Bell Hopes for New Casino Manager, More Profits

August 16, 1987|BETH UYEHARA | Community Correspondent

BELL — Control of the California Bell Club will be up for grabs Monday when the partners meet to decide whether to oust the current managers.

For the Bell City Council, the partners' meeting represents the possibility of an end to the internecine wrangling that has plagued the club for months, and that a strong, central management will emerge to restore the club's former profitability.

"We need some changes at the club," City Administrator Byron Woosley said. "The City Council believes it's reasonable to count on $1.5 million in tax revenue each year. We want to see a situation where they present to us a plan to achieve that. This has not occurred (with the present managers)."

Councilman George Mirabal agreed. "Our first preference would be to find a management team that is also the owner of the club. It's hard for us to deal with someone who is not really responsible."

Income Vital to City

The casino currently accounts for nearly 15% of the city's $9 million tax revenue. In its heyday, it contributed almost 25% of the municipal budget, and the drop in income has hurt the city, Mirabal said. "It looks like we are going to have to cut back this year because of the loss of income."

Bell has received $565,000 in tax revenue from the club so far in 1987. In 1986, the club paid the city $1.3 million, but in 1985, the club's lowest revenue year, the city got only $738,000. In the club's early years, revenues to the city were around $2 million a year.

The club's operation has been under a cloud since December, 1983, when a former city councilman, a former city administrator and five club investors were indicted on federal charges that ranged from mail fraud for the city officials to either fraud or racketeering charges against the others.

Even before the indictments and later convictions, however, the club's revenue had begun to slip as competing casinos opened nearby, starting with the Commerce Club in mid-1983, and followed by the Huntington Park Casino and the Bicycle Club in 1984.

Revenues Surge, Dip

Casino revenue, which reached a high of $1.5 million a month in July, 1983, the month before the Commerce Club opened, dropped to about $500,000 a month in January, 1985, in the midst of the racketeering trials.

In September, 1985, the present management team, Bell Club Management Corp., was chosen by the limited partners and it looked as if the club might be on the road to recovery. With the new managers in place, and with the introduction of the popular Chinese game pai gow, revenue climbed again to more than $1 million a month for much of 1986. However, this year has seen revenue dwindle to about $800,000 a month.

To help the club get back on its feet and to help it better compete with other clubs, the City Council has granted a series of tax breaks since July, 1985.

The club's latest request for tax relief, which is scheduled to be heard by the council Monday, would grant the casino a one-year tax reduction, the longest yet. The proposed tax reduction would charge the club 9% on its first $1 million income monthly and 13% on all revenue above that amount. The normal tax bracket for a business the size of the casino would be a flat 13%.

Tied to Conditions

The city, though, is tying the tax break to a number of conditions. For instance, the club must guarantee the city $1.25 million a year in revenue and spend a certain percentage of its income to promote the casino.

While shoring up the club with tax breaks, the city has tried to clean up its reputation in relation to the club.

The indictments of city officials and the resulting scandal helped lead to the election of four new members to the council: only Mayor Jay Price, an adamant opponent of the casino when it was first proposed, remains from the early days of the club's existence. George Cole and Ray Johnson were elected in April, 1984, and Mirabal and Rolf Janssen in April, 1986.

The council has required a number of new controls to prevent abuses at the club. It hired a new accounting firm to monitor the club's operation; ordered lock boxes for cash transactions; began monitoring the club with rotating teams of city employees; instituted spot checks of transactions via video cameras and divided oversight of the club among the city administrator, police chief and finance director.

Cole said that the council's goal was to prevent the possibility of corruption from occurring again. "These rules aren't perfect," he said, "but they increase the accountability."

Lawsuit Filed

Despite these efforts by the city to restore public confidence, disputes between the limited and general partners erupted in March into a civil lawsuit under the federal racketeering statute, with one group of limited partners charging misconduct on the part of the managers. However, there have been no criminal charges made against anyone involved in the casino, and the issue remains a civil matter.

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