by Joni Astrup
A pizza restaurant’s request for a $90,000 grant has been denied by the Elk River Housing and Redevelopment Authority (HRA). But the HRA did offer the proposed Elk River Pizza Ranch a low-interest loan of up to $90,000. The details will be negotiated by the city staff and, if the project proceeds, brought back to the HRA for consideration.
Robert McDonald of Elk River Pizza Ranch told the HRA at its April 4 meeting that without the $90,000 grant, he would have to scale back the project or look somewhere else.
Pizza Ranch is considering locating in the former Movie Gallery building at 19141 Freeport St. in Elk River. The $90,000 grant was requested to pay for $72,000 in sewer and water availability charges (SAC and WAC) and to help buy adjacent land to expand the parking lot.
Tax Increment Financing (TIF) District 16 is the source of funding for the loan, and would have been the source for the grant as well. TIF allows cities to capture property taxes from development and use the money for specific purposes.
TIF District 16 was created in 1996 for the purchase and removal of blighted structures at the corner of King Avenue and Main Street in downtown Elk River to assist the construction of a proposed office development, according to Elk River Economic Development Director Cathy Mehelich. The original office proposal was later withdrawn, and in 2000 the HRA sold the land for the construction of First National Financial Center. First National did not receive any of the TIF funds as a result of their development, Mehelich said.
Recent legislation allows the city to temporarily use TIF money from that district to stimulate construction or rehabilitation and stimulate job creation.
Elk River Pizza Ranch is an estimated $1.6 million project that McDonald expects would create four full-time and 70 part-time jobs. The former Movie Gallery would be acquired, rehabilitated and turned into a restaurant which would seat 220 people and include a community room.
Paul Motin, a member of the HRA and the city council, said the Pizza Ranch concept is good and it could do well in Elk River. But when the city looked at potentially using TIF funds as grants to entice sit-down restaurants to locate in Elk River, he said it wasn’t necessarily looking for another pizza joint.
“We already have at least eight that I can think of,” Motin said. He indicated that residents are asking for restaurants like an Olive Garden or a Timberlodge — something more unique to the city.
Motin is also worried the Pizza Ranch would cannibalize some of the existing pizza restaurants. “You might be bringing in jobs, but you may be taking them from other places,” he told McDonald.
Motin said he definitely couldn’t support a grant. He and the other four HRA commissioners voted in favor of negotiating a low-interest loan for the Elk River Pizza Ranch.
McDonald, meanwhile, said he’s looked at other concepts and run the numbers on them.
“I’d love to have a nice steak house in town or something like that, but the numbers just don’t support that,” he said.
He also noted that Pizza Ranch doesn’t just serve pizza. It also has chicken, a salad bar, desserts and so forth and is a sit-down family restaurant.
Pizza Ranch is based in Iowa. It was founded in 1981 and now has more than 150 restaurants in nine states.
by Joni Astrup