Cypress Casino Promoters Have $600,000 Debt

The promoters of this city’s controversial card club proposal, who have spent a half-million dollars trying to sell voters on the idea of legalized gambling, have amassed more than $600,000 in overdue debts and delinquent taxes in recent months, records and interviews show.

In the biggest single chunk of the debt, a development company partly owned by card-club promoters Lloyd Arnold and Chris Bardis owe the county $260,000 in delinquent property taxes on land surrounding their Los Alamitos Race Course in Cypress, county officials said.

The prospective card club owners also owe money to a Southland church and to two horse racing industry groups, with overdue loans or payments and delinquent taxes now totaling $611,948, officials said.

Bardis, a Sacramento developer who owns a major interest in the Los Alamitos track, acknowledged in an interview Friday that he and his business partners have some overdue debts.

But he said Los Alamitos recently hired a new controller who is “unraveling the problems” the race course has encountered keeping its bills current, and that the temporary delinquencies did not reflect on the ability of the card club promoters to finance the proposed $30-million gambling establishment that voters in Cypress are being asked to approve Tuesday.

Stanton residents will also vote Tuesday on a similar plan to allow card gambling in their city.

If either initiative is approved, it would mark the return of gambling to Orange County after an absence of a dozen years.

“I can tell you my credit rating is triple A, and to suggest, even to indicate that we are in a position that we can’t pay our bills is ludicrous,” Bardis said.

“I could write a check out tomorrow to pay (those debts). . . . You are talking about liabilities that are minuscule to the entire operation,” he said.

But opponents of the pro-gambling measure on Tuesday’s ballot say disclosures of the past-due debts and taxes raise questions about the promoters’ financial reliability, and about their ability to make good on economic commitments to the cash-strapped city.

During their campaign for passage of the card-club measure, race track officials have offered voters a potpourri of economic lures: 2,500 new jobs for the battered local economy, more than $10 million a year in new revenue for depleted city coffers, and the establishment of a $1-million student scholarship fund. The promoters promise all this and more if Cypress voters approve Measure A.

“If in fact (the tax and loan payments) are past due,” said Mary Ann Jones, a spokeswoman for one group that is opposing the card-club initiative, “then that certainly concerns me, because all these promises (Arnold) has made to pay the city all this money are then in jeopardy. If he can’t meet his own financial debts, how can he then meet his debts to the city?”

But Cypress Mayor Gail H. Kerry said she was unconcerned by the debts, and remained confident that the city is not taking an undue financial risk in considering approval of the card club.

“Obviously, they feel they can get the money, and look how much money they have spent on this campaign,” she said, referring to the $500,000 the club’s promoters have thus far reported spending to woo voters to their side. “They must have money or they couldn’t do that.”

But financial records show that companies owned by Arnold and Bardis have amassed at least four recent debts, ranging from $50,000 to $260,000, that are now past due:

* The county tax collector’s office says that Cypress Development, a company owned by Arnold, Bardis and at least two other developers, owes more than $260,000 in delinquent property taxes on undeveloped land surrounding the Los Alamitos Race Course.

In late 1989, a consortium led by Arnold and Bardis bought the Cypress track and surrounding acreage for $71 million from Hollywood Park. Six months later, they sold a 50% interest in the track to Ed Allred, who is now the third partner in the card club proposal. Arnold and Bardis, joined by other investors, formed Cypress Development to oversee the sale and development of several parcels of the surrounding land.

County tax records show Cypress Development has missed two property tax payments since last December on each of four separate parcels surrounding the track, with the overdue bills totaling $259,948.12. That total includes a 10% penalty that the county has assessed against the firm for each missed payment, county officials said.

Bardis said, however, that the county actually owes Cypress Development money, because the company was overcharged several hundred thousand dollars on its past property assessments. The company has been trying to negotiate a settlement with the county but, in the meantime, is refusing to pay its outstanding tax bill until the matter is resolved, he said.

* Cypress Development failed to repay a $222,000 loan that came due in February from First Nazarene Church of Long Beach, Pastor John Calhoun confirmed.

First Nazarene loaned the money to the development company when the church swapped 26 homes it owned in Long Beach for property at the race course near the corner of Cerritos Avenue and Walker Street, where it plans to build a church.

“They are just short of cash,” Calhoun said in an interview, adding that Arnold has asked the church for a 90-day extension to pay back the money. “They intended to repay the loan with the sale of the houses that we traded to them. . . . (But) those houses have not sold.”

Calhoun said that the loan indebtedness is secured and Cypress Development’s failure to repay the debt has not unduly inconvenienced the church. The church board is expected to decide whether to grant the loan extension this weekend, the pastor said.

Bardis said he understood the church had already extended the loan, and he dismissed the issue by saying: “It is not a big deal to the church. It is not a big deal to us. I run a business that deals in sales of $60 (million) to $100 million. If you are taking about $200,000, it is a drop in the bucket,” he said.

* The Los Alamitos Racing Assn., a harness-racing meet operator owned by Arnold and Bardis, has owed the California Harness Horseman’s Assn. between $50,000 and $60,000 since mid-March, according to Alan Horowitz, executive vice president of the horsemen’s association.

The debt stems from unclaimed winnings at a November meet at Los Alamitos, Horowitz said. The horsemen’s group says the Los Alamitos operators failed to turn the money over to them to cover track employee benefits, as is standard procedure, he said.

“We have not been successful in receiving the funds despite many requests,” Horowitz said.

But Bardis denies that his group owes any money to the horsemen’s association, saying “that is absolutely incorrect.”

* Officials with the Daily Racing Form, an industry newspaper that charts race results, say the Los Alamitos Race Course operators are past due by two months on a bill for copies of the publication. Gilbert Sierras, an account representative with the newspaper, confirmed the debt but refused to disclose the amount. One source, however, placed the debt at $80,000.

Bardis acknowledged that the track may be behind on its payments to the Racing Form, but said the track’s new controller should be able to resolve these accounting glitches.

The mounting debts apparently have not interfered with the card club promoters’ ability to finance what locals describe as one of the most expensive electoral campaigns in Cypress history.

The most recently filed campaign disclosure forms, listing contributions and expenditures through Wednesday, show that the Los Alamitos Race Course has spent an estimated $503,624 in support of Measure A, including videos, mailers, advertising, consulting and other campaign expenses.

That works out to a total of more than $11 for each of the 45,000 voters in the city of Cypress, and dwarfs the $21,148 that opponents have reported spending on their campaign to defeat the idea of legalized card gambling in the city.

“It’s hard to beat the money,” acknowledged club opponent Jones.

Campaign spending has been similarly one-sided in Stanton, where voters will also go to the polls on Tuesday to decide whether they want to legalize gambling in their city. Ard Keuilian, owner of the Indoor Swap Meet, wants to convert the site into a card club.

In Stanton, backers of the card-club initiative there have reported spending $60,000--compared to just $23,385 for club opponents.

David Shawver, a schoolteacher and former Stanton councilman who heads the club opposition, said the pro-gambling forces in the city are “trying to buy the town.”

In a small city where a few thousand dollars can often get a candidate elected to the City Council, Shawver said the funds amassed by the Stanton pro-club campaign “is more money than has ever been poured into an election here that I’m aware of.” But he quipped: “Those last-minute contributions are going to come rolling in--for us, I wish.”

Financial backing for Cypress’ Derby Club proposal has become a hot topic of local speculation--and that has only been fueled by disclosure of the track investors’ debts.

Throughout the campaign, Arnold maintained his group will own and operate the club and, if it is approved by the voters, would rely on a bank for financing.

But track officials acknowledged that business partner Allred had talked with officials at Las Vegas’ Mirage Casino/Hotel about operating the proposed card club, a possibility that Arnold will not rule out.

Bardis, meanwhile, said in an interview earlier this week that it is still undecided whether he and his partners would maintain exclusive ownership of the club if launched, seek private shareholders, or even take the company public.

“My concern right now,” Bardis said, “is to win an election, and then cross that bridge when we come to it.”