Scrambling to hold on to several million dollars of state grants that are close to expiring, financially battered Hercules is set to pour an additional $200,000 into its ambitious but delay-plagued waterfront transit center project.

Consultants Michael Bernick and the firm Gray-Bowen would receive $15,000 and $50,000, respectively, to pursue and retain government funding.

The rest, about $136,000, would go to HDR Engineering Inc. for archaeological work to protect historic Indian shellmounds and remnants of the defunct Hercules Powder Co. plant, as part of a federal environmental review that city officials had hoped to complete well before the end of the year.

More than $8 million of the $13.5 million that the city has spent on the project has gone to HDR and its subcontractors.

Immediately at stake is $9.1 million in state transportation grants that require the city to fulfill certain requirements by March 31, including completion of the environmental review for the transit center, which would accommodate trains, buses and ferries.

A private developer, Hercules Bayfront LLC, meanwhile, plans an adjacent 1,400-home transit village with stores and offices. The city lost out in a recent bid for $23 million of federal transportation stimulus funds.

A Nov. 7 letter from the state Office of Historic Preservation demanding the extra archaeological work is the latest glitch in the federal environmental review process.

Another

hurdle looms, this one erected by Hercules Bayfront: a letter to the Federal Transit Administration by the developer's attorney, Bingham McCutchen LLC. The letter raises a host of red flags about possible effects of the project on protected plant and animal species, including several birds and small mammals and a shrimp.

It also contends that the review underestimates vehicular traffic, parking needs and train ridership; attacks other aspects of the review related to greenhouse gas production, property acquisition and a potential conference center; and challenges the relegation of the ferry terminal to a future phase.

In an August interview with this newspaper, Hercules Bayfront principal Jim Anderson said the letter was primarily a defensive move against eminent domain, a tack that a previous city administration flirted with in late 2010 as a possible means to acquire some Bayfront land for the train station. He said he did not think the letter would prolong the federal review process.

A Federal Transit Administration official, however, said recently his agency would decide in the course of the environmental review whether to consider the letter, which was submitted more than two months after the comment period was supposed to end.

Since the city raised the prospect of eminent domain, it has hired a new city manager and new city attorney, and all five City Council members have been replaced; eminent domain is no longer under discussion. But Anderson has not acted to withdraw the letter -- not that it is certain the FTA would let him.

Anderson, in a recent email, said HBL has made it clear for months that to protect its project, it will not withdraw the letter until the council approves development agreements with his company.

Draft agreements were supposed to be discussed at the Dec. 20 special City Council meeting, but snags in the negotiations forced postponement to January; the parties have agreed in principle on a transfer of the 13 acres needed for the train station and access to it, and additional land for a ferry terminal and a park.

Anderson said the development agreements were worked out in October and approved by the Planning Commission on Nov. 28, but then "the city began making many, many more changes to the document."

Charlie Long, the consultant managing the project for the city, said Anderson's frustration is understandable given a sudden pause early this month triggered by the city's reassessment of its finances. The general fund deficit, previously pegged at $1 million, recently was reestimated at $1.5 million.

The $200,000 allocated by the council last week for the archaeological work would be advanced against city development fees, to be reimbursed from regional park bond funds or other non-city funds. Several residents complained about the additional delay, which officials said was unanticipated.

Contact Tom Lochner at 510-262-2760.