The Oswego Village Board recently authorized economic incentive and loan agreements designed to bring a higher-end American-style restaurant to the downtown.
“There’s a laundry list of what residents have wanted, they want an upscale restaurant in our downtown … this checks all of the boxes simultaneously. I cannot be happier,” Oswego Village President Ryan Kauffman said.
Trustees voted unanimously to approve the agreements with 4 Guys Kitchen Oswego, LLC, the applicant proposing a “substantial buildout” of a vacant space at 180 W. Washington St. within the Reserve at Hudson Crossing development for a restaurant to be called Ellwood Steak and Fish House.
The applicant was granted approval of up to $340,000 in direct financial assistance along with a $300,000 loan at a 3% interest rate based on estimated project costs of $1.15 million, Oswego Economic Development Director Kevin Leighty said.
“The site is more of a concrete slab that requires a lot more investment to bring it into occupancy standards let alone a full-service restaurant,” Leighty said.
The project is ultimately dependent on financial assistance to move forward, he said.
The proposed tenant, Ellwood Steak and Fish House, is an established restaurant concept with an existing location in DeKalb, Leighty said.
Leighty informed trustees that the restaurauteur finalized a letter of intent and subsequently a lease to take over the vacant corner space within the Reserve at Hudson Crossing development.
Village staff has been working with the group since December when it began looking for available space in Oswego, Leighty said.
The total cost of the buildout is estimated at $905,000. The applicant estimates an additional $100,000 in opening inventory costs and $149,000 in working capital costs for an “all-in total of approximately $1,154,000,” Leighty said.
Leighty said the restaurauteur has secured private financing for up to $300,000 and a tenant improvement allowance of up to $400,000 from the landlord Shodeen.
The tenant has presented proof of up to $150,000 that it is able to contribute in equity for a grand funding total of $850,000, village officials said.
There remained a significant gap of approximately $304,000 that the applicant approached the village about to help make the project viable, Leighty told trustees.
“When we’re talking about that large of a gap, we want to complete a substantial financial review which we did,” Leighty said.
The village secured competing contractor quotes to ensure the estimated build-out cost was reasonable, officials said.
“We also had our independent financial consultants audit our findings,” Leighty said.
Leighty said the applicant’s project budget “was reviewed internally with the utmost scrutiny” and comparisons of construction costs were reviewed and scrutinized as well.
The village staff recommended up to a $340,000 incentive to be paid over a maximum of 10 years. The village will rebate 50% of all sales taxes collected by the village, such as food and beverage sales taxes, that are generated by the business for up to 10 years or until a maximum of $300,000.
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In addition, the village will provide an economic development grant award of $40,000 to be paid upon completion of the buildout. The agreements do include a waiver of village-levied permit fees ranging from $8,000 to $15,000 as well.
The restaurauteur informed village trustees that the plan is to start construction as soon as possible and potentially open before the end of the year.
“The project is expected to produce a substantial amount of tax revenue which would help offset the financial impact of the incentive,” Leighty said.
The restaurant is expected to generate an estimated $500,000 to $1 million in sales taxes over the 10-year incentive term, he said.
“Of this amount, the village would collect half during the incentive term and then an estimated $65,000-$80,000 annually thereafter based on reasonable sales projections,” Leighty said.
The retail tenant space has been vacant since the Shodeen Group’s Reserve at Hudson Crossing building was constructed and opened in 2021, village officials said.
Members of the Oswego Village Board praised the restaurant group for investing in Oswego. The project is also what Oswego residents have wanted over the years, they said.
“We always envisioned a white tablecloth steakhouse. The fact that we are here has been a long time coming,” Trustee Karin McCarthy-Lange said.
“For years, our residents have been saying they want something in our downtown … by the village working with you, we are bringing to light a vision that the community has wanted. I cannot support this enough,” McCarthy-Lange said.
Trustee Jennifer Hughes noted there are provisions within the agreements to protect the village.
“There are milestones they have to meet (and) there is a clawback provision should they not deliver. We are protecting the residents. Not to say that’s going to happen with your track record,” Hughes said about the restaurant group.
Linda Girardi is a freelance reporter for The Beacon-News.