ATTACHMENT 3
176
AGENDA ITEM NO. 21.
City Council Report
Card Room License Fees
September 13, 2010
ordinance amendments, with the environmental analysis and card room permit back to City Council in one package.
Chronology of Proposal
1. May 12, 2009, Staff met with Mr. Cardot regarding initial discussions regarding the proposal.
2. May 22, 2009, staff responded with a recommended course of action.
3. July 13, 2009, staff goes to Council with the following - "For the City Council to consider preliminary proposal to amend Clovis Municipal Code Chapter
5.6, Gaming Club and Card Room Regulations, in connection with the expansion and relocation of the existing card room, and provide general policy direction to staff regarding the processing of the proposal." Council Action - on a 4-1 vote, to approve option 3 of the staff report - which read "Consider the merits of a proposal to incorporate, expand / relocate to another site within the city. If the answer is affirmative, then the applicant has indicated that their proposal will officially be filed as a comprehensive application and city staff would return with a detailed analysis and measures that would be required; the applicant would be required to pay the necessary deposit and fees for the application processing."
4. May 3, 2010, staff receives comprehensive response to the city's May 22, 2009 letter. On this date, the Applicant also depositecj a check with the City in the amount of $10,000 to cover the cost of the required staff to evaluate the proposal.
5. July 6, 2010, City Council approved a request to approve an agreement for the purchase and sale of partnership interest in the Clovis 500 Club (from George Sarantos to Louis Sarantos).
6. On July 19, 2010, City Council approved, in concept, the Expansion, Relocation, Incorporation, and Allowance for Sale to Third Party, and directed staff to initiate Ordinance Amendments to Chapter 5.6 of Clovis Municipal Code (CMC) regarding Gaming Club and Card Room Regulations and Chapter 9.3 regarding Zoning.
License Fees
Staff has performed an analysis of numerous card rooms across the state and what they are paying their respective jurisdictions. Unfortunately, they run the full spectrum from a nominal charge per table ($200 - $300) to a percentage of gross revenues ranging from 1% to 10%. Over the past four weeks, staff has met with the Applicant on
ATTACHMENT 3
177
AGENDA ITEM NO. 21.
City Council Report
Card Room License Fees
September 13, 2010
numerous occasions to negotiate the license fees. While both parties began the discussions far apart, staff believes what is being recommended below is an equitable compromise that meets the needs of the Applicant's business plan and at the same time provides the City with a revenue source.
The specific proposal is to charge the card room both a fixed amount of $2,000 per table per year and a graduated scale of the percentage of gross revenue beginning with 3% and climbing to 9% in year 7 for gross revenues over $2M. This proposal allows the business to become established in the early years and when established allows the city to benefit in a commensurate fashion. The analysis below shows three scenarios to give Council an idea of what could happen. Scenario 1 is a conservative estimate of gross revenue beginning at $2.5M in year one and growing 5% each year for 7 years to $3.35M and total license fees ranging from $51K to $158K each year. Scenario 2 is more aggressive and starts gross revenue at $3.75M with license fees ranging from $89K to $308K per year. Scenario 3 is quite aggressive and begins sales in year 1 at $5.0M with license fees ranging from $126K to $459K per year.
Scenario 1 = Year 1 at $2.5M Gross with a 5% escalation per year Gross
Year Rate Gross Revenue Reduction License Fee Table Fee Total Fee 1 3% $ 2,500,000 $ 2,000,000 $ 15,000 $ 36,000 $ 51,000 2 4% $ 2,625,000 $ 2,000,000 $ 25,000 $ 36,000 $ 61,000 3 5% $ 2,756,250 $ 2,000,000 $ 37,813 $ 36,000 $ 73,813 4 6% $ 2,894,063 $ 2,000,000 $ 53,644 $ 36,000 $ 89,644 5 7% $ 3,038,766 $ 2,000,000 $ 72,714 $ 36,000 $ 108,714 6 8% $ 3,190,704 $ 2,000,000 $ 95,256 $ 36,000 $ 131,256 7 9% $ 3,350,239 $ 2,000,000 $ 121,522 $ 36,000 $ 157,522 Total $ 672,948
Scenario 2 = Year 1 at $3.75M Gross with a 5% escalation per year Gross
Year Rate Gross Revenue Reduction License Fee Table Fee Total Fee 1 3% $ 3,750,000 $ 2,000,000 $ 52,500 $ 36,000 $ 88,500 2 4% $ 3,937,500 $ 2,000,000 $ 77,500 $ 36,000 $ 113,500 3 5% $ 4,134,375 $ 2,000,000 $ 106,719 $ 36,000 $ 142,719 4 6% $ 4,341,094 $ 2,000,000 $ 140,466 $ 36,000 $ 176,466 5 7% $ 4,558,148 $ 2,000,000 $ 179,070 $ 36,000 $ 215,070 6 8% $ 4,786,056 $ 2,000,000 $ 222,884 $ 36,000 $ 258,884 7 9% $ 5,025,359 $ 2,000,000 $ 272,282 $ 36,000 $ 308,282 Total $ 1,303,422
ATTACHMENT 3
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AGENDA ITEM NO. 21.
Scenario 3 = Year 1 at $5.0M Gross with a 5% escalation per year Gross
Year Rate Gross Revenue Reduction License Fee
1 3% $ 5,000,000 $ 2,000,000 $ 90,000
2 4% $ 5,250,000 $ 2,000,000 $ 130,000
3 5% $ 5,512,500 $ 2,000,000 $ 175,625
4 6% $ 5,788,125 $ 2,000,000 $ 227,288
5 7% $ 6,077,531 $ 2,000,000 $ 285,427
6 8% $ 6,381,408 $ 2,000,000 $ 350,513
7 9% $ 6,700,478 $ 2,000,000 $ 423,043
City Council Report
Card Room License Fees
September 13, 2010
Table Fee Total Fee
$ 36,000 $126,000
$ 36,000 $166,000
$ 36,000 $211,625
$ 36,000 $263,288
$ 36,000 $321,427
$ 36,000 $386,513
$ 36,000 $459,043
Total $ 1,933,895
While exact performance is unknown at this time, staff estimates that the operation would begin at or near the conservative estimate in the first two years, and if successful, move to the optimistic forecast shortly thereafter.
The ordinance regulating card rooms in the city will be developed to minimize the impact on city operations. The overall goal is to have enough regulatory authority so that in the event, the operation does become a drain on city resources, action can be taken to remedy, while at the same time not being overly regulatory that would impact the ability of the business to operate a successful enterprise.
FISCAL IMPACT
See analysis above.
REASON FOR RECOMMENDATION
License fees will have an impact on the Applicant's business plan. It will take several months to move forward with the required ordinances for approval. The Applicant has requested we come to terms on the license fee now so that he could determine if he should move forward with the proposal.
ACTIONS FOLLOWING APPROVAL
Staff will notify the Applicant of City Council's ruling.
Submitted by:
/J/;;iolt, Assistant City Manager/ City Clerk)
ATTACHMENT 3
179
AGENDA ITEM NO. 21.
AGENDA ITEM NO:
City Manager:
- CITY
REPORTT
F CL VIS -
THE CITY C UNCIL
TO: Mayor and City Council
FROM: Planning and Development Services
DATE: September 6, 2011
SUBJECT: Consider various actions in connection with the relocation and expansion of the Clovis 500 Club card room from 500 Clovis Avenue to 771 W. Shaw Avenue, Suite #101-108. The expansion would increase the number of permissible tables for gaming from 6 to 18.
Consider Approval - Res. 11-_, A request to approve an Environmental Finding of a Mitigated Negative Declaration for OA2011-02, OA2011-03, SPR2011-06 and issuance of a card room license.
Consider Introduction - Ord. 11-_, A request to approve OA2011-02 an ordinance amendment to Section 9.3.215.1 of the Clovis Municipal Code to add card rooms as a permitted use in the C-2 (Community Commercial) Zone District, subject to the provisions of Chapter 5.6 which require the issuance of a gaming club license from the City and amendment to Section 9.3.215.4 of the Clovis Municipal Code to remove card rooms as a use expressly prohibited in the C-2 (Community Commercial) Zone District. Clovis 500 Club, applicant.
Consider Introduction - Ord. 11-_, A request to approve OA2011-03 an ordinance amendment to various sections of Chapter 5.6 of Title 5 of the Clovis Municipal Code pertaining to gaming club and card room regulations and license requirements. Clovis 500 Club, applicant.
Consider Approval - Res. 11-_, SPR2011-06, A request to approve a site plan review for a change in use at 771 W. Shaw Avenue, Suite #101- 108 for a card room, restaurant, bar, and outdoor patios. Western Village, Inc., a California Corporation, owner; Clovis 500 Club, applicant; John Cardot, representative.
OA2011-02, OA2011-03,
SPR2011-06 8/29/2011 2:44:53 PM
Attachment D
ATTACHMENT 3
180
AGENDA ITEM NO. 21.
ATTACHMENTS:
City Council Report
OA2011-02, OA2011-03, SPR2011-06
September 6, 2011
Exhibit A:
Exhibit B:
Conditions of Approval
Site Plan
Exhibit C: Floor Plan
Exhibit D:
Attachment 1:
Attachment 2:
Attachment 3:
Attachment 4:
Attachment 5:
Attachment 6:
Attachment 7:
Attachment 8:
Attachment 9:
Attachment 1 O:
CONFLICT OF INTEREST
None
RECOMMENDATION
Elevations
Mitigated Negative Declaration
Planning Commission Minutes
Draft CEQA Resolution
Draft Ordinance, OA2011-02
Draft Ordinance, OA2011-03 (showing changes)
Draft Ordinance, OA2011-03 (clean version)
Draft Resolution, SPR2011-06
May 4, 2011, Operational Statement from Louis Sarantos
Chronology of Proposal
Correspondence
July 19, 2011 letter from the Bureau of Gambling Control The Planning Commission and Staff recommend that the City Council:
1. Approve Res. 11-_, adopting a Mitigated Negative Declaration for OA2011-02, OA2011-03, and SPR2011-06, pursuant to CEQA Guidelines; and
2. Approve Ordinance Amendment OA2011-02 amending Section 9.3.215.1 of the Clovis Municipal Code to add card rooms as a permitted use in the C-2 (Community Commercial} Zone District, subject to the provisions of Chapter 5.6 which require the issuance of a gaming club license from the City and amending Section 9.3.215.4 to remove card rooms as a use expressly prohibited in the C-2 Zone District; and
3. Approve Site Plan Review SPR2011-06, to allow for a card room, restaurant, bar, and outdoor patios at 771 W. Shaw Avenue Suites 101-108 subject to the attached conditions of approval listed in Exhibit "A".
Staff recommends that the City Council:
4. Approve Ordinance Amendment OA2011-03 amending various sections of Chapter 5.6 of Title 5 of the Clovis Municipal Code pertaining to gaming club and card room regulations and license requirements. (This item did not require Planning Commission action and was provided to the Commission for informational purposes.)
OA201 i -02, OA201 i -03,
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AGENDA ITEM NO. 21.
City Council Report
OA2011-02, OA2011-03, SPR2011-06
September 6, 2011
EXECUTIVE SUMMARY
In May 2009, the applicant Louis Sarantos ("Applicant") made two requests of the City:
(1) to purchase the entire 50% general partnership interest of George Sarantos in the Clovis 500 Club partnership; and {2) to relocate, expand, incorporate, and allow for the sale of the card room business to qualified third parties with prior State and City approval. Over the past two years, staff has worked extensively with the Applicant to process his requests.
On July 6, 201 o, the City Council approved the purchase and sale of the entire 50% general partnership interest of George Sarantos. Actions being considered in this report relate to item 2 above (relocate, expand, incorporate, and allow for the sale of the card room business).
This proposal has been before City Council in various capacities on four separate occasions over the past two years. The Applicant is requesting the following:
1. 2.
Expansion (increasing the number of gaming tables). The 500 Club is restricted by law (Uncodified Ordinance 86-6 and subsequent amendments) and by space limitations at its present Old Town location to operating six (6) gaming tables.
Expansion beyond the current six {6) tables would trigger Chapter 5.6 of Title 5 of the Clovis Municipal Code, the City's codified Card Room Ordinance. Chapter
5.6 was approved by City Council in 1995 and limited the number of tables to fifteen (15). The Applicant is proposing amendments to the Card Room Ordinance to allow for the relocation, expansion, and incorporation. The Applicant proposes to expand to 18 tables as permitted by the California Gambling Control Act. Approval of Ordinance Amendment OA2011-03 amending various sections of the Card Room Ordinance will allow for the requested expansion.
Relocation of Card Room. The Applicant is proposing to move card room operations from 500 N. Clovis Ave. to the Western Village Shopping Center located on the northeast corner of Willow and Shaw Avenues at 771 W. Shaw Avenue, #101 - 108. The proposed location would nearly quadruple the existing card room space and parking is located adjacent to major transportation corridors. (The Clovis 500 Club Bar and Grill would remain in Old Town Clovis less the card room.) Approval of Ordinance Amendment OA2011-02 amending Section 9.3.215.1 of the Clovis Municipal Code to add card rooms as a permitted use in the C-2 (Community Commercial) Zone District, subject to the provisions of the Card Room Ordinance, which require the issuance of a gaming club license from the City will allow for the relocation. Site Plan Review SPR2011-06 will allow for modifications to the structure and property site to accommodate the proposed card room operation. Site Plan Reviews are normally ministerial and approved by the Director of Planning and Development Services. SPR2011-06 OA2011-02, OA2011-03,
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AGENDA ITEM NO. 21.
City Council Report
OA2011-02, OA2011-03, SPR2011-06
September 6, 2011
has been forwarded to the Planning Commission and City Council for consideration because of the related discretionary entitlements.
3. Incorporation. Applicant is requesting amendments to the Card Room Ordinance to allow for incorporation as permitted by the California Gambling Control Act.
Approval of Ordinance Amendment OA2011-03 amending various sections of the Card Room Ordinance will allow for incorporation.
4. Allowance for sale to a qualified third party with prior State and City approval.
The existing Card Room Ordinance prohibits the Applicant from selling or transferring any interest in the card room to anyone other than any existing licensee, their spouse, or their children. The Applicant desires that the Card Room Ordinance be amended to allow for the sale to any qualified third party with prior State and City approval in a manner consistent with the California Gambling Control Act. Approval of Ordinance Amendment OA2011-03 amending various sections of the Card Room Ordinance will allow for the sale to a qualified third party.
Ordinance Amendment OA2011-03 amending various sections of the Card Room Ordinance was provided to the Planning Commission for informational purposes only.
The Planning Commission does not have jurisdiction over the Card Room Ordinance (Chapter 5.6) and associated Card Room License. On July 28, 2011, the Planning Commission did review the land use issues: whether the City should allow card rooms in the C-2 zone district and consideration of the Site Plan and recommended that the City Council approve these items.
Staff is presenting the materials as a single package because the environmental review is designed to also cover amendments to the Card Room Ordinance as well as the subsequently issued Card Room License.
BACKGROUND
The City of Clovis currently has a single card room governed by Uncodified Ordinance 86-6 and subsequent amendments. The applicant is requesting to expand the card room beyond its current six tables to 18 tables. The request to expand is subject to Codified Ordinance 95-27 and found as Chapter 5.6 of Clovis Municipal Code regarding Gaming Club and Card Room Regulations in the City of Clovis ("Card Room Ordinance"). Local licensing and regulation of gaming is in addition to and in compliance with regulations set forth by the California Gambling Control Act.
The May 4, 2011 Operational Statement from Mr. Louis Sarantos (Attachment 7) details the proposed relocation and expansion of the 500 Club from the existing location at 500 N. Clovis Avenue where they operate six (6) card tables to the 771 W. Shaw Avenue, Suite #101-108 (northeast corner of Willow and Shaw Avenues) where they propose to expand to eighteen (18) tables. The existing location would become the Clovis 500 Club Bar and Grill and maintain similar operations less the gaming aspect.
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AGENDA ITEM NO. 21.
City Council Report
OA2011-02, OA2011-03, SPR2011-06
September 6, 2011
Procedurally, two ordinance amendments are required to allow for relocation, expansion, incorporation, and allowed sale to a third party. To comply with the California Environmental Quality Act (CEQA), an environmental analysis has been conducted to evaluate the impact of the proposal. Additionally, a new Card Room License will be required.
Amending the Card Room Ordinance (Chapter 5.6 of the Clovis Municipal Code) will allow for the expansion, incorporation, and sale to a third party. Relocation of the existing card room to another area within the City can be facilitated by an ordinance amendment adding card rooms as a permissible use in the C-2, Community Commercial, Zone District, subject to the Card Room Ordinance and licensing requirements. A conditional use permit is not necessary because of the strict regulations set forth in the Card Room Ordinance as well as the ability of the City to impose additional conditions through the licensing process.
Historically, the site at 771 W. Shaw Avenue has operated as a bar and restaurant with live entertainment. As minor modifications are required to the site plan to accommodate the use a site plan review application is required. This application will allow for evaluation of the parking, patio additions, and the reuse of the building as a card room and restaurant.
The entitlements to accommodate this request are being processed concurrently to permit consideration by the City Council of the entire package. • General Plan Designation: Commercial
• Existing Zoning:
• Current Land Use:
• Adjacent Land Uses:
PROPOSAL AND ANALYSIS
OA2011-02
C-2 (Community Commercial)
RetailNacant
North: Commercial
South: Commercial
East: Commercial
West: Commercial
Currently, card rooms are only permitted subject to special permit in the C-3 (Central Trading District) Zone District. To accommodate a card room at the subject site requires amendment to the Section 9.3.215.1 of the Clovis Municipal Code to add card rooms as a permitted use in the C-2 (Community Commercial) Zone District, subject to the provisions of Chapter 5.6 which impose strict regulations on card rooms and require the issuance of a card room license from the City and amendment to Section 9.3.215.4 OA2011-02, OA2011-03,
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AGENDA ITEM NO. 21.
City Council Report
OA2011-02, OA2011-03, SPR2011-06
September 6, 2011
to remove card rooms as a use expressly prohibited in the C-2 (Community Commercial) Zone District.
OA2011-03
Over the past eighteen (18) months staff, in conjunction with the City Attorney's office has met with the applicant on numerous occasions to discuss proposed amendments to the existing Card Room Ordinance to allow for what is being proposed. Amending the Card Room Ordinance (Chapter 5.6) will allow for the expansion, incorporation, and allowed sale to a third party. Attachment 5 is a copy of the Ordinance amendments.
Two copies of the ordinance are provided in Attachment 5 - the first is the version that shows all of the changes compared to the original 1995 ordinance; the second is a clean version incorporating all of the changes for easier reading. In June staff sent a copy of the proposed amendments to the Bureau of Gambling Control for review.
Attachment 1 O is a July 19, 2011, letter from that agency indicating that the proposed changes comply with applicable provisions of the Gambling Control Act.
The recommended amendments reflect considerable work between staff and the Applicant. It is important to note that the gaming industry in the State of California is heavily regulated by the Gambling Control Act, last amended in 2008 (http://ag.ca.gov/gambling/pdfs/gca2008.pdf). The Card Room Ordinance and the proposed amendments are intended to regulate gaming clubs in the City concurrently with the State of California, and to impose local controls and conditions upon gaming clubs as permitted in the Gambling Control Act.
The Card Room Ordinance was developed to minimize the impact on City operations.
The overall goal is to have enough regulatory authority so that in the event the operation does become a drain on City resources action can be taken to remedy, while at the same time not being overly regulatory that would impact the ability of the business to operate a successful enterprise.
SPR2011-06
Project Description
The eighteen (18) card room, restaurant and bar would occupy approximately 12,667 square feet of a stand-alone building located in the existing shopping center at the northeast corner of Willow and Shaw Avenues. The applicant is proposing to add two outdoor patios. The east patio near the entry is proposed to be 170 square feet and will be used for smoking and food service. The west patio is proposed to be 495 square feet and will be used for smoking only.
The card room will operate 24 hours a day, seven (7) days a week, and 365 days a year. There will be food service during all hours of operation; however, the restaurant and bar portions of the card room will only operate from 6:00 a.m. to 2:00 a.m.
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ATTACHMENT 3 185
AGENDA ITEM NO. 21.
City Council Report
OA2011-02, OA2011-03, SPR2011-06
September 6, 2011
The anticipated number of occupants at the card room during peak operating hours is approximately 350 persons, including staff.
A site plan review application is being processed to memorialize the change in use, changes to the site to accommodate handicap accessibility, and repairs and improvements to the exterior of the structure along with the construction of two outdoor patios. Site plan reviews are usually ministerial and approved by the Director of Planning and Development Services. This site plan review has been forwarded for consideration by the Planning Commission and City Council only because of the related discretionary entitlements.
Parking
Parking for commercial centers over 70,000 square feet is calculated at 4.7 parking spaces for each 1,000 square feet of building area. This shopping center has 147,607 square feet of leasable space. The outdoor patios will add another 665 square feet of leasable space for a total of 148,272 square feet of leasable space. The shopping center is required to have 697 parking stalls. Currently the shopping center has 833 regular parking spaces and 16 handicap parking spaces for a total of 849 parking spaces which exceeds the required parking by 152 parking spaces.
The center is currently occupied by several popular restaurants, a gym, a trade school, and other retail lease space. A number of these uses generate substantial parking.
The applicant plans to use valet parking, with these cars being parked on site, in the parking lot north of the buildings behind the gym. This is a parking field that is not as convenient for patrons of the center to use and will insure that adequate parking continues to exist for customers patronizing this shopping center.
Issuance of Card Room License
After completion of the new building, and prior to opening, the Applicant will be required to obtain a Card Room License from the City. In connection with issuance of the License, the City may impose additional conditions relating to operation of the business.
Those conditions, if any, cannot be determined until completion of the building and the submittal of detailed security and other operational plans, at which time the precise operations can be assessed.
California Environmental Quality Act (CEQA)
The City of Clovis has completed an environmental review (an assessment of the project's impact on natural and manmade environments} of the proposed project, as required by the State of California. The City Planner has recommended approval of a Mitigated Negative Declaration (a written statement announcing that this project will not have a significant effect on the environment). Recommendation of a proposed Mitigated Negative Declaration does not necessarily mean this project will be approved.
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ATTACHMENT 3 186
AGENDA ITEM NO. 21.
City Council Report
OA2011-02, OA2011-03, SPR2011-06
September 6, 2011
Several studies were conducted to substantiate the CEQA findings for Air Quality, Greenhouse Gas, and Traffic (Appendix B and C of Attachment 1 ). The Air Quality Study showed that the Project would not create any significant air quality impacts with the incorporation of the identified mitigation measures. The Greenhouse Gas Analysis concluded that the Project would not contribute significantly to global climate change and would not impede the State's ability to meet its greenhouse gas reduction under AB32. Conclusions of the traffic study indicated that the Project would not significantly alter the peak-hour trip generation characteristics at the existing shopping center or substantially deviate from traffic created by previously existing/historical uses.
Additionally, Staff requested that the applicant provide information to address concerns raised by a Council Member regarding the potential for an increase in crime and higher personal bankruptcies from expanded gaming in the City, with a corresponding increase in demand for police and social services, which if unaddressed could lead to physical changes in the environment. The applicant submitted a report (Appendix D of Attachment 1) that analyzes the findings of a 1998 California Attorney General Report and provides an excellent discussion of this issue leading to the conclusion that there is no evidence that expansion of the 500 Club from 6 to 18 tables will lead to a substantial increase in crime or personal bankruptcies with associated social and economic changes that could physically impact the environment.
The applicant will be required to implement mitigation measures as part of a mitigation monitoring program to be adopted as part of this proposal. Mitigations are required in the categories of Aesthetics and Air Quality and are further explained in the attached Mitigated Negative Declaration (Attachment 1 ).
The City published notice of this public hearing in the Fresno Bee on Thursday, August 11, 2011.
FISCAL IMPACT
In September 2010, City Council approved a resolution setting card room fees in the City of Clovis. The overall goal was to ensure that a sufficient revenue stream is generated for the City to more than cover the cost of additional services being required to support the operation of the expanded card room at the new location.
The specific proposal is to charge the card room both a fixed amount of $2,000 per table per year and a graduated scale of the percentage of gross revenue beginning with 3% and climbing to 9% in year 7 for gross revenues over $2M. This proposal allows the business to become established in the early years and when established allows the city to benefit in a commensurate fashion. The analysis completed last year showed three scenarios to give Council an idea of what could happen. Scenario 1 was a conservative estimate of gross revenue beginning at $2.5M in year one and growing 5% each year for 7 years to $3.35M and total license fees ranging from $51 K to $158K each year.
Scenario 2 was more aggressive and started gross revenues at $3.75M with license OA2011-02, OA2011-03,
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ATTACHMENT 3 187
AGENDA ITEM NO. 21.
City Counci I Report
OA2011-02, OA2011-03, SPR2011-06
September 6, 2011
fees ranging from $89K to $308K per year. Scenario 3 was quite aggressive and began sales in year 1 at $5.0M with license fees ranging from $126K to $459K per year.
While exact performance is unknown at this time, staff estimates that the operation would begin at or near the conservative estimate in the first two years, and if successful, move to the optimistic forecast shortly thereafter.
REASONS FOR RECOMMENDATION
Prior City Council actions considered on July 19, 2010, directed staff to continue with the processing of entitlements to accommodate the proposed card room relocation and expansion. These entitlements included ordinance amendments, a site plan review and future issuance of a card room license. Staff and the Planning Commission therefore recommend that the City Council approve the environmental finding of a Mitigated Negative Declaration for the Project along with recommending that the City Council approve OA2011-02 and SPR2011-06. Additionally, staff recommends that the City Council approve OA2011-03 amending the card room ordinance.
ACTIONS FOLLOWING APPROVAL
If approved at introduction, the second reading of the Ordinances will be heard by the City Council at its September 12, 2011, meeting and if approved, will go into effect 30 days after adoption.
NOTICE OF HEARING
Property owners within 300 feet notified: 48
Interested individuals notified: 1 O
Prepared by: Connie Combs, AICP, Senior Planner
Submitted by:
David�ICP Dwii ht Kroll, AICP
Deputy City Planner Dire tor c � Planning and
Devi oprr ent Services
OA2011-02, OA2011-03,
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ATTACHMENT 3 188
AGENDA ITEM NO. 21.
-CITY
REP RTT
TO: Mayor and City Council
FROM: Administration
DATE: May 21, 2012
AGENDA ITEM NO: CC-8-1
City Manager: _(l-"""' ___ --1
F CL VIS ...
THE CITY COUNCIL
SUBJECT: Approval - Issuance of Card Room License in connection with the relocation and expansion of the Clovis 500 Club card room from 500 Clovis Avenue to 771 W. Shaw Avenue, Suites #101-108.
ATTACHMENT (A) Project Location Map
(B) Draft License
(C) September 6, 2011 Council Report (less Attachments) (D) May 4, 2011, Operational
Statement from Louis Sarantos
(E) Chronology of events
CONFLICT OF INTEREST
None
RECOMMENDATION
For the City Council to approve the issuance of Card Room License in connection with the relocation and expansion of the Clovis 500 Club card room from 500 Clovis Avenue to 771 W. Shaw Avenue, Suites #101-108.
EXECUTIVE SUMMARY
In May 2009, the applicant Louis Sarantos ("Applicant") made two requests of the City:
( 1) to purchase the entire 50% general partnership interest of George Sarantos in the Clovis 500 Club partnership; and (2) to relocate, expand, incorporate, and allow for the sale of the card room business to qualified third parties with prior State and City approval.
This proposal has been before City Council in various capacities on five separate occasions over the past three years. Most recently, on September 6, 2011, the City Council approved the necessary ordinance amendments and land use approvals for the 500 Club 5/15/2012 4 02 34 PM Page 1 of 5
Attachment E
ATTACHMENT 3
189
AGENDA ITEM NO. 21.
City Council Report
500 Club License
May 21, 2012
expansion, including: Ordinance Amendment OA2011-03, which amended the City's Card Room Ordinance to authorize 18 tables, as permitted by the California Gambling Control Act, and made other technical changes; OA2011-02, which amended Section
9.3.215.1 of the Clovis Municipal Code to add card rooms as a permitted use in the C-2 (Community Commercial) Zone District, and Site Plan Review SPR2011-06, which allowed for modifications to the structure and property site to accommodate the proposed card room operation.
As part of the September 6, 2011 approvals, the applicant is required to obtain a Card Room License from the City after completion of the building and prior to opening. The Applicant is currently completing tenant improvements at the new site and anticipates opening the new location on or near June 1, 2012. The City Council previously approved all of the requirements for the expansion and relocation and this item is the last approval required by the City before opening.
The Applicant has worked closely with the Building, Fire, and Police Departments to ensure compliance with all applicable City requirements. Section 5.6.11 of the Clovis Municipal Code provides great detail with regard to what is required to issue a Card Room License. The Applicant is in compliance with all known requirements from Building, Fire, and Police. In connection with the issuance of the License, the City may impose additional conditions relating to operation of the business. Staff has recommended several conditions to address issues that may not be known until after the card room opens for business. Should there be any issues that arise when the new location becomes operational, there is sufficient language in the ordinance and the license conditions to address them.
BACKGROUND
The City of Clovis currently has a single card room governed by Uncodified Ordinance 86-6 and subsequent amendments. The City Council previously approved expansion of the card room beyond its current six tables to 18 tables. The expansion is subject to Chapter 5.6 of Clovis Municipal Code regarding Gaming Club and Card Room Regulations in the City of Clovis ("Card Room Ordinance"). Local licensing and regulation of gaming is in addition to, and in compliance with, regulations set forth by the California Gambling Control Act. The Applicant has submitted an application to the California Gambling Control Commission (CGCC) for purposes of obtaining a license to operate 18 tables at the new location. The Applicant anticipates that the CGCC will approve the application to increase the number of tables to 18 and to move to the new location in May or June of 2012.
In order for the Applicant to open at the new location with 18 tables, the application must be approved by the CGCC and a License must be issued by the City of Clovis.
Approval of this action will provide the Applicant with a License in accordance with Chapter 5.6 of Clovis Municipal Code. Once the new location is operational, the former 500 Club 5/15/2012 4:02.34 PM Page 2 of 5
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City Council Report
500 Club License
May 21, 2012
location, 500 Clovis Avenue (dba 500 Clovis Bar & Grill), will no longer be a gaming establishment. It will remain at that location as a bar and grill.
The Applicant has worked very closely with all departments over the last three years that it has taken to process the project through the City and the State. The Card Room Ordinance that the Council approved in 1995, and amended last year, will become operational when the new location opens up. The Card Room Ordinance has a number of provisions that allow the City to amend the License at any time should the operation of the new location lead to an increased demand on City services.
A copy of the September 6, 2011 staff report is included as Attachment (C) that provides detail of the prior Council actions and associated documents.
FISCAL IMPACT
In September 2010, City Council approved a resolution setting card room fees in the City of Clovis. The overall goal was to ensure that a sufficient revenue stream is generated for the City to more than cover the cost of additional services being required to support the operation of the expanded card room at the new location.
The current fee schedule charges the card room both a fixed amount of $2,000 per table per year and a graduated scale of the percentage of gross revenue beginning with 3% and climbing to 9% in year 7 for gross revenues over $2M. This fee schedule allows the business to become established in the early years and when established allows the City to benefit in a commensurate fashion. The analysis completed last year showed three scenarios to give the Council an idea of what could happen. Scenario 1 was a conservative estimate of gross revenue beginning at $2.5M in year one and growing 5% each year for 7 years to $3.35M and total license fees ranging from $51K to $158K each year. Scenario 2 was more aggressive and started gross revenues at $3.75M with license fees ranging from $89K to $308K per year. Scenario 3 was quite aggressive and began sales in year 1 at $5.0M with license fees ranging from $126K to $459K per year.
While exact performance is unknown at this time, staff estimates that the operation would begin at or near the conservative estimate in the first two years, and if successful, move to the optimistic forecast shortly thereafter.
REASONS FOR RECOMMENDATION
Staff is recommending issuance of a License to the Applicant due to the amount of work that both the Applicant and the City have put forth over the past three years to ensure that the sole card room in the City of Clovis will be managed in a fashion beneficial to both the Applicant and the City of Clovis. A well crafted Ordinance is in effect, the Applicant has run a successful operation at the current location, and the gaming industry is heavily regulated by the CGCC.
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ACTIONS FOLLOWING APPROVAL
City Council Report
500 Club License
May 21, 2012
If approved, staff will issue the License, monitor operations, and report back on an annual basis.
Prepared by: John Holt, Assistant City Manager
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I
500 Club
ATTACHMENT (A)
PROJECT LOCATION MAP
SPR2011-06
City Council Report
500 Club License
May 21, 2012
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ATTACHMENT 3
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AGENDA ITEM NO. 21.
JAMES 8. BETTS
JOSEPH 0. RUBIN
VIA E-MAIL
John Holt
Assistant City Manager
City of Clovis
1033 Fifth Street
Clovis, CA. 93612
BETTS & RUBIN
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
907 SANTA FE AVENUE
SUITE 201
FRESNO, CALIFORNIA 93721
TELEPHONE
(559) 438-8500
TELEFAX
(559) 438-6959
December 22, 2017
Re: Clovis 500 Club, Louis G. Sarantos Jr.
Dear Mr. Holt:
On behalf of my client, Louis G. Sarantos Jr., we would like to formally request that the City of Clovis take all necessary action to approve the sale of the 500 Club Casino, 771 W. Shaw Avenue, Clovis, California, to buyers Michael LeBlanc and Kevin Barclay.
Should you have any questions with respect to this matter, I would be happy to make myself available.
Very truly yours,
�� ,.· James B. Betts
BETTS & RUBIN
JBB:dm
Attachment F
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