The Chelsea Downtown Development board of directors unanimously approved a request from Smokehouse 52 for inclusion in an REU utility assistance program at its regular monthly meeting on Thursday, Sept. 20.
“This is my chance, my shot in life to build something big and Chelsea is my town,” said Phil Tolliver, the owner of the new restaurant, when offered a chance to talk about the new BBQ business.
With the new venture, he said he’s looking forward to helping Chelsea become an even greater destination for people, adding that he’s gotten nothing but positive comments through his social media updates.
Tolliver said what’s special about his featured type of food is “it’s the whole culture of BBQ,” adding that he’d like to hold special events, such as a cook-off at the Chelsea community fairgrounds.
Thursday’s decision is the next step in a several-step process as plans move forward for the new business. The REU program offers funds for utilities, similar to tax abatements, wherein the DDA pays the city based on an agreement between the owner of the property and the DDA.
It “provides for periodic forgiveness of the installments of principal and interest,” as part of a special assessment district for the property, which would need City Council approval.
The program was first approved by the DDA in April 2011 as a way to attract new businesses and redevelopment to the downtown district to offset some of the costs for utility hook-ups and allocated $300,000 to fund the program in 2011-2012, $350,000 in 2012-2013 and $150,000 in 2014-1015.
It would amount to 1/12th of the original amount of the special assessment plus interest. So, in essence, it’s a special assessment that’s forgiven over 12 years.
This is the first request for assistance through the program that was put in place to assist in redevelopment within the DDA district.
To understand the importance of this redevelopment tool to a new business, the cost of water and sewer is based on a formula called a residential equivalent user (REU) fee schedule, which takes into account the amount of usage, the square footage, and the impact on the cost of operating and maintaining the city’s water and sewer systems.
The previous tenant in the space, the New Chelsea Market, used about 4 REU’s for its business operations, while the new tenant, Smokehouse 52 BBQ is expected to use about 12 REU’s for the about 4,000-square-foot space.
According to the agreement, the DDA shall pay to the city $82,324.82 on behalf of the owner as payment for the increased REU rated services.
“The amount of forgiveness shall be one-twelfth of the original principal amount of the special assessment, plus applicable interest,” according to the agreement.
Tolliver said he’s “pushing to open in November,” and the liquor control board has his application and the county is reviewing his plan.
DDA Chairman Pete Flintoft did not vote on the request stating that he had a stake in the LLC with whom the agreement would be made, and he left the meeting room and turned the proceedings over to Mayor Jason Lindauer for the discussion and vote on the item.
One member was absent — Tim Merkel.