Highlights of the Fort Smith Board of Directors Meeting 2/14/23
The study session meeting of the Fort Smith Board of Directors held 2/14/23 started with Director Rego reminding the Board that the discussion had still not been had about finding a permanent new name for the Blue Lion building where Board meetings are held. Inspired by Fire Chief Christensen’s recent death, Director Rego suggested that there might be future discussion of naming the building after him.
Then it was decided that the property insurance discussion and water fees discussion that were on the evening’s agenda should be tabled. More time is needed to have all the information necessary to have the rates to compare for the property insurance. The water fees review is predicted to be a long discussion. Both were rescheduled for a special study session meeting to be held at 5:30 pm on Thursday 2-16-23.
The first agenda item that was discussed was the update on trails including the results of the recent Move Fort Smith online survey of local residents conducted by Laneshift regarding bicycling and walking. Mobility Coordinator Micheal Mings reported that the survey results indicated that improving biking and walking conditions were important to the people of Fort Smith. 96% of people surveyed said that walking conditions are important. Mings did say that for many people using active modes of transportation is “an aspiration more than a reality”. The top barrier discouraging active mobility is lack of connectivity. Being unsure of safe routes or the lack of safe routes is also a big concern. Mings said that improving improving conditions requires designating safe routes and especially creating designs that put reasonable distance between people and cars.
Director Rego mentioned that 650 responses to the survey is a nice large sample size that is very helpful.
Director Martin mentioned the need for better safer ways than sidewalks and that “interconnectivity is gonna be key to that”. Mings added that “connectivity in neighborhoods is what we’re going to be going for” and that how many people are going to be utilizing it will be the major factor in prioritizing projects. Director Morton asked about how the Maybranch Trail to be constructed soon will impact connectivity. Mings responded that that will be the most well connected trail in the city.
Administrator Geffken said that the City is looking for grants to help with the cost of planned trails. Mings said that it will be about a year to 18 months before the new active mobility Master Plan is completed.
Fort Smith resident Nancy Raney spoke on the importance of urban trails and encouraged the board to support projects that create connections to existing trails.
Deano Traywick, head coach of the River Valley Marshalls NICA team of youth cyclists talked about the NICA program including mentioning that in September it is set to bring 2000 students and their families to Springhill Park for an event. He suggested that the City’s plan include more soft surface bike tracks with more technical features.
Purchasing Manager Alie Bahsoon recommended that the City continue to purchase auto insurance through the Arkansas Municipal League insurance program. He praised the “excellent relationship” with AML “in terms of vehicle coverage”. Director Morton spoke positively about the $8400 increase over last year’s cost calling it “impressively small”. Bahsoon explained that the rates themselves had not increased but most of the cost increase was caused by increased coverage needs from an increased size and value fleet including the new large buses and new police mobile command unit. The Board will vote on renewal of the auto policy with AML at the 2-21-23 meeting.
The Board talked about a potential water rate study. Arkansas Act 605 requires that a rate study be submitted to the Arkansas Natural Resources Commission by June 30, 2026 and it will be mandatory that the rate increases recommended by that study are imposed within a year of the study being submitted if the increases will be less than 50% and within 2 years if the increases will be over 50%.
The City is allowed to do a rate study of its own volition at any point in time before June 30, 2026 and does not need to submit it to the state before the deadline. So if a study were conducted sooner, the City could use the results for its own purposes (including determining rate increases) without needing to submit it to the State early or being forced to enact the mandatory rate increase the State would require at that time. A study could be used to provide better information to make plans and find solutions. Aside from impending Act 605 related concerns, it is generally recommended that rate studies be conducted every 5 years to account for things like growth and inflation.
Director Settle expressed concern about doing a study while there are efforts already underway in the legislature to get Fort Smith an exemption from the requirements of Act 605. Geffken said that efforts are underway both to get Fort Smith an exemption based on being under a significant federal consent decree with substantial economic impact and a bill is also in process that would repeal Act 605 entirely. Geffken clarified that by mid-April it would be certain what the legislature was going to do and that any recommendations from a rate study started now would not be available till June.
Director Morton expressed his support for doing a rate study. He mentioned that there have been no water rate increases since 2011. He said “we need to know what it really costs to be able to know what our rates really should be”. He expressed his interest especially in costs associated with and rates for contract users (including cities outside of Fort Smith that Fort Smith sells water like Mountainburg, Cedarville, Winslow, Chester, Arkoma, Van Buren, and Barling) and industrial users. Utilities Director McAvoy mentioned that it is legally permissible to charge out-of-town users increased rates associated with the increased costs of delivery.
Rego pointed out based on plans and estimated costs it will require a $378 million to $427 million investment to continue to provide customers with the quality and safe water they are currently receiving.
McAvoy clarified for Director Catsavis that if a study was conducted now (regardless of its findings and any increases enacted as a result) that a new study would still have to be conducted closer to 2026 to submit to the State to satisfy Act 605 requirements. The one now would still not be up to date enough then. Director Catsavis also asked about the new customers resulting from growth helping offset the infrastructure costs. McAvoy answered that the increased revenue from the growth is not enough to cover the costs.
Director Martin pointed out that just looking at the cost of planned projects it appeared that a 40-50 percent water rate increase wold be needed to fund them. He expressed a desire to see the capital improvement plans and budgeting plans of similar cities around the state to compare.
Director Settle expressed a desire to get federal help to fund expensive infrastructure projects, especially the 48 inch transmission line project. Geffken said that work is currently being done on that, especially at the US Senate.
Director Morton pointed out that 2/3 of water revenue in 2022 came from non-residential customers. He suggested focusing on increasing money coming in from commercial, industrial, outside cities, and contract users so that Fort Smith citizens are only absorbing a small percentage of the burden. McAvoy added that the contract user rate is $1.80/ccf regardless of whether it is North or South of the river. Yet, it is legally permissible to charge extra to cover added costs of infrastructure based on those geographic cost differences. He said the lowest rate for residential customers is $2.24/ccf. Director Settle was critical of the rates that are cheaper for outside the city than inside. He expressed support for raising rates outside the city to be higher than inside. Director George Catsavis agreed that rates outside should be higher than inside. He asked about rates for commercial accounts inside the city and used OK Foods as an example. Russ Bragg, Senior VP of OK Foods was in attendance in the audience and chimed in that many OK Foods facilities are paying the $2.33 rate for high usage accounts. Director George Catsavis expressed displeasure that other city customers are paying less than Fort Smith businesses. McAvoy added that the contract rate for Van Buren is $1.44/ccf. Geffken extrapolated that if the rate for sales to Van Buren was raised $1/ccf, it would bring in an extra $2.5 million per year.
Director Morton asked if there are any contracts in place that prevent rate increases on contract customers. Geffken answered that there are not. Morton said “Let’s get on with it”. Director Christina Catsavis asked if the Board could rise other rates (contract rates, commercial rates, etc.) and not raise rates on the Fort Smith residential customers. McAvoy answered that they could and that all rates are done by ordinance and it is “at the desire of the Board how we move forward”. Director Morton said he wanted to check with the lawyers on not raising residential rates first before taking action, but expressed a general positive opinion of the idea.
The Board will vote on conducting a water rate study at the last meeting in April.
During the Citizens Forum section of the meeting, Nancy Raney was first to speak, returning to the mic again to show the Directors a picture of a bike lane in Rudy Road in Alma. She called the lane “beautiful” and explained that the 2 lane residential street’s lanes had been narrowed to allow for the bike lane and it had a smooth surface and a 35 mph speed limit. She then pointed out that Waldron Road is being resurfaced and is also a 35 mph road. She suggested that a bike line be created on Waldron Road. She mentioned the use it could get from UAFS students. She also expressed her approval of the new sidewalks. Director Rego said that with street striping being brought in-house soon that the technology would be available to make incorporating that sort of lane relatively simple and that it is “certainly something to look at”.
Then Russ Bragg, OK Foods Senior VP, spoke asking for clarification on Burns and McDonnell, the company that would be conducting the water rate study. He asked if the City would be tied to them for both studies (now and in 2026) and if the company sets the course and the City just has to go along with it, and if other providers are considered,too. Geffken responded that the City has worked with Burns and McDonnell for a long time. They know how the city operates, about the consent decree, etc. and were crucial in getting the City the 5 year extension on the consent decree. The process of a rate study is a very interactive process with abundant input from the Administration. Then the Board of Directors makes the final decision on everything regardless of the recommendations from Burns and McDonald. McAvoy responded that the American Water Works Association M1 manual sets how rate studies are to be performed. Act 605 requires that it be done as the M1 manual says. Geffken added that Act 605 also has a list of providers approved to conduct the studies and that Burns and McDonald is on that list.
