The Des Plaines City Council voted Monday to grant an $80,000 business development incentive to the Tap House Grill, which plans to take over the former Jimmy Buffett-themed Cheeseburger in Paradise restaurant in Metropolitan Square.
The money will help finance the remodeling of the nearly 6,700-square-foot building, estimated to cost more than $700,000, officials said.
The chain operates seven restaurants in the suburbs, including in Glen Ellyn, St. Charles and Westmont. Another is expected to open by mid-October in Palatine, at the site of the former Mia Cucina restaurant.
The Des Plaines restaurant should open by September, employing 10 people full time and 25 to 35 part-time workers, officials said.
"We look at ourselves as a Main Street restaurant," said Scott Ward of Long Grove, co-owner of Tap House Grill. "We are the local gathering place. We take advantage of the craft beer market."
Ward said the eatery's menu is medium-priced and the business has been growing despite the economic recession. Sales were up 16 percent in 2012, he said.
Tap House Grill is investing $332,000 into the rehab of the Cheeseburger site, which has stood vacant for nearly two years. The downtown shopping center's landlord also is contributing $300,000 to the project, officials said.
City Manager Mike Bartholomew said Tap House Grill will be investing the money upfront and then be reimbursed $80,000 by the city once work is completed.
Half the grant will come from the city's downtown tax increment financing district -- where property taxes going to local governments are frozen at a certain level and any taxes collected above that go into development -- and the rest from an existing business assistance program. Even after paying the incentive and completing $2.8 million in downtown street improvements, there will be $2.1 million left in the downtown TIF fund, city Finance Director Dorothy Wisniewski said.
Officials project nearly $295,000 in sales, food and beverage tax revenues for the city over five years once the eatery is open. However, the city's business development agreement includes a five-year, prorated "claw back" clause, which could allow the city to recoup its investment if the restaurant prematurely closes.
Resident Brian Burkross questioned why the city is offering the business $80,000, when typically business assistance allocations have been up to $40,000.
"Are we so sure if we would have said no, they would go somewhere else?" he asked. "Part of the problem with Metropolitan Square was this city originally gave away $20 million to the original developer who then turned around and flipped it. Des Plaines has a lot to offer to businesspeople. Des Plaines is well known in the industry as a giveaway town, and we should start changing that."
Burkross suggested that Des Plaines should lower its taxes, if it wants to attract more businesses.
But Bartholomew said the Cheeseburger site has a number of challenges that made it cost-prohibitive to interested tenants. "Thus far, no one has been interested in even making a go at that restaurant," he said.
Metropolitan Square emerged from foreclosure in May 2012 after Austin-based World Class Capital Group LLC acquired it for about $6.5 million. The loan outstanding on the property was $17 million.
"It was fully leased, but the cost to own it was too high," said Matt Kurucz, asset manager at World Class Capital Group.
The shopping center, north of Miner Street near Northwest Highway and Lee Street, opened in 2006 and is anchored by Shop-N-Save, which covers a third of the total square footage. There has been an exodus of businesses since, with only a handful remaining, including a Potbelly Sandwich Shop and Panera Bread.
Contrary to reports that Metropolitan Square's rent charge is twice the market rate, Kurucz said the new owner has reduced rents.
"We've been able to renew eight tenants since we took ownership in June 2012," he said.
Tap House Grill has agreed to a 10-year lease with two options to renew for another five years.
Kurucz said this fall the shopping center is welcoming another new tenant, Elite Training and Fitness center, which is remodeling three storefronts totaling roughly 11,000 square feet to accommodate a new gym. The space, on the southwest side of the center across from the former Cheeseburger in Paradise, formerly held Coldstone Creamery, World Gym and Spa di da.
Both Elite Fitness and Tap House Grill will be open in September, Kurucz said.
"There's going to be a place to go watch a game and have a beer" in Metropolitan Square, he said.
Resident John Milstead urged city officials to increase signage for Metropolitan Square, beyond the small sign along River Road, to increase visibility for the center and give new businesses a fighting chance.
"Nobody knows it's here," Milstead said. "Sooner or later we have to come up with more recognition because we do need to keep these businesses there and attract more."
City officials said there will be decorative signs installed directing people to the shopping center as part of the streetscape improvements.