Fort Smith Board not happy with $3.2 million budget surprise, approve interim utility director plan

by Aric Mitchell ([email protected]) 171 views 

The Fort Smith Board of Directors grilled the city’s Utilities Department over a $3.2 million appropriation request at Tuesday’s (May 17) regular meeting. Additionally, City Directors allocated $94,376 for a three-month transitional period as the city seeks to replace former Utilities Director Steve Parke, who stepped down April 1.

Also, in a surprise move, the Board voted down a cross-departmental recommendation to hire U.S. Bank for implementation of the city’s new purchasing cards (P-cards) program.

The appropriation request drew the most fireworks from City Directors for its hefty price tag ($3.2 million) and the fact it had not been included in the Water and Sewer Operating Fund during the budget approval process last November and December despite department personnel knowing that the projects were “non-capital” in nature.

The projects include $1.12 million for sewer program management, $835,000 for sewer pump station/force main evaluation, and $525,000 for development and implementation of a capacity, management, operations and maintenance (CMOM) program.

Director Kevin Settle inquired whether the oversight would affect the city’s bond rating, to which City Finance Director Jennifer Walker confirmed that it would, though “not by much, by about 1%” on the 2016 fiscal year. Bond rating minimum requirements are 110%, so as a frame of reference, Walker said if this appropriation were made on the 2015 budget, it would have taken the city’s final rating down from 120% to 119%.

Director Tracy Pennartz said she was “a little bit dismayed when I saw this come across our desk.”

“What bothered me most about it was that management – certainly the department head (Parke) – knew of this impending obligation and to tell you the truth, I don’t remember any discussion during the budget talks about including this as a program section in the 2016 budget. Of course, the Board can always amend the current year budget, but this amount is what I was disturbed by – a $3 million expenditure, that somehow this was not sufficient or large enough to be discussed in detail during our budget hearings,” Pennartz said.

City Administrator Carl Geffken called it a “rather large and unfortunate error,” but advised that it was best the spending was accounted for properly and taken into account for the 2016 rate study. The Board approved 6-1 with Settle dissenting.

The Board’s focus on the utilities department did not end there as City Directors voted unanimously to approve staff support services through consulting firm Burns & McDonnell for a 90-day transitional period as the city looks to replace Parke while dealing with the day-to-day demands of the department and the $480 million consent decree for the city’s violations of the Clean Water Act.

The item first came up for discussion at the Board’s April 26 study session, and Burns & McDonnell’s final proposal was developed based on Directors’ feedback at that time. The proposal is for an initial 90-day service period and a manpower effort of approximately 32 hours per week, plus direct expenses at cost.

As defined in an April 22 letter, the plan names Bob Roddy of Burns & McDonnell as interim utilities director while the city undertakes its recruitment process to make a full-time hire. The proposal also includes a small amount of time for other members of Burns & McDonnell to provide support services as needed.

The 90-day base fee was proposed at $68,376. Additionally, there is a not-to-exceed amount of $10,000 to reimburse direct lodging and travel expenses at cost. Finally, there is an owner-controlled “contingency provision” of $16,000 if there are services needed beyond the initial project scope.

Also Tuesday, the Board voted down a cross-departmental recommendation to approve U.S. Bank as the provider of purchasing card (P-card) services that would allow authorized city personnel to purchase necessary items in a simple and timely manner while allowing the city to maintain a high level of control over usage.

The P-card program would have also enabled the city to better manage low-dollar purchases. Total responsibility and accountability for P-Card transactions would reside at the department/employee level.

While City Directors agreed the program was necessary, they were not ready to go with U.S. Bank based on the recommendation because of majority preference to offer locally-based Arvest Bank another crack at a proposal.

Staff, which included representatives from the IT, purchasing, finance, and fire departments, recommended U.S. Bank because of its experience with real-time/near-real-time reporting, Enterprise Resource Planning (ERP) systems, and a 1.4% rebate program — the highest among the three requests for proposal that were received (Arvest and American Express being the other two.

Arvest’s technology is not yet ready to offer the real-time, completely automated updates like that of U.S. Bank, but since the city’s ERP is not yet in place, City Directors were interested in delaying until they could learn how long it would take Arvest to become operational in that capacity.

Directors Settle, Don Hutchings, Andre Good, and George Catsavis, voted against the U.S. Bank proposal while Directors Pennartz and Mike Lorenz voted for it. Director Keith Lau abstained.