DeKALB – City officials are hoping that an Olive Garden, located at Small's Furniture on Sycamore Road, will be up and running by fall 2013.
But the restaurant's opening is heavily dependent on whether the DeKalb City Council invests $900,000 in tax increment financing proceeds to the chain's owner as a forgivable loan.
City Manager Mark Biernacki said the site of 2211 Sycamore Road will cost Darden Restaurants additional money to construct an Olive Garden, making a private-public partnership necessary.
"If we're to bring quality projects such as Olive Garden on that [Sycamore Road retail] corridor, it will come at price because it's going to require redevelopment of existing sites," Biernacki said. "And often times, those costs can't be overcome without some public participation."
Under the proposed agreement, Darden Restaurants would have seven years to generate enough sales tax revenue to repay the $900,000 loan.
Should the Olive Garden fail to generate enough revenue, or shut down before seven years has elapsed, Darden Restaurants has to repay the balance of the loan.
The city is estimating the new restaurant would generate $180,000 to $195,000 a year in sales tax. At that rate, the loan would be paid back in four or five years.
There is popular demand for an Olive Garden, said Roger Hopkins, the city's economic development coordinator. Hopkins pointed to a 2011 survey identified Olive Garden as being "the most significant retail or restaurant business that people go to."
"It was two or three times greater than the responses we got for any other individual business," Hopkins said. "It was a very significantly desired restaurant."
Hopkins said while the city hopes the restaurant opens in time for the Illinois High School Association's State Football Championship in 2013, Darden Restaurants has two years to begin construction on the site.
The Olive Garden/Small's building sits in a TIF district. When a tax increment financing district is created, a base value of the property within its borders is calculated, and for up to 23 years, local taxing bodies such as schools, collect taxes only on that base level.
Taxes paid by property owners within the district continue to rise, though, and the money collected above the base rate – the increment – goes into a special fund to pay for improvements within the district. The $900,000 the city would invest in the project as a forgivable loan is coming from the increment.
The loan will help pay for destroying the Small's building and upgrading the parking facilities at the location. The new restaurant will be 5,700 square feet with parking for 130 cars.
Forty of those spots would be at the adjacent Northern Illinois University Art Annex. Bill Nicklas, the associate vice president of institutional planning and sustainability, said about 40 students and faculty use the annex for studio space and some theater productions.
Nicklas said construction could prevent students and faculty from accessing the site at some points.
"The city does construction projects around the town, every day, in the commercial districts," Nicklas said. "Workers are always on their toes to make sure people get in and out and I'm sure the same will apply here."
Nicklas said he does not anticipate traffic from the restaurant impacting NIU students and faculty's ability to access the site, noting that they've been co-existing with a business at that site since 1995.
The loan also will pay for a new parking lot at the annex. Nicklas said while there's an understanding between NIU and DeKalb staff on the project, the NIU Board of Trustees has not voted on anything.
Hopkins said he hopes the new Olive Garden will get other businesses to flock to that area. He also said the city is trying to find a new tenant for the Old Navy building.
"We think this will help some of those efforts a little bit indirectly," Hopkins said.
The DeKalb City Council will debate the proposal at its Oct. 8 committee of the whole meeting.