Highlights of the Fort Smith Board of Directors Meeting 5/9/23

The Fort Smith Board of Directors study session meeting held 5-9-23 began with discussion about the potential for an indoor sport complex. Conventions, Sports, and Leisure International’s Bill Krueger who conducted the feasibility study about the complex was in attendance to discuss interest in pursuing the project and what the next steps would be if the City were to pursue the project. The study started in November of 2021 and the results of the finished study were presented and discussed at a study session held June 14, 2022. The study found that there is a moderately strong to strong demand for a facility. Volleyball, basketball, wrestling, soccer, and off-season training for field sports are the core recommended uses for the facility. It is recommended that the facility be publicly owned by the city but managed by a private management company. Sports Facilities Companies and Fieldhouse USA were a couple of examples given of management companies already operating similar facilities in other areas. The recommended facility would be a 120,000 sq ft building on 10 acres and include 8 hardwood basketball courts (that can also be divided to serve as 16 volleyball courts), a regulation size indoor turf field, a walking track, food court, and locker rooms with optional space for performances and e-sports. The main reason recommended for the city to invest in the facility would be the economic impact of attracting tourists. On the weekends the facility could be booked for tournaments bringing in lots of participants, but the weekdays could also provide added community benefit by being used by local residents.

The construction cost of the facility was originally estimated to be $31.2 million, but with inflation and increased building costs would be higher now. Based on the original estimate, after the 4th full year of operation, it is predicted that the facility would generate an annual profit of $319,000, an annual city tax revenue of $.76 million, and an annual economic impact of $42.4 million.

Director Rego mentioned a prepared food tax, private sector partnerships and creative “alternative financing mechanisms” as possible funding sources for the project.

Director Settle asked for some examples of cities that make a profit on similar facilities. Krueger answered that Cedar Point, Ohio and Frisco, Texas do. Director Settle asked for examples of cities with similar populations to Fort Smith that have profitable facilities. Krueger did not have that information on hand. Settle said that he has visited sports complexes in other cities for his daughter’s volleyball tournaments. He argued that Krueger’s prediction of a complex here being able to host 12 volleyball tournaments the first year was inaccurate. He said that no one hosts more than 4 per year. Krueger disagreed saying that he is “confident” in the numbers. The difference seemed to lie in the difference between Krueger and Settle’s definitions of a “tournament”. Settle was talking about competitions that bring in people from outside that stay in hotels and eat at restaurants. Krueger’s definition included smaller and local and regional multi-day competitions.

Director Martin said that he frequently hears parents say “When can we have a facility like this?” and that they’re tired of driving elsewhere. He said “I’d love to be able to figure out a way to make it work.” but expressed concerns about the price.

Randy Johnson of OVG360 who is the General Manager of the Fort Smith Convention Center presented a review of the Convention Center’s accomplishments in 2022. The Convention Center 2022 revenue increased 12% over 2021. The new in-house food service was the biggest change for the Convention Center. They sold $380,000 dollars in plated catering meals and $100,000 in concessions. Food service brought in a 24% profit. 100% of the customers who used the food catering have already re-booked for a future event.

Mulitiple dance competitions, performances by Lyle Lovett, Peter Pan Ballet, Lori Morgan, The Nutcracker, Rodney Carrington, the Fort Smith Symphony, and UAFS music groups were among the performances hosted in the Arcbest Performing Arts Center.

The Convention Center faced some challenges. In the wake of the pandemic, about 30% of organizations are still not holding events or holding them online because of cost reduction, worries about Covid, or economic uncertainty. The labor shortage also poses a challenge. Supply chain issues with food service supplies and equipment were a struggle. The Executive Chef and the General Manager were both left and were replaced. The facility relied heavily on over a million dollars in subsidies from the City.

Johnson called 2023 the “Year of Comebacks for the Event Industry” and has already been seeing positive signs for the rest of this year and for next year. He looks forward to booking more shows next year from a wider range of entertainment and musical genres.

Director Rego praised the food served at a Mercy Health event saying that it was the most compliments they’d ever received on the food “hands down”.

Director Morton said that 2022 was a “tough year” but that they “can’t sustain” the 2022 reliance on heavy City funding. He said he is “certainly looking forward to an improved 2023”. He said that he’s only seen a small amount of advertising for shows.

Johnson said that a corporate marketer has been handling the ad purchases but that changes will be made in the coming year to market more heavily locally including advertising on the Fort Smith Transit Buses.

Director Settle said that his experience with a volleyball tournament there was good but that the netting needs to be improved. Johnson said the netting is already going to be addressed.

Director Martin said the “subsidy needs to drop”. Administrator Geffken agreed that Covid is over now, so they need to get the subsidy number back down again as soon as possible. Director Martin said that marketing including social media marketing needs to improve.

Director Rego encouraged Johnson to consider advertising on popular streaming services like Hulu and Youtube TV.

The Board discussed potential changes to which department handles utilities billing and customer service.

One potential option discussed was moving the customer service, collections, and billing from the Water Utilities Department to the Finance Department. In a discussion between the Finance Department, Human Resource, and Water Utilities Department, the main challenge that change would pose is the lack of training and experience of the Finance Department in handling the call center and customer service. Utilities Director McAvoy said the Finance Department said of themselves “We know nothing about running a call center.” Also, the Water Utilities Department has a process in place for meter reading, re-reading, billing and billing adjustment and concerns were expressed that to separate that from the Water Utilities Department would require all new process that may not be as effective or efficient.

Another potential option discussed was the recommendation made by that multi-department discussion. They recommend that instead of moving the customer service to the Finance Department, a brand new Customer Service Department be formed that would handle the call center, customer service, and collections, to be headed by the current Water Utilities Deputy Director of Business Operations (who has call center experience already). The Customer Service Department would have oversight from Finance and Utilities but report directly to the City Administrator. This option would require hiring a replacement for the Deputy Director of Business Operations and one billing analyst.

Utilities Director McAvoy recounted the history of how the customer services and collections ended up under the Utilities Department in the first place because in 2018 the Finance Department was overwhelmed so other departments took on some of their duties (Billing, collections, and customer service for utilities went to Utilities, Business Licenses went to Planning, etc.). There were challenges in the transition and in 2019 a call center was added. Since then processes have been documented, procedures have been standardized, and accountability for adjustments has been established.

Director George Catsavis expressed concerns that 6 call center employees was not enough for the 1500-2500 inbound calls per week (450 per day average inbound and 335 per day average outbound). Director Settle said that we’ve “Gotta have money to pay for hiring”. McAvoy said that it would be possible to find the money for 2 additional new hires. Director George Catsavis expressed frustration at the customer service he hears people are receiving calling it “Unacceptable. People deserve better than that.”.

Director Settle asked if calls for Sanitation would go the new department,too. McAvoy answered that they would. Geffken said that “One number for the whole city is the goal, but we’d need the funding for it.”

Director Morton talked about the need to have a review process before staggering erroneous bills from bad meter readings go out to customer mailboxes. He also advocated for a change to the ordinance that currently creates a 20 day deadline for sending out bills. Geffken suggested it could be amended to 30 days to relieve the pressure to send out bills. Director Morton expressed his preference for hiring more meter readers for double checking readings and more call center employees rather than restructuring and hiring a replacement department head. Geffken mentioned that there are existing vacancies and they are trying to hire more staff. Morton also suggested that the deposit amount for new accounts be raised and the time before refunds of deposits are issued be made longer to reduce unpaid debts (mostly from renters who move and leave unpaid bills behind).

Director Rego talked about how many residents only interactions with the city government are with utility bills and expressed concerns that bad experiences with that could lead to lasting negative views about the city in general. He said “It has to get better.” McAvoy agreed about the importance of customer service, saying “We’re here for the customers.”

Director Martin mentioned that during the last Audit Committee meeting they discussed that things with “finance components need to be under Finance”. He advocated for moving the customer service, billing, and collections to under the Finance Department.

Director Good said that he thought it would be “better served in Finance” but that he didn’t really care either way so long as the solution provided better customer service, especially increased staffing at the call center.

Director George Catsavis asked Finance Director Andy Richards if Finance could handle taking on the customer service, billing, and collections tasks. Richards answered that if they added one more person they could, but he recommended the City would be “better served” by a new Customer Service Department.

Mayor McGill reminded that in the strategic planning meeting they talked about making staffing a priority.

Director Christina Catsavis asked about outsourcing the call center. McAvoy said that they had looked into that and it was more expensive, but that he could look into it again.

A presentation on how water meters are read and a discussion about parking on Fairway Hamlet Court that were on the agenda were both tabled due to the length of the meeting. They will be added to a future meeting agenda instead.

Deputy Director of Business Administration and Utilities Joshua Robertson gave a presentation regarding the Energy Master Plan for the City of Fort Smith facilities and the City’s participation in the OG&E SAGE program. SAGE is a free program that sets a goal of 10% energy use reduction at the facilities the program recommends for improvement and can result in $78,820 in savings, plus cash incentives, and 90% funding for efficiency improvement projects (including replacing inefficient lighting and HVAC equipment). Two projects that have already benefited from the SAGE program funds are a Massard wastewater treatment plant project that has received $99,000 towards the project and changing out the lights in the parking garage to LED that was 99% paid for by SAGE.

The program did an in-depth building by building benchmark study of the City’s facilities and compared their energy use with other similar building types in other municipalities in our climate zones. Overall, Fort Smith was found to consume more energy per square foot and spend similar budget dollars compared to other municipalities in our climate zone. Fort Smith performed slightly below average in efficiency (77.6 KBTU per square foot here versus 64.7 KBTU per square foot elsewhere) and had higher energy costs ($1.50 per square foot here versus $1.07 per square foot elsewhere). Fort Smith had a similar energy use per occupant as elsewhere. The facilities shown to have the highest overall energy cost were the Convention center ($285,547), City Hall ($81,639) and Police Headquarters ($68,088). Robertson called high use at the Creekmore Tennis Center a “big surprise for us”. High use at Parrot Island was explained to be a result of the HVAC being designed for just a snack bar originally, but that adding a grill and kitchen equipment has resulted in the air conditioning running very hard continually.

The top facilities most targeted for improvements were the Landfill Service Shop and Creekmore Tennis Center followed by the Landfill Service Shop break room, Riverfront Pavilion, and Parks Maintenance office. The top buildings found to already be performing most efficiently were the City Annex, Creekmore Pool Office, and Oak Cemetery followed by the Visitors Center, Parking Garage, Fire Stations #1 and 5 and the Landfill office.

Ethan Townson with the company that conducted the study talked about the SAGE program’s focus on low cost and no cost improvements that will result in 10-15% total utility savings per year. He recommend that the city become efficient first and then look at solar because with a lighter load to support the capital expenditure will be less, plus tech will be better in the future.

The City is entering an agreement with OG&E to purchase solar electricity from them and to rename the OG&E solar power generation farm in Branch, Arkansas the Fort Smith Facility. The agreement requires the city to purchase 50% of their annual Kwhs of electricity from the OG&E solar farm and would limit the City’s own on-site or self generated power to 20% of the City’s use (during non-emergency times, so power outages would be excluded from that limitation)for its small accounts. There is no limit on how much could be generated for the city’s large accounts.

While the efficiency initiative was praised for its potential to reduce usage and save money, Geffken said he would like to “ideally eliminate electricity cost eventually”. Director Morton mentioned that September 30,2024 is the deadline to start a solar project to have it qualify for 1 to 1 net metering. The project need not be completed, but must at least have a feasibility study finished by that date. Geffken said that with the fixed amount of SAGE funds available from OG&E it was good to work on the efficiency measures and get applications for funds in right away but that the efficiency measures “need to go in parallel” with the solar to be able to take advantage of the net metering opportunity by the deadline.

Fort Smith resident Rick Murphy spoke in support of the city establishing a solar farm. He asked the audience to stand up if they were there to support solar and many in attendance at the well attended meeting stood up. He advocated solar as a path to save money, improve quality of life, and make the city more attractive. He advocated fixing inefficient buildings, but agreed with Geffken that the legislative deadline for net metering means that efficiency must be done in parallel with solar.

Fort Smith resident Chris McRay said that he has never experienced an electricity rate decrease and doesn’t expect to see one. He said “Time is of the essence” for going solar. He talked about successful solar programs including Batesville Schools whose solar farm built in 2018 has saved then $600,000 per year and a farmer in Prairie Grove that is saving $24,000 per year. He also asked for the City if they built a solar farm at the landfill to donate part of their solar farm to low-income residents.

Sam Hannah with Hannah Oil and Gas spoke about how his company took advantage of the net metering policy and built a 2.5 acre solar farm at 6301 Stateline Road that produces 820,000 kwhs at 8 cents per kilowatt. They are set to make their money back from the land purchase and construction in a total of 8 years. He said that their April 2022 bill before the solar was $7432, but their April 2023 bill was only $1800. He mentioned that solar farms only have to be within 100 miles of where the energy will be used, so it could be any location. Geffken added that besides the landfill, the watershed around Lee Creek is potential City property for a solar farm.

Solar experts Flint Richter and Ellison Forte with Entegrity Partners, the company that built the Batesville, Farmington, and 2 of the U of A solar farms spoke and answered questions. Forte said “reducing your consumption is key” but also recommended “moving with swiftness” on solar.

Director Morton asked how many acres of solar farm would be needed for the City of Fort Smith to meet or exceed all of their usage needs. Forte answered that a 5 megawatt project would be needed and that at 4-5 acres per megawatt he estimated 30 acres of good flat land (or up to a 10 degree south slope) would be needed.

Director Morton asked how long it would take to build a 30 acre farm. Richter answered a year to a year and a half. Director Morton asked what the whole project would cost. Richter answered roughly $6 million. Director Morton asked about financing. Richter said that typically it could be financed with a Solar Service Agreement involving a 25 year agreement with private investors that pay the upfront costs. The up to 40% of the cost in tax credits that the project would qualify for would be passed on to those investors. The client (in this case the City) agrees to buy power from the array from the investors. It would cost the City zero dollars up front to build the array.

Director Rego asked how much the feasibility study might cost. Forte answered $35,000-$80,000.

Steven Kurtz with the Citizens Climate Lobby spoke to support going solar by the net metering deadline and mentioned that solar could be done for no capital cost the way the Integrity Partners mentioned and that Hannah Oil and Gas owns their own farm themselves.

This meeting included the monthly Citizens Forum section.

Rod Blake spoke about the Deer Trails Golf Course. He was one of the first property buyers at Chaffee Crossing back in 1998. He currently owns over 400 acres of Chaffee property. He wants to develop some of his properties but needs assurance that the golf course is going to remain a golf course. He has already met with a private investor who wanted to develop an indoor sports complex on his property. When he originally purchased the property, he was told that the golf course was not for sale, but it is now being marketed and 2 different offers have been made on it. He said the FCRA has a “vested interest in marketing every inch of property out there nowdays.” and called them “detrimental to development”. He said that FCRA board meetings are a “very threatening atmosphere” and citizens have been told to “sit down and shut up” by the FCRA Board Chair. Blake suggested the Board of Directors bring the FCRA chair in to answer questions.

Director George Catsavis motioned to have FCRA Chair Dean Gibson in to answer questions in a combined meeting with the Fort Smith Board of Directors and the FCRA. This will be arranged and added to a future meeting agenda.

Director George Catsavis asked if the City could sue for an injunction to stop the sale of the course. Geffken said that he would ask but he was not sure that the City had legal standing on that issue. Director Morton reminded that the Board of Directors has zoning control and can just opt to not approve any requests to change the zoning to anything but the current golf course use zoning. Director Catsavis asked if the City is under contract to supply water to the course property if someone buys it. Geffken said they are not.

Fort Smith Resident Sara Ligen who spoke at last month’s Citizens Forum about an issue regarding a neighbor’s dogs killing one of her cows and injuring another and one of the dogs being allowed to remain with her neighbor and concerns about a conflict of interest with City Prosecutor Rita Watkins being friends with the Harmons that own the dogs returned to speak on that issue again. She said it has been 29 days that she’s had to stay in her home due to the vicious dog across the street. She expressed worries about the safety of her children. She said she has been in contact with the Attorney General, County Prosecutor, and new City Prosecutor for that issue and is spending about $15,000 for fencing on her property to protect it from the dog. She brought the Directors copies of text messages between Rita Watkins and the dog owners regarding the incident and in which Watkins offered legal advice including about filing a complaint on a Fort Smith Police Officer.

Director George Catsavis asked if the neighbors had fixed the hole in the fence the dog had been getting out of. Ligen said that they had not. Geffken asked for a picture of the hole to send to the Sheriff since they said they don’t see the issue. Ligen provided the picture.

Director Christina Catsavis called the text messages between Watkins and the Harmons “infuriating”. She asked if that personnel issue would be discussed with the Board. Geffken answered that it would not, that the Board is not involved in hiring and firing decisions.

Dr. Phillip Russell and Dr. Rosalee Russell spoke about the 40,000 square ft Community School of the Arts that is currently being built next to the Marshals Museum on the riverfront. The school is applying to be an open enrollment public charter high school for grades 9-12. It would serve up to 500 high school students in the daytime and then have after school programs for other ages. The school has raised over $10 million and the construction of the school was originally estimated to cost $10 million. However, the construction costs have gone up and the project will now cost $20 million. They asked for the City to consider through Covid relief funds or City government funds donating a million dollars towards the project

In the Directors Forum section of the meeting, Director Settle suggested that agendas for study sessions that are the first study session of the month, so they will include the Citizens Forum, be designed to not be long meetings. Meetings that will likely be long could be scheduled for the second study session instead. The 5-9-23 meeting cut two agenda items for time reasons and still ran till after 9pm. There was interest from the Board in planning future agendas so that the first study session of the month was not so full.