Highlights of the Fort Smith Board of Directors Meeting 12/5/23

At the Fort Smith Board of Directors meeting held 12-5-23, the Board voted to contract with Baker Tilly US for an estimated total cost of $10,000-$15,000 (at a rate of $235 per hour) to perform a third party review of the disputed findings in the Fort Smith Animal Haven audit. To save on travel costs, the review will be performed virtually rather than in-person.

Fort Smith resident Johnnie Rogers spoke in opposition to the audit review. She asked “Why are we doing that?” and expressed opposition to the expense of the review. She said City Internal Auditor Shockley “did the job you asked her to do”. She said “We’ve got the information we were looking for, be it good or bad.” Rogers also asked Director Rego to recuse himself from the vote on the issue because he is employed by ACHE and Fort Smith Animal Haven’s Brenda Altman serves on the ACHE Board of Trustees and asked Director Morton to recuse himself because he serves on the ACHE Board with Altman.

Director Good said “I am totally in agreement with Mrs. Rogers.” He said that the auditor did what they were asked to do. When there were questionable findings found, they were given to FSAH and there has been discussion. From correspondence back and forth between the City and FSAH, Good says he has seen that FSAH is willing to pay what they owe and uphold policies and procedures as recommended going forward. Good said that other than the expense of the review, the only result of the review would be that a third party could say that neither FSAH nor City Administrator Geffken did anything “nefarious”. It could clear their names. Good said that he visits the animal shelter and has watched their volunteers. He said that FSAH is providing a service “no one stepped up to do”. He said that “non-profits are hard to run.” He said “I want to move forward.” and “Let’s wash our hands of this.”

Fort Smith resident Mel Winker spoke and encouraged Directors Rego and Morton to recuse themselves from the vote because of their associations with ACHE. She also spoke in opposition to the audit review saying there is “absolutely no reason” to spend taxpayer money on it and calling the audit that has been completed a “comprehensive audit”. She agreed that non-profits are difficult to run but said that for the million dollars per year in tax payer funds paid to the shelter through the service contract “we can ask them to perform correctly.”

Director Rego did not recuse himself saying that it was “not an issue that deals with ACHE” and that the ACHE Board of Trustees has members “in all sorts of fields.” Director Morton also did not recuse himself saying that he has no financial interest in ACHE and that “If I recused from every item I know someone on a board, I wouldn’t be able to vote on anything.” and “We all know a lot of people.” He supported Director Rego’s decision to not recuse himself adding that the ACHE Board of Trustees has very little to do with employees like Rego. Director Christina Catsavis encouraged them to recuse saying that it was “highly emphasized” to her early on in her term on the Board that “even the appearance” of a conflict of interest is to be avoided.

Director Morton said “I wish we could dispense with this audit.” but that we “cannot get to that place until someone completely independent” makes a decision regarding whether the total owed to the City by FSAH is $42,000 that the City says is owed or the $14,000 FSAH says is owed. He said that the City would try to get FSAH to agree to help pay for a portion of the third party review. He said that the fee Baker Tilly charges is “very low” for similar audit services. He reminded that the Board already voted in September to have a third-party review conducted and that the vote at the current meeting is only about who to hire.

Director George Catsavis asked Finance Director Richards for clarification whether there is any connection between Baker Tilly and anyone at the City or the animal shelter. Richards responded that there is “no connection at all.”

Director George Catsavis said “I blame the majority of this on the City not keeping track of the shelter’s expenses” and that the City “should have been on top of this every month.” He expressed concern that if the Board approves the review that in the future everyone who is audited will also ask for an additional independent party review. He said the Directors can make a “fair and equitable decision” and “decide what’s owed and not owed and move forward.”

Director Settle was surprised to hear that the current figure the City says the shelter owes is $42,000, with the last figure he had heard being $101,000. Director Martin agreed that this was also the first he was hearing of the lower figure. Director Rego said that in an 11-16-23 email when he asked Shockley for an update on the discussion between the City and the shelter he learned that through the discussion process between the parties adjustments had been made and the amount the City says it is owed has been reduced to $42,852.

Director Martin expressed concern about the accuracy of the review with the inability to control what info is submitted by both parties to Baker Tilly. He said that there are “just too many questions and concerns” and “It’s time for us to move on”. He said that there are “too many things that will never be right” if we pass it off to a third party. He said the “Goal is to go back and change those procedures and processes that were being done and move on.” He suggested that no review be done and that the audit issue be ended and that a remediation audit be conducted in 2024 or 2025 to know if anything found in the previous audit got corrected.

Director Morton said that both parties would have opportunity to submit whatever materials they have. He said that “CPAs aren’t going to wade into veterinary decisions.”

Director Martin said that the third party review “undermines our internal auditor” and said that the internal auditor “just looks at the interests of the City” to make sure vendors are meeting the terms of their contracts.

Director Good questioned how the Board would get a right answer on what’s being owed. He said “Conversation is being made. People are communicating. We are compromising.” He said the audit went too deep because it was the first one that Shockley has done on a non-profit. The City Internal Auditor normally audits City functions. He said the services contract doesn’t “tell FSAH how to function.”

Director Rego agreed with Good. He said what you hope for in an audit is “positive change” and “if there are financial penalties, those are paid.” He said that FSAH is the “only entity providing very necessary service.”

Director Rego asked Finance Director Richards how long the review would be expected to take. Richards did not know. Director Morton said that based on the price estimate, Baker Tilly is expecting it to be 40-60 hours of work, not weeks and weeks.

Director Morton said that FSAH has plans to build an efficient modern new shelter but those plans are being held up because some major donors to that project will not commit until the audit issue is resolved.

Director Settle asked “How do we get finality on the dollar amount on this?” Director Martin answered “zero disputed dollars” and suggested just moving forward without any repayment of any money from any of the findings in the audit and then conducting a remediation audit in 2024 or 2025.

Director Good said of FSAH, “helping them meet their goals will help us meet our goals” and the “end goal realistically is the viability of the program we’re working with.”

Director Rego asked if there was any interest from the Board members in a resolution to be voted on at the next meeting expressing appreciation for all of the parties involved including the internal audit department, FSAH, and the community for staying engaged on the topic. Director Christina Catsavis responded “No.”

The contract with Baker Tilly for the review was approved with Directors Settle, Rego, Good, and Morton all voting in favor and Directors Christina Catsavis, Martin, and George Catsavis all voting against it.

The Board voted unanimously without discussion (except for Director George Catsavis who was not at his seat at the time to participate in the vote) to approve the top strategic goals for 2023-2024 set at the recent day-long strategic goals workshop. The goals include…

• #1 - Reduce neighborhood blight through the use of demolition and code enforcement. Examine possible use of grid based code enforcement.

• #2- Reduce homelessness. Support the new Next Step transitional housing facility and policies that grow affordable housing.

• #3- Strengthen relationships with federal and state government agencies to reduce the impacts of the consent decree. Request additional time to complete the consent decree requirements.

• #4 Mitigate the impacts of inflation on City services. Prioritize needs over wants in budgeting.

• #5 Hire Assistant to the Deputy City Administrator to free up the City Administrator to focus on other tasks

• #6 Prepare a plan to increase water supply and pressure and plan funding for that plan

The agenda for the meeting featured a vote on contracting with Vortex Services for $21,856,895 for consent decree required sewer repair and capacity improvement work including 55,774 feet of pipe and 624 manholes. However, City Administrator Geffken said the City has now received a memo from some local contractors who say that they can provide the necessary work at a lower cost. He asked the Board to table the item and have the project rebid before the end of the year.

Director Christina Catsavis said that when it originally came up that Vortex was the only bidder the Board was told that it was because the project was not big enough to interest other bidders, but she knows that local companies routinely bid on much smaller contracts. Utilities Director McAvoy said that the project was intentionally bundled to get more interest. The time frame required to complete the project was the issue for other contractors. Forsgren had said that they couldn’t complete it in a year.

Director Martin asked why the project wasn’t started earlier. McAvoy said that it was held off to make sure that money from the sales tax fund for consent decree sewer work had accumulated enough to fund it.

Director Morton suggested when the rebidding is done that the project be broken up into 2 or 3 smaller projects. McAvoy said that the bundling was following the direction of the EPA contractor and that if the project were split into multiple smaller ones the City would lose the benefit of the economy of scale.

The Board voted unanimously to withdraw the item from the agenda. The project will be sent back out for bids again instead.

The Board voted unanimously without discussion to renew the legal services contract with Daily & Woods at the same rate as the existing contract, $168/hr for attorney services and $70/hr for paralegal services. Daily & Woods has provided legal services to the City since 1968. This year they were the only bidder to submit a proposal for the legal services contract.

The Board voted unanimously in approval of a request from the Fort Smith Housing Authority to abandon the right of way on part of Lexington Avenue as part of the development of a new housing subdivision at the site of the old Bailey Hill Reservoir.

Director Morton asked for an update on the housing authority’s plans for the development and expressed excitement for the subdivision providing affordable housing. Planning Director Rice said that the demolition at the site will begin in the first quarter of next year and that construction should happen in 2025.

Director Martin mentioned that the development would eradicate existing homeless encampments in that area.

The Board voted unanimously to contract with Forsgren for $2,481,021.35 for 2.1 miles of street overlays.

The Board voted unanimously to purchase homes at 3408 and 3414 Edinburgh Drive through the flood buyout program in which the City purchases flood-prone homes when it is cheaper to buy the property than perform the improvements necessary to mitigate the flooding. The total cost of the homes will be $440,000.

The Board voted to renew the contract with First Western for insurance and risk management advisory services at the same rate as the current contract, $130,000 for the year. All of the Directors except for Director Settle voted in favor of the renewal.

Director Settle suggested that the Board consider hiring a full-time City employee for that position because it would cost less than $130,000 to handle it in-house than to contract that job out to an outside company.

The Board voted unanimously to contract with Stearns, Conrad, and Schmidt Engineers for $178,500 and Sloan Vaszquez McAfee for $258,400 for a master plan for solid waste management. The master plan will include a feasibility study and conceptual site plan for a City-owned recycling materials recovery facility, a plan for relocation of the customer convenience center at the landfill, a regulatory review, an updated 20 year strategic plan for the landfill, a waste composition study, and a landfill and solid waste rate study that would include a comparison of the current all-inclusive collection rate system and a pay-as-you-throw system.

Director George Catsavis asked what the outside consultants would do that the City can’t do in-house. Solid Waste Director Riley responded that in addition to their expertise, there is also much of it that her department doesn’t have the time or man power to do themselves. She mentioned the waste composition study will involve digging into the ground, looking at the materials pulled up, hand sorting them, putting them through screens, and analyzing them. The materials recovery facility feasibility study will go in-depth including costs and comparing different options like different levels of manual processing versus automation. Director George Catsavis asked “How much will it save us?”. Riley said that answering that is the intent of the study, “to look at where we’re going to go and what we’re going to do.”

Director Christina Catsavis reminded that the Solid Waste Department runs as an enterprise fund and “runs like a business.”

Director George Catsavis asked how long the studies will take. Riley answered 6-8 months.

Director Morton said that “long term planning is a really good idea in a City and an enterprise fund”. He called the studies “exactly what we need to be doing” and said that the overall cost of the contracts are small in comparison to the scale of the revenue of the department.

Director George Catsavis asked how long the life left of the landfill is estimated to be and if that figure factors in future growth. Riley answered that it is expected to last about 100 years, but as for estimating to account for the future growth she said that the “study does exactly that.”