Fort Smith to bill Van Buren for 2009 ‘true up’

story by Luke Hobbs
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The City of Fort Smith will reverse course and bill the City of Van Buren for more than $250,000 in water rate adjustments for 2009.

In Tuesday night’s (Nov. 15) regular meeting, directors discussed a special agenda item on water Fort Smith has sold to Van Buren. In late July, Fort Smith officials learned they had failed to meet an August 2010 deadline for completing a “true-up” of 2009 water costs for Van Buren.

City staff took the stance that because Fort Smith had failed to meet this requirement, they could not bill Van Buren for an adjustment in water rates of $253,706.

A true-up is a type of audit, according to City Attorney Jerry Canfield. Canfield explained to directors that the water agreement between Fort Smith and Van Buren, which was signed in 2002, included a study that served as the basis for Van Buren’s water rates.

The study was prepared by the City and reviewed by professionals in the area, and it became the model for determining water rates for Van Buren, Canfield said.

Each time Fort Smith needs to adjust rates, according to Canfield, it must either prepare a new study or make retroactive adjustments based on updated water usage figures. The latter option has been the City’s practice for the past seven years.

When Fort Smith presents those adjustments to Van Buren, Canfield said, Van Buren has 60 days to request a true-up to verify the updated figures. Once the request is made, Fort Smith has another 60 days to complete the true-up and provide Van Buren with the results.

The true-up for water rate adjustments for 2009 was due in late August of 2010.

By that time, the City did not have a qualified employee who could perform the true-up. The financial analyst who had performed previous true-ups had quit earlier in the year to take another job, and his position was left unfilled.

In July of this year, Van Buren city officials informed Fort Smith city officials the true-up requirement was not met and that Van Buren would not pay for 2009 rate adjustments.

City Director Philip Merry Jr., who introduced the special agenda item in Tuesday’s meeting, said he believed Fort Smith should bill Van Buren for the $253,706 because it was still money Van Buren owed, regardless of the true-up failure.

Merry also questioned whether Fort Smith should cash the approximately $161,000 in water checks it has received from Van Buren for the 2006 true-up.
 
Gosack said that although city staff received “a lot of pressure” to cash those checks, he had always argued the city should wait until it had received the full amount it was owed. Cashing a check for part of what was owed, he said, could be taken as “calling it even” over the past rate adjustments. Gosack said Tuesday that cashing the $161,000 check would have resulted in the city not being able to collect $327,000.

Van Buren has since agreed to pay about $327,000 owed from true-ups in 2007 and 2008.

Canfield said that while the city could make a legal claim against Van Buren to get the 2009 rate adjustment, he did not think the claim would succeed.

City Director Kevin Settle called for a joint meeting between officials and staff from Fort Smith and Van Buren.

“I think both sides should meet and settle the differences that way,” he said.

City Director Pam Weber agreed with Settle and added that she wants city staff to keep the board apprised about true-ups in future years.

Merry and fellow City Directors Don Hutchings and Andre Good said they felt the city should bill Van Buren for the 2009 water rate adjustment even though Van Buren might not be legally required to pay. Hutchings said he hoped Van Buren would accept the rate adjustment in good faith as money owed to Fort Smith.

“We have an obligation to be transparent with our findings,” Good said. “That’s why I’m so set on billing Van Buren. We owe it to future Boards to document what happened and how we responded.”

Merry agreed, saying, “We may have to ask for a rate increase someday. What we do now will be in people’s heads then.”

Gosack said city staff will bill Van Buren for the 2009 rate adjustments and will work to schedule a meeting with Van Buren city officials about water rate issues.

PARKS CHANGES TABLED
City directors unanimously voted to table an ordinance establishing new restrictions for public assemblies, meetings, demonstrations, and other public expressions in public parks.

The proposed ordinance, which was recommended to the board by the Parks and Recreation Commission and city staff, would establish a permit system for public assemblies, selling food or merchandise, and noncommercial soliciting on City property.

Former state Rep. Frank Glidewell spoke against the proposed ordinance, saying the Board should not enact it until Arkansas Attorney General Dustin McDaniel may provide an opinion on whether the section dealing with noncommercial soliciting was constitutional.

The section in question reads, “The solicitation of goods and services, gifts, money, or of signatures for petitions for any purpose is prohibited in any City park except within the terms and conditions of a permit issued by the Director of Parks and Recreation or his or her designee.”

Glidewell said the ordinance violated the First Amendment and that if the Board enacted the ordinance without seeking an opinion on its constitutionality, he would file suit against it.

Canfield had informed the Board that it has no authority to request a legal opinion from the attorney general. Glidewell said Arkansas Rep. Denny Altes, R-Fort Smith, had offered to request an opinion if the Board so desired.

Fort Smith resident Joel Culberson also spoke against the ordinance, saying it was “a bit extreme” for the ordinance to require a 45-day advance notice for any “public expression of views.”

Mike Alsup, director of Parks and Recreation, responded that the 45-day requirement would only apply to events that would use public facilities.
 
But Settle agreed with Culberson that the ordinance seemed to require an advance notice and a permit for something as simple as demonstrating in support of a cause.

City Director George Catsavis moved to table the ordinance for six months, and in the meantime to have one of Fort Smith’s state legislators get an opinion from the attorney general on the ordinance’s constitutionality.

The motion passed 7-0.