Elk Grove sues Slow & Low founder, seeks foreclosure on Garden Highway parcel
Complicating matters is a recorded lien by small-business lender Balboa Capital.
The City of Elk Grove has gone to court against restaurateur Michael Hargis, seeking to seize and sell his riverfront property to recover nearly $442,000 in taxpayer money lost when his short-lived Old Town eatery, Slow & Low, defaulted on a taxpayer-backed loan. The lawsuit, first reported Monday by the Sacramento Business Journal, was filed June 23 in Sacramento County Superior Court.
Slow & Low opened with fanfare at 9700 Railroad St. in June 2024 after Elk Grove deposited $500,000 at River City Bank as a loan guaranty. According to the city’s complaint, the restaurant stopped making payments two months later, prompting the bank to raid the collateral account for $425,485 in January.Under the security agreement, Hargis must reimburse the city for every dollar it paid the bank, plus 10 percent interest and legal fees.
As collateral for the guaranty, the couple pledged their property at 7001 Garden Highway along the Sacramento River. Elk Grove’s suit asks a judge to foreclose on that land, bar any right of redemption, and allow the city or another bidder to buy it at a sheriff’s sale.
Complicating matters is a recorded lien by small-business lender Balboa Capital. The city contends Balboa’s deed of trust is “subordinate, inferior and subject” to Elk Grove’s claim and wants the court to declare the city first in line for sale proceeds.
In a text to the Business Journal, Hargis said he had hoped simply to deed the lot to the city, “but unfortunately a vendor put a lien on the property.… 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.”
As a matter of policy, city officials refuse to comment on pending litigation.
Slow & Low’s troubles became public in late December, when the restaurant announced an “indefinite” closure for retooling. Elk Grove News reported that the taxpayer-guaranteed barbecue joint would shut its doors January 1, 2025, after just half a year in business.
A follow-up story in January quoted City Manager Jason Behrmann assuring residents that a new tenant, Oakland pit-master Matt Horn’s Horn Barbecue, would eventually assume operations.
The foreclosure fight is only the latest legal headache for Hargis. Separate Sacramento County suits filed last fall accuse companies tied to the restaurateur, known for Midtown establishments LowBrau and Holy Spirits, of defaulting on Small Business Administration and equipment-finance loans. Those cases are unresolved.
Elk Grove’s complaint asks for a court-ordered sale of the Garden Highway property, a deficiency judgment if proceeds fall short, and reimbursement of attorney fees. A hearing date has not been set.
If the city prevails, taxpayers could recoup some or all of the $425,000 already lost, though any competing claims, such as Balboa Capital’s lien, could reduce the city’s share. Under the security agreement, Hargis must reimburse the city for every dollar it paid the bank, plus 10 percent interest and legal fees, which would push the claim to $441,573 and increase by $116.57 per day.
Meanwhile, the Old Town space once occupied by Slow & Low has been reopened as Horn Barbecue and appears to being doing a far better business than Slow & Low.
The entire 88-page complaint is available for viewing below. Also posted below is a video of Hargis's appearance before the Elk Grove City Council, where the loan guarantee was granted.
