Fort Smith Board hears about $2 billion wastewater asset, talks about rules on talking to city staff

The Fort Smith Board of Directors received a detailed overview of the city’s wastewater treatment program, specifically as it relates to the $480 million consent decree leveled against the city for years-long violations of the federal Clean Water Act.

Board members also considered best practices for contact with city staff as well as a $2 million proposal for the purchase of new equipment for the Fort Smith Landfill at Tuesday’s (Sept. 13) study session.

Temporary Utilities Director Bob Roddy of Burns & McDonnell commended the city’s compliance with the $480 million consent decree leveled against the city by the U.S. Environmental Protection Agency. The decree was finalized in 2015, Roddy said, adding the compliance “has been excellent” among department staff.

A $2 BILLION ASSET
Listing the city’s wastewater treatment assets, Roddy said the city maintains 516 miles of sanitary sewers, 12,372 manholes, 22 pump stations, two major treatment plants, and four equalization basins, all of which fall under purview of the consent decree.

“If you went out and purchased the whole utility today, the replacement value would be $1.5 to $2 billion,” Roddy said, adding the overall asset is maintained by revenues that will hit $30 million by 2017, “or 1.5% of the value of what you’re maintaining.”

“It’s a pretty good return on your money,” Roddy added.

Rate increases will move the operating budget to $25 million in 2016 and $30 million in 2017. Approximately 49% of those figures will be shouldered by residential customers while 38% will come from commercial billing, 12% industrial billing, 1% “other billing,” and less than 1% from wholesale billing, Roddy said.

Operating expenses over the same period will be $26 million in 2016 and $31 million in 2017 as more requirements of the consent decree are implemented with debt service and capital expenses increasing over time.

The consent decree has “complexity,” Roddy said, noting there are 400 specific items required of the city with 1,300 total entries when factoring in subsets. “It’s complex and difficult, and you can slip up pretty easily if you’re not paying attention.” Also, as part of the capital requirements, Roddy said he anticipates the city will have to venture into land acquisitions (i.e. eminent domain), which “can get contentious.”

BOARD BEST PRACTICES
City Directors started with their annual review of the “City of Fort Smith Board Best Practices” document adopted on Sept. 2, 2014 to improve interactions between the Mayor, the Board, and City Administration and to promote transparency.

The section that drove the most discussion on Tuesday was “17.3: Limit Contact to Specific City Staff.” Director Andre Good expressed his concerns with the section’s restrictions on how a director can interact with city personnel.

The section stipulates that questions regarding additional background information “should be directed only to the City Administrator, Deputy City Administrator, City Attorney, Internal Auditor, and department heads.” It does not limit informal communications between City Directors and city staff members, however, which is encouraged in Section 17.2.

Still, Good said, “If I wasn’t so worried that we weren’t getting good information from our department heads, I wouldn’t feel the need to listen to everyone else telling me what they think the problem is, and we’ve seen that occur. We may not want to address it because it’s a hard to bring up, but recently, about two months ago, I saw an email in the Sanitation Department telling employees not to contact City Directors. To me, that is bogus. The Street Department has also been told verbally not to contact Board members or go to Board meetings.”

City Director Tracy Pennartz said in the past she had solicited information from department heads but provided notice to City Administration of the meeting “as a courtesy,” and did not believe she would “need permission to do that.”

Geffken, whose first day was May 9, said on the flip side of those concerns is the fact the “desire to communicate can be misconstrued as a course of direction that does not include (Deputy City Administrator) Jeff (Dingman) or me in that decision-making process,” thus creating conflict. “It’s a very fine line to walk.”

SANITATION PROPOSAL
Lastly, the Board reviewed a plan from Sanitation Director Mark Schlievert to lease-purchase heavy equipment for the Fort Smith landfill over a three-year span. Equipment would consist of a bulldozer, compactor and two off-road trucks totaling $2.106 million ($1.301 million in year one and two payments of $402,503 in years two and three). Funding for most of the first year would come from $735,000 already set aside for a bulldozer in the 2016 budget as well as $513,000 earmarked for two trash trucks. The department will also be selling off equipment to round out the $1.301 million total.

“There is a large amount of equipment that needs to be replaced in the Sanitation Department,” Schlievert said. “If this recommendation is approved, it will get the department through until other options can be identified via Rate Study.”

Schlievert also updated the Board on “discrepancies” in the depreciation schedule for Sanitation Department assets, noting that under past leadership, it was not adequately handled.

In a memo to the Board ahead of Tuesday’s study session, Schlievert wrote, “It should be noted that this depreciation schedule is set-up for contractor development construction schedule which is based on 10 year useful life. It has failed to indicate that this type of construction equipment is also based on 10,000 hours or 1,000 hours annually which is normal for this type of equipment. Landfill equipment is different in that the same useful life of 10,000 hours remains true (sic) however, this equipment is utilized more during the year and will acquire 2,500 hours annually. This will reduce the useful life of this equipment to around 3 to 4 years vs. the 7 years as indicated in the depreciation schedule.”

“The net result is we don’t have a firm program for replacement of equipment that matches the needs of the department,” said Dingman in comments after the meeting to Talk Business & Politics. “It’ll be confirmed by the comprehensive rate study that we do, so we can plan for 20 years out instead of ‘what equipment do we need to replace next year?’”

Dingman terminated Schlievert’s predecessor, T. Baridi Nkokheli, in December 2015 while serving as the Acting City Administrator for “violation of personnel policies and the code of business conduct.”