$50M In Hercules Redevelopment Spending Questioned In Audits

HERCULES (CBS SF) - Audits by State Controller John Chiang's office reveal that close to $50 million in state redevelopment funds appear to have been misspent by Hercules city officials between 2005 and 2010.

Chiang's office found that Hercules' former city manager who also served as executive director of the city's former redevelopment agency had an apparent conflict of interest when his own consulting company was awarded millions in contracts, contributing to a deficit of more than $8 million for the redevelopment fund.

The report did not refer to the former city manager, Nelson Oliva, by name.

The report also indicates that city council and other redevelopment board members failed to raise any concerns, "even though it was obvious that at least $7.1 million in unallowable expenditures were being charged to the RDA Operating Fund."

California dissolved all city redevelopment agencies beginning on February 1 of this year.

While the audit found that some of the spending appeared to be for legitimate services from the consulting company, "it is not possible to distinguish the legitimate payments from payments that were excessive or unnecessary."

However, the largest portion of questionable spending came in the form of property transfers from the development agency to the city.

"The city used RDA bond funds to purchase five properties to be used for redevelopment purposes. However, the RDA governing board did not adopt resolutions for four of these purchases, amounting to $32,769,638," reads the report.

Chaing's office indicates that city officials were not cooperative during the 7-month investigation, and that requested documents "may have disclosed additional issues of waste, abuse, and possible misappropriation of public funds."

The full findings are available on the Controller's Website.

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