Deal in works for sale of Oak Tree Casino

Owners hope to pay off back taxes, wages with proceeds from Woodland cardroom

By Tyler Graf, Columbian county government reporter

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photoWoodland City Councilor John J. Burke stands at the front entrance of the Oak Tree Casino Restaurant, which shut down in December. The Oak Tree opened last winter amid high hopes before debts at the cardroom mounted.

(/The Columbian)

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WOODLAND — As owners of the Oak Tree Casino Restaurant in Woodland work to finalize a deal to sell both the business and the property on which it sits, they hope the sale will pay off the cardroom's growing debts.

In the Oak Tree's yearlong stint as a gambling establishment, the owners of both the property and the business have racked up more than $80,000 in debt, both in back taxes and unpaid wages.

Chuck McCormick, who worked as the cardroom's general manager and is a member of the business' ownership group, said his top priority is ensuring that employees are paid. He said a sale between the property's owner, AK Development, and a new group of Portland-area investors is imminent, with money from the sale expected to be used to pay the cardroom's liabilities.

McCormick says the investors would like to reopen the Oak Tree as a cardroom.

"I would think, in a roundabout way, the money from the new buyers would take care of a lot of things," McCormick said.

OT Enterprises LLC, the ownership group behind the Oak Tree's transformation into a cardroom last year, owes the Washington Department of Revenue $60,494 in unpaid taxes.

The corporation didn't pay its taxes from July through September 2012, so the Department of Revenue issued a tax warrant Dec. 19.

The cardroom shut its doors five days later. Because the state garnished money from the corporation's bank account, the Oak Tree couldn't make payroll and employees weren't paid, McCormick said.

The Washington State Department of Labor & Industries began receiving wage complaints from former employees shortly after the Oak Tree's December closure. As of Friday, the department had fielded eight complaints, totaling $8,506 in unpaid wages.

L&I opened an investigation into the Oak Tree at the beginning of the year. That investigation is expected to last 60 days, said department spokeswoman Dana Botka.

Meanwhile, AK Development owes Cowlitz County more than $11,000 in delinquent property taxes for the second half of 2012. The principal of AK Development, Belal Alkhatib, could not be reached for comment.

AK Development leases the property where the Oak Tree is located to OT Enterprises, which owns the business.

McCormick said the deal now in the works would sell both the land and the business to an investment group. McCormick did not disclose the name of the potential investor group.

He said he was confident a reopened Oak Tree cardroom would rehire laid-off employees.

The spring would be a better time to reopen the cardroom, McCormick said, because gambling tends to slow down during the summer months.

"The sooner they get this done," McCormick said, "the sooner we can reopen."

At a local watering hole, Merwin Tavern in downtown Woodland, patrons questioned whether the cardroom was a good idea in the first place.

Many said they weren't shocked when they heard the news it had closed down.

"It was not a surprise," said Sherri Back, a long-time Woodland resident.

She'd frequented the restaurant regularly before it was turned into a cardroom. Back had fond memories of the gift shop that welcomed patrons as they walked through the doors.

"People would go to the Oak Tree just for the gift shop," she said.

Financial instability had long been rumored at the cardroom, which opened last winter with ambitious plans to give La Center's four existing gambling establishments a run for their money.

The cardroom's owners initially estimated it could generate $200,000 in gambling tax revenue for the city of Woodland. That figure was later cut in half, then dropped to $80,000.

The actual figure ended up being lower still.

Despite reporting more than $1.1 million in net gambling earnings to the Washington State Gambling Commission over the summer, the cardroom generated only $60,000 in tax revenue for the city by the time it closed down in December.

The city spent the money on two police cars and a pickup truck for the fire department.

At City Hall, there's tempered hopefulness that the Oak Tree will reopen sometime during the spring, with Mayor Grover Laseke saying he's cautiously optimistic it will happen.

Walking through the Oak Tree's parking lot on a rainy day, Woodland City Councilor John J. Burke, who doubles as the director of the Woodland Chamber of Commerce, echoed the mayor's hopes.

Burke originally opposed granting the cardroom city approval without first taking the idea to voters. But he said now is not the time for the city to lose tax revenue, even though he's skeptical about whether there's enough demand for the cardroom to survive.

A decadeslong Woodland institution, renowned for its banquet space and voluminous dining area, the Oak Tree now represents about 48,000 square feet of empty space in the city's core.

Burke said the city has already lost Lewis River Motors, which closed at the end of last year to restructure.

Bank of America has announced it would close its Woodland branch during the spring.

Burke said his big question is whether there's enough demand to reopen the cardroom. "You can go to an AM/PM and buy lottery tickets, or you can go into a bar and do pull-tabs," Burke said.