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HomeMy WebLinkAboutMinutes 1995-05-09 Mayor Robert Yee Council: Jack Drago Joseph A. Fernekes ~--John R. Penna Roberta Cerri Teglia MINUTES City Council South San Francisco High School Cafeteria May 9, 1995 1i0 SOUTH SAN FRANCISCO CITY COUNCIL SPECIAL TOWN HALL MEETINGS DISCUSSION ON CARD ROOM PROPOSAL NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of California, that the City Council of the City of South San Francisco will hold Special Meetings for discussion on the card room proposal for the Shearwater site with all meetings beginning at 7:00 p.m. and ending at 8:30 p.m.: Monday, May 1, 1995, El Camino High School, Cafeteria, 1320 Mission Rd. Tuesday, May 2, 1995, Alta Loma Middle School, Multi Use Room, 116 Romney Ave. Wednesday, May 3, 1995, Ponderosa School, Multi Use Room, 295 Ponderosa Rd. Monday, May 8, 1995, Martin School, Multi Use Room, 35 School Street Tuesday, May 9, 1995, South San Francisco High School, Cafeteria, 400 B St. Tuesday, May 23, 1995, Westborough Junior High, Multi Use Room, 2570 Westborough Blvd. Dated: April 26, 1995 City Clerk City of South San Francisco CALL TO ORDER: ROLL CALL: AGENDA (Cassette No. 1) Discussion on the cardroom proposal for the ~'qO~ Shearwater site. ACT!aN TAKEN 7:08 p.m., Mayor Yee presiding. Council Present: Drago, Teglia and Yee. Council Absent: Fernekes and Penna. Mayor Yee announced this was the fifth Town Hall Meeting, stated reports would be presented by staff and explained to the audience how to address Coun- cil. City Manager Wilson introduced himself and the members of staff involved in preparing and doing the research behind the report. 5/9/95 Page 1 AGENDA A~TION TAKEN ,__Discussion on the cardroom proposal for the Shearwater itc - Continued. He stated in July or August of last year a develop- ment team approached the City, Bill Poland of the Bay West Group and a representative from Holly- wood Park, with a proposal for development of the property we call Shearwater. He described the physical location of the property, told of the previous use by U. S. Steel and of subse- quent proposed uses, stated it is identified as a con- taminated site with an estimated clean-up cost of approximately $10,000,000 and described the uses in the proposal from Bay West, which are for a power center, or a large retail center with large stores and possibly restaurants, and a cardroom casino of 100,000 sq. ft. with up to 150 tables. He pointed out this was the fifth time this presenta- tion had been given and they keep modifying it to include answers to questions that arose in previous presentations. Answers to the questions include the following: The cardroom size would be the largest in Northern California and probably the fourth largest in the State. Other options for the land in- elude two, prior proposals but each failed to pro- teed. Each time the City has been approached for a use on the property it has been by the potential developer, this time it was by Bill Poland, who was in the audience along with Hollywood Park repre- sentatives. The City did not go out and bid the gaming component of this proposal because Holly- wood Park is in union with the Bay West group and they approached us. The City was not out looking for a gaming facility. In answer to why this project is seemingly being rushed through the City, we were first approached last July or August, they showed us a tentative plan, came back after the first of the year, raised the issue again and, at that point, Coun- cil said it was a unique use with a lot of complica- tions that go with it and Council had staff go out and do a due diligence review. Regarding what's going on in the State of California on gaming, Council sent police department representatives down to Southern California to go through the Clubs and to meet with the operators and then other members of staff called their counterparts in the cities that are homes to these Clubs to ascertain information on what laws they now have, find out what problems they have and if they would have set up the laws differently. Another question was regarding Holly- wood Park in Inglewood and how large is Inglewood and how does it compare to So. San Francisco. 5/9/95 Page 2 AQENDA AC!ION TAKEN Discussion on the cardroom proposal for the Shearwater '--'itc - Continued. Inglewood has a population of about 120,000, is in a major metropolitan area and not far from the air- port. We do have two, very small cardrooms in this City, more like taverns with tables, they are licensed to have not more than ten tables per site, are both located on Grand Avenue, do not cause a lot of activity for the City and generate revenue to the City of about $250 per cardroom. The type of proposed cardroom vs. the exiting two cardroom operations we have are entirely different. Hollywood Park, under current California law cannot operate the gambling cardroom, they can own the facility, sup- ply all auxiliary services, run the restaurant and do all the housekeeping. Hollywood Park would con- tract with another firm to run the gambling but, at this point, they do not know who it would be. However, whomever they do select will have to go through a backgrounding by our Police Depa~iaient and will have to be licensed by the State of Califor- nia. Regarding what would happen to the cardrooms that now exist if this goes through, the Pascos, the owners of the two, current cardrooms, are under negotiations with Hollywood Park and they may be able to form a partnership and become one. Other than that, the way we are addressing it now, there would be no impact on the Pascos' exist- ing operations, they would be left alone and the new ordinances being addressed would not reach down to that level, but there would be concern about the new market facility should that occur. Regarding the age that would be allowed to frequent or work at that facility, in the gambling area of the facility you would have to be 21 years of age to visit, participate or work in that area. Under 21 you could work in the support activities, the restaurant or housekeep- ing, or a family could bring a minor to the restau- rant but not through the gambling section of the facility. Nobody knows yet if the workers will be Union, the employees will have to decide - there will be an election. The Hotel Workers Union's representatives have appeared at some of these meetings, are in favor of this proposal and felt they would have a fair opportunity to organize workers if they so chose. He stated the presentations to follow would parallel the outline given out and that the presentations were based on investigations by staff - they are not social scientists nor sociologists, they reviewed a lot of data and looked at written materials and studies to identify the issues. They cannot tell people if they 5/9/95 Page 3 AfiENDA ACTION TAKEN Discussion on the cardroom proposal for the Shearwater itc - Continued. are right or wrong, this is beyond their scope of knowledge but they wanted to put information up for thought. Regarding revenue, these type of facilities do generate a lot of money and they are going to talk about regulatory measures and how the money might be used. The intent of these meetings is to provide information based on research of issues, people are not going to be given an answer as to whether or not there should be a cardroom in this City. He invited the audience to ask questions at the end of the presentation, stated questions asked would be incorporated into the next meetings and reviewed the schedule for subsequent meetings. Mike Nave, Assistant City Attorney, stated there are two, major legal issues in which people might be interested. Certain gambling is allowed in Califor- nia and the State allows local communities to further regulate gambling, however, the State does not allow Nevada style gambling and a change to this would have to be made by an amendment to the California Constitution. Regarding the necessity of an election, in his opinion, the City is not required by State law to hold an election because, when the law was enacted, it exempted all cities that had card- room uses that were authorized or existing prior to January 1, 1984 and this City did have prior uses. An election is required by City law as it is today as stated in the General Plan and Municipal Code. Council could amend the General Plan to allow a cardroom use in part of the City and still require an election for a use in other parts. He explained in detail the requirements necessary for Council to change the requirement for an election for the Shearwater site. Mark Raffaelli, Police Chief, stated he is going to give facts based on his findings and this is not a presentation for or against the cardroom. He stated his Department had to evaluate the impacts this use would have on the City and what they would have to do to eliminate those impacts. They found the impacts were probably not that significant. They also had to evaluate the building, its size and layout, to see whether or not it would invite trouble. He related the following: there have been many changes in gaming and what goes behind it through- out the years and Hollywood Park is probably on the top level for running it as far as rules the State may 5/9/95 Page 4 A~NDA ACTION TAKEN Discussion on the cardroom proposal for the Shearwater [te- Continued. Councilman Penna arrived at the Meeting. pass; they looked at the Bicycle Club and Holly- wood Park in Inglewood; both have over 100 tables and would approximate the size of what is proposed for this City; he described them as looking like the facilities in Reno, Tahoe or Vegas - very luxurious, spacious and clean, with restaurants, coffee shops, banquet facilities and small shops set apart from the gaming; you are not playing against the house but rather against other people sitting at the table, the only thing the house gets is a fee; Hollywood Park has a security force of about 100; relationship be- tween the Club and Police Department was very good; good surveillance system with cameras all over the place; he cited number of calls for service from various establishments in the City and com- pared those to the average 200 calls from gaming clubs; he explained in detail the types of crimes associated with cardrooms, include money launder- ing, loan sharking, prostitution, organized crime, drugs, follow-home robberies, bookmaking, extor- tion, skimming and cheating, and the measures the clubs take to prevent these problems; Asian gangs infiltrate some of the cardrooms by being allowed in to subcontract dealing of the games - but Hollywood Park does not allow this; they will need additional staffing of six officers and one clerical position to police the club to be proactive, 4 officers will be assigned to the club to do employee background checks; most calls come in between 7 p.m. and 3 a.m. He stated regarding the Municipal Code, they took from the best parts of the codes of other agencies, talked to other Police Chiefs, security personnel, etc., asked how they would make the ordinance better and added in parts to cover problems they saw. Areas it would cover are backgrounds on employees, requiring a surveillance system that conforms to Nevada style gaming, IRS reporting, no campaign contributions to individuals running for Council, no transfer of gaming license and the City's power to revoke the license. Councilman Penna arrived at the Meeting at 7:55 p.m. Interim Director of Economic & Community Devel- opmem Beyer discussed the social and economic impacts of the project: becoming addicted to gam- bling can cause a change in behavior, such as being addicted to smoking, alcohol or drugs, and can 5/9/95 Page 5 AGENDA ACTION TAKEN ._Discussion on the cardroom proposal for the Shearwater rte - Continued. affect others, such as friends or family; can cause dysfunctional behavior in children of gamblers, stress to family due to family money being used for gambling debts; immediate family and friends are the victims and most at risk are the children; estimated 300,000 compulsive gamblers in Califor- nia but not known how many are card players. He stated the economic impacts: 1,100 to 2,000 new jobs from the gaming facility, minimum wages but augmented by tips; possibility of other jobs - accountants, cashiers and managers; retail portion will create 400 to 600 new jobs; payroll is estimated at $24,000,000 with business-to-business purchases at $13,000,000; ripple effect is estimated at $55,000,000; little impact if any on downtown shopping area; can't yet tell what type of stores would associate themselves with a cardroom; too early to tell what happens when you combine a power center and gaming operation; property values in the area should increase, as there will be a $52,000,000 investment made in improving the site, and should have a positive effect on the community as well. Assistant City Manager Martel discussed the revenue this project will generate for municipal services: revenue from card club will be $5.1 to $6 million annually; sales tax from retail sales and food sales in the casino would be $89,000 a year and could be used to provide City services to residents and busi- nesses; property tax increment would increase by $233,000 ($30,000 to the City for services and about $200,000 would be available to the Redevel- opment Agency for administration, property acquisi- tion, site preparation and marketing activities); retail center will generate sales tax of $1 to $1.6 million annually and could be used for City provided services; additional property tax increment would be generated and would by used by the City and the Redevelopment Agency; combined development could generate an additional $1.7 million in new sales taxes for the City and over $.5 million from tax increment increase for the Redevelopment Agen- cy; to minimize the influence from and reliance on the source of these speculative, new revenues staff proposed funds not be used to balance the current budget but that Council establish a policy to direct use of funds for specific purposes; cost of oversite activities involved would be $620,000 and would be advanced by the card club by payment of an annual 5/9/95 Page 6 A~ENDA ACTION TAKEN Discussion on the cardroom proposal for the Shearwater itc - Continued. licensing fee; one-time expenditures, directed by Council, for building improvements, street and infrastructure improvements, park improvements, capital outlay, equipment purchases and property acquisition would come from the revenues; changes in revenue would not impact on-going city services, only one-time expenditures; card club regulations will be contained in an ordinance that will define the responsibilities of the City and the card club for financial activities and auditing; detailed explanation of the strong administrative and auditing controls necessary to insure integrity of financial transactions as a result of having a gaming operation in the City. City Manager Wilson related that copies of a more extensive report than what was presented that eve- ning are available in both libraries and at City Hall in the City Manager's Office and in the Economic Development Office. John Ballas, 173 Northwood Dr., stated he was for the project; it would develop the bayfront, which has been vacant for 20 years; it will open up many, new jobs; much money will be put into the economy and could be used for improvements; if put to a vote, he would like to see it be fair. Hank Rogers, 934 E1 Camino, related he has been a business man in this City for about 30 years and is in favor of the project; wants more money for the City but is concerned about guarantee of City re- ceiving the money promised; thinks the license to operate should be property of the City not the appli- cant and City should rent out the license; does not want to see licensee later abandon project, leaving the City with an empty building sitting on the site and no control of the license; City should have power forever to decide about the license; if an applicant promises a given amount of money to the City, he should be required to post an irrevocable bond for the amount of money and guarantee the amount in writing - that the 10 highest stockholders of the business should guarantee it with their person- al assets; does not believe such an intense operation can be handled by only six more police officers and one or two more cars; he stated the peak hours of operation were 10 p.m through 4 a.m. and ques- tioned the scheduling of officers in the club during that time; follow-home shootings and loan sharking require more police; asked if the agent representing Hollywood Park, Mr. Ito, was authorized by its 5/9/95 Page 7 AGENDA ACTION TAKEN .~ 1'7 ,..Discussion on the cardroom proposal for the Shearwater rte - Continued. principals to sign a guarantee that the City would receive the $6 million/year; this facility is as large as all the present gaming clubs between San Jose and San Francisco combined; clientele in cardrooms is 85 % Asian and wonders where all the Asians would be coming from to fill this facility - if not filled, where is the $6 million coming from; City Council should not decide this on their own but have a vote of the people, because there could be a recall of Council people who voted for it; he gave Council copies, and left copies for anyone interested, of two articles on gambling, one from the New York Times and one from the San Jose Mercury News. Jim DuPont, Hotel Employees and Restaurant Em- ployees International Union, spoke in favor of the development; Hollywood Park has agreed to remain neutral regarding unionization of the facility here; 1,000 jobs where people will be making a living wage and getting he.~lth benefits; these are not be- ginning jobs but good jobs, even the tip jobs without unionization are very good and high tipped; in Las Vegas 80% of all casinos are organized and people stay in their jobs for a long time, whereas in Reno there is only one union casino, Circus Circus, and the rest of the area is very transient; this industry represents a chance for working class people to get a good job, which they can't get through working for a MacDonalds; if the casino isn't allowed here it will be located next door - there will be a major casino in this part of the Peninsula and this City will get the effects but none of the benefits; there will be a union house and there will be a ripple affect, as the money made there will translate out into the community. Royce Morgan, 713 Haven Ave., wanted to take on the Council regarding the quality of the brochure handed out; a gentlemen said the building would be 100,000 sq. ft., the fourth largest in the United States and have 150 tables but doesn't tell what else is going to go along to support all this and on the back it says a 4,000 sq. ft. retail center and the gentlemen said that has been increased to 400,000; there is no way from what was heard nor from what was presented that a definitive decision could be made; will get a copy of the improved presentation from the City Manager. Bill Poland stated he is the developer and a partner with Hollywood Park in the casino and stated he has 5/9/95 Page 8 A~ENDA ACT!QN TAKEN Discussion on the cardroom proposal for the Shearwater ~te - Continued. ;,Cassette No. 2) been involved with So. San Francisco since 1972; bicycle and pedestrian paths will be provided around the almost mile of water frontage and there will be access to the water from many points; not very precise in plan because they don't know the sizes the tenants will need; the City will be reimbursed in advance for any expenses it has to put out; their investment will be substantially larger than $52 million, the cardroom alone will be about $30 to $35 million; projections of revenues were based on cardrooms of the same size in other parts of the State and they applied a tax rate to that; they would not make a $35 million dollar investment with the idea of walking away; site has been an eyesore for a long time; no large sites available on the freeway from San Jose north, other than Fashion Island Shopping Center in Foster City, so this won't be a white elephant; the risk is the toxics and this is a very high risk because all that is down in the ground is not known; he believes former Police Chief Datzman is up in the air on the project; a letter has been submitted to the City suggesting the retail per sq. fi. Jake Jones, 12 El Campo Dr., stated his family has been here since 1908, when there were only 500 people and, if the "doomers and gloomers" were listened to then, there would be nothing here now; he felt the speakers against the project must repre- sent other cardrooms elsewhere; former Police Chief Datzman is not against this project; this gets the cardrooms off Grand Ave., although there are no problems associated with their operation there; City can revoke the license; City will have the buildings and toxic waste cleaned up; he urged people to jump on a good deal and show they want progress in the City. Carl Ito, Vice-President of Development for Holly- wood Park, stated he wanted to clarify things he heard which, he felt, were based on inaccurate information; the license is a privileged license - the City or the State of California can, at any time, revoke the license; they have audits and great aecountabilities because they are a public company and no other club in California is operated by a public company; they are willing to make a $20 to $30 million risk in this project - this is a viable site, there will be another park on the Peninsula and they think it is important to be first, as this creates a better market draw; they are willing to pay a tax 5/9/95 Page 9 AGENDA ~.Discussion on the cardroom proposal for the Shearwater ~ itc - Continued. ACTION TAKEN 119 rate on gross revenue; City is almost like a parmer in the project because it gets the revenue off the gross, not the net, and is in a first position for get- ting its revenue; they support tight regulations be- cause this brings legitimacy to the industry; the image of a cardroom has changed over the years; Hollywood Park wants to grow in this industry and in this community. Manny Madriaga, 23 Sunrise Ct., related his posi- tion on the project; he is in favor of an increase in good paying jobs in So. San Francisco and in in- creased revenue for the City but only if there are no hidden costs; he wanted to caution people that this new money may be just a lot of hype; we should look at all data, not only data presented; in favor of elected officials doing what they were elected to do; in favor of people knowing all the facts as well as sobering news; neither for nor against gambling - people can do what they are entitled to do and that is protected by the Constitution; he is against per- sonal attacks and feels what we should have is an exchange of ideas so, at the end, we will know the truth; he is totally against shortcutting the process and not letting the people of So. San Francisco decide the issue. Alex Agusta, Dir. of Security for Hollywood Park, Inc., wanted to address security concerns; Chief Raffaelli went to their operation unannounced and they certainly welcomed this; he has a background in police enforcement; they have a 97 man security force, which is bigger than the majority of police departments throughout the United States, and they schedule so that a major number of these employees are on duty during peak times; they have a zero tolerance at their club for gangs, ladies of the eve- ning etc., as they cannot afford to have negatives in their business. Maria D'Alessandro, 773 Baden Ave., stated she is against the cardroom; she believes the issue should go to a vote of the people of the City; asked if the Shearwater site was on the EPA Superfund list and was told it was not; she asked if the $24 million payroll was based on 1,100 or 2,000 jobs and was told it was based on 1,100. Tony Khorojian, 209 El Camino, stated we already have in the City 450 places where people are gam- bling and that is where there is the Lottery and 5/9/95 Page 10 A~ENDA ACTION TA~ 120 Discussion on the cardroom proposal for the Shearwater itc - Continued. ADJOURNMENT: nobody criticizes it because it benefits the schools and the children; this gambling will benefit the City; he is a businessman in the City and we have to be wise and make wise decisions; he is in favor of the project. Joe Valcazar recapped the number of speakers at previous meetings and the number who were for or against the project; it was said at previous meetings this 150 table card club is twice the size of the largest cardroom in California and today it was stated it will be the largest card club in Northern California and the fourth largest card club in all of California, therefore, it is four times as large; he emphasized in detail how large the card club will be, stated it will be a huge operation yet they say it will not impact the City; he explained in detail how Asian games are played; we should have the right to vote on the issue. Jake Jones, 12 El Campo Dr., stated he has been hearing a lot about Asian people and their gambling habits but he has been in the tour business for 30 years and has hauled a lot of Asians as well as a lot of people of other races to Reno; cardrooms don't start gamblers; he felt the majority of speakers against the project were planning to run for City Council and that they were just there to further their agendas; he felt this is good for the City and he felt we should let the people we voted in vote on the matter. M/S Teglia/Drago - To adjourn the meeting. Carried by unanimous voice vote. Time of adjournment was 9:36 p.m. 5/9/95 Page 11 A~NDA ACTION TAKEN .....~SPECTFULLY SUBMIITED, E ai~ne~J. Bill, Deputy City Clerk City of South San Francisco APPROVED. Robert Yee, Mayor City of South San Francisco The entries of this Council meeting show the action taken by the City Council to dispose of an item. Oral communica- tions, arguments and comments are recorded on tape. The tape and documents related to the items are on file in the Office of the City Clerk and are available for inspection, review and copying. 5/9/95 Page 12