Industry Impacts Outdoor Seating Charges

The Metropolitan Council assesses and implements what are known as Service Availability Charges (SAC) on restaurants throughout the seven-county metropolitan area. These one-time charges are assessed on businesses to provide access to the regional sewer system. While the Metropolitan Council determines the SAC charges, it is then up to the individual cities to in fact assess and collect the charges.

We learned recently that many cities in the metro area had not been assessing the SAC charge on outdoor seating, which was counter to the Met Council’s understanding of the charge. Upon auditing the cities’ efforts with regard to the SAC charges, Met Council realized this and began seeking to have the cities assess the charge, which is $2,000 per every eight outdoor seats. In some cases, this “new” charge was reaching $40,000 or more.

The Minnesota Restaurant Association joined with a number of other metropolitan businesses to protest the outdoor seating charges. We testified before the council on September 9, as did the cities of Minneapolis and St. Paul themselves. We were successful. Starting October 1, the Metropolitan Council will reduce the outdoor seating SAC charges by 75%.

At the hearing, we pointed out that seating outside simply displaces patrons who would otherwise be inside. In other words, the outdoor seating doesn’t add usage, but moves existing usage from inside to outside. Further, we pointed out that many days of our short summers are unusable due to bad weather and bugs.

The fees go toward capital expenses for the region’s inter-city sewer system. Charges are based on sewer capacity, or how much the system must be capable of handling at peak moments. The formula for restaurants calls for them to pay the SAC charge of $2,000 per eight seats both inside and out. It’s a one-time fee paid when a space is expanded or built.

This fee reduction is a tremendous victory. For example, Terry Keegan closed the patio last year on his Keegan’s Irish Pub to avoid a $7,200 SAC. With the reduction, Keegan intends to reopen the patio next year.

Many of those who testified at the hearing outlined the importance of outdoor seating. It adds to the ambiance of the city. Patios also make the city safer as patrons keep their eyes open for nefarious street activity.

David Siegel, CAE, IOM
Minnesota Restaurant, Lodging and Resort & Campground Assocations