Highlights of the Fort Smith Board of Directors Meeting 4/12/22
The Fort Smith Board of Directors study session meeting held 4-12-22 kicked off with discussion of the Utilities Department’s updated Standard Operating Procedure including billing adjustments for water leaks, meter changes, unexpectedly high usage, and a form to fill out for adjustments for filling swimming pools. Utilities Director Lance McAvoy said that the meter change adjustment is to allow for a “forgiveness period” for customers who had previously had old meters that were under-reporting their usage and are surprised by their usage being recorded properly by the new accurate meter and that usage being higher than they are used to. It was discussed that there is currently no notification for the customer when their meter is changed out. Administrator Geffken proposed that a door hanger tag be put on doors informing them that the meter was changed and the policy on how to have their bill adjusted if they need to printed on it. Director Settle suggested that the information about the new policies be posted on the top and front of the city website and shared on social media.
McAvoy and Geffken also pointed out that the new Govdelivery email communications system is now live and that they will share that information via Govedelivery,too. Geffken mentioned that the new Govdelivery system allows citizens to go to the city website and pick exactly what topics they wish to have information emailed to them about. Mayor McGill suggested the information about Govdelivery be sent out as an insert in the utility bills. Geffken agreed and said he would do that.
Then the Board discussed changes to the Project Concern utility assistance program to make it more generous and simpler to understand. The program is available to customers who are at or below 165% of the federal poverty guideline. Proposed changes to the program would keep the existing discounts of 50% off the water base rate and sewer volume rates plus add a 50% discount for water volume and a 50% discount off the sewer base rate (making it simple, that water and sewer are half price, regardless of it’s a base charge or a volume charge or water or sewer)and increase the discount for solid waste from the current 19% to 25%. Directors Rego and Morton spoke out about their support for the change.
Director Morton added that he is certain that more people qualify and would be interested in the program than the 640 participants currently using the program. He expressed that he sees a need for a better effort to help more people be aware of the help offered. Director Martin agreed that people don’t know. Morton suggested that an item be put on a study session agenda to discuss and brainstorm ideas to get more word out about social services that are available. Administrator Geffken agreed and suggested that 100 Families, 211, and United Way, and other local charity organizations also be invited to participate in the discussion. Director Martin expressed his view that “Government cannot solve every problem but can be a conduit to bring folks together” to solve things. Director Settle suggested that an insert be included in the utility bills about Project Concern. Geffken agreed and said that since the one to be included about Govdelivery has two sides, the other side could be about Project Concern. Settle also suggested a handout and the idea was well-received with Martin mentioning that he often doesn’t pay attention to mail inserts.
The final and longest discussion for the night was concerning 3600 Kinkead and other blighted properties and the procedures to deal with them. Building Services Director Jimmy Deere presented that bids have been taken from contractors to deal with the property. Two bids have been received for basic clearing of debris, mowing, and draining and filling in pools, one for $22,925 and one for $26,500. Two bids have also been received for complete clearing of the site including demolition of the buildings and asbestos abatement, one for $953,792 and one for $612,285(not including asbestos abatement). Director Dawson expressed being “stunned” at the bids and inquired what the property might be worth once it is cleared. Deere said that with the value of the property compared to the high demolition cost the city would “never get that out of the property”. Dawson asked if there might be grants available maybe from the Federal or State governments to help with the cost. Deer answered that there were not. Dawson asked if the property is in an Opportunity Zone. It is not. Dawson asked if it might be something we could use for city needs. Geffken responded that the city would “need to get creative” and “think about what investment you’re making in your city” and mentioned land banks, but that unless you have the cash to buy the property there is “nothing you can do”. He added that the 4.5 acre property is appraised by the county at $313,000, but that he felt that it might sell for higher, and that there is potential to get back some money via property taxes eventually if the lot is developed.
Director Rego and Adminstrator Geffken both spoke about the need to balance private property rights with common good. Rego said that with “20 code violations and owners on the radar of the criminal justice system” it is imperative to be in the process of reviewing options including demolition. Director Morton asked if the city would obtain the property if they paid for the demolition. Deere clarified that they would not. A lien would be put on it for the cost of the demolition, but there is no feasible way for the city to realistically recoup it. No one is likely to want to buy the property and pay off a million dollar lien. Director Settle expressed concern that the city would pay for the clean up and then the owner would end up with property and a million dollar lien. Geffken agreed that nobody is going to take it unless the city exercises eminent domain. Settle expressed that if we used eminent domain we would need to make sure to not fall outside the guidelines set in the 2005 Supreme Court case Kelo v. New London about having an economic development plan in place for the property. He expressed that he doesn’t want to spend a million in tax payer money before we own the property. Director Rego expressed concern that if eminent domain is used, the city would have to pay fair market value for the property. He favored trying first to use negotiation to acquire the land that would result in the city ending up with the land after settling the lien. In calculating the property tax rate that goes to the City if the lot were to sell and the new owner were to invest in a $5 million development, Director Settle estimated it would take 35 years to restore the money put in for the demolition.
A local commercial realtor, Mr. Harmon, spoke about offers received on the property in the 1.2 million range that fell through. He expressed that the situation is very difficult. It would cost upwards of $5 million to develop. With liens and property taxes being an issue, he doesn’t see “how it would work unless the city takes it”. When asked about his vision for the property’s future, he said he’d love to see affordable housing based on the median income (not low-income housing). Shawn Gard with Neighborhood Services discussed having met with investors and having had one deal come within $200,000 of the price but the owner would not budge. He expressed that he is “not done with trying to sell this property”. He mentioned that the property is on a national website saying that the city will “go the extra mile” for investors to buy this property. The city is willing to work with a buyer on things like permits and making it as easy as possible to develop. Deer said that the city has been in contact with the mortgage lender for the property (a Texas firm) and they said they have begun foreclosure on it. He said that he doesn’t yet know, though, how much interest the mortgage lender has in the property or their intentions for it and hopes to have more information on that in the next 7 business days.
Morton asked if a lawsuit had been filed. Deere responded that it had been but that they so far have been unable to serve the owner. Morton asked if the owner could be charged with a felony. Police Chief Baker responded that the violations are only of city ordinances. The arrest warrant that is out for the owner is a result of not coming to court when summoned, not the lack of property maintenance itself. The bulk of the issue is a civil matter, not a criminal one. Director Catsavis asked if a process server had tried to serve the owner. Deer answered that they cannot cross state lines. Baker clarified that because the warrant is only a Failure to Appear misdemeanor in Arkansas, law enforcement in other states (like Texas where the owner resides) doesn’t get notification of the warrant. Catsavis asked if the Board of Directors could somehow make it a felony. Baker answered that no, the Board can only legislate misdemeanors. Catsavis expressed frustration that he "hates getting took like this” and that taxpayer money being spent on it “just burns me up”. Baker added that he expects most courts and juries would hold the owner legally accountable monetarily if he did end up in court.
Shawn Gard mentioned a possibility of dealing with the property in phases. Phase 1, basic abatement (cleaning debris, draining pools, mowing, etc), then Phase 2 removing the worst of the structures starting with the burned out ones, and Phase 3 clearing the whole property entirely. Bids have been received for Phase 2, one for $44,500 that does not include asbestos abatement, and one for removal of 7 structures and asbestos for $232,500. Deere said that 80% of the buildings need to come down. Deere called the piecemeal approach “prolonging the agony”. He mentioned that while it’s not something that Fort Smith has ever done, some cities do their own demolition. It would be possible to pay the $200,000-$250,000 to outside experts for the asbestos then have existing city staff do the demolition.
Director Good said that it was a good idea if we could put something on it (he mentioned it being a great location for a police substation combined with a community center) but stated he is “not a big fan of eminent domain” but rather favored doing what’s necessary to work around that by negotiating with the owners to avoid it. Director Morton pointed out the high demand for rental property but mentioned that the asbestos seriously complicates the issue. Director Rego spoke on how demolishing the buildings could “set the tone moving forward” about serious violations and “go a long way to preventing violations of that that magnitude” as well as bolster citizen trust.
Director Rego asked when the cleanup could start. Deere responded that the abatement cleanup (not the demolition, just the cleaning, draining, mowing, etc.) could start as soon as next week. They are currently waiting on the required third bid, but as soon as the third bid is in and a winning bidder is approved the work could '“begin straight away”.
Director Morton asked if there are any rules we could change to catch problems sooner, mentioning houses he’s driven past with plywood boarded up windows. Deere answered that the structures have to become unsafe to be condemned. Plywood is acceptable. They do everything they can to get the owner to take care of maintenance problems before it escalates to having to go before the Board. The Neighborhood Services Department has a $135,000 budget this year to deal with property clean up. He said that he feels the current ordinance is working great but that he could bring things to the Board quicker if directed to. There are currently 320 structures on the department’s radar that haven’t got to that point yet. He added that if he condemns more than one house on the same block in a year that they would have to do a full asbestos study and abatement. A single house at a time doesn’t have to go through that process and incur that significant extra expense. Morton stated that he would be willing to consider allocating more money to deal with the blighted property issue. He expressed his opinion that out of state owners need pushed to take action. Deer said that if they need to request more funds they will talk to the administration.
Gard mentioned that Neighborhood Services has been making increased use of the courts. The first and third Wednesdays of each month in District Court are now Environmental Court for just their cases. Non-compliance within 9 months is now going to District Court. He also mentioned the department’s partnership with the Police Department. They often call the police to deal with vacant buildings inhabited by squatters and the police let them know when they bust a meth house that needs red tagged for cleanup to be safe to inhabit.
