Highlights of the Fort Smith Board of Directors Meeting 3/21/23

At the Fort Smith Board of Directors meeting held 3-21-23, the Board voted unanimously to table the issue of abandoning the public right of way on the Leigh Avenue horseshoe section until the December 5, 2023 meeting when the new Leigh Avenue extension is set to be completed.

The Board voted unanimously in favor of changes to the animal ordinances. Some of the most significant changes being proposed are…

• Requiring microchip identification for all cats and dogs not secured at all times within a building, enclosure, or yard or on a leash. Plus, a secondary form of identification like a collar tag will be required

• Requiring spaying or neutering for all cats and dogs not secured at all times within a building, enclosure, or yard or on a leash. Animals that have a letter from a veterinarian attesting they are too old or have health problems that would make altering them inappropriate will be exempt from the requirement.

• Vouchers for spaying and neutering will be made available to low income residents through the Police Chief or their designee with required proof of residency and income. They will be available on a first come first serve basis, limited to one per pet (a change from the version previously discussed that limited it to one per household), and will be available until money budgeted for the program runs out.

• Any loose animals brought to the shelter will be spayed or neutered and microchipped and vaccinated if they are not already sterilized and chipped and vaccinated. The owner will be required to pay the fees for these procedures to be able to retrieve their animal.

• Animal control will return altered animals that can be identified by their microchips directly to their homes twice a year. Any more escapes will result in a citation for an unsecure enclosure. Any unaltered or unchipped animals will be taken to the shelter.

• Leaving pet food out unattended will be prohibited.

• Citations will be issued to the owners of barking dogs that receive 3 or more complaints within 90 days from 2 separate households regarding sustained barking in the daytime. Citations can be issued for any instances of complaints regarding sustained barking from 10pm-7am.

• Dogs will not be allowed to be tethered for longer than 10 days and nights and must have access to food, water, shade, and shelter at all times while tethered.

• Animals riding in open vehicles, including the beds of pickup trucks, must be inside a secured container.

• The threshold to not be considered a “kennel” will be lowered from 7 dogs to 4 (with the exception of temporary fosters).

• The price of a Breeder’s License will increase to $1000 per year per animal and will require meeting all of the other requirements for a business license.

• A $500 annual fee will be required to keep an animal deemed “aggressive” and it must be spayed and neutered.

• People taking in strays (including pregnant animals) for the purpose of re-homing them will be exempt from the newly instituted rules prohibiting selling and giving away animals. Sales of livestock (including the auctions at the fair) will also be exempt from the new prohibition on animal sales.

Johnnie Rogers with Almost Home Shelter in Van Buren spoke in support of the spay/neuter requirement and the voucher program. She also mentioned that Almost Home has been getting a strong response from the voucher program that grant funding is allowing them to do right now.

Derek Himple spoke in support of the part of the ordinance that prohibits leaving food out unattended that may attract wild animals. He spoke about the threat from parasites transmitted by raccoons and said it is “imperative” to take steps to protect pets and children from the parasite.

Nancy Pollan spoke in support of the ordinance. She told of recent visit to an animal rescue facility in Boston that was nearly empty and demand for pets there was high as a result of that city’s animal ordinances including spay/neuter and the enforcement of those ordinances.

Ramona Roberts spoke in opposition to the ordinance and requested that the Board table it and form a committee made up of representatives from veterinary care and rescue organizations. She expressed the view that the $75,000 currently budgeted for the voucher program would not be sufficient. She also shared her concern that the voucher program as currently planned would not be helpful enough to low income households with having to pay more for pets over 50 lbs and having to have pets microchipped and vaccinated to use the neuter voucher. She also disagreed with the ordinance putting the Executive Director of the animal shelter in charge of making decisions regarding animals being euthanized. She suggested that only trained veterinarians should make that decision.

Director Morton acknowledged that Roberts’s comments were “valid” but expressed that he felt it “important that we start somewhere” and “make improvements as we go along”.

Director Rego expressed his desire to implement a “5 part path out of our situation” to include passing and enforcing the spay and neuter ordinance, increasing animal control, enforcing the rules strongly, the shelter, and expansion of the shelter. He suggested that an outside expert evaluate and report on progress after the new rules are implemented. He expressed that he preferred to not “let perfect be the enemy of good” and not let the troubles in the details stand in the way of making important progress on the issue.

Director Good noted that it was the first time that the majority of the Board has ever been in favor of spay and neuter. He agreed that more than $75,000 will be needed for the vouchers.

Director Morton reminded of ACHE’s recent donation of land for the construction of a new shelter. He suggested that in the future the city make a financial contribution to the shelter. He said that a city of this size cannot have no shelter and reminded that Fort Smith came “perilously close” to not having one in May 2019. Director Martin said that he feels like the City is already making a financial contribution (via the service contract) to the shelter but that with a financial contribution “comes expectations”. He said he has a high expectation and “That expectation needs to be met.”. He wants to be sure that the shelter is doing everything possible to deal with the animal problem via adoption and transportation. He gave the impression he wasn’t absolutely certain that there wasn’t room for improvement there.

The Board voted unanimously to allow Covia ISP to participate in the tax back program that allows for them to get back state and local sales taxes paid on building materials and machinery used for expansions. Covia intends to invest $36.5 million in the expansion of their plant on Gerber Road that makes ultra white filler materials for engineered stone used in bathroom and kitchen countertops. The expansion will add 11 new jobs at an average pay rate of $22.95 per hour.

The Board voted unanimously to approve a contract with Plante Moran for $165,360 for an audit of the IT department’s processes, resources, networks, systems, and security. IT Director Gentry spoke of the importance of the audit and the strategic plan that would be devised as part of the process and called the cybersecurity assessment “critically important”. Director Christina Catsavis asked when the audit would be done in relation to when the cybersecurity insurance policy would need to be discussed. Gentry answered that the audit will probably be completed in August. Administrator Geffken answered that the insurance discussion will start in October and decisions need to be finalized by December. Director Settle reminded that the City’s property insurance coverage through AML also includes cybersecurity insurance even if the other cybersecurity policy runs out.

The Board voted unanimously in favor of a change to the Board of Directors best practices document. This list of non-binding guidance suggestions includes things like a code of conduct and ethics and the responsibilities for the Board of Directors. The wording in one section was changed to “Effective decision making requires finality. While it is important to deliberate in many voices, the Board must govern with one voice. Decisions of the Board must be allowed to stand, and should be revisited if changes in facts or circumstances suggest that the Board might consider a different decision.” from the previous version of that section that read only “Effective decision making results in finality. While it’s important to deliberate in many voices, the Board must govern with one voice.”

The Board voted unanimously to approve the purchase of a 25 cubic yard CNG fueled rear loader garbage truck for commercial collections from Labrie Environmental Group. The truck will cost a total of $401,828.40 with $100,000 of that cost being covered by a grant from the State. Geffken thanked Solid Waste Director Riley for securing the grant funds. Director Settle praised that it was another CNG fueled vehicle instead of diesel.

The Board voted unanimously to approve a contract with Steve Beam Construction for $2,717,154 for multiple drainage improvement projects.

The Board voted unanimously to approve the purchase of Fire and Police computer aided dispatch, wireless digital assistant, and records management software from ProPhoenix for $968,855. Director Morton called it a “great project”. Police Chief Baker called it the “best product available for us.”

The most hotly debated topic of the night was the issue of whether or not to offer financial incentives to a particular business (that could not be disclosed yet) referred to as Project X. The incentives would be in the form of abatement of the sales tax and ad valorem tax paid by that business for a period of 10 years. The incentive program would involve a total of $4,925,000 in sales tax reimbursements from the City to Project X. With only the money that goes into the general fund (mostly from the City’s 78% share of the 1% county sales tax) being able to be used for reimbursements (none of the sales tax money that is earmarked specifically for things like streets and drainage, police, parks, fire, consent decree, etc. could be used ), it would result in $2,478,695 of that nearly $5 million overall over ten years (mostly at the beginning of that 10 year term) actually having to come out of the budget rather than just being pass-through reimbursements.

Bennie Westphal who is the owner of the property where Project X would be located, both the former Best Buy building and the adjacent land where the State Farm building is (the Best Buy building would be used and the State Farm building would be demolished and an expansion Project X would be built on its site), and who has been working to bring the business to town spoke at the meeting. He said the business is a large retail business with a tourist attraction component. It will employ 93 full time employees at an average of $53,000 per year. It will invest $12 million on the site. It is estimated to have $28 million in sales per year. He said of the over 100 cities considered initially for locations by the company Fort Smith is one of the final 12 being considered. He said Project X is a business that draws other businesses when it comes to a town. He called it a “privilege to have something like this in a community”. He said that the company typically commands incentives when moving into a community.

Director Morton called the proposal “very different than anything we’ve done before” since it’s not just a straight tax back or reduction on property taxes or an investment in infrastructure but actually will require writing $2.5 million in checks from taxpayer money to a private company. He also spoke about that most of the City’s incentive programs previously have been to manufacturers and that manufacturers are not consumer facing and are not competing with each other and with local businesses. He said there is “gonna be a cannibalization” from existing local companies with Project X being retail. He said that the incentive would give Project X an unfair advantage over those competitors. He is unaware of any other incentive like this being done in Arkansas. He said he is “very much in favor of this project” but suggested that instead of the tax abatement based incentive that an investment be offered in the form of roads or infrastructure. He said that he is not in favor of “writing checks for $5 million in the face of the Constitution”.

City Attorney Canfield said that under the current Constitution of the State Arkansas that the City cannot legally issue incentives to a retail industry. He said that even if the legislature were to act (and Westphal is currently working with the legislature and assured that an act will be passed this session), it would still not likely be approved by the State Supreme Court.

Director Rego pointed out that every state that borders Arkansas uses sales tax incentives to attract businesses. He said the incentive is necessary to “stay competitive” and “maximize the chances of landing this project”.

Director Settle pointed out that an empty building produces nothing economically. He called the opportunity to bring Project X in a “game changer to our city”. He passionately supported the incentive saying that you have to sometimes “challenge the norm to prove you’re right.” He said that other cities will see Project X and will want to come to Fort Smith, too.

Director Rego also supported the incentive. He said “Pioneers sometimes take the arrows” but he called it a “chance to embrace that spirit” and said “opportunity is worth it even if there are challenges over the horizon.”

Director Martin asked what the legal risk would be. Canfield clarified that any taxpayer could file suit for illegal exaction. If the suit was filed before any money was spent, it could only result in an injunction. But if the suit was brought at any time in the rest of the 10 years after money was being spent it “could become a very thorny issue” and the City or Project X could be targeted to have to repay the tax money.

Director Morton reminded that every Director swears an oath when they take office that includes a promise to abide by the Constitution. He expressed his view that the incentive would violate that oath. He called it “bad policy”. He also said that “Taxpayers will not react favorably to this.” Of incentives, he asked “Where does it stop?” saying that other companies could also seek incentives to come here.

Director Rego said that the issue up for a vote was not “wanton disregard of the law” and that the complex legal issues will be settled by the legislature or by the court, not just decided by one attorney. He said that incentive is based on sales tax formulas and collection “not just out of the check book” and that incentives are used by dozens of states and that they all manage to “not find themselves in the legal stockade”. Director Morton reminded that other states have different Constitutions.

Director George Catsavis praised the potential employment of 93 people and that much of that $5 million in annual payroll would be spent in Fort Smith. He said Project X is “gonna be a really good thing for Fort Smith”.

Director Good said it is “one of those real hard issues” with “legal issues on one hand and opportunity on the other”.

The Board voted to approve the Memorandum of Agreement to offer the incentives to Project X with all voting in favor of the incentive except for Morton.