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DeKalb City Council approves $900K Olive Garden loan

DeKALB – Barring any unforeseen bumps in the road, an Olive Garden will be in DeKalb within two years.

The DeKalb City Council gave final approval Monday to loan $900,000 to help chain owner Darden Restaurants build a new Olive Garden at 2211 Sycamore Road.

The agreement that six council members signed off on requires Olive Garden to hire 55 full-time employees within 60 days and be open within in two years or it will have to pay back the remaining balance on the loan.

The council waived a second reading, meaning that Monday’s action was final. Aldermen David Jacobson and Ron Naylor of the First and Fifth Wards, respectively, voted no on the proposal.

The $900,000 would be paid out of funds generated by a city tax increment financing district. TIF is a funding mechanism used by municipalities to redevelop blighted areas, and the property is within the district.

The forgivable loan is 20 percent of the project’s $4.5 million price tag. City officials said they expect the restaurant will generate $180,000 to $195,000 a year in new sales taxes, enough to cover the cost of the loan in about five years. Darden Restaurants would have seven years to pay back the loan.

Monday night’s meeting saw dissent on the Olive Garden proposal. Jacobson reiterated his concern that money from TIF was being misused in this situation.

While the site is within the district, Jacobson said the Sycamore Road area is not “blighted.”

Stephen Clark, a bankruptcy attorney based in DeKalb, also voiced opposition to the project.

“The original goal of TIF is to promote and help blighted areas,” Clark said. “Sycamore Road is not blighted.”

Clark added that the deal does not make much economic sense, and that private businesses should be the ones to develop private property, not have the city pay for it.

Naylor expressed concern that the city will not be able to differentiate between new revenue to Olive Garden, and from revenue that it takes from existing businesses. Roger Hopkins, the city’s economic development consultant, said the city should see a spike in sales tax revenue because of popular demand for an Olive Garden.

Both city officials and Darden officials have described the loan as being a “deal breaker” – without it, there is no Olive Garden.

But Second Ward Alderman Tom Teresinski said there are still things that need to take place before the $900,000 is given out. An intergovernmental agreement has to be drafted between the city and Northern Illinois University because the university’s Art Annex sits behind the proposed Olive Garden.

Officials have said previously that some of the construction at the site would have to be staged at the annex. To settle the issue, the city will pay for the retaining wall and the reconstruction of the annex’s parking lot.

City Attorney Dean Frieders said any disagreements between any of the three parties on the language of the agreements could stop the project all together, and the money would not be issued. The proposal also states that the $900,000 loan will be given out once the restaurant is operational.

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