City Sets Out to Make Right On Red Barn Losses

The city is looking to recoup some of what it lost in a 2005 deal it entered into with developer Red Barn, where millions in city funds were drained to produce a project that was never built.

City Attorney Patrick Tang last week that in a four to one vote, with Vice Mayor John Delgado dissenting, the Hercules City Council “authorized staff to negotiate a settlement of claims related to the Red Barn property.”

Red Barn, which owns the Market Hall lot, has been accused of spending over $10 million in city funds without delivering on the project it was contracted to develop.  Wording of the city’s original agreement with Red Barn has hindered its ability to take action against the company.

Hercules is now trying to recover some of its loss through the sale of property it once gave to Red Barn. City real estate negotiator Frank Fox said the city is meeting with companies interested in taking over development of the land, which the city once tasked Red Barn with turning into New Town Center.

 “We believe they (Red Barn) have identified a very strong developer with a local and national presence…that will closely resemble the New Town Center…” Fox said, adding, the city is trying to “make sure the developer’s plan matches the city’s vision.” Fox did not say what the city stood to gain financially from the sale of Red Barn’s property.

At Tuesday’s City Council meeting, Tang said although Hercules is only entering into negotiations with Red Barn on the property, it is possible that the city’s Red Barn saga could end in litigation.

In a partnership with the Hercules Redevelopment Agency, Red Barn was contracted to develop New Town Center in 2005.  The city awarded Red Barn with the old Bay Area Rapid Transit Center park and ride lot in exchange for aiding in negotiations with BART.  

At completion, New Town Center would become Hercules’ new “downtown,” says Red Barn’s website, with retail, entertainment, offices and residential spaces. A $12 million fund was set up for Red Barn to use towards making the project a reality.

Over five years later, -- a temporary “shopping center” with several airstream trailers, a food court and outdoor stage -- is planted on the New Town Center site.

Red Barn said the economic downturn slowed its progress in building New Town Center and so it built Market Hall, Hercules' temporary downtown.

While giving her bold at a public meeting in December 2010, former Assistant City Manager Lisa Hammon announced that the city was signing off on invoices for $30,000 in monthly manager fees for Market Hall as well as for Red Barn President Tom Weigel on items including travel and computer monitors. Hammon also said the city was spending $100K per month to keep Market Hall open. Market Hall usually sat empty during business hours.

After news of the expenditures broke, the city discontinued funding Market Hall. Red Barn closed the center soon after, and the property has sat nearly vacant since.