The city of Fenton's numbers for Buffalo Wild Wings' sewer tap-ins weren't adding up, and now the president and CEO disputes the $54,740 administrators said he owes.
Fenton City Council will discuss the issue at its July 5 work session.
Someone representing the city allowed the landlords for the property, in 2001, to purchase sewer taps for Buffalo Wild Wings, at the rate of 150 seats, said attorney Chuck McKone, representing Fenton.
A Jan. 15, 2001 letter from Buffalo Wild Wings said plans were for 214 seats, but the restaurant expected a normal crowd of 150. The letter ended with, "We would greatly appreciate any consideration given to this matter. If you have any questions, please do not hesitate to call."
The city official who made the decision in 2001 to base payment on 150 seats did not have authority to waive the fees, McKone said.
Since then, the city has a new manager, attorney and director of public works.
With Buffalo Wild Wings' expansion project that is now underway, it is increasing from 214 to 234 indoor seats, and from 16 to 34 outdoor ones.
President and CEO Michael Ansley, for Buffalo Wild Wings, said the restaurant has been in Fenton for 10 years and employs 55 people, half of them full-time. The remodeling project will cost around $430,000, including $255,000 in construction. New equipment and furniture also is in the works.
Upon applying for the building permit, Ansley was "floored" by the amount of $83,720 for water and sewer tap fees. "My jaw just dropped."
Typically, the developer pays tap-in fees, he said. The property owners in 2001 paid the city $52,800 for the Buffalo Wild Wings location. Now, the property is in receivership, and Buffalo Wild Wings has the bill for the tap-ins.
Fenton agreed to payment based on 150 seats in 2001, Ansley said. In addition, he disputes paying 2011 rates. The issue began in February, and construction was supposed to begin June 6 and was delayed. Buffalo Wild Wings needed to place money in escrow in order to begin. "I can't even tell you how frustrated I am," he said.
Mayor Sue Osborn said Fenton values his business in the city. It has a discrepancy, which it must address. The city has never had this type of discrepancy with anyone else before.
"Everything you see here is making up for money we lost in 2001. We should have charged you for those seats back then," Osborn said.
Ansley said whoever represented the city at the time agreed to the number, and the developer paid it. Now the developer is gone and a bank owns the land. Buffalo Wild Wings is in a tough position regarding the amount of the fee. Fenton has not demonstrated any out-of-pocket expenses or costs incurred as a result of what was paid in 2001, he said.
Instead of determining what did or did not happen in the past, McKone said Fenton knows 41 sewer units are now needed. Twenty-four have been paid for, meaning the difference is 17 units. Today's cost is $3,220 per sewer unit, for a total of $54,740. In 2001, the cost per sewer unit was $2,200. Seven units weren't paid for in 2001.
What to charge Buffalo Wild Wings is a question for council to decide, McKone said. Fenton's sewer fund is a proprietary one, which the city must keep financially solvent. Fenton can't gouge customers and move money from its sewer fund to the general fund. Sewer fund money must stay with the sewer fund, and the city has to protect the fund. Tap-in fees must be fair and accurate.
Since the city is part of the Genesee County sewer system, the county tells Fenton how to calculate sewer units. Based on this, each seat in a restaurant is .16 unit, while outdoor/patio seats are .06 unit. But this doesn't set how much Fenton charges customers per unit. Council decides, by ordinance or resolution, how much to charge per unit, he said. This pays the city back for what it paid the county.
City officials cannot exceed their authority, McKone said. They must, by law, follow the ordinances and cannot exceed them. In addition, Fenton can't use one formula for one business and another for a different business. The city must treat everyone the same based on the units the county established. And to say it didn't collect then, so it won't now, would be a "horrid mistake," he said.
The issue is one for city council — not the city manager or attorney — to decide, McKone said. Council could decide to price the seven units not paid for in 2001, at the 2001 rate of $2,200. "You have to weigh things."
This includes the money Fenton hasn't had the use of, to operate the sewer system. In addition, it doesn't have any interest the money could have gained. He suggested that council decide what it believes the sewer units should cost. His suggestion for council is, to charge today's rates for the first 10 units, minimum.
Osborn said council will discuss it at the 7:30 p.m. Tuesday, July 5 work session, according to its policy. Ansley raised the issue during public comment at the end of Monday's regular meeting.
Councilwoman Cheryl King said there were different seating numbers council saw, for Buffalo Wild Wings. She went over them three or four times. "We have to follow the law," King said. "We have to."
Osborn encouraged council to gather material from Department of Public Works Director Daniel Czarnecki and Buffalo Wild Wings and discuss it at the July work session.
City attorney Stephen Schultz said he was not representing Fenton at the time of the Buffalo Wild Wings issue in 2001. He has a conflict of interest in the issue, so McKone is representing the city on it.