Sacramento's LowBrau - operator of the city of Elk Grove's loan guaranteed Slow and Low - in financial squeeze, loan default
https://www.elkgrovenews.net/2024/09/sacramentos-lowbrau-operator-of-city-of.html
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| The owners of Sacramento's LowBrau, which is one of the owners of Elk Grove's Slow and Low, have defaulted on loans and are being sued for back rent. The city of Elk Grove and its taxpayers have guaranteed loans for Slow and Low. | |
Will LowBrau's financial contagion infect Elk Grove's Slow and Low?
On Friday, the Sacramento Business Journal reported that Sacramento's popular Midtown LowBrau restaurant was being sued for alleged loan default.
Members of the Lowbrau ownership group are involved in the recently opened Slow and Low restaurant in Elk Grove's Old Town-Historic Downtown Elk Grove. Slow and Low opened in June and, at the behest of Elk Grove economic development director Darrell Doan, received Elk Grove taxpayer loan guarantees.
According to a Business Journal story by Mark Anderson, Golden Pacific Bank in Sacramento filed a lawsuit on August 16 in Sacramento Superior Court against the LowBrau ownership group. The lawsuit alleges LowBrau Bier Garten LLC and its other establishment, Beast + Bounty, have not made monthly loan repayments since May.
Addtionally, the Business Journal reports that LowBrau has not submitted the required financial statements for 2022 and 2023. One of LowBrau's principals is Michael Hargis, who is part of the Slow and Low ownership group.
In June 2023, Elk Grove Mayor Bobbie Singh-Allen and the city council guaranteed a taxpayer-backed loan guarantee at Doan's behest. Doan and Singh-Allen guaranteed a $500,000 loan from River City Bank to Hargis to finish construction on the structure at 9700 Railroad Street.
The loan guarantee is part of Singh-Allen's redevelopment initiative for Old Town, which is now also being marketed as Historic Downtown Elk Grove. The mayor has boldly claimed that Old Town-Historic Downtown Elk Grove could be a tourist magnet similar to San Diego's Gaslamp Quarter.
As reported in this June 2023 Elk Grove News story about the mayor and city council's approval of the guarantee, "By guaranteeing the loan, should Slow and Low default, taxpayers can foreclose on Sacramento real property owned by its principals, Michael and Carry Hargis, valued at $400,000, and $100,000 on equipment for the new restaurant."
Although the two establishments appear to be separate entities, it is not known if Hargis used his personal property as collateral for the LowBrau loan as he did with the Elk Grove taxpayers' loan guarantee. If his personal property is collateralized for the LowBrau loan, Elk Grove taxpayers' loan guarantee could be subordinated if LowBrau's finances collapse.
Mayor Singh-Allen, Doan, city manager Jason Behrmann, and Elk Grove City Councilman Rob Brewer have not responded to a Friday email seeking comment on whether the LowBrau financial contagion could spread and put Elk Grove taxpayers' guarantee at increased risk. Slow and Low is in City Council District 2, which Brewer represents.
While Elk Grove hyped the restaurant's June opening, it opened one year behind schedule. When Doan made his June 28, 2023, presentation to get Hargis and Slow and Low taxpayer guarantees, he promised the restaurant would open last summer.
After providing an overview of the loan during the June 28, 2023, city council meeting, Doan told Singh-Allen after receiving funding, "Mr. Hargis will open this summer, and we will all go eat smoked meats."
Speaking at the meeting, Mr. Hargis reassured that he would not let the taxpayer loan guarantee go into default. As evidence, Hargis pointed to LowBrau, which he noted had been in business for 10 years at that point (see Hargis' comments in the video below).
Perhaps the lengthy delay foretold problems already underway for LowBrau and, by extension, Slow and Low.
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6 comments
The city collateralized $100,000 in restaurant equipment. How stupid can they be? It's like using a brand-new car for collateral. Once that car drives off the lot, it loses 20 % of its value. Good luck selling that junk to the Richard Boulevard dealers - they'll give you a dime on the dollar if you are lucky!
As for the $500,000, you can be sure Mayor Bobbie and her punks got something kicked up the ladder to them, and I'm not talking about a slab of Low and Slow ribs!
Good point Sid, plus what is to stop the business owner from taking the equipment out before he skips rent and sell it on the open market? The remaining $400,000 collateral is supposedly from a property at 7001 Garden Highway. If you look at the property on Zillow, it is a vacant lot along the river submerged under water!
IF DJ's statement is correct and I certainly trust him more than I trust what I hear coming out of city hall these days, the city's got another albatross to deal with. It seems as hard as they try this mayor and city council just can't seem to get anything right. Taxpayers pay for their continued mistakes.
According to Zillow, preliminary home plans on stilts were approved by the County for the property in 2022 but never built. If the City has to claim the property, maybe the City can buy a row boat and we can promote the Mayor to Admiral Bobbie!
People, people, people, are we forgetting that Darrell Doan will get free chicken wings for life. Now that is something to cluck about. Doan keeps laying those golden eggs before the Mayor and Elk Grove City Council. It’s only the taxpayers that are smart enough to know they have all been rotten ones!
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