Sacramento Out Thousands In Back Rent From Closed Downtown Restaurant

SACRAMENTO (CBS13) -- A downtown restaurant closed several months ago owing thousands of dollars in back rent to its landlord, the city of Sacramento, but the municipality has no plans on collecting the money.

Jim Harnish owned the Fog Mountain Café at 10th and I streets, just a stone's throw away from City Hall. The restaurant opened more than three years ago and did well initially.

"Oh, it was fabulous," Harnish said. "The place was packed and we were thrilled with the way things were going."

But within months ""the recession hit and the bottom dropped out, " said Harnish, whose business catered to government workers.

"We fell behind on rent. We were paying some," Harnish said.

In two and a half years he owed more than $130,000 in back rent to the city. He never paid it back. But now city officials are letting Harnish off the hook. They're forgiving a big chuck of that debt and completely wiping it off the books.

They did so by buying back some of his restaurant equipment, from salt and pepper shakers to pots and pans. That left harnish owing about $80,000. Money taxpayers will never see again. Officials say it would cost the city a lot more in lawyer fees to take Harnish to court.

"At the end of the day they just couldn't make a go of it," said Howard Chan, parking services manager for the city.

But the situation doesn't sit well with some restaurant owners. Jay Pak is just down the street from Fog Mountain Cafe

"It's kind of tough," he said. "Most of the people don't get nothing."

City officials say its better to cut their losses while they can even if taxpayers are out tens of thousands of dollars in the process.

"The way the city views it is it's better to have a viable space that's active than something go dark," Chan said. "Because if it goes dark it actually exasperates the problem and it causes issues for us to attract new tenants."

It's not a done deal yet. Staff still has to present the agreement to the City Council on Tuesday night. But a new tenant will be moving in. It will be called Big Joe's barbeque.