Highlights of the Fort Smith Board of Directors Meeting 2/8/22
The Fort Smith Board of Directors study session meeting held 2-8-22 was lead by Vice Mayor Rego in the absence of Mayor McGill. Director Martin attended remotely. The meeting started with discussion of the city’s property and vehicle insurance coverage renewal. Currently the property and vehicles and equipment are covered by an insurance program through Arkansas Municipal League. The AML program allows cities all over the state to pool their money in a trust and purchase insurance together. Phillip Merry from First Western who has been contracted by the city to consult on insurance expressed the desire to find ways to continue coverage from AML but to reduce costs. Some changes Merry and fellow First Western representative Denise Ingall proposed would be removing some things from coverage, putting art on a separate art policy, reducing coverage values on some things like higher depreciation rates on older vehicles, and only taking liability coverage instead of full coverage on some equipment like trailers and non-motorized equipment. The changes proposed by First Western could result in a total of $104,148 in savings.
Ingall mentioned that the AML pool coverage program is loved by small cities because it’s so easy to use and they have less property to be concerned about but that it was appropriate to be considering whether this is or isn’t the best plan for a city as large as Fort Smith. An advantage mentioned in addition to the overall easiness of the AML system that is designed for cities mentioned by AML representative John Wells was that the AML program does not require drivers lists and MVR drivers’ records that other insurers would need. That eliminates a costly hassle. Wells also advocated for his organization’s coverage of replacement value for damaged buildings and property saying that as a Director he would rather explain insurance price rather than why the city can’t replace lost property. He praised the AML coverage program as “not perfect, but we are excellent”.
Ingall mentioned that other insurers were contacted for quotes and many were not interested in seeking Fort Smith’s business because of the wind and hail weather problems in this area. Travelers Insurance (the company through whom the city previously was covered before AML) was very interested,though. Ingall expects a quote from them to be ready next week.
Director Morton questioned the cause of the noticeable increase in the cost of AML coverage if renewed. One of the things Wells pointed at for the increase was the exponential increase in costs of building materials recently. He mentioned that many other pools in other states have seen increases of 20%-40% or reductions in coverage. In addition to the higher quote originally presented by AML, there will be an additional increase on the actual price to renew based on a 9% increase in the appraised value of the property. Merry said that in 2 years the price going up 40% is “ something we want to manage around”. Director Morton said he has “no issue with AML” adding that “insurance is very complicated”.
Director Settle asked for Merry and Purchasing Director Bahsoon to make sure that proposed changes to the policy coverage (like dropping some items, reducing coverage or increasing depreciation for some items, etc) be handled in the AML online system before the issue is brought back at the 2-15-22 meeting for a vote on renewal and that was agreed to.
Then the Board discussed the realignment of the wards based on the 2020 census population shifts. On the census Ward 1 was the least populated and Ward 4 the most populated (mostly because of high growth at Chaffee Crossing). Adjustments were made in an effort to balance the average number of voters in each ward to around an average of 22,286 per ward and a couple adjustments (like where the Kelley Highway Walmart is but nobody lives) were made at the request of the County to prevent creation of any tiny precincts. Population and GIS information was used as well as a website that considers information like voting records and other variables.
Director Settle inquired why Ward 4 was not reduced further, like to a current population of 21.500, to account for that the area is still rapidly growing in population. Administrator Geffken answered that by State law the adjustments must be within 15% of each other so the extra adjustment of Ward 4 right now to “bake in some additional population” would potentially exceed that.
The lines will be on the 3-1-22 meeting agenda for a vote.
The Board discussed the water leak adjustment policy presented by Utilities Director McAvoy. McAvoy expressed that when Utilities took over responsibility for utility billing (that used to be handled by Collections) in 2019 it came to their attention that there was no real solid policy in place for handling billing adjustments for leaks when multiple people came in asking for their “annual leak adjustment” as if it was just a routine yearly discount. Since then a more formal system has been established, but there has been interest from both the Utility department and the Board in making a better and more set Standard Operating Procedure.
Top proposed changes include allowing adjustments for leaks that result in water going down the drain (including leaks in faucets and toilets that are not currently eligible for adjustment but still not adjusting for leaks in irrigation systems), water volume used over the monthly average as a result of a leak being billed at the lowest tier rate (instead of the full regular rate) and sewer usage over the monthly average as a result of the leak being billed at only 50% of the regular rate, allowing for only one leak adjustment per year (instead of the current allowance of 2 per 6 month period), setting a threshold for water usage to qualify for a leak adjustment at twice the average monthly volume (currently there is no minimum usage increase threshold), requiring a formal leak adjustment request form to be submitted, and allowing for one Unexplained High Usage adjustment per 2 year period that allows for an adjustment on a bill more than double the monthly average but that does not require proof of repair (like a plumber or plumbing supply purchase receipt) like the leak adjustment does, and allowing for one adjustment for a month that is more than double the average usage when a meter is changed out.
Director Dawson argued that an outside faucet that would be covered under the new policy is no different than an irrigation system and that irrigation systems should also be covered. McAvoy responded that irrigation systems are typically on their own meter and already billed at the highest tier rate all of the time (but no sewer charge) so there would be no water tier rate or sewer charge to adjust. Director Catsavis expressed agreement with Director Dawson that an adjustment should be made for irrigation,too.
Director Morton expressed disagreement with the proposed policy changes and suggested instead a policy that is based on adjusting all leaks over double the average usage down to the average monthly usage over the 6 months prior to the leak. He voiced his opinion that he didn’t think the proposed policy was fair that people would be billed for water they didn’t use. Director Catsavis agreed. Director Good also expressed support for a policy based on just adjusting up to three consecutive bills down to the average. He mentioned situations where elderly ladies living alone had each been billed $1000-$3000 and contacted him because they were worried and unable to pay such astronomical surprise bills. He expressed that “a Director shouldn’t have to get involved” and that that needs to be handled in customer service.
Director Morton also argued that the 2 month limitation is too short especially when factoring in how long it sometimes takes to get a plumber out to perform the repair so the impact can fall onto 3 bills. He also expressed that once in 12 months is not necessarily enough for an old house.
Geffken mentioned that the city already makes around a million dollars in adjustments each year and that would go up with bigger more generous changes. Morton said the “pain has to be shared equally, not on people with old houses” and that the policy was “well intended” but in real cases was “too much” burden for some citizens especially those on low and fixed incomes.
McAvoy said the proposed policy is “more forgiving” than most Arkansas city policies. He praised that it’s objective.
Director Settle said that he felt 3 months worth of billing being eligible for adjustment would be fair. He suggested a way be found to make it more noticeable sooner when there is a higher bill like high bills being on red paper. McAvoy clarified that the Utilities Department already automatically contacts customers via phone or email if the bill is going to be double the previous month.
Director Catsavis asked McAvoy if we could make the new policy retroactive to January 1st, especially with the recent freeze . McAvoy said that it would be difficult because some requests had already been denied but that it was possible.
Director Settle asked if the Board is “trying to solve 100% of the problems or 99% of the problems” and said that the city should use data to come up with solutions to fix the majority of the problem. Director Good added that customer service could handle the small percentage of remaining outliers.
Director Settle suggested that a form be created that would allow customers to apply for a pool filling adjustment before they fill their pools instead of having to request an adjustment after like they currently do. McAvoy called that a “great idea” and agreed to make one a part of the new Standard Operating Procedure.
Settle also said that he wants the Board of Directors to take an official action to approve a new Standard Operating Procedure for leak adjustments instead of it just being an Administrative and departmental matter. The new policy will be brought to a study session again mid-March and then to the following regular meeting for a vote on a resolution. The resolution presented will most likely be leak adjustments for inside or outside leaks adjusting both water and sewer rates for up to 3 consecutive bills down to the average billing for that address for the 3 months prior to the leak and allowed once per year.
McAvoy also reminded about Project Concern and encouraged more people to sign up for the program. Currently only about 1000 residents participate but many more probably qualify. The program that offers reduced water, sewer, and trash rates is available to people at or below 150% of the federal poverty line.
The Board discussed the agreement between the City of Fort Smith and Service Line Warranty Program (formerly named Service Line Warranties of America)that allows Service Line Warranty Program , a private for-profit company, to use the official City of Fort Smith logo in their promotion materials for advertising their insurance program for private property water and sewer line and plumbing repairs. The City incurs no costs nor receives any money in return for allowing Service Line Warranty Program to use the logo. Director Catsavis said there is a lot of confusion from people thinking it’s City insurance because of the logo being on the letters. Settle and Martin chimed in in agreement that the logo should not be allowed to be used. Morton said he was “in the middle” that he wants people to buy the insurance, but also seemed to understand the confusion. Director Settle made a motion to add it to the 3-1-22 meeting agenda to cancel the agreement with Service Line Warranty and no longer allow them to use the City of Fort Smith logo.
