OCEANSIDE: City wants to raise casino fee

Says it would boost Oceanside's flagging budget

By CRAIG TENBROECK - Staff Writer | Saturday, May 10, 2008 5:03 PM PDT ∞

OCEANSIDE ---- With the economy in a slump and tax revenues flattening, Oceanside is looking to the cards for a way to bolster revenues.

The city's draft, two-year budget, unveiled last week, proposes the first increase in the city's annual card-room fee in 16 years.

Adjusting that rate, from 4 percent to 6 percent of a business's gross, would funnel an extra $440,000 into city coffers during the fiscal year that begins July 1, a city official said last week.

But the card room fee is different than most assessments; it affects just one business ---- the Ocean's Eleven Casino.

Not surprisingly, the owners of casino said last week that they weren't thrilled about being the city's economic crutch.

"Business is down," said Bob Moyer, who co-owns the 11-year-old card room with several local businessmen, including Haig Kelegian and Dan Dreger. "We're not opposed to the increase, we just think 6 percent is a little excessive."

A change of fortune

Moyer said the last few months haven't been kind to Ocean's Eleven, a converted bowling alley on Brooks Street, just east of Interstate 5.

Though he declined to give specific figures, Moyer said the card room's revenues have dropped about 20 percent since the first of the year.

People are more protective of their dollars, he said, and poker's once-soaring popularity has cooled.

"I think that the Texas Hold 'Em craze has peaked," he said. "A lot of the players have gone to other forms of recreation, rather than gaming."

That assessment of his industry is different than Moyer's comments last fall when he asked the City Council to change the city's gambling law and increase the number of tables allowed from 45 to 56. (The city complied.)

Moyer said at the time that his business was booming, with gross revenues hitting $27 million.

Since then, Ocean's Eleven has reduced its expansion plans to just five tables, he said.

"We can't fill the 45 we have now," Moyer said.

A sour economy

Oceanside's revenue projections for the next few years aren't bleak, but the city has said it won't have much wiggle room in next year's $120.5 million budget. City officials said they are planning to reduce overtime and eliminate 20 positions to keep expenditures flat.

Money generated from development-related services, such as licenses, permits and building inspections, is expected to dip 9 percent, or $2.3 million, next fiscal year. And sales tax dollars, which climbed 16 percent over the past two years ---- from $17.4 million to $20.3 million ---- are likely to flatten out.

Property tax revenue, the largest source of general fund dollars, should continue to climb but at a slower rate than years prior, Finance Director Teri Ferro told the council last week. The city says it will collect $50.1 million in property tax over the next fiscal year, an increase of 9 percent.

Increasing the card-room fee is an opportunity to bring in several hundred thousand dollars extra each year, a city report states.

Oceanside currently collects $2,000 per table, plus 4 percent of Ocean's Eleven's gross each year. In recent years, the assessment has been around $1 million.

If the city approves the 50 percent rate increase, revenue would climb to $1.53 million in the next fiscal year and $1.75 million the year after that, according to the draft two-year budget.

The higher rate would be in line with what other cities charge, Ferro said.

In a recent memorandum to the council, Ferro outlined how several other cities assess their card rooms. The approaches vary dramatically.

Napa, for example, charges $500 per table and 13 percent gross, while Haywood charges just $1,500 per table.

The next step

The council won't make a decision on the card room fee until next month's budget hearing.

"I'd like to hear all the facts first," Mayor Jim Wood said last week. "I want to hear from the city and I certainly want to hear from the card room about how it will impact them."

Councilman Rocky Chavez has indicated support for the fee hike, saying "it's important that we go to the same standard for that industry."

At least one City Council member has qualms about the change.

"When I see a 50 percent increase for one business, I think that's alarming," said Councilman Jack Feller. "I don't know how we can throw the brunt of all this on just them."

Councilman Jerry Kern said he didn't think the fee hike was "outrageous or anything like that," but he's concerned the city's revenue projections for Ocean's Eleven are overly optimistic.

Lately, Kern said, he has had no trouble finding a parking spot when he stops by for lunch, "which is a quick indicator that business at Ocean's Eleven may not be what it used to be," he said.

Councilwoman Esther Sanchez did not return a call seeking comment.

Contact staff writer Craig TenBroeck at (760) 901-4062 or ctenbroeck@nctimes.com.