Fort Smith Board of Directors discuss possible water rate hikes, hold millage rates at same level

The Fort Smith Board of Directors eyed possible water rate increases for the utilities department at Tuesday’s (Oct. 4) meeting, and also approved more than $400 million in capital improvement proposals, renewed existing city millage rates, and deferred education reimbursement policy changes for city staff.

The water rate increase discussion dominated much of the meeting, starting from the five-year capital improvement program (CIP) offered by Interim Utilities Director Bob Roddy for the city’s water system.

A previously approved sewer rate increase lifted the average monthly bill from $19.63 in April 2015 to $47.91 by January 2017. While no decisions were made on a new rate hike Tuesday – the Board voted to approve 2017 under the current rate structure – the reality of a water rate increase is sinking in for city directors.

“How do you pay for it?” asked Director Keith Lau of the five-year plan.

Lau said he could not “in good conscience” approve a five-year CIP without having a way to answer that question. Lau formally amended the request to include just one year with the stipulation the Board revisit funding for 2018-2021 at a later date. City Director Tracy Pennartz echoed Lau’s concerns and said there were only a few ways to pay for the improvements, “and rates are part of that.”

“But how does that affect the economic viability of people living in Fort Smith? Any water study, probably, is going to conclude that rates are going up. There’s a high probability of that occurring, and the damaging part of that is the attractiveness of our city and the affordability of living in Fort Smith,” Pennartz said.

City Director George Catsavis said he had “a real problem” with any kind of a water rate increase because “we’ve already told the citizens what we need” through the previous sewer rate increases, “and now we’re going to tell them, it’s not enough.”

“I’m getting calls from people every day who’ve almost given up, and I can’t put any more pressure on the people,” Catsavis added.

Fort Smith Mayor Sandy Sanders advised the Board that new revenue wouldn’t have to fall exclusively on rate increases, noting there are “other alternatives” to funding, such as extending the time for payment.

The five-year request was for more than $123 million. What the Board approved Tuesday night was for 2017 only at the current rate structure, a $14.505 million total.

On the sewer side, the Board voted for an additional $237 million in capital improvements, most of which are directly related to the $480 million federal consent decree for years-long violations of the Clean Water Act. The consent decree gives the city a 12-year window to make federally mandated improvements to its sewer system. It is the primary driver of the recent sewer rate hikes.

STREETS, PARKS, AND MILLAGE
Also Tuesday, the Board approved a $137 million five-year plan for streets, bridges, and drainage sales tax funds with the first $43.6 million slated for 2017. Approximately $28 million of next year’s total will go toward neighborhood drainage improvements ($10.049 million) and improvements from Jenny Lind Road to Zero Street and Cavanaugh Road ($17.61 million).

The Jenny Lind project is under construction and will finish in the spring of 2018 with final payouts slated for the following year. The city’s engineering department has budgeted more than $29 million for the project from 2016 to completion.

As with the streets program, the parks and recreation department’s five-year plan will run through 2021. It is funded through the city’s 1/8-cent sales and use tax and will total $12.6 million across all five years. For 2017, the department will set aside $2 million for parks projects and $577,920 for the operating budget, which includes personnel, professional services, and operations.

Also Tuesday night, the board approved millage ordinances fixing rates at five mills for all taxable real and personal property within city limits; one mill for the public library; one mill for the Police Retirement and Pension Fund; and one mill for the Fire Retirement and Pension Fund. The eight mills are projecting $8 million in total revenue for 2017. All rates remain the same and are the max allowable under law with the exception of the library.

According to the Finance Department, revenue generated from the five mills for real and personal property ($5 million) will account for 15% of all General Fund revenue. Fort Smith taxpayers have 52.5 mills collected on property each year with Fort Smith Public Schools (Operations and Debt Service) claiming 36.5 mills; Sebastian County (General and Roads) eight mills; and Fort Smith city government the remaining eight mills.

In the city’s case, millage rates have not increased since 1989 for Police and Fire; 1986 for the public library; and 1892 for the General Fund.

EDUCATION REIMBURSEMENT CHANGES DELAYED
Finally, the Board decided to table the proposed education reimbursement policy changes discussed at last Tuesday’s (Sept. 27) study session.

City Administrator Carl Geffken said there have been new developments involving a “very generous offer” from an institution of higher learning he declined to name. He requested city directors to table, so he and staff could have time to review the offer and bring a final proposal to the board at the Nov. 1 meeting.