DeKALB – Despite concerns about how to get its money back if the business fails, the DeKalb City Council has agreed to loan the owners of Lincoln Inn Restaurant $355,000 to convert one of the old DeKalb Clinic buildings into a banquet hall.
However, the council wants more time before approving a similar loan of $423,900 to Pappas Development. DeKalb aldermen will take a final vote at their May 28 meeting.
John Pappas, one of the partners behind the development, said he provided more financial information to council members Tuesday.
“Whatever they ask, we provide,” Pappas said. “They asked the right questions. They have a right to ask those questions, and we provide the information.”
The council unanimously approved loaning tax increment financing funds to Bill and Joy McMahon, which they will repay in new property and sales tax revenue through operating their banquet hall, Faranda’s. Monica O’Leary, 7th Ward alderwoman, was not present for the meeting.
The banquet hall will be located at 302 Grove St., the site of the old DeKalb Clinic Annex. The McMahons purchased the property at auction for $181,500 in March.
Roger Hopkins, the city’s economic development consultant, said with the exception of Northern Illinois University, there are no large venues in the city.
“I think this banquet hall is necessary for DeKalb to remain competitive,” Hopkins said.
Pappas wants to develop a restaurant or retail center at 2211 Sycamore Road, site of the vacant Small’s Furniture building. Since the last council meeting, Pappas decreased his his loan request from $628,000 to $423,900. Pappas has to attract certain businesses, however, or he will be unable to pay the loan back.
Despite some of their concerns, the City Council voted 7-0 to receive and file Pappas’ request. A motion to make that vote final failed.
Each of the TIF loans have clawback provisions. If Pappas or the McMahons fail to recoup the loan amount through sales and property tax revenue within a certain period of time, the business owners have to repay the city.
The provisions were a concern for the council members, who wondered whether they would recoup the money if either venture failed. Both Pappas and Bill McMahon each said they are aware of the financial risks, and that the city staff has signed off on the details.
“If this doesn’t go through, my wife and I know we are on the line,” Bill McMahon said.