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 25,000 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.
Cities Assets Offer Opportunities
Yet Hercules possessed assets. It is a lovely place to live, with a mild microclimate, a Bay waterfront, spectacular views across the San Pablo Bay to the north, and rolling wild hills to the east. A large area, some 426 acres in the center of town, was vacant and could be made ready for development. Highway access and visibility is excellent. Passenger rail service was a tantalizing possibility. Most notably, local government enjoyed the constructive participation of an active core of citizen leaders, a legacy of the smaller, company-town days.
In 1998, Hercules' very survival was challenged by its need to grow a missing commercial core. But the conventional suburban response, to attract strip centers and big-box stores, would still not yield enough economic activity to rescue the City. Citizens also sensed that conventional suburban development also threatened their prized quality of life.