The Contra Costa civil grand jury is accusing Hercules of questionable practices and a lack of transparency in its affordable housing and business loan programs.
In a report titled "The Crumbling Pillars of Hercules -- Casting a Shadow of Impropriety," the grand jury examines the city's relationship with NEO Consulting Inc./Affordable Housing Solutions Group. The company, once owned by City Manager Nelson Oliva, did $950,000 worth of business with the city this fiscal year and last, running a half-dozen programs ranging from affordable housing to "general administration support."
NEO's business with Hercules is poised to grow to more than $1.1 million in fiscal year 2010-11, part of a list of city contract renewals totaling about $6.6 million that is on Tuesday's City Council consent calendar.
"Hercules officials routinely award public service agreements to NEO ... bypassing any competitive bidding process," reads a segment of the grand jury report's summary.
Oliva divested himself of his financial stake in NEO -- the initials stand for Nelson E. Oliva -- a few months before he became city manager in April 2007, ceding ownership of the company to two of his daughters, Hercules officials have said.
Hercules Mayor Kris Valstad said last week the city is taking the grand jury report seriously and that some of the points it raises, including what he characterized as "the
Two Oliva daughters -- Taylor Oliva, a December college graduate, and Adrianna Oliva, a 2009 high school graduate -- were CEO and Chief Financial Officer of NEO Consulting Inc. according to a Statement of Information filed with the California Secretary of State in July 2009. The two also were directors of the company, along with another sister, Gabrielle Oliva. NEO general manager Walter McKinney and Nelson Oliva's administrative assistant at City Hall, Eguzki Olano, are the other directors listed on the July 2009 statement.
The company filed an updated Statement of Information in February showing McKinney and Olano as the only two directors and McKinney as the sole officer. The company's "principal executive office," according to the February statement, continues to be at the same address in Southern California as in the company's initial, 2005 statement filed by Nelson E. Oliva.
The company's Web site, www.affordablehousingsolutionsgroup.com, as of Friday, described Taylor Oliva as the company's president and "guiding force," part of a four-person leadership team that also includes McKinney, former City Manager Mike Sakamoto, and his son, Jonathen Sakamoto.
The Web site notes the company's current involvement in construction management and its success in landing $7.8 million in state grants for the $50 million-plus, Hercules Redevelopment Agency-sponsored, mixed-use Sycamore North project, to include 96 affordable housing units.
Taylor Oliva could not be reached Thursday at the affordable housing office, located in a portable next to Hercules City Hall. On Friday, Jonathen Sakamoto, who answered the phone, said she was in a meeting.
The grand jury report also chastises the city for not recording and not keeping minutes of council subcommittee meetings; for making deals involving agency-owned or agency-financed residential properties away from public view; for failing to advertise agency-owned residential properties for sale to the general public; and for providing loans to city officials or family members.
Cabral questioned the accuracy of the grand jury report.
"There are many factual errors that need to be corrected, beginning with the outrageous title that has no relationship to the substance of the report," Cabral said. He did not specify the putative errors and said the city will provide a detailed response within the time allowed.
The city has until Aug. 2 to respond to the grand jury's findings and recommendations, which include calls for more ethics and conflict of interest training and more transparency.
The NEO list of contract renewals for 2010-11 on Tuesday's consent calendar include: Affordable Housing Program, $408,500; Sycamore North management, $240,000; Community Beautification Program, $150,000; Portfolio Administration and Compliance, $60,000; General Administration Support, $120,000; and Business Development Loan Program, $50,000. The list also includes a program that was not on the previous year's list: Wastewater Treatment Plant Development services, $90,000.
Details of the contracts were not included with Tuesday's agenda packet. There was no discussion of the contracts when the list went before the council Finance Subcommittee last week.