Hurt by Card Club Losses, Bell Must Dip Into Reserves

City officials said Thursday that sharply declining revenues at the California Bell Club card parlor will force the city to dip into reserves to meet expenditures at the end of this fiscal year.

Nearly a quarter of total city revenues have come from the club in the past five years, officials said. Last September, however, club revenues began to plunge and have not recovered since. The Bell club has paid the city more than $8 million in taxes since it opened in August, 1980, city records show.

Revenues from the club prevented cutbacks in services after the passage of Proposition 13 and have helped finance new construction at the Bell-Cudahy Police Department and Bell City Hall, city officials said. Club taxes have also paid for trash pickup for Bell residents, said City Administrator Byron Woosley.

But in October the club fell under $1 million in gambling revenues for the first time since opening in September, 1980; the take has dropped steadily. (See graph, Page 2). The city’s share, which is about 13% of the club’s gambling gross, fell with it.

City officials said $4 million in city reserves would more than cover any temporary loss of revenue. The city will consider cutting expenditures in the next fiscal year, said city officials, who estimated club payments will be as much as $800,000 below what the city budgeted.

Club spokespersons expressed optimism that a “new management team” now being organized can bring back customers and restore financial health to the club. The recent decline, they said, is primarily because of competition from newer casinos in the area, poor past management practices and a federal investigation resulting in convictions of several general partners on corruption charges.

Behind in Taxes

The club, one of Southern California’s largest casinos, has also failed to pay city taxes and fees totaling $155,000 for December and January, city officials said. Non-payment of taxes is a violation of the municipal code and could jeopardize the club’s license, said City Administrator Byron Woosley.

“We’re still waiting on them,” Woosley said. “We’re trying to be as patient as we can, but this can’t last forever.”

The debts and shrinking revenues from the club, while “most definitely serious,” are not cause for panic, he said. The city has $4 million in reserves “to last us over any kind of crisis period,” Woosley said.

Besides, he said, “We’re not convinced yet that the card club will go under. . .. It could survive.”

Rumors Denied

Club financial supervisor Ebrahim Victory firmly believes it will. In an interview, Victory vehemently denied rumors of imminent closure.

“No way is this place going to close,” Victory said. The Bell club, he maintained, is in a stronger financial position than newer casinos in Commerce, Huntington Park and Bell Gardens because it has no construction debts.

The reorganization has brought in new partners and investors--a “new management team,” Victory said, and city debts will be paid “to the last dime” within three weeks.

But the casino has been plagued with more than money problems. During its heyday as the only poker club in the Southeast area, it was the target of a federal investigation that last year resulted in the conviction of two former city officials and several club partners in a racketeering scheme.

One general partner still faces trial for his alleged role in the scheme, and another, who traded information to the FBI for his own immunity, still holds shares in the club.

The convictions and pending trial have “raised havoc with the management of the club,” Victory said. “From one day to the next, you don’t know who the hell is in charge.”

Former housewife and veteran card player Josephine Dabao took charge of daily operations a month ago as club general manager. Dabao is convinced that “corruption is gone from this club . . . (and) everybody’s picking up their spirits.”

“It’s time to look forward now,” Dabao said. “We’re finally seeing daylight with a very, very promising financial outlook.”

In January, the club’s gross gambling revenue was $515,313, the lowest it has ever been. The club had its best month in July, 1983, taking in nearly $1.5 million, and until February, 1984, had never seen a month’s take fall below $1.1 million.

Meanwhile, the club owes the city monthly license taxes totaling $77,000 for December and $55,000 for January, said finance director Steve Klotzsche. The tax, a percentage of the club’s revenues from table rentals, is the city’s largest source of revenue. It reached a high of $194,000 in July, 1983--more than three times the January, 1985, figure--before revenues began to sag.

Payment of the February license tax, estimated at $60,000, is due March 15. The club also owes the city $22,000 for a quarterly business license fee payable last Dec. 31 and $1,000 for landscaping fees in December and January, Klotzsche said.

No Plan Submitted

Two weeks ago, he said, the City Council asked the club to submit a plan for payment of its debts, but the club has not complied.

In the long run, city officials are reconciled to, but not happy about smaller revenues from the casino because of increased competition.

Even with the reserves on hand, city officials agreed that it will be necessary to scale down the budget for next year.

“We’re going to start looking at cutting our losses,” Klotzsche said.

With revenues generated in part by the club, the city has improved equipment at City Hall, expanded police services and is now building a $500,000 addition to the police department, Woosley said. Club revenues prevented cuts in city services after the passage of Proposition 13, he said.

But the city overestimated the revenues from the club for the current fiscal year, Klotzsche said. Instead of the expected $1.8 million, the city may collect only $1 million by next July, he said. Since July 1, the city has collected only about $700,000 in revenues from the club.