa County. Like scandal-plagued Bell, this small town isn’t rich, it isn’t over-populated, and it isn’t being run on the up-and-up.

The media hasn’t yet latched onto the story, but the appearance of corruption and conspiracy by the Hercules city officials is nonetheless frightening.

There are conflicts of interest, amounting to millions of dollars in contracts being awarded by city employees to companies established and operated by family members.

A city council member applied pressure to a subordinate to keep information from the public because it could hamper his private interests.

People were hired and fired, took leaves and resigned at times and in manners that suggest backroom dealing and conspiracy.

Employees quit in protest.

Unlike Bell, however, the depths of its scandal and dysfunction haven’t created a media feeding-frenzy. But that doesn’t mean their story is any less deserving of scrutiny and disbelieving head-nods.

“We’ve had lots of personnel changes over the last few months,” said city spokeswoman Michelle Harrington. “That’s why [Hercules] is making the news.”

On October 8 of last year, Hercules’ city manager Nelson Oliva announced he was taking a leave of absence for medical reasons. Four days later, Charlie Long was appointed interim city manager. His contract, scheduled to last until June of 2011, was supposed to be eight months. He wouldn’t even make it two.

Charlie Long made headlines and his first appearance on PublicCEO on November 1, after he cut city contracts for utilities management, saving $1.1 million; he fired the director of the utility; he demoted the finance director to assistant finance director and hired a new director of finance.

At roughly the same time, Long identified and cancelled no-bid contracts that were determined to be a conflict of interest. The contracts in question were between Hercules’ Affordable Housing Authority and a firm that city manager Nelson Oliva started and his family operated.

The company, Affordable Housing Solutions Group, which also operated as NEO Consulting Inc, received $3 million in no-bid contracts over three years.

Three weeks later, Long reported that the city’s mixed-used redevelopment project was running a $13 million budget deficit. Later, that total would climb to $42 million.

In a documented meeting between Long and Councilman Ed Balico on December 2, Balico angrily told Long not to publicly release information about the financial troubles of the city.

Why would he want Long to withhold information from the public? His company, Hercules Global Technology and Services, had deals pending with regional agencies. The news could jeopardize these contracts and the company’s business.

Ignoring Balico’s request, Long disclosed the problems:

  • The city’s Redevelopment Agency couldn’t pay its bonds or service its obligations.
  • The city didn’t have enough revenues in its general fund to pay for municipal services.
  • Multiple redevelopment projects had badly spent their money, including paying consultants more than $12 million to build a new town center, with only a temporary food court with a couple of vendors, and lists of questionable expenses to show for it. These expenses included luxury hotels, car rentals on the East Coast, upgrades to premium seats on airlines, and more.

On December 7, only fifty-one days into his tenure, the city council ousted Long. To much orchestrated fanfare, Nelson Oliva announced he was fit to resume work at once. He resumed his responsibilities as City Manager suddenly thereafter.

However, it seems that troubles continued to stir and fester in the city’s ranks. About a week later, Lisa Hammon, Hercules Assistant City Manager, issued a public rebuke of the city council and city manager and resigned.

Hammon delivered a speech to the City Council that preempted her resignation. She claimed that the city’s finances were monumentally mismanaged, that too much money had been wasted to continue construction on a development project she oversaw directly, and that a lack of transparency allowed a line item to be added to another project’s budget without explanation. The effect was to render that project revenue neutral or financially sound. She also claimed that City Hall’s workplace policies reflected racial barriers, and that employees had “sold their souls” to continue working. You can watch her empassioned speech here.

Eight days later, the City Manager
Oliva resigned. Oliva’s contract guaranteed him a municipal golden parachute, including months of severance pay.

The new year didn’t end the problems in Hercules. On January 5, a group called Hercules Recall had built momentum towards recalling three of the five members of the city council, including Councilman Ed Balico, who had become Mayor. The recall targeted all of the members of the council who were associated with Long’s financial revelations and subsequent dismissal.

Of the five, three remained on the Council, two were voted off in November. Mayor Ed Balico, Vice Mayor Joanne Ward, and Councilman Donald Kuehne were all facing recall.

Yesterday, January 12, Mayor Balico suddenly resigned, effective immediately. At the City Council meeting, he cited the need to spend more time with his family, but even his resignation didn’t prevent him from being served with a notice of intent to recall him.

Recall notices were also served to Ward and Kuehne.

The same night Balico resigned, it was revealed that the Hercules Police Department began investigating files that had been deleted from the city’s network. The files, deleted late Thursday or early Friday of last week, were discovered on Friday.

“On Friday afternoon, an employee notified the police that the files had gone missing,” said Michelle Harrington. “The police department and IT department determined that it didn’t appear to be an accident, and they opened an investigation.”

According to Michelle Harrington, all of the files that had been deleted have been recovered. “We are obtaining outside help to conduct a forensic review of the files.”

Once that investigation is concluded, the computer used to delete the files should be able to be identified.

Hercules could soon find itself sharing Bell’s spotlight.