Fort Smith Director calls for auditor on $480 million in sewer system work

Steve Parke, director of utilities for the city of Fort Smith, had another tough night in front of the city’s Board of Directors at Tuesday’s (Aug. 18) regular meeting. But that item of business took a back seat to a tense Q-and-A between Parke and City Director Keith Lau in which Lau suggested an internal auditor may be needed for the utilities department.

Lau questioned Parke’s computations on a piece of the water and sewer improvements as laid out in a $480 million EPA consent decree against the city for violations of the Clean Water Act.

This time around Parke was asking the Board to approve a $90,110 request with Morrison Shipley Engineers Inc., for engineering services associated with improvements to the Riverlyn Wastewater Pump Station. The station was built in 1968 and the consent decree requires a facility upgrade.

While the Board voted 6-1 in favor of Tuesday night’s request as part of its consent agenda —Lau being one of the “yes” votes and Director Tracy Pennartz the only “no” — Lau was not pleased with the high figures or the fact Parke could not give a more defined answer on the overall cost of the project. Parke tried explaining there were “too many variables involved” to arrive at a ballpark figure that would be worth anything at this point in the project.

“So we are just supposed to trust you, I guess, is what we are supposed to do?” Lau asked. “How do we know that these numbers are correct?”

Pushing his point, Lau noted that the city was able to estimate the $480 million for the EPA order, but is unable to provide an estimate on an element within the bigger picture estimate.

Lau also worried that “if you put $90,000 out there it's going to get spent,” implying that projects always have a tendency to use every dollar budgeted for them. Parke pressed back on this, noting his department has “under-run” projects in the past and that it was no one’s desire to see more expenditures than necessary.

“We are not interested,” Parke began. “I am a member of the community. Most of my staff is. We live here, and we’re not interested in paying higher sewer rates and building things we don’t need.”

The utility department is to have the project finished by the end of 2017 by order of the consent decree.

PAST SPENDING CONCERNS
At a prior meeting on July 21, Lau questioned Parke over a $249,000 request for engineering services on the Lake Fort Smith and Lee Creek Fluoride Feed Systems. Parke said the funding was a nine-month contract for engineering services, which would include “submittal review and contract compliance” as well as “providing a full-time resident inspector on both locations during construction. Parke said the amount was “within the standard percentage rates of all the contracts we’ve done.”

This didn’t fly with Lau.

“I can assure you with our consent decree that’s coming up that we’re going to have to start looking at things like this — exorbitant costs — which $249,000, especially with two full-time inspection engineers on site is exorbitant, and I think this Board would support me in saying that,” Lau said, adding that city staff needs “to come up with some kind of way in the future to control these costs.”

Lau continued: “I want to see an effort to really look at this. Instead of it coming across on a consent agenda for $249,000, that there’s some thought given to how we can save money on these kinds of projects. I think we owe it to the citizens, to the employees of Fort Smith, to all the payers of these high rates that we’re going to be charging. I’m just putting everybody on notice, I’m not putting up with these kinds of exorbitant costs in the future.”

Ultimately on that issue, board members voted Parke down 4-3.

Lau again noted after Tuesday’s meeting that the city may need to invest in an internal auditor.

“I think we owe it to the citizens of Fort Smith to come up with some kind of program or system to check these numbers and make sure that we are not overspending,” Lau explained. “I mean I couldn’t get a date (of completion). I couldn’t get a cost. We've got $480 million dollars out there, (and) I'm not so sure that we shouldn't have some kind of internal audit position in water and sewer to be checking all these costs to make sure that we are getting fair and accurate bidding or costs for professional services. I just don't have a good, warm, fuzzy feeling.”

BUDGET CUTS
The night’s main item of business — the approval of proposed budget cuts and a transfer of $770,473 from the General fund to the city’s police and fire (LOPFI) contribution fund passed unanimously. However, the Board decided to hold off on applying an additional $314,538 from a higher than expected share of the County Sales Tax revenue from January through June 2015. The Board’s main concern about doing so at this time is that if it made the decision now, it would not be able to reallocate funds should there be any unexpected budget shortfalls — a possibility given the belt tightening from city departments.

The decision not to apply the additional revenues to LOPFI passed 6-1 with Director Andre Good being the only “no.”

The next regular meeting of the Fort Smith Board of Directors will take place Sept. 1.