Fort Smith Board, city staff discuss $480 million DOJ settlement plan

There were few, if any, smiling faces in the room Tuesday night (Dec. 9) as Fort Smith city staffers and the city’s attorney explained to the Fort Smith Board of Directors more details on settlement with the Department of Justice that will cost the city at least $480 million by 2026 and potentially triple water and sewer bills for homeowners.

The costs are part of a possible agreement between the city of Fort Smith and the Department of Justice related to Clean Water Act violations with the city’s water and sewer system. The U.S. Environmental Protection Agency turned the matter over to the DOJ in 2006. Initial word was that a proposed consent order would cost about $205 million in capital improvement costs.

However, Tuesday’s presentation revealed estimated capital costs between 2015-2026 of $375 million – not including finance costs. Also, estimated operations and maintenance costs in the 2015-2026 period tally $104 million, including hiring up to 82 people to implement the plan and its various new programs.The city’s combined water and sewer operations now employs 196.

The Board is scheduled to vote Dec. 16 on the extensive and detailed settlement plan. (Link here for a PDF of the city’s presentation on some of the costs and actions required through the proposed consent order.)

BIG PICTURE COSTS, ACTIONS
Of the $375 million capital costs, 39% ($145 million) is for defect remediation, 17% ($63 million) for capacity remediation, 12% ($45 million) for pumping improvement and 10% ($37 million) for engineering and professional services. Treatment, capacity assessment and current projects are also included in the capital costs.

Of the $104 million in operations and maintenance costs, 26% ($27 million) is estimated for collection system maintenance and repairs, 23% ($24 million) for extra staff and management support, 13% ($14 million) for treatment and pumping maintenance, and 13% ($14 million) for information management. The remainder will cover project management, root removal and pre-treatment work.

While the proposed settlement between the city and the DOJ is complex, the primary purpose of action is to increase capacity to eliminate wet weather overflows and address remedial defects to eliminate dry weather overflows. The time frame outlined in the city's presentation of the proposed consent decree terms extend for 12 years, giving the city time to invest the needed funds to bring the sewer system up to standard.

Much of the city’s previous investments in the system have been to mitigate or eliminate wet weather overflows. The focus now appears to be toward doing the same for dry weather overflows. According to the proposal, the city will have to begin monitoring overflows in wet and dry weather situations and report all overflows to the Environmental Protection Agency. In addition, the assessments will focus on finding the dry weather blockages and intrusions in lines that cause overflows during dry periods. These can include grease blockages and roots that have grown into water lines over periods of years or decades. Testing private lines of residential and commercial users could involve smoke testing. There were some questions Tuesday about the legality of forcing property owners to submit to such tests. (At the end of this story is a short video explaining how a smoke test is conducted and problems discovered through smoke testing.)

DISCIPLINE NEEDED
Jerry Canfield, an attorney with Daily & Woods and the city’s lead attorney on the settlement effort, said he recommended the Board approve the settlement plan, and that if litigation ensues it could cost the city $1.5 million annually in legal fees and could result in civil penalties much higher than the $300,000 presently proposed. However, he cautioned that if the plan is approved, the Board and future Boards must have “the discipline to not be stalled … by things that might come along.” He said the plan includes “multiple, multiple deadlines” with stiff penalties for missing them.

Water and sewer bills for Fort Smith residents could grow from an average of $40 per month to up to $120 by 2026. If a sales and use tax is implemented in 2020, the monthly rate may only increase to $103 by 2026.

“There’s not going to be much time for special treatment and delays,” Canfield said in explaining that allowing a few “squeaking wheel” voices to alter the plan or reduce needed rate increases would add to the costs.

Canfield freely noted he was tempted many times to walk away from negotiations with the DOJ and at times had a “strong desire to go tell them to fly a kite.” He said the “brinksmanship” of parts of the negotiations were “the most remarkable” in his more than 40 years of practicing law.

DIRECTOR REACTION
City Directors Keith Lau and Kevin Settle were pointed in their concerns with the plan. Lau said he had “heartburn” about hiring 82 people for a 12-year program. He also wanted more detail on how the money would be spent in the $375 million capital costs program.

“I need more convincing that that (capital cost budget estimate) is a good number,” Lau said in an interview after the meeting. “I just haven’t seen enough data to justify that and 82 more people.”

Settle asked Steve Parke, director of Fort Smith Utilities, to “make sure you justify” the need for each of the 82 positions.

Parke assured Settle that the city staff would return to the Board to have a “genuine conversation” about staffing and costs. But Parke added that the city’s utility department has always been a “reactionary” workforce with respect to system maintenance. They will need more people to get ahead of problems and stay ahead of them.

In a brief interview after the meeting, Parke said the settlement, if approved by the Board, asks the city to do a lot in just 12 years. When asked his confidence level of making it all happen in 12 years, Parke paused, and then said, “We will do it.”