Highlights of the Fort Smith Board of Directors Meeting 12/12/23

The Fort Smith Board of Directors study session meeting held 12-12-23 began with a presentation from the Community School of the Arts about their plan for their facility being built on Riverfront Drive and a request from them for the City to donate a total of $1 million to the school over a period of 10 years. In addition to its primary purpose of being a charter performing arts high school (the first such school in Arkansas), CSA plans to host an annual national arts festival and a minimum of 100 shows and concerts per year. Rosilee Russell with CSA mentioned the role the school plays in development of the Riverfront area and that the school would provide an additional high school to serve population growth from the upcoming Foreign Military Sales project. She also mentioned the estimated $10 million in tourism related economic impact of the arts festival.

There was no discussion from the Board on the matter.

The Board had a joint meeting with members of the 64.6 Board in relation to their contract with the City to provide downtown services.

Director Rego asked about their plans and challenges foreseen for 2024. 64.6’s Mitch Minick responded that they are focusing many of their plans for 2024 around Mainstreet Arkansas’s main strategies for organization, design, promotion and economic vitality. Chase Garrett with 64.6 mentioned plans for 2024 including The Unexpected, beautification projects, and promoting the preservation of buildings.

Director Morton mentioned being “very positively impressed by” the activity that he witnessed on Garrison Avenue on a recent evening. He expressed that he felt like in that neighborhood “restaurants and bars and some office buildings” are successful and retail is “not really something that is expanding”. He suggested building off of the “strong evening activity” of the music venues and entertainment and restaurants. He mentioned the importance of a vibrant downtown on bringing in and filling housing north of Garrison. Garrett said that there is a situation where businesses need housing, but housing needs businesses. He expressed a need for a “more diverse mix” of businesses than are operating downtown currently. He said “Retail can come back” but that it “will take a little bit of seed money and investment.” He mentioned that 64.6 has been working with shopkeepers to encourage them to light up their shops in the night even if they are closed to help give pedestrians passing by at night displays to look at while walking by.

Director Morton called Fayetteville’s downtown “vibrant” and mentioned noticing that their retail shops are open late on certain nights. Director Settle agreed that shops stay open late in other downtowns. He mentioned recent well-attended events in Van Buren. He expressed a desire to have a more coordinated effort to attract people to downtown outside of huge events like Pub Crawl, Peacemaker, and Steel Horse Rally. Minick said “I couldn’t agree with you more.” He talked about the challenges 64.6 has faced in encouraging shop owners to stay open after 5PM because it “doesn’t make financial sense for them to stay open” but that that is a “chicken or egg” type problem.

Director Settle suggested having the Christmas parade at night. Minick said that the Christmas parade almost went away entirely after having lost its sponsor but 64.6 facilitated new sponsorship. He called the night parade idea a “great suggestion to take to the sponsors.” 64.6’s Talicia Richardson said that the idea has already been presented to the current sponsor but that they prefer to have it during the day.

Director Good praised the Levitt Amp music series of free concerts at Harry E. Kelley Park calling it “fabulous”. Minick added that 64.6 has secured the series returning in 2024 and 2025. In 2024, it will be split into a spring set and a fall set of concerts. Director Christina Catsavis asked if attendance was improved by the splitting into an earlier and later set of concerts in 2023 instead of the continuous set through the heat of summer in 2022. Minick said that attendance was “flat” but that they did receive positive feedback about the change.

Director Good praised The Unexpected and 64.6’s contribution to the establishment of the form based code. He said “We see the work” and “understand there is a huge challenge.” He asked 64.6 to describe their relationship with the City. Minick praised the non-contractual relationship with the City, the way the departments including Parks, Sanitation, Planning, and Transit coordinate with 64.6. He said the service contract in 2023 has allowed for a “steady stream of funding” to allow for things that included staffing, the Downtown Guide, the Cisterna Park Christmas display, and maintenance of the statues in Gateway Park. Richardson mentioned that grants including those through Mainstreet Arkansas helped pay for things like individual expert technical assistance to businesses to help enhance visibility, the canopy over the amphitheater, and banners on Garrison. She expressed frustration that when grants were available during Covid that of the 20 retailers that were approached that would have been suited for grant money, only 3 applied for the grants.

Director Good expressed the priority that is being put on reducing blight and asked if the money being spent on the 64.6 service contract might be better spent on fighting blight and increasing affordable housing. Minick, who is also head of the Fort Smith Housing Authority, said that it “can’t be one or the other”. He said that with the City’s access to HOME and CDBG funds and other sources of funding that there are other avenues to find a way to help reduce blight. He said that Mainstreet Arkansas and the general fund are a better place for the funds to come from for downtown.

Director Martin asked about 64.6’s role in reducing homelessness. Minick said 64.6 “absolutely supports and works with” organizations working to address that issue including Hope Campus, Next Step, and Salvation Army. When property owners contact 64.6, 64.6 contacts those organizations to find solutions. Director Martin asked about buses regularly dropping off homeless people from other cities into our downtown. Minick responded “I couldn’t speak to that.” but said that he has also heard rumors about that occurring. He said “I don’t think 64.6 is in a place that’s something we can focus on.” Director Martin said “We need you guys to actively fight it.” Minick said he “would absolutely be open to suggestions to share with partners that work on that issue.”

Director Martin asked about 64. 6’s relationship with property owners. Minick described a “strong relationship with property and business owners downtown.” He said that for a lot of them Richardson is their “first phone call.”

Director Martin mentioned that the connection between 64.6 and Mainstreet Arkansas facilitiating a potential for grant opportunities was one of the main reasons for establishing the service contract. He asked about the return on investment and the amount of grants received so far. Minick mentioned $40,000 for bus stop shelters featuring art, $87,000 in grants for the Levitt Amp concert series, and $2000 of the $5000 for the downtown Christmas display coming from an in-kind donation from a local business owner. Director Morton mentioned that the City has recently hired a full-time grant seeking employee. He urged 64.6 to contact the City if they see a grant available that is not a 64.6 thing that the City might want to apply for.

Director Morton suggested that 64.6 coordinate with the Advertising and Promotion Commission and downtown retailers and the US Marshals Museum during big conventions at the Convention Center to have extra open hours.

Mayor McGill called 64.6 “vital to the future of not only downtown” but the city as a whole.

The Board heard and discussed the results of the recently completed study of water rates and proposals to raise rates.

Dave Naumann with Burns & McDonnell that conducted the study mentioned that costs for water are going up nationwide to accommodate for factors including use per account going down reducing revenue (conservation and low-water-use appliance were named as two causes of the reduced usage), inflation raising the cost of materials and labor, capital costs from replacing and repairing aging infrastructure, and costs of complying with more stringent water quality regulations. He said that Fort Smith water rates have not gone up since 2011. There were however, drastic sewer rate increases in 2015, 2016, and 2017. He called the average household water bill in Fort Smith “relatively low” in comparison with other cities regionally and statewide. He presented two proposals, one with a rate increase (there would be a 50% water rate increase in 2024 and smaller annual increases every year thereafter) plus a 20 year long .5% sales tax. The sales tax would be estimated to bring in $14.4 million annually. The other was a proposal for a series of higher annual rate increases that would not include a sales tax and would utilize bond debt more heavily. Both proposals would also include raising the base charge for wholesale customers to the same as retail customers.

City Administrator Geffken mentioned that a sales tax would result in out-of-town residents that come into the city helping fund the water, lessening the burden on just Fort Smith residents.

Director Morton asked for a timeline in which the projects (including the Lake Fort Smith transmission line) could be completed to provide good water pressure to the entire city if the rate increases were approved and the sales tax were passed . Utilities Director McAvoy answered that it could be finished at the end of 2026 to sometime in 2027.

Director Settle pointed out that in the comparison with water rates of other cities and nationwide that the sewer rates were not included in the totals being compared. He said that if the sewer rates were added in that Fort Smith would not likely be on the low end of the comparison. He expressed his view that most citizens don’t perceive their utility bill in terms of the separate water bill, sewer bill, and sanitation bill, but rather as one unified bill. He also said that if rates are raised people will use less and the outcome will be a net revenue that is less than expected.

Director Settle asked if City would have enough water if they were hypothetically to no longer have any out of town users. McAvoy answered that while there would still be significant challenges getting enough pressure to the East side of the city, that there would be. Director Settle called the challenges in delivery to the East side “minor in comparison” to the expense of running the 48 inch Lake Fort Smith transmission line. He said “It’s our water.” and the “outside rate is way too low.” In addition to focusing on the rates for outside users, he suggested that a cap on water rate raises for a period of time like the one included in the recent consent decree sewer tax be included with the water sales tax. Director Rego said he was “certainly in favor of adjustments” for outside water users but not in favor of leaving them without water service or pricing them out. He called that “not humane.” Director Morton said that outside cities that rely on Fort Smith water would “get an injunction in one day” stopping the shut off.

Director Morton said that the proposed rate increases are in keeping with what state law Act 605 says that every responsible city should be doing. Fort Smith has received an exemption from having to comply with Act 605 because of being under the federal consent decree. Morton mentioned that Greenwood recently raised their rates by more than the rate increase being proposed for Fort Smith. He said “Every city in this area is facing the same problems.” He reminded of the times when the Board at the time didn’t do anything on funding sewer repairs and improvements, that eventually resulted in ending up under the consent decree. He said “It’s an obvious answer, we have to do something” to make sure to have an adequate water supply.

McAvoy said the proposal is brought with a “sense of urgency” to continue to find a way to provide water while having the least financial impact on customer bills. He said that the preferred proposal, the one that includes the sales tax, would result in an increase of $16 dollars a month over 5 years for a household that uses 5 CCF per month (an average number for a typical household). It would raise rates to the outside customers to the South (based on the higher cost of service to deliver water) enough to result in higher rates for them than for Fort Smith residents.

Director Christina Catsavis said “We know people are struggling.” She expressed a desire to do something to help minimize the impact for residential customers. She suggested changing the base rate tiers so that instead of the first tier being 1-5 CCFs that it would be 1-7 CCFs. She said that her family of 3 uses over 5 CCFS. McAvoy said that 1-10 CCFs would all have to go up to meet the cost of service and that the plan is already built so that the more you use the more you pay. He added that 1-5 CCFs is the standard residential use. Geffken said that the 1-5 tier was designed especially with helping the lower income people in mind. He also suggested that the threshold to qualify for Project Concern could be increased from 165% of the federal poverty line to 200%. Currently there are 625 people participating in the Project Concern program. Director Settle said that many residents are “too proud to be on Project Concern” and that instead of expanding that program so that “half the city” is on Project Concern that they find a solution that is “fair and equitable for everybody.” Director Morton said many people “are struggling” but “we’re in a hard spot here.”

Director Martin said “I’m for looking to the higher tiers, commercial, industrial, and outside cities.” Naumann said that the residential class is “impacted the least” in the proposal.

Director Christina Catsavis asked what would happen if the sales tax did not pass. McAvoy answered that they would have to raise rates at a higher level.

Director Settle expressed concern about the percentage of tax money that would be going to debt service. Naumann said that debt funding is necessary. Director Settle pointed out that the Streets and much of the consent decree sewer work are funded without debt.

Mayor McGill said “We’ve created an amazing water supply” and are experiencing growth but that “going without the essential is not an option.”

Director Martin asked about the timeline for the proposal. McAvoy said that there will be an item on the agenda for next week’s Board meeting to vote on the proposal featuring the rate increase with the sales tax. If approved at that meeting the increase could go into effect January 1 for Fort Smith and April 1 for contract customers. Geffken added that the calling for the sales tax vote would need to be approved at the next meeting to get it onto the March primary ballot or else the next opportunity would be the November general election ballot. Director Rego said “I generally support this” but “I don’t support a jam job between now and March.” McAvoy expressed support for getting it onto the March ballot because if it were approved on the November ballot, the City would miss out on half a year’s worth of sales tax. Director Morton pointed out that if they were to vote at the next meeting to put the sales tax on the ballot, they could decide on the rate increase later if they wanted to, and if they decided to not go forward with the sales tax after all they could still pull back the election on it later. But if they don’t get the sales tax approved to be on the March ballot, they would miss that window. Director Christina Catsavis said she is a “fan of sending things to the people” and would support sending the sales tax to the ballot at next week’s meeting.

Director Settle asked how much sales tax would be needed to not need to do any rate increase. Geffken said that they didn’t calculate a proposal for that because state law caps municipal taxes at a maximum of 3% and Fort Smith is already at 2%. Director Rego said that a sales tax only approach would cost people more out of their wallets than the proposed plan that includes a rate increase.

Director Good said “We have a need” and “We haven’t been keeping up with our rates as far as covering the cost” but expressed the importance of looking for a solution to “protect our most vulnerable.”

In the Citizens Forum section of the meeting, Fort Smith resident Holly Grimm spoke regarding a issues with neighbors parking in the area of her property near the sidewalk that is a City easement but that she’d until recently been under the impression that it was still her property and that it was her responsibility to maintain it and that she could tell people not to park there. Problems have arisen with neighbors parking there and being loud and “obnoxious” and killing 2 of her cats with poison and possibly poisoning her dogs. When the neighbors called the police because she told them not to park there, the officers who responded said that it was City property from the sidewalk to the street and that the public could park there. She asked for clarification and/or help with the issue. Mayor McGill and Administrator Geffken assured that they will coordinate with Neighborhood Services and/or the Police to address the issue. Director Good agreed that there is often a lack of clarity regarding easements and rights of way because there are so many “different layers” of rights of way and easements. Director Morton added that “if rules don’t make sense…we need to change the rules.”

Johnathan Griffin, owner of Royal Ridge Construction, spoke requesting that the issue regarding the contract for consent decree sewer work that was tabled at last week’s meeting be added back onto next week’s agenda to be approved as originally presented. The issue was tabled following a memo from some of Royal Ridge’s local company competitors seeking to have the project rebid so that they could participate in the bidding (after having not submitted bids previously for the project, only Vortex had submitted a bid). Vortex partners with Royal Ridge. The Board was unaware that 50% of the work on the project would be performed by local company Royal Ridge. Director Morton said Vortex still might end up the contractor, that the Board wants to consider breaking the project into multiple smaller contracts to get more bids. He said “we did not know any local company was involved.” but that that would not have made a difference for him on his vote to table the issue. He said “We’re committed to moving quickly on this.” and “You’ve raised many valid points we have to consider.” Director Christina Catsavis asked how many employees Royal Ridge has and if they had turned down other projects in anticipation of the project and if there would be layoffs if they do not receive the contract for the project. Griffin answered that they employ 80 people and that they have worked exclusively on bidding, scheduling, and preparations for the project in order to be able to start immediately on it and there would need to be layoffs if they did not receive the contract. Director Christina Catsavis said that she supports doing business locally and that Griffin has “certainly given me a lot to think about.” The contract that was tabled last week will be put on next week’s agenda.

Fort Smith resident Drew Smith spoke in support of the proposed water rate increases. She said that Fort Smith is “hiding behind” the Act 605 exemption and “kicking it down the road.” She said that she would be “more than happy to pay $5 a month to have water in 5 years.” She said that there are citizens who are OK with paying a higher water rate.