Van Buren rejects 2009 true up charge

The Fort Smith Board of Directors must now decide a course of action after Van Buren officials rejected a request to pay the city of Fort Smith a contested water charge of $253,000

The Fort Smith Board voted Dec. 6 to immediately pay Van Buren $30,000 in a rate adjustment — true up — for 2010 and to have city staff negotiate with Van Buren over the $834,000 that Fort Smith says is still outstanding for 2006 through 2009.

True-ups are geared to cover changes in operating costs that may increase or decrease the cost of water. Van Buren Municipal Utilities Commission Chairman C.E. Dougan has said Fort Smith officials missed an August 2010 deadline to provide the Van Buren commission details on the 2009 true up.

Van Buren officials have agreed to pay Fort Smith for $581,000 in true-ups for 2006-2008, but does not believe it owes a $253,000 true-up for 2009.

Fort Smith city directors have said Van Buren still owes the 2009 adjustments and should pay them.

Fort Smith City Administrator Ray Gosack met Dec. 14 with Dougan and Gary Smith, manager of Van Buren Utilities to ask if they would pay the 2009 true and to set terms and payment amounts for the money Van Buren has agreed to pay. Gosack said Dougan and Smith were not willing to budge on the 2009 payments, and gave four reasons why they will not pay the 2009 true up.

• Van Buren believes it’s on solid ground legally to not owe any payments for 2009.

• Van Buren can’t provide a rationale explanation to its citizens why it would make a payment for 2009 when Fort Smith didn’t follow the contract requirements for that year.

• Van Buren disagrees with the calculations for 2006-08 but tentatively accepted the amounts calculated by Fort Smith in the context of settling and getting behind them the true up disagreements for 2006-2009.  If Fort Smith pursues arbitration/litigation to receive a payment for 2009, then Van Buren won’t accept the amounts calculated by Fort Smith for 2006-08 and will challenge the true up amounts for all years.

• Van Buren has nothing to gain by making a payment for 2009.
 
“I asked if there was any circumstance under which Van Buren would consider paying a true up amount for 2009. Mr. Dougan replied that there wasn’t,” Gosack noted in his memo to the Board.

Gosack said the 75-minute meeting ended with terms on how to resolve true ups from other years.

“In summary, Van Buren isn’t willing to pay any additional amount for 2009, but is willing to pay up front $397,000 and the balance of  $184,174 in equal monthly installments without interest during 2012,” Gosack explained in the memo. “If this true up settlement arrangement is acceptable, we’ll prepare an agreement which would likely be ready for the January 3rd board meeting. If you’d like to have a study session discussion prior to considering a settlement agreement, please let me know.”

Gosack said Monday morning (Dec. 19) that he had yet to receive any feedback from the Board about his meeting with Dougan and Smith.