DeKALB – Olive Garden representatives canceled plans to build a restaurant on Sycamore Road without using any of the $900,000 in approved city incentives, city officials said.
City officials received notice Thursday morning from Darden Restaurants that the company is abandoning its plans for the shuttered Small’s Furniture City location at 2211 Sycamore Road, DeKalb City Manager Mark Biernacki said.
“It’s a reflection of how the economy is not strong on the retail part of the economy,” Biernacki said. “These chains are pulling back not just in DeKalb, but all over the country.”
The DeKalb location is one of 21 planned restaurant sites being abandoned this year. Darden has no interest in bringing Red Lobster or LongHorn Steakhouse to DeKalb either, Biernacki added.
The announcement comes on the heels of Caribou Coffee, 2385 Sycamore Road, and Hallmark, 2445 Sycamore Road, closing this week. Deals, 2359 Sycamore Road, is expected to close March 17.
“This is one of the things we’re running into with how the economy is,” said Roger Hopkins, the city’s economic development consultant.
Despite Old Navy closing a year ago at 2347 Sycamore Road, Hopkins said the city has been fortunate in that no other big-box stores have closed because of the rough economy.
City officials had planned to use $900,000 in tax increment financing district money to reimburse Darden Restaurants for renovating the building. The money was to have come from property tax payments associated with increasing property values within the defined special taxing district.
Under the plan approved in October, Darden Restaurants had seven years to generate enough sales tax revenue to repay the $900,000. City officials estimated the restaurant would generate $180,000 to $195,000 a year in sales tax and finish the repayment in four or five years.
If it failed to do so, Darden would have to repay the balance of the loan within seven years.
First Ward Alderman David Jacobson, who joined 5th Ward Alderman Ron Naylor in voting against the incentives, said the city should follow the free market, not try to dictate it.
“As much as the city tries to use funds irresponsibly to change that, the more obvious it becomes it doesn’t work,” said Jacobson, who also is running to be DeKalb’s mayor.
Mayoral candidate Mike Verbic, who also is a DeKalb school board member, said he would not use incentives to attract new businesses at the expense of existing ones.
“While I’m supportive of offering our community choices for restaurant retail, I am hesitant to offer incentives to businesses that don’t offer living wages and meaningful benefits,” Verbic said.
Mayoral candidate Jennifer Groce, the former executive director of Re:New DeKalb, expressed similar sentiments, stating that the city needs to re-think how it approaches economic incentives.
“Our core focus has to be bringing new companies or expanding jobs in these communities so we can attract people here,” Groce said, adding that they would lead to better financial resources for the city. “I am not saying we should not focus on retail – Sycamore Road is a big part of the equation – but that should not be our primary focus.”
The loan was offered to Olive Garden because their desired location would have required extensive renovation and reconstruction. Mayoral candidate John Rey, the secretary of Re:New DeKalb, said it was necessary in order for DeKalb to be a contender.
As mayor, Rey said he would also re-think of how the city does economic incentives.
“Those incentives need to be used carefully or wisely,” Rey said. “I don’t think we need to be spending more, I think we need to be spending smarter.”