And for the paywalled:
Article:
The city of Elk Grove has filed a lawsuit against the former owner of barbecue restaurant Slow & Low, seeking to foreclose on a property used as collateral for a city-backed loan.
Slow & Low, operated by local restaurateur Michael Hargis, opened at 9700 Railroad St. in Elk Grove in June 2024 before shuttering at the end of the year. To help open the restaurant, Hargis received a $500,000 loan through River City Bank that was guaranteed by Elk Grove and secured by a residential property at 7001 Garden Highway in Sacramento owned by the restaurateur.
Hargis allegedly defaulted on the loan in August, prompting the lender to remove approximately $425,000 from a collateral account to satisfy amounts due by the borrower, according to lawsuit filed in Sacramento County Superior Court on June 23. The city alleges that under the terms of the security agreement, Hargis is required to pay the city all sums expended or expenses incurred by the city for the default, which totaled approximately $442,000 as of June 17, the lawsuit claims.
The residential property used as collateral, however, has a recorded lien from small business lender Balboa Capital, according to the lawsuit. Representatives with Balboa Capital did not respond to requests for comment. Elk Grove is seeking a determination by the court that Balboa Capital’s lien is inferior to the city’s rights to the property, and that the deed of trust be foreclosed by the court, with the proceeds of the sale going to the city, according to the lawsuit.
Hargis said he’s held several talks with Elk Grove’s city council regarding the matter and was aware the lawsuit was coming.
“I had planned on just handing the lot we used as collateral over but unfortunately a vendor put a lien on the property,” Hargis said in a text message. “The only way for the city to get the lot unencumbered was to file suit. Neither of us are happy that this route needed to be taken.”
Representatives with Elk Grove did not respond to requests for comment.
The former Slow & Low space in Old Town Elk Grove has since been replaced by Horn Barbecue, which also has locations in Lafayette and Oakland and is led by pitmaster Matt Horn. Around the same time Slow & Low closed, Hargis shuttered his Sacramento restaurant Beast + Bounty, citing “financial challenges.”
Hargis was also involved in other popular restaurants and bars on Sacramento’s grid including LowBrau and Holy Spirits. The restaurateur was named in separate lawsuits last fall accusing him and the ownership group of defaulting on Small Business Administration loans and equipment finance loans. Those suits appears to be ongoing in Sacramento County Superior Court.
The Business Journal reported in March that both LowBrau and Holy Spirits were in the process of being acquired by a Bay Area-based group comprised of Mark Milz and Benjamin Seabury. The deal was still in escrow as of early June.
