The Cudahy Redevelopment Agency on Monday approved an out-of-court settlement with the financially troubled Cudahy Social Service Agency for $40,000 in back rent that it expects to raise from the proceeds of a bingo game.
Under the agreement, the Redevelopment Agency must receive the money by June, 30, 1990, or the Social Service Agency, which distributes food and clothing to the needy, must move out.
The city cut off funding for the Social Service Agency last September and has tried since November to evict it from its offices at Elizabeth Street and Otis Avenue. The agency has paid no rent to the city since July, 1988.
The City Council, acting as the Redevelopment Agency, voted 3 to 1 to approve the agreement. One member, Councilman John Robertson, was absent.
The lone dissenter, Councilman Joe Fregeau, said: "The whole thing sounds fishy." He would not elaborate.
Joseph D. Castagno, attorney for the Social Service Agency, said its executive director, James L. Graham, is expected to sign the agreement by Monday.
The agreement relies on Graham's ability to raise the $40,000 from a bingo game that would be operated by the nonprofit Cudahy Social Service Foundation, recently formed by John Mgrdichian, a Compton businessman and casino operator.
Mgrdichian owns Murcole, a Compton rubbish firm, and the Hi Desert Casino & Inn in Adelanto, near Victorville. He also has an interest in the California Commerce Club, a card club in the city of Commerce.
Cudahy is reviewing Mgrdichian's application for a license to run a 450-seat bingo parlor that would be built at 4610 Santa Ana St., on property recently purchased by the Cudahy Social Service Foundation.
Mgrdichian would not predict how much money could be made in such a venture but said he intends to donate funds to local social service organizations.
According to state law, most proceeds from bingo games must be used for charitable purposes.
The Redevelopment Agency and the Social Service Agency were scheduled to go to Norwalk Superior Court on Aug. 17 to resolve the rent issue, but the city decided that the dispute had gone on too long and cost too much, Mayor Tom Thurman said.
"It makes a lot of sense to work out a settlement that both parties can live with," Thurman said.
He said the city was spending between $10,000 and $15,000 in legal fees. The Downey law firm of Solton, Jacobs, Weiss, Castagno and Sims was representing Graham of the Social Service Agency for free, Castagno said.
Said Graham: "This whole thing was a political fiasco. It has hurt everybody so badly."
The agency and the city have been squabbling on a variety of fronts since last year.
Last September, funding for the nonprofit agency was dropped after city auditors said it did not have an "adequate financial control system."
The Social Service Agency received more than $130,000 from various government agencies channeled through the city during fiscal 1986-87. Another $50,000 had been earmarked for the agency for fiscal 1988-89.
In October, the city contracted with two other nonprofit agencies to provide social services to residents. Those contracts expired June 30, and city officials have not acted to renew them.
Angered by the city's cutoff of funding for the Social Service Agency, some residents made an unsuccessful attempt to recall Councilmen Robertson and Joseph Graffio.
Under the Cudahy Social Service Foundation plan's to conduct bingo games to raise money for the agency, the city could also receive a licensing fee of 1% of the monthly gross bingo revenues over $5,000.
According to city records, Graham is one of the foundation's seven directors. Earlier, Graham, Mgrdichian and Councilman Wilfred Colon proposed holding bingo games in the building the Cudahy Social Service Agency is renting. However, the proposal stalled when other council members opposed holding bingo games on city-owned property.
Final approval of Mgrdichian's current bingo application, after a background check by police and a city review of construction plans, could come within two weeks, City Manager Gerald Caton said.