Fort Smith Board approves sewer rate hike, new rates to begin May 1

Sewer rates for all Fort Smith customers will increase May 1 to help pay for an estimated $480 million in federally mandated sewer system improvements. The rate hike is less than originally proposed but will raise the average monthly residential bill from $19.63 now to $47.91 by January 2017.

City staff recommended sewer rate hikes to help fund the work needed to meet the requirements of a recently approved consent order between the city of Fort Smith and the Department of Justice and the Environmental Protection Agency. The order requires extensive investments in new infrastructure and ongoing maintenance activities to bring the city in compliance with the Clean Water Act.

A rate hike vote was tabled at a March 17 meeting by Directors who wanted more information, including how rate hike would impact commercial and other classes of users.

The estimated $480 million includes $375 million capital costs and $104 million in additional operations and maintenance expenses. 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 fix defects to eliminate dry weather overflows. The agreement gives the city 12 years to invest the needed funds and do the work to bring the sewer system into compliance.

The rate hike was approved by the Fort Smith Board of Director during their Tuesday (April 7) regular meeting. The Board first voted Tuesday to increase rates that would allow for a 20% reserve in the sewer fund compared to a 33% reserve originally proposed. Lowering the reserve essentially reduced the rate hike by 9%. For example, the January 2017 average monthly residential bill would have been $52.70 under the 33% fund, but dropped to $47.91 with the 20% reserve.

Following are the rate structure changes, with the dollar amount per ccf. According to city consultants, the average residential ccf use is 5.67.
Residential, Commercial and Industrial users
• increase to $5.30 in May 2015
• increase to $7.10 in January 2016
• increase to $8.45 in January 2017

The billing charge per account will be $2.50 as of May 1, 2015, increase to $3.50 on Jan. 1, 2016, and up to $4.50 on Jan. 1, 2017.

Director Kevin Settle continued to challenge the need to hire more people for the utility department. The consent order with the EPA and DOJ calls for hiring 77 people during the 12 years of the order to help implement the changes. Settle argued that money should be spent on capital projects and not to hire personnel and add long-term costs to the budget.

Director Tracy Pennartz said the rate hike approval doesn’t void consideration of other funding options.

“It does not mean that we as a board would not look at additional options. … In no way does a vote tonight close down further investigation” of how to structure the program to reduce expenses or find other funding options, Pennartz said.

Mayor Sandy Sanders said even with the rate increase the city will have lower rates than Fayetteville, Bentonville and other comparable cities. And after the vote, Sanders urged citizens to understand that the Board has struggled with the issue.

“This has not been an easy decision for your board members,” Sanders said.

Director Settle was the only vote against the rate hike.

The sewer rate increase comes just a few weeks before a May 12 Fort Smith special election seeking voter renewal for renewal of the 1% sales tax for street, bridges and drainage improvements. Part of the ballot will also include a voter question on directing 5% of the tax collections toward development of a multi-use trail system. A Trails & Greenway Committee developed the plan that seeks to add 35 miles to the city’s trail system. The Fort Smith Regional Chamber of Commerce and the Fort Smith Regional Council have endorsed renewal of the tax and the 5% portion for trails and greenways.

The street tax generates $18 million to $20 million each year. The tax, first approved by voters in 1985, has a sunset clause that requires voter approval every 10 years. The tax was renewed by voters in 1995 with 87.2% voting yes, and in 2005 with 66.3% voting yes.