From its incorporation in 1900 until the
1970's, Hercules was a modest but prosperous company town, organized around one of the
world's largest dynamite manufacturing plants. In the early 1970's, the Hercules Powder
Company plant closed, and a planned residential suburb was rapidly created. As planned,
about 20,000 people now live in the eight square miles of Hercules. However, the suburban
plan did not provide for a strong town center or other physical assets required for a
balanced local economy.
High levels of municipal services were initially supported by homebuilder
development fees and sales tax revenue from an oil refinery within the city limits.
Hercules receives nearly zero property tax revenue, since its recapture rate was fixed
after Proposition 13 at an almost negligible level. The City provides about $120 more in
services per year than it receives in property tax revenue, for each of 6,300 residential
units.
In the early 1990's, development fees from new homebuilding ran out.
Worse, the refinery closed. Unprepared, the City was headed for a financial crisis. The
only practical sources of municipal revenue were hamstrung by the condition and pattern of
physical development. Hercules is located outside the core ring of urban Bay Area economic
power. A modest recession had slowed the expansion of building activity in the Bay Area,
making rapid new development of industrial, retail or other commercial activity even more
difficult. By the mid-1990's, the very survival of Hercules was challenged by its location
in the region and the economic cycle.
Hercules was also suffering from the conventional suburban pattern of
development, which, by strict segregation of land uses, flings apart the necessary
functions of complete cities. Hercules had become a place of just one use, a bedroom town
vacated by commuters every working day. Despite its location at the intersection of major
highways, Hercules lacked a vibrant commercial center. An existing Redevelopment Area
covered mostly vacant land, still polluted by the lingering remnants of dynamite
manufacture.
