Land acquisitions will play a role in the city of Fort Smith’s $480 million consent decree for years-long violations of the federal Clean Water Act. While a necessity for ensuring the city has the capacity to do required improvements, it does create an eminent domain situation that can prove “contentious,” according to temporary Utilities Director Bob Roddy of Burns & McDonnell.
There are “no specific sites in mind” at present, Roddy said, but the consent decree requires the city to do “a lot of specific construction, it’s going to impact neighboring properties, and many people don’t want to see their property used for sewer activity.”
Street and utility departments have the option of using eminent domain laws to acquire property when providing services to a city, but the need to do so can create conflict in two ways, Roddy said.
“A lot of times we will use appraisers to come up with a value and people believe the property is of a higher value so there is a negotiation process to hopefully come to some consensus as to what the price should be,” Roddy explained, adding that other groups of people simply “don’t want a sewer line running through their field.”
Assigning a dollar value to the city’s eminent domain push during the consent decree is difficult as “no specific sites have been singled out at this time,” Roddy said, but land will likely be purchased in small parcels. This corroborates recent comments from City Administrator Carl Geffken, who “ballparked” the figure at $2 million, but admitted he “didn’t know for sure.”
“Generally most of the land we purchase is $5,000 or less,” Roddy recently said. “We’re not purchasing acres and acres of ground here. It will be five feet here or 10 feet there. Most of the stuff we do involves putting a pipe below the ground or getting an easement. We want to make sure it’s unobtrusive and not an eyesore day-in and day-out. The challenging part is coming to a price or getting a land use change. But mostly it’s the price.”
The money for land acquisitions would be spent over the course of the consent decree and possibly “10 to 20 years,” he said.
“Some of the projects won’t require land acquisition, but what happens is when you’re doing a system expansion and building new lines, you get into this sort of issue.”
Roddy said the first system improvements could come in 2016 or 2017, and in those cases there “might be land acquisition we have to do.”
“We would have to look at it project-by-project to see if land will be an issue,” he said, adding the consent decree has “complexity,” with 400 specific items required of the city and 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.”
Fort Smith 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.
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.
Roddy will continue as temporary utilities director until a suitable replacement is hired. The city thought it had the post filled with applicant Francisco Martinez, who turned down the administration’s $102,000 offer to take the lead on the embattled department on Sept. 22.
The city will repost the position through Strategic Government Resources (SGR), the Dallas-based firm it used to recruit for the soon-to-be-filled police chief and recently-filled human resources director positions.
The city’s utilities director search took about two months following the resignation of former director Steve Parke on April 1. The earliest a new hire will take over for Roddy will be late November or early December. SGR had more challenges recruiting for the utilities director position receiving only 10 applicants compared to the combined total of 72 for the police and HR posts.
The challenges likely have something to do with terms of the consent decree, which have driven a major sewer rate increase for Fort Smith residents and placed the department on a strict 12-year deadline for completion.