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DeKalb moves forward with Olive Garden loan plan

Published: Tuesday, Oct. 9, 2012 5:30 a.m. CDT • Updated: Tuesday, Oct. 9, 2012 11:49 a.m. CDT

DeKALB – Members of the DeKalb City Council voiced support for bringing Olive Garden to the city by giving the parent company a $900,000 forgivable loan.

The money would come from the city’s tax increment financing account, a funding mechanism used by municipalities to redevelop blighted areas, and go to Darden Restaurants, which operates Olive Garden.

“I look at the opportunity to bring in 55 full-time employees... to see an immediate increase in our sales tax,” said Mayor Kris Povlsen, who supports the project. “From my perspective, that’s what those TIF dollars are for.”

The City Council will hold its first vote on the proposal at its Oct. 22 meeting. It is possible that, if there is no debate on the issue, the council will waive its second reading and the vote will be final.

Under the proposal, Darden Restaurants, the owner of the Olive Garden chain, would purchase the site at 2211 Sycamore Road, where Small’s Furniture used to be.

The operator will spend $4.5 million on re-developing the site, including destroying and re-constructing the building and parking lot.

Fourth Ward Alderman Brendon Gallagher said he supports the city loaning $900,000 to Darden Restaurants, which would have seven years to generate enough sales tax revenue to pay back the $900,000.

“This is a perfect example of using TIF dollars and putting skin in the game so Darden Restaurants can jump in,” Gallagher said.

The popular demand and almost-instant generation of sales tax revenue by the site was a big selling point for many of the aldermen. Roger Hopkins, the city’s economic development coordinator, estimated that Olive Garden would generate $180,000 to $195,000 in sales tax.

“Compared to Small’s Furniture, it’s a substantial increase to sales tax revenue potential,” Hopkins said. Gallagher estimated that Small’s Furniture generated about $90,000 a year.

The $900,000 loan was described as being a “deal breaker” – if the City Council doesn’t approve the proposal, there would be no Olive Garden, according to Hopkins and two representatives from the company.

Allea Newbold, a principal at Ryan, a global tax services firm Darden Restaurants hires for consulting, said the chain does not build restaurants in which there are extra costs associated.

Trudy Blakeman, director of incentives, property and sales taxes at Darden Restaurants, touted the company’s achievements and commitment to the community to the City Council.

“We own all our restaurants. We don’t franchise,” Blakeman said. “When we make a $4.5 million investment, that’s Darden’s capital. ...We will be a part of your community for a very, very long time.”

The only alderman who spoke against the project was First Ward’s David Jacobson. Jacobson said while he understands the project, he does not support the use of TIF money for something like this.

“While I do understand that this is a re-development project, we have several other needs for infrastructure improvements and other blighted areas,” Jacobson said, who suggested using some kind of sales tax rebate instead.

Newbold and Blakeman said they are hoping to have the restaurant open by fall 2013.

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