Do I sue? What a mess!

[Rich Weese]

I've mentioned that I bought a 154 unit building about 9 months ago. They are located on 2 streets 68 on one and 84 on the other. There are 2 water meters on the 68 and 1 meter on the 84. Tenants are billed back the water bill proportionate to their size. Worked very well. Until a couple weeks ago. Somehow, City of Garland had NO RECORDS for the single meter! They had not been charging anything for the meter that services the 84. Now they caught it.
Been negotiating with them for couple weeks. They wanted to back charge for 5 years! I can't backcharge tenants, so I'd be stuck with it. After a lot of stress, they have offered a "deal" for paying from Jan 1, 2010 in the amount of 16K. I'd have to try to recapture from the tenants their %.
The other building tenants have also received a bonus for all this time because the 2 meters have been prorated among ALL 154 units! I contacted an attorney and have been told I'd spend quite a few bucks in the lawsuit. I hate lawyers, but City won't budge anymore, and I'm a very good negotiator. Do I sue? I may lose more and there has been a LOT of free water even before I bought it.
I've been thinking about this for a couple days. I doubt anyone has a similar deal to discuss, but feel free to chime in. I'm leaning toward the settlement. They'll allow payment over 12 months.Rich