Highlights of the Fort Smith Board of Directors Meeting 7/18/23
The Fort Smith Board of Directors meeting held 7-18-23 started with a vote concerning economic incentives to lure Project X, (the code name for a not yet publicly announced retail business) that would be a 50,000 square foot facility in the old Best Buy building that would require a $12 million capital expenditure for the renovations and would employ 93 people each at an average $53,000 per year salary. The business is expected to have revenues of about $28 million per year. The owner of the property, Bennie Westphal, compared the scale of the business to a Costco, Trader Joe’s, Bass Pro, or Target. The Board of Directors approved incentives at the 3-21-23 meeting that 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. The current Arkansas Constitution does not allow for that type of incentives for retail businesses.
At the time of the original vote on the issue, there was anticipation that the legislature would amend the Constitution to allow for the incentives. During the most recent legislative session the House did pass an amendment that would allow it. The legislative change is modeled off of the wording on similar incentives in Texas law and would allow for incentives for retailers that have over $20 million in annual sales revenue and employ over 75 people and when there is competition for the business between coming to an Arkansas city or a city in another state. The bill did not make it to the Senate as a result of limited time because of the tornado that affected the Little Rock area. Currently, Arkansas law allows for economic incentives for retailers if they’re used for certain uses including job training facilities, warehouse facilities, job recruitment and employee retention. So the resolution brought to the Board at the 7-18-23 meeting included provisions so that if the original planned incentives remain unconstitutional that instead the City would commit to paying Project X up to $400,000 per year for 12 years in incentives that would be used for the currently legally allowed purposes. Project X will submit invoices to the City for up to $400,000 in qualified expenses. There will be no carry-over year to year. Anything remaining unspent out of the $400,000 each year will revert back to the City. Westphal said that if the $400,000 per year were approved that it would “allow the project to move forward almost immediately”
Director Morton motioned to amend the resolution. He suggested that it be specified that the City’s obligation for the incentive should be reduced by the amount of any incentive money Project X receives from the State or Federal government, that the incentive be non-transferable to any entity other than Project X, that the incentive would terminate immediately if Project X closes, and that wording be added that clarifies specifically what happens to any unspent funds from the $400,000 per year.
The Board voted unanimously in favor of the incentives for Project X as amended with Morton’s suggestions.
The Board voted unanimously in favor of requesting that Acme Brick donate land they own that was the former site of their brick making facility and quarry to be redeveloped into a mountain bike park in the part that was the clay pit and a detention pond for flooding in what was the kiln area. Mobility Coordinator Micheal Mings said that when the proposed park plans were brought to the Parks Commission, they were overwhelmingly supportive of the idea. Mings said the park has the “potential to be catalytic for the city”.
Director Rego called the park a “truly exciting innovative project” and a “potentially monumentally transformative project”. Director Morton called it a “brilliant idea'“ and suggested that Acme be acknowledged permanently in the naming of the park, for example, Acme Brickyard Park. Director Settle agreed with Director Morton on including Acme in the name. Director Settle also encouraged that when planning the park the planners should “think outside the box” about where Old Greenwood Road is and that roads can be moved. He said “Doing something revolutionary puts you on the map.”
Director Good praised the project’s potential for addressing habitual flooding on the Northside. Director Morton also explained how the planned detention pond can keep up to 50 million gallons of water at a time off the Northside and that would help give the existing drainage a chance to catch up, preventing flooding.
The Board voted on continuing the existing allocation percentages for the portion of the County sales tax that goes to the City for the upcoming 10 year period. Public safety receives 76%, the library receives 6%, Parks receives 2.5%, Senior citizen services receive 1.5%, and other city services including general administration and operations receive 14%. The County sales tax is up for renewal that would last through 2034 via a public election vote on August 8, 2023.
Director Settle questioned how the resolution works and expressed that while he is not contemplating any current changes to the allocations, that looking towards the future, he would like the percentages to be more “locked down”. Director Morton expressed how much the library depends on their 6% and voiced his desire to “set in stone for 10 years” the library’s allocation. He also expressed his feeling that it is critical that the public be able to trust that the taxes are spent on what they said they would be spent on when they were vote on. He said that he wants “something that makes it hard to change” the allocations. Deputy Administrator Dingman added that the library has a separate agreement with the City that assures their 6% contractually. Administrator Geffken suggested that the Board could amend the resolution to make it so that two public meetings would be required to be held and that a super-majority vote of the Board (at least 5-2) would be required to pass any changes to the allocations. The Board voted unanimously in favor of the amendment to make it tougher to make changes to the allocations and then the Board voted unanimously in favor of the resolution approving continuing the current allocations including the measures to make them tougher to change.
The Board vote unanimously in favor of paying a total of $149,200 to acquire easements for the Lake Fort Smith water transmission line project. The Board also voted unanimously in favor of spending $21,700 and using the power of eminent domain to acquire easements for the relocation of utilities required for a highway project.
The Board voted unanimously in favor of accepting a bid from Tony’s Tires not to exceed $200,000 annual for tires for Solid Waste Services department vehicles.
The Board voted unanimously in favor of spending $77,823 from the Flood Residence Buyout Program to demolish two houses that are frequently flooded. Director Morton asked about the seemingly higher than expected cost of the demolition. Engineering Director Stan Snodgrass responded that the buildings have asbestos that increases the cost.
The Board unanimously approved issuing a 2 year non-residential waste collection permit to Scarbrough Enterprises.
During the Officials Forum portion of the meeting Director George Catsavis brought up the invoice the City received from veterinarian Dr. Chris Ashworth for a total of $3200 (for 8 hours at $400 per hour) for consulting during the Fort Smith Animal Haven audit. Director George Catsavis criticized the high bill. Director Morton agreed “I believe $400 is excessive” and expressed a willingness to pay the going hourly rate for veterinarians in our area. Director Christina Catsavis added that the veterinarian’s participation in the audit was at Director Morton’s insistence and that the Board never officially voted to include the veterinarian or to compensate him for his time. Director Morton said that while Dr. Ashworth is paid $2000 a month by FSAH for his work with the shelter, at the audit meeting Ashworth said that he would need to be compensated for his time outside of the shelter. Director Morton said that no one objected to that so Geffken agreed to handle payment. Director Morton said that he felt Dr. Ashworth’s input was important to understanding some things in the audit. Director Christina Catsavis said that she didn’t realize at the audit meeting that they could have voted on the compensation and did not realize that they would be charged $400/hr. She expressed frustration saying that the “tax payer money could be used for people starving in the heat” instead.
Director Good said that to him the fee seemed “excessive” but also acknowledged that he is not a “nationally acclaimed and known veterinarian” that Dr. Ashworth is. He called Ashworth’s information “vital for the audit”. Director Good expressed his feeling that the City should remain committed to paying the bill saying “We pay our debts. We pay our bills. We take care of business.” Director Rego agreed with the idea of fulfilling obligations saying “It doesn’t bother me in principle to pay something that is owed”.
Director Settle reminded that the Board pulled Dr. Ashworth away from his vacation to participated in the audit, but added that the Auditor had 8 months prior to that to consult with Ashworth and “we could have paid zero”.
Administrator Geffken said that starting with their next bill FSAH will be charged for their City utilities.
Adminstrator Geffken discussed that there has been a request from Community School of the Arts for the City to donate $1 million dollars to the charter school being built on the riverfront. Through matching funds and tax credits that are available if the school were to receive the $1 million, they could raise $10 million.
Director Christina Catsavis said that in the trip to Washington DC, officials seemed very excited about the CSA. It was also mentioned that the delegation from Singapore involved in the Foreign Military Sales program coming here was also very interested in the school. City Attorney Canfield said that it currently is not legal per the Arkansas Constitution to donate the money, saying “cities are not set up to be financing agencies for other entities”. Director Settle expressed concerns about opening a “pandora’s box” of requests from other worthy organizations. Director Rego said that if there is a flood of requests inspired by the donation setting a precedent that they could be dealt with on a “case by case basis”.
In the Executive Session portion of the meeting, Genia Smith was reappointed to the Community Development Advisory Commission. Belva Ross, Marlene Torres, and Trevor Campbell were all appointed to the Fire Code Board of Appeal and Adjustments. Nate Deason and Robert Clock were reappointed to the Historic District Commission. Justin Sparrow was reappointed to the Property Owners Appeal Board and Jo Elsken was reappointed to the Transit Advisory Commission.
