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The Saga of the Silver Saddle Casino : Gambling: After nearly nine troubled years, Cudahy is still waiting for the grandiose poker club to open and start generating revenue for city coffers.

September 23, 1990|TINA GRIEGO | TIMES STAFF WRITER

CUDAHY — Nine years ago, a young South Gate real estate broker with an amiable grin and the gift of gab came to this town and promised its leaders that he would build a card club that would put all others to shame.

But for a good part of nine years, Charles R. King, as owner of Tanlo Inc., has had little success in his attempt to build the world's largest card casino on three acres in Cudahy's tiny industrial sector. He has searched for, found and lost financing and spent hundreds of thousands of dollars on a scaled-back version of the club. Except for a few months in 1986, King has never opened the Silver Saddle Casino for business.

Now, with the casino as close to completion as it has ever been, he and his partner, Beverly Hills businessman Shyr Jin (Jim) Tsay, are embroiled in a complicated financial dispute and work has ground to a halt.

This time, city leaders have more to lose than time if King and Tsay fail to end their disagreement amicably.

The Cudahy City Council is counting on $650,000 in gaming revenue from the casino to help it get through this fiscal year. The city budget was balanced on the assumption that the club would open as scheduled this fall and begin pouring anywhere from 8% to 13% of its gross revenue into city coffers.

The casino's closure has forced the city to slowly draw upon its $750,000 in cash reserves, money that city leaders say could have been put to good use elsewhere in this crowded town that was recently ranked one of the poorest in the state.

Thus far, a majority of the council has remained calm about the possibility that the casino will not open this year. City Manager Jack Joseph said that the city would be in trouble if the casino did not open by next July, but he said the city plans to float a bond later this year that will replenish its reserves. Also, Joseph said, this is not the first time in the last nine years that the city has counted on casino revenue to balance its budget.

Last year, the council penciled in $400,000 in gaming revenue. When the casino did not open, Joseph said the city recovered most of its budget shortfall with greater than expected sales tax revenue.

Councilman John Robertson, a harsh critic of King and the Silver Saddle, has been the only councilman critical of the decision to use casino revenue to balance the city budget.

"King has never fulfilled one promise to this city," Robertson said. "If he doesn't come through we are not going to have any money in the bank. This city can't afford it."

The probability that the casino will open this year is slim, City Manager Joseph said.

In addition to the financial dispute between Tsay and King, Tsay's company, Naxos Inc., which arranged the financing for development of the casino, has filed a request for involuntary bankruptcy on behalf of the Silver Saddle with the U.S. Bankruptcy Court in Los Angeles. The request was filed without King's knowledge, his attorneys said.

If the court allows the Silver Saddle to go into bankruptcy, the project could be delayed for an unknown length of time.

But the problems do not end there. City leaders said last week that King and Tsay are in violation of their license agreement with the city, which stipulated that construction of the casino was to have been completed in January.

City Manager Joseph said that, in all likelihood, the City Council will have to hold a hearing to decide whether the casino license held by King and Tsay should be revoked.

To more than one frustrated council member, revocation is not out of the question.

"I'm getting to the point where I say, 'This is enough,' " Councilman Joseph Fregeau said. "They were doing darn good up to now, but now construction has stopped and Chuck and Jim Tsay are fighting and it's getting to the point where they have to put up or get out. If they don't want to do it, I'm sure we could find someone else who does."

As the situation stands now, the Silver Saddle project is a "mess," Joseph said.

"We know that construction has stopped. That King and Tsay have sought arbitration. That according to the license agreement construction should have been completed in January. What else could happen?" Joseph said.

Neither King nor Tsay would comment on the current dispute.

Ira G. Rivin, King's attorney, said that according to the joint venture agreement signed by King and Tsay in September, 1987, Naxos Inc. was to provide and procure all "necessary" financing for the project. Now, he said, Naxos Inc. is saying the project will cost too much to complete and is balking at arranging more financing. The building is complete except for work on the interior that is expected to take 90 days, King said.

"Naxos is saying that it is going to take a substantial amount to complete the project, and basically they want Tanlo to reduce its interest in the Silver Saddle," Rivin said. "That is something we are not willing to do."

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