A cardroom expansion in Clovis will mean more revenue for the city under a plan approved Monday night by the Clovis City Council.
The fees paid by the 500 Club for its relocation next year to a shopping center at Shaw and Willow avenues will escalate on a graduated basis until it reaches its peak in seven years.
Most of the revenue is from a "license fee," which will grow from 3% to 9% in the first seven years of operation. Other city revenue is coming from a $2,000 table fee that will provide $36,000 yearly for the city when the cardroom grows to its proposed 18 tables.
The existing 500 Club has six card tables and a restaurant at Fifth Street and Clovis Avenue. The restaurant will remain open at the old site, which has been open since 1953.
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Under the license fee, the city will be paid 3% of gross revenue from the 500 Club in the first year, which will rise 1% each year before peaking at 9% in the seventh year. The license fee would rise above the annual 1% increase if the 500 Club collects revenue of $3.5 million. If that happens, the 9% fee would apply.
If the 500 Club earns $2 million in gross revenue the first year, the city would receive $15,000 in addition to the table fee. By the seventh year, if the cardroom reaps more than $3.35 million in gross revenues, the 9% license fee will provide the city with $121,522. And with the $36,000 table fee, the city would collect more than $157,000.
The city now receives $15,000 to $20,000 annually from licensing fees and other revenues.
"This represents a compromise between the city and [owner Louie] Sarantos and he supports the proposal by city staff," said John Cardot, a Fresno lawyer representing the 500 Club's owner. "We acknowledge that the city government should recoup its costs" for providing law enforcement and other services to the cardroom. He said the City Council can adjust the fees at any time.
Council Member Bob Whalen opposed the plan, saying he did not think the city will receive enough money to pay for public safety officers. He suggested the city receive 12% of gross revenue.
John Holt, assistant city manager, said city officials thought it was a fair fee, even though it was on the high end in the state. Fresno charges 12% to Club One, which has 49 card tables in downtown Fresno.
Lt. Vince Leonardo said he estimates that 40 police calls for service, most alcohol-related, came from the existing 500 Club location, but he also said some of those calls could have been related to patrons from other nearby establishments.
Mayor Harry Armstrong said the initially reduced license fee allows the owners to get the business up and running, expand it and employ people in the community.