Trey and Deanne Skinner knew opening a restaurant involved significant start-up costs.
Leased space on Broughton Street.
Redesign and remodeling of what was an automotive repair shop.
Even the dining room tables, custom-made with pancake griddles in the center, represented heavy investment.
One bill surprised these first-timer entrepreneurs, though.
To open their 68-seat, 1,600-square foot eatery, to be known as the Funky Brunch Café, they must pay the city of Savannah’s Water Services Bureau $20,772 in water and sewer fees.
“And it’s not like they have to put in new pipes or even a new meter,” Deanne Skinner said. “You go in there now and the faucet works and the toilets flush. It’s pretty steep and obviously impacts the business plan for a small operation like ours.”
The Skinners’ plight has renewed cries in Savannah’s small business community about the city’s perceived anti-business attitude. For all the progress made in the last year through personnel and policy changes under new city manager Stephanie Cutter, the city still shows draconian tendencies, business leaders say.
The Skinners’ water-sewer fees puzzled even Alderman Van Johnson.
“We can’t say on one end that we want small businesses to invest and open in Savannah and on the other end make it cost-prohibitive to do just that,” Johnson wrote in an email.
Complex calculation
The city is not price-gouging the Skinners.
The fee structure is standardized. A confluence of factors contributed to their high water and sewer fees. Call it the pricey storm.
The city’s revenue ordinance lays out the costs. A new business’s “tap” and “connection” fees are calculated based on anticipated water and sewer use.
In the case of the Funky Brunch Café, the fee involves the number of seats. The restaurant is rated for 89 seats — the 68 physical chairs plus 21 more to account for staff — with each seat utilizing 20 gallons of water per day. The restaurant will therefore generate a “flow” of 1,780 gallons per day.
The flow is then divided by 300 gallons, which is the average amount of water used daily in a single-family home, known in the water-sewer business as the “equivalent residential unit” or “ERU.”
The math results in 5.93 ERUs for the Funky Brunch Café. That number is then multiplied by the cost per ERU laid out in the city’s revenue ordinance for water tap-in, sewer tap-in, reclaimed water connection fees and the treatment plant fees.
The total is $21,348. From there, the city calculates a credit for businesses going into pre-existing properties. The credit amount is where the Funky Brunch Café’s case gets funky.
The café’s location, nestled on the northeast corner of Broughton and Lincoln next to the Blick art supply store, has long been vacant but was previously an auto repair shop.
The owner of that store paid tap and connection fees when he opened, but his ERUs were much lower — a garage uses significantly less water and sewer than a restaurant — resulting in just a $576 credit for the Skinners. Hence, the $20,772 charge.
Had the Skinners chosen the site of a former restaurant or some other water-intensive business, their credit would have been larger. In fact, the Skinners may not have paid a dime in tap or connection fees, says John Sawyer, the city’s public works and water resources bureau director.
“It’s tough,” Sawyer said, “but until somebody tells me differently, I have to apply the ordinance evenly to everybody.”
Paying for infrastructure
Savannah’s approach to water and sewer fees is the norm.
Water and sewer services operate essentially as a private utility, like Georgia Power or AT&T. Sawyer’s bureau receives no tax money for water and sewer operations or infrastructure.
Consumption fees — what’s collected through the bi-monthly bills — cover operational costs. But it is the tap-in and connection fees that fund the infrastructure and upgrades, including the debt service on bonds issued to build the treatment plant.
“They’re called tap-in fees, but they are better described as capital recovery fees,” Sawyer said. “We don’t turn a profit here. Everything we take in goes back out.”
The other options to paying for water and sewer infrastructure, such as annual property tax assessments or a monthly fee imposed on users, would place the burden on homeowners.
“The attitude here and in communities across the country is business pays its own way,” Sawyer said.
The only businesses that pay the capital recovery fees through other means are large ones that employ 200 or more full-time workers. Businesses that qualify for the “alternative new employer economic development rates” don’t get a break, however. They pay the tap and connection fees over time on their monthly consumption bills.
The city allows the large businesses to pay in installments because there is little risk they will shutter before the tap and connection fees are recouped. Small businesses, restaurants in particular, are just as likely to close after 100 days as 100 years.
The Skinners’ situation underscores the importance of research for would-be business owners.
The city employs a development service liaison as well as a business development coordinator, both of whom can outline the permitting process and potential costs. Sawyer and his staff are also readily available to answer questions.
“It’s no coincidence that for real estate developers and other design professionals, water and sewer is their first stop, often before they even put in an option on a property,” Sawyer said. “We’re here to work with you.”
As for the Skinners, they praised the city staff. The business development coordinator, Rob Davis, “has been wonderful,” according to Deanne. But the city employees lack the ability to adjust their water and sewer charges.
“Everybody has been very helpful and concerned, but nobody has any control,” she said. “We’re either going to have to pay it or not open.”
CITY RESOURCES FOR NEW BUSINESSES
The City of Savannah’s revenue ordinance lays out the fees for new businesses and can be viewed at www.savannahga.gov/revenue. Business Development Coordinator Rob Davis can be reached at 912-651-3653 and Development Services Liaison Christy Lawrence’s telephone number is 912-651-6510.