This post was originally published on All We Can Eat.
With North Market Kitchen, chef Bryan Voltaggio’s planned restaurant and market in Frederick, co-owner Hilda Staples didn’t want to repeat the nightmare of Volt’s final push to secure a certificate of occupancy. Back in 2008, with Volt nearing its debut, the city of Frederick socked the restaurant with a $90,000 bill for water and sewage fees.
City officials, Staples says, wouldn’t hand over the certificate without the cash. “It almost closed the doors at Volt” before it even opened, she notes.
Staples hoped to avoid such a situation with North Market, Voltaggio’s ambitious $2 million operation in a former Carmack-Jay’s grocery store in downtown Frederick, so she started researching the water and sewage fees before the owners even signed the lease at 331 N. Market St. It was a smart move: The estimate for the impact fee came in at a whooping $205,543. The estimate is based on the number of fixtures — urinals, toilets, drains, sinks, washing machines, dishwashers — that will be installed in the space, and, as you might suspect, North Market has many such fixtures in its preliminary architectural plan.
“I’d rather cut my losses now than get into a project where I’m paying $200,000 to the city for nothing,” says Staples. “That money that we gave to the city when opened Volt just hurt us so badly, that I was like, ‘It’s never happening to me again.’ It was painful.”
There may be a chance for the city to salvage the North Market project in downtown Frederick, but Staples says Mayor Randy McClement and the Board of Aldermen would need to move quickly to solve the issues. In a letter that the Frederick director of economic development sent to Staples — and she forwarded to All We Can Eat — the city noted “the Mayor’s office and Department of Economic Development are considering legislation to allow for impact fees to be paid over time through a payment plan and an incentive for infill and revitalization projects like this one.” The city is also looking to rewrite its code for sewer and water impact fees.
But those moves could be three to six months into the future, a timeframe that doesn’t work for the North Market team. The problem, Staples says, is that investors have already forked over $1 million, which has just been sitting idly in the bank.
“They’re like, ‘Hey Hilda, you’ve had our money for no interest for a year,’” she says. “‘What are you doing? Either build the restaurant or give us our money back.’”
“I can’t sit on people’s money,” she adds, “and I already have. It’s already been like almost a year.”
Staples and Voltaggio had figured the impact fee would be about $100,000, which their landlord, Norman Jemal of Douglas Development, had agreed to split. But when the estimate was double that figure, the North Market team doubted they could justify the costs, even if the fee was divided between tenant and landlord.
“At $200,000, [Jemal is] going to pay 70 percent of it?” Staples says. “I can’t even ask him to pay 70 percent of it. That’s a lot of money. That’s a lot of money for anyone, and I don’t even believe in it.”
“I didn’t fundraise and spend that much effort to just hand over $200,000 of it to the city, just for some fees that don’t make sense,” Staples adds. “That’s not a responsible way to spend this money we raised. We need the money for payroll and for food and for vendors and for alcohol and everything that goes with opening a restaurant. I understand that you have to pay some fees, but 10 percent of your build-out costs to go for some random nothing? It doesn’t make any sense, and it’s not right.”
Josh Russin, the executive assistant to the mayor, says the impact fees are not random and cover important public services, such as supplying and treating water for residents as well as building more infrastructure so the city can grow. Russin also notes that some cities have higher usage fees and others have higher impact fees; a jurisdiction has to make a decision where to get its money — up front or in usage fees. (He promised to send All We Can Eat a comparison of water and sewer fees from surrounding jurisdictions, which we will then publish.)
Those upfront costs in Frederick, however, would drain too many of North Market’s resources from the outset, Staples says. Plus, those fees are just not found in other jurisdictions outside of Frederick.
“The problem is, it’s Frederick,” Staples notes. “We’re not on an island, where we have no other choices. We have choices. We can go elsewhere. I can go to D.C. These charges are not in D.C. They’re not in Frederick County.”
But before North Market moves to another location, it must talk to its investors, who are homers for Frederick. “They’re town people,” Staples says. “They’re not only investing in us, but they’re investing the future of downtown [Frederick]. This is the project that everyone wants to see happen. So...we’re going to have to pitch them again and say we have a new idea.”
The chef behind North Market is confounded by the way Frederick does business.
“I mean, I understand that the city needs to [upgrade] its infrastructure,”says Voltaggio. “But if they were to put a Gap in there, for example, in this space....they would have to put a bathroom in, so the impact would be very minimal. They also wouldn’t have 65 to 85 employees who would be paying downtown income tax and then also generating our new 9 percent sales tax on liquor for Maryland.”
“It’s very disheartening,” he adds. “I’m looking at this from a global standpoint as far as everybody doing business in Frederick who are involved in restaurants. How is this fee going to impact them? So far it’s nothing but negative.”
Incidentally, Voltaggio is still moving full steam ahead on his bistro at Chevy Chase Pavilion, where the chef will offer his own twist on a steakhouse: one using off-cuts of meat.