The digging continues…

Despite sales commissions, Hercules councilman says there’s no conflict on waterfront
By Tom Lochner

In his business activities around the Hercules Waterfront during the real estate boom of recent years, Hercules City Councilman Ed Balico says he took care to avoid any appearance of a conflict of interest.

A state-licensed real estate broker, Balico had an office at 2210 Railroad Ave. until around fall 2007, when he said he quit Hercules Waterfront Properties Inc., a company he said belonged to his son. HWPI moved out around spring 2008.

Now the waterfront, the economy notwithstanding, is poised for another boom, after the council in July unanimously approved a plan for more than 1,200 homes, with offices, a boulevard of shops and a transit center with a train station and ferry terminal.

These days, Balico runs his own company, .Com Real Estate, out of his home. At HWPI, he was “just an agent,” and he made virtually no money there, he has said.

“I very seldom have possible conflicts of interest arise,” Balico said in an e-mail. “In fact, I cannot remember an instance that involved a possible conflict with me. When questions arise, I always contact the City Attorney (Mick Cabral) for guidance. … My purpose is to properly represent the citizens of Hercules and to avoid any circumstance that could be considered improper or unprofessional.”

Since mid-decade, the council has conducted numerous discussions and votes on land use, finance, public works and other matters related to the waterfront and surrounding areas. State conflict of interest rules for elected officials say, generally speaking, that “You will have a conflict of interest only if it is reasonably foreseeable that the governmental decision will have an important impact on your economic interests” — unless a significant portion of the jurisdiction feels a similar impact on their economic interests.

Cabral late last year said Balico “was simply broker of record (at HWPI) to accommodate his son,” who is not a licensed real estate broker. Last week, Cabral referred to Balico another question regarding Balico’s business with two developers.

On a Statement of Economic Interests for 2006, Balico reported gross income from $10,000 to $100,000 at .Com Real Estate and identified two sources of income of $10,000 or more: Hercules Waterfront LLC and John Laing Homes.

“Every time there’s a new buyer to Hercules, we refer them there and get a commission,” Balico said in October, speaking about John Laing Homes.

That company built about 160 homes as one of two builders in the Bayside Development off Sycamore Avenue. Several area brokers told the Times that John Laing was not commissioning brokers in Hercules in 2006 because it did not need them in a hot real estate market. Scott Tiernan, spokesman for John Laing, said the homebuilder is unavailable for comment about the nature of the company’s relationship with Balico; he said Laing homes at Bayside were priced from the low $600,000s and up.

Hercules Waterfront LLC built a block of 15 three-story buildings on Railroad Avenue between Sycamore Avenue and Bayfront Boulevard. Eight of the 15, including the larger end properties, are sold, said company President David Cury of Santa Cruz. He said he kept the other seven off the market to hold for investment.

“This town has a real future,” said Cury, who also owns two Bayfront Boulevard lots.

He said Balico brought buyers for several of the buildings — he did not recall how many — and that he believes Balico’s commission was $5,000 per sale for all but the one at 2132 Railroad Ave. at Sycamore Avenue; some sold in 2005, others in 2006. Cury said Balico’s commission for 2132 Railroad Ave. was a “standard” one; he declined to say the exact amount Balico got but said a standard commission would be about 3 percent.

That corner building, which today houses the Powder Keg Pub and has four apartments above, was bought by Francisco Montoya in 2006 for $2 million. A 3 percent commission would come out to $60,000.

Balico, in his e-mail, pointed out that the City Council approved the final subdivision map for the Cury project in June 2003 and the Bayside Final Development Plan in June 2004.

“There was never a time when Hercules Waterfront LLC or John Laing Homes came before the City Council when I would have to consider recusing myself,” Balico wrote. “Neither were source of income to me in 2003 or 2004, and I had no idea at that time they might become source of income to me.”