ELK GROVE, CA (MPG) - The City of Elk Grove is seeking to recoup $425,000 following the revelation that the now shuttered Slow & Low Smokehouse, a restaurant that had been positioned as a key part of the city’s Old Town revitalization effort, defaulted on a city-backed loan. 

Sacramento restaurateur Michael Hargis opened the restaurant in June 2024 with financial backing from the city in the form of a $500,000 loan guarantee through River City Bank. But after just six months in business, Slow & Low shuttered in late December. 

City Manager Jason Behrmann confirmed at a city council meeting on April 9 that Hargis defaulted on the loan and the bank retained $425,000 of the city’s pledged collateral. Behrmann said the city is taking legal steps to recover some of the funds by starting foreclosure proceedings on a Sacramento County property offered as a collateral by Hargis. 

“Slow & Low defaulted on the loan, [and] the bank retained $425,000,” Behrmann said. “The city intends to pursue foreclosure against property pledged by Hargis as collateral.”

Despite the setback, Behrmann pointed to progress in the Railroad Street corridor, including the anticipated opening of Horn Barbecue, which will take over the former Slow & Low space. He said Horn Barbecue recently conducted a hiring event and plans to open soon.

“One of the big things we intended to do with Railroad Street was serve as a catalyst for activity that is happening in our historic main street,” Behrmann added. “We are really proud to see the energy and vibrancy that has occurred as a result of the work that the city has done and what the city has done.”

Not all residents are convinced the investment was worthwhile. Elk Grove resident Lynn Wheat expressed concern about the use of public funds and what she perceived as a lack of transparency around city-backed ventures. She spoke during public comment before Behrmann revealed the new development. 

“Unfortunately, we are losing,” Wheat said. “The city put up half a million collateral with the bank; the bank is keeping $425,000 of it.”

She questioned what additional costs might arise as the city moves to recover funds. 

“How much are we going to lose going through the process of foreclosure, because I’m sure we are not the only one in line,” she said.

Wheat, who has long voiced concerns about city spending, also referenced the original promises tied to the Railroad Street project. 

“We were told this economic plan was going to be a big boom, bring jobs, bring lots of activity to Old Town. We, the taxpayers, are losing. It’s always easy to spend someone else’s money, until it is gone,” she said.

She also brought up the budding Elk Grove – Sacramento Zoo and the city funding tied to the project. 

The zoo is a collaborative effort between the City of Elk Grove and the Sacramento Zoological Society to relocate and expand the Sacramento Zoo from its current location in William Land Park to a new, larger site in Elk Grove. The proposed zoo will span approximately 65 acres and is planned to be built in multiple phases over several years.

Funding for the $302 million project includes contributions from the City of Elk Grove, which has identified $239.8 million through development impact fees, city funds and bond financing. The Sacramento Zoological Society is responsible for raising an additional $50 million, with efforts underway to secure the remaining funds through community partnerships.

The relocation aims to provide a modern zoo that can accommodate larger habitats and a greater number of species. The new facility is expected to significantly boost regional tourism, with projections of up to 1 million annual visitors and the creation of approximately 250 jobs, according to city officials.

Phase 1 of the Elk Grove – Sacramento Zoo is anticipated to open to the public as early as 2029, contingent upon the successful completion of fundraising and construction milestones.