Highlights of the Fort Smith Board of Directors Meeting 2/21/25
At the Fort Smith Board of Directors meeting held 2-21-25 with Director Good attending remotely, the Board voted unanimously without discussion in favor of a 3.5% increase in sewer rates starting June 1, 2025 and then increasing by 3.5% every January 1 through 2030. The base charge for sewer service will increase from $4.50 to $4.66 and the volume charge for one CCF will increase from $8.45 to $8.75 on June 1, 2025. The public hearing on this increase was held at the 2-4-25 meeting but the vote on the issue was tabled.
The Board voted unanimously for a zoning change for 4401 Savannah that will allow for an existing metal shop building to be remodeled into a 437 unit climatized mini-storage facility. This issue was discussed at the 2-4-25 meeting but was tabled until the military could approve it in regards to security with the property being located outside of the Military Compatibility Overlay Area where it would require extra security precautions but still very near the airport. The 85th Fighter Group has now approved of the proposed development.
The Board voted in favor of putting a set of sales tax proposals to fund the consent decree sewer work for a vote on the May 2025 ballot.
The package to be on the ballot will
result in the total tax rate remaining at the current 9.5% rate
authorize issuance of $360 million in bonds for consent decree projects (a total bond issue of $385 million)
reauthorize the existing 3/4 cent sales tax through 12-31-2059 (instead of it ending 12-31-2030) with 5/8 of a cent to be used for consent decree sewer projects and debt service on the consent decree bonds and 1/8 of a cent going to the Police Department
renew the existing 1% sales tax for streets/bridges/drainage through 12-31-2059 but reallocate it with 5/8 of a cent going to streets/bridges/drainage and 3/8 of a cent going to consent decree projects and debt service on the consent decree bonds
Krystal Cadelli spoke in opposition to the taxes. She suggested that parks contracts be put on hold instead. She advocated against diverting money from the streets tax saying that “streets are not in the condition they need to be in.”
Chris Cadelli spoke in opposition to the taxes. He mentioned that Arkansas ranks the third highest in the nation for state and local tax rates. He advocated against diverting money from the streets tax calling streets “vital infrastructure.” He suggested funding the consent decree with cuts from the Parks budget instead.
Danny McLemore spoke in opposition to the taxes. He advocated against diverting money from the streets tax. He suggested the Board “take a week and take a look at everything and see where we can cut corners.”
Joey McCutcheon spoke in opposition to the taxes. He expressed his view that 34 years is too long a term for the taxes. He suggested looking for spending cuts to fund the consent decree instead.
Director Kemp said that the Streets fund is “healthy” and that growth will help with revenue for future streets needs. He expressed his view that maintaining the existing tax rate by diverting from the streets tax would be an “easier pill to swallow to not increase taxation.”
Director Settle said that in 2015 he “begged the Board” to not vote for entering the consent decree but to keep fighting legally instead. He mentioned that $400 million would be diverted from streets over the life of the tax. He said “I think the voters will vote for a diversion. I don’t like it.” He expressed his preference for pay-as-you-go rather than using bonds. He mentioned that he will be 86 years old when the taxes expire. He said that a diversion from the Parks tax would be unlikely to be passed by voters.
Director Martin said that citizens “have done a lot”, mentioning the 167% rate increases in 2015, 2016, and 2017, the 5/8 cent sales tax, and the 17.5% rate increase. He said they are “paying for sins of the past.” He expressed his support for the diversion from streets as it is his view that it is not in the citizens’ best interest to add sewer rates and also increase taxes. He suggested that streets projects that could be cut might include the proposed Kelley Highway extension, Massard widening, and a “more measured approach” to resurfacing could be considered.
Director Good expressed his concerns about the extreme sewer rate increases that could be forced on the citizens if the Federal government takes over. He said that he is against “kicking the can down the road”. Boards in the past failed to raise rates when staff said that there was a need to raise rates. He expressed his view that the current Board “need to make hard decisions.” He expressed his opposition to diversion from streets expressing concern about the length of the diverted tax. He mentioned that the streets tax and the Parks tax were both “wildly” approved by voters.
Director George Catsavis said of originally voting to enter the consent decree “In retrospect, we should have gone to court.” He said that the Board at that time were told by the Utilities Director then that it would only cost $10 million-$15 million to take care of the consent decree.
Director Kemp asked about the fine if the consent decree requirements are not completed. Interim City Director Dingman answered $25 million in stipulated penalties. Director Kemp asked what must be met to avoid receivership. Dingman answered elimination of all sanitary sewer overflows. Director Settle called zero SSOs “a fantasy.”
Director Martin said that he is “ideally” against using bonds and would prefer to pay-as-you-go but the negotiations with the EPA indicate that the EPA will not be satisfied without “front-loading” the remaining work. He said pay-as-you-go “has not been well-received.” He mentioned that while the EPA has verbally agreed to additional years to complete the consent decree work, they have not technically officially agreed to anything and the consent decree is still set to have to be finished by 2027. Director Kemp suggested further negotiation with the EPA to not do the front-loading and bonds and pay-as-you-go instead. Director Settle mentioned that funding the work pay-as-you go it would take 22 years to complete it.
Dingman clarified that the $360 million in bonds would not be issued all at once. Because the bonds have required spend-downs and there is no reasonable way that the work could be contracted to get the whole $360 million spent that fast, the bonds would be issued in series within the next 3 years. One third could be issued right away and the rest issued in other series if needed. Director Martin asked if the City would be obligated to issue all $360 million. Dingman answered that they would not, that they would be authorized to issue up to $360 million but would not be required to. They could issue less if desired. Director Martin asked about the 34 year time period on the taxes. Dingman explained that the bonds are to be issued for 30 years and if the last series is issued 4 years from now, that will be 34 years.
Director Martin asked if the tax was approved by the voters if it would be the end of additional taxes and rate increases for the consent decree. Dingman said no, it depends on how effective the fixes are and that the City will be seeking to find alternate sources of funding to not have to go back for more, but he could not reassure that. Director Martin said he “can’t go back to the citizens against for a 4th, 5th, time.” Director Kemp agreed saying “When do you say enough is enough?”
Director Christina Catsavis said that all of the discussion is “assuming the money is what’s the problem.” She said that the EPA has expressed frustration at the City not hitting metrics the City laid out because they cannot get contractors to bid on the projects. She said the “way to handle this is diplomatically” and mentioned contacting President Trump and to “make inroads with people who can do something.” Director Martin mentioned having recently tweeted EPA Administrator Zeldin. Director Christina Catsavis said she is not in favor of a tax rate increase. She expressed support for sales tax at the current rate with the diversion from streets, though, in that sales tax spreads out the burden and allows the City to “buckle down and get the work done.” Director Settle mentioned that half of sales taxes are paid by people who live outside of Fort Smith.
Director Rego reminded that the Board controls the rates directly but “It’s the voters who make the decision about the taxes.” He encouraged the Board members who are attending the National League of Cities meeting to reach out to the White House Office of Intergovernmental Affairs representatives that will be there regarding Fort Smith’s consent decree situation.
Mayor McGill said that the EPA is “looking for a plan that’s front-loaded” and it is “up to us to decide what that’s gonna look like.”
Director Kemp asked if the Board would reserve the right to not issue the bonds. Dingman clarified that if the measure passes at the election that the Board would be authorized to issue the bonds but would not be required to issue bonds. Director Settle added that the Board would have to vote to issue any bonds.
The Board voted to send the tax issues (the renewal of the 1 cent streets tax with the 5/8 going to streets and 3/8 going to the consent decree and the renewal of the 5/8 cent sales tax for consent decree and police) to be put on the ballot for voters to vote on in May with only Director George Catsavis voting against it.
Noting Director George Catsavis’s opposition to the taxes, Director Settle asked Director George Catsavis if he had a better option. Director George Catsavis did not offer an alternative plan, but said that there have been “years and years of spending” and he wondered “how much we would have if we’d tightened our belts.” He said “I’m just not in a good mood.”
The Board voted unanimously to issue a resolution requesting ARDOT allow parking on the 300 block of Garrison to return to angled parking instead of parallel parking. In 2023, businesses on the block requested to change from angled to parallel parking while the resurfacing project on the Garrison Bridge was happening. The businesses were informed at the time that if they changed to parallel parking that it would have to remain parallel even after the resurfacing project was completed. They chose to still switch and ARDOT authorized the change to parallel. They have since requested to revert back to angled and ARDOT staff have denied permission to switch back. If passed, the resolution will also be sent to the Arkansas Highway Commission.
Director Christina Catsavis clarified that the resolution does not change the parking back, only makes the request. Directors Martin and Settle added that they have heard from the Highway Commision and the ARDOT Director that if the request is sent “It will get done.”
The Board voted in favor of an appropriation of $235,931 to pay the severance pay to former City Administrator Geffken.
Director Christina Catsavis asked if there was an obligation to pay all of the severance if Geffken gets another job over $100,000/year. Director George Catsavis answered that that was a modification to this contract that was discussed during Executive Session at one point, but that it was never officially approved. Director Christina Catsavis asked if the contract could be changed so that by taking the severance Geffken would be waiving his right to pursue legal recourse over his termination. City Attorney Rowe said that the contract could be changed, but that both parties would have to agree to that. Director Kemp asked if the City could ask Geffken to agree to that. Rowe said that they could ask, but that he doesn’t have to accept. The contract said that the severance would have to be paid.
Director Rego suggested that the contract with the next City Administrator be written so as not to have this situation again in the future.
The Board voted in favor of the appropriation with only Director Christina Catsavis voting against it.
The Board voted unanimously with no discussion to approve for Zona Zero Event Center at 3321 South 66 to apply for a private club alcohol license.
The Board voted unanimously without discussion to contract with Hawkins Weir Engineering for $558,300 for design services for consent decree sewer work.
The Board voted unanimously to contract with Halff Engineering for $558,300 for design services for consent decree sewer work.
The Board voted unanimously to contract with Burns & McDonnell for a contract not to exceed $1,126,233 for a sewer hydraulic model, asset management, and flow monitoring. The work is to help with a new technique for prioritizing sewer projects with a focus on elimination of sanitary sewer overflows and bundling the same remediation techniques to promote more bidding from more contractors to save money. The process is used by other cities under consent decrees.
The Board voted unanimously to renew the City’s property and vehicle insurance coverage with Arkansas Municipal League. The premiums will be $1,660,466.61 for property and $791,077.49 for vehicles for a total of $2,451,544.10. This issue was discussed at the 2-11-25 study session meeting.
Krystal Cadelli spoke about the need “to purge” City owned properties that are not being utilized so that they would not still need to be insured. She suggested selling the former Bost building and the parts of the former ACME brick property that are not going to be used for flood retention ponds.
Chris Cadelli spoke and also advocated for selling off unused properties.
Phillip Merry with First Western who is contracted by the City to consult on insurance matters said that they “do go through with a fine tooth comb” to see what they can cut insurance coverage on.
The Board voted to approve an agreed order to resolve the case of Cavin v. City of Fort Smith. The order agrees that the City will not appropriate funds to any private entity or person in violation of the Arkansas Constitution. It specifically singles out any future sponsorship or funding (without proper service contracts in place) for Mercy Hospital Ball, Fort Smith Roundtable Juneteenth Celebration, Steel Horse Rally, golf tournaments, Twisted Effects Braid Studio, and Begin a New Generation. These entities and events previously received funding from the Mayor’s office. The spending for Twisted Effects Braid Studio and Begin a New Generation were in relation to the Braids and Fades back to school event featuring free haircuts and hair braiding and free backpacks with school supplies for children. The agreed order will result in both sides in the case paying their own legal fees but no further financial consequences to the City.
Mayor McGill said “for years our city has supported community based organizations” and those “partnerships have strengthened our community.” He said that he has “always acted in good faith” and the “limitations were not previously brought to our attention.” He said the issue was “raised by those who seek to undermine our efforts rather than improve them.” He said that the City will look to find ways in the future to continue supporting community organizations legally.
Krystal Cadelli spoke and said that citizens should choose to give or not give to charities, not the government. She expressed her frustration that the Board overlooked the spending. She called for an audit of the Mayor’s budget since taking office and of the Water Department.
Chris Cadelli spoke and said “mismanagement of taxpayer funds, no matter how righteous you think it is, is wrong.” He said that the situation highlights the importance of filling the Director of Internal Audit vacant position. He said that the spending problem may have been going on for previous mayors also.
Dan Williams spoke and said that McGill had an “opportunity to own up to something” and didn’t take it. Williams voiced his disappointment in the “lack of courage to take ownership” of the problem.
Director Martin said that the Board needs to look into the funding in the 2025 Mayor’s budget and “carve back out” from it and make sure there is a “narrow definition around where that money goes.”
McGill said “If this had been known, none of this would have happened.” He said he “recommends certainly that we put in some checks and balances.”
The Board voted to approve the agreement with all voting in favor except for Director Rego and Director Good.
The Board voted unanimously without discussion in favor of Solid Waste Department purchases of a replacement Skyjack Telehandler 8K forklift for $129, 954.60 from Hugg & Hall, a replacement Komptech Multistar XL3 star screener for compost for $736,250 from Powerscreen Texas Inc., a replacement Caterpillar Model 420 backhoe for $130,437 from JA Riggs, a replacement Ford F-550 service truck with air compressor, welder, crane, and tommy lift for $210,803 from Olathe Ford Sales, a replacement International MV607 cart delivery vehicle for $118,851.26 from International Motors, and an additional Caterpillar Model 730 haul truck (instead of continuing to rent one) for $558,400 from JA Riggs.
The Board voted unanimously without discussion in favor of renewal of Ozark Dumpster Service’s non-residential solid waste collection permit. The permit would be for 2 years with a 5% franchise fee.
During the Officials Forum section of the meeting, Mayor McGill and Directors Settle, Good, Kemp, and Rego spoke in remembrance of former Director Don Hutchings who passed away recently. Director Kemp mentioned that the services for Hutchings would be held Saturday at 2pm at Evangel Temple and also be streamed on Youtube.
Director Christina Catsavis spoke about Act 1445 that is being legislated on at the State level currently that would strip cities of control over short term rentals. She expressed opposition to the bill saying “We should be the ones making these decisions, not Little Rock.” Mentioning complaints from neighbors and short term rentals driving up housing costs, she suggested potentially licensing ones that already have invested to grandfather them in and then capping them. Director Settle added that the bill is because the City of Bella Vista and one person have a disagreement on AirBnBs and that the bill is out of committee but has not passed the House yet. He said that keeping zoning as a way for cities to regulate short term rentals is something that is being worked on in the House.
Director Rego announced that he will be sharing his “Curbing Unrestricted Taxpayer Spending” package that includes suggestions for $3.6 million in cuts that could be used to fund the consent decree at the 3-4-25 meeting.
