IRS to Audit $60 Million Hercules Bond Issue

The Internal Revenue Service is joining the handful of state and federal agencies taking a closer look at Hercules’ financial records.  

In a June 11 letter to city officials the IRS requested documents related to the $60.5 million Hercules Merged Project Area Tax Allocation Bonds isssued by the now defunct redevelopment agency in December of 2007.  

Proceeds from the sale of those bonds were used for property purchases, the rail station project, payments on a court settlement with developer Catellus and Sycamore North construction. Some of the proceeds were also paid to former city manager Nelson Oliva's family company, NEO Consulting/Affordable Housing Solutions Group, for various management services related to Sycamore North and affordable housing activities.    

In requesting documents the IRS said only that it “routinely examines municipal debt issuances to determine compliance with Federal tax requirements.”