Click photo to enlarge
The Palace Casino is photographed in Hayward, Calif., on Thursday, Sept. 24, 2009. The card room was recently granted a permit to expand its gaming quarters by about 24 patrons. (Anda Chu/Staff)

HAYWARD -- The city's last remaining card club, and the only one between Emeryville and San Jose, will expand after the City Council loosened some restrictions and the business agreed to pay hefty new fees.

The Palace Poker Casino on Mission Boulevard near D Street, which currently has 11 card tables, was given the green light to add two more. The club also will be able to build a two-story addition on the north side of the building in what is now an alley. At the same time, the club will pay fees more than 10 times what it is assessed now.

The council approved the changes Tuesday night on a 6-1 vote, with Mayor Michael Sweeney voting no.

The Palace has been run responsibly for several years and has a good relationship with the police, Development Services Director David Rizk told the council before the vote. There have been only eight calls since November 2011, and most of those were from the club's security staff, according to the staff report.

"This establishment is very well-maintained," said police Sgt. Ryan Cantrell. "The security is very good."

The establishment does not serve alcohol and has security employees both inside and out, along with several security cameras. Police have used the camera system to help solve unrelated crimes in the area, Cantrell told the council.

Councilman Francisco Zermeno said he had visited the club and noticed it was very crowded. "We're hampering their economic growth" with the restrictions, he said.

At one time, downtown Hayward was home to six card clubs. The Palace was allowed to stay open after the others were shut down in the 1960s by then-police Chief Charlie Plummer. The former police chief later said that the Palace was the only one that operated legally, allowed police to regularly review the books and donated generously to community causes.

Statewide, there is a moratorium on new card clubs through 2020, and few remain in the area. Emeryville has one, the Oak Card Club, and San Jose has two: Casino Matrix and Bay 101. Under the changes approved by the council, Cathy Aganon and Pam Roberts, the two sisters who run the card club, also will now be allowed to transfer ownership, subject to city approval. And the club could relocate from its current site, though that would require zoning changes.

As part of the revised regulations, the club will be paying more than $200,000 in new fees. That includes an increase in what the city charges per table from $1,500 per table to $8,693 per table. The club will begin paying a first-time fee of $114,186 per year to secure a designated parking spot for its shuttle at the city's Watkins parking garage and pay for the cost of litter cleanup in the garage.

The same family has owned the club since the 1950s. It has been at its present location since 1992, when the old site was razed to make room for a municipal parking garage near City Hall.

The Palace has more employees than any other downtown business, 150, with about 350 patrons daily, who come from Hayward and outside the area. Many shop and eat in Hayward, Aganon told the council.

"We want you to be glad we're here," she said.

Aganon said Wednesday that poker has become more mainstream and is seen as a sport rather than just a game of chance, as slot machines are.

She said her family "is overwhelmed by the support we received from the Planning Commission, the city's incredible staff and from the City Council. They're obviously pro-business."