WORKSHOP ITEM - Erik Thorvig, Community Development Director
Title
CHANTICLEAR PIZZA AND GRILL FINANCIAL REQUEST AT ROYAL LAKES RETAIL CENTER
Background
The developer for the Royal Lakes project at 125th Ave and Lexington Ave received approvals for a restaurant in September, 2019 and has been attempting to secure a restaurant tenant for an approximately 5,500 sf. space. He has talked to several restaurant users and discussions have progressed with a franchise owner of Chanticlear Pizza and Grill who has existing locations in Maple Grove and Coon Rapids. The bar and grill model expands on the original Chanticlear Pizza concept and offers delivery, take out, inside dining and patio dining. In addition, there is a full liquor bar that features a large selection of premium craft beers on tap along with a nice selection of wines available by the glass or bottle. The menu is highlighted by same award-winning pizza that Chanticlear has been famous for since 1964 and also offers a wide variety of salads, sandwiches, burger, pastas, entrées, along with wings and many other appetizers.
One of the challenges that the restaurant owner has expressed is the ability to make a project financially feasible. A letter is included that outlines the difficulties and risks with this endeavor along with two financial requests. The requests are full relief of Sewer Availability Charges (SAC) and a grant in the amount of $50,000 for construction of the outdoor patio.
The SAC is a fee by the Metropolitan Council to maintain wastewater infrastructure. SAC fees vary based on the type of use and the amount of discharge they produce into the wastewater system. Based on the Met Council SAC estimator, the SAC fee for the restaurant will be approximately $50,000. The city has an account with approximately $125,000 that was collected from SAC credits available to the city from building demolitions. This is money that was collected by the city however did not have to be distributed to the Metropolitan Council because credits were available.
Staff is proposing to provide a forgivable loan to the restaurant owner for the SAC fees. Funds from the account referenced above would be used to pay the Metropolitan Council for the SAC charges. The loan could be structured where if the business is open for a period of five years, the loan is forgiven. However, if the business closes prior to five years, the loan must be paid back with interest. SAC is a fee that can be assessed against a property so the loan is secured as the city can collect funds through an assessment if needed.
Staff does not support a grant for the outdoor patio area. There is not a precedence for this type of assistance from the EDA. The city can offer a commercial loan up to $75,000. This loan program was approved by the EDA in 2019 and the business owner can choose to apply if they wish.
If there is interest by the city in proceeding, staff would work with the business owner to prepare a loan agreement and a formal action by the City Council is required to execute the agreement.
Recommendation
Discuss the request and direct staff accordingly.