The Fort Smith Board of Directors revisited the topic of underwriters for bond issues at Tuesday’s (Nov. 1) regular meeting, opting to shift the split on water and sewer bonds from 80/20 in favor of Stephens Inc., to a flat 50/50 between Stephens and Raymond James.
However, the vote was not a unanimous, ending 4-3 with City Directors André Good, Mike Lorenz, Tracy Pennartz, and Kevin Settle voting for City Administrator Carl Geffken’s recommendation and Directors Don Hutchings, Keith Lau, and George Catsavis voting against.
Prior to the vote, Geffken estimated the bond refinance would save the city approximately $5.46 million over the term of the issue and that it would be accomplished through a Series 2016 replacement.
“The current market conditions and available interest rates will allow refunding the $86.85 million in outstanding debt service (total, including all principal and interest payments) with new debt service in the amount of approximately $80.29 million,” he wrote in a memo to City Directors.
The refinance would result in the same amount of savings regardless, Geffken explained further, but the 50/50 shift was to create additional competition to attain the city of Fort Smith the best possible bond issuance scenarios moving forward.
Former City Director Phillip Merry spoke out against the recommendation prior to the vote, calling Stephens “a great partner for the city of Fort Smith.” The Board agreed, but Settle and Lorenz were especially vocal that competition would benefit the city.
“I want to make sure that we understand this isn’t change just to make a change,” Lorenz said. “We are refinancing to save significant capital, and we have serious expense issues. If you’ve got a way to save money, you take it. This is no slight against anyone. A 50/50 split is best for the city. Given the market position, and the fact we have two well-qualified firms, we should allow both to proceed in a 50/50 manner to best suit our need to market this debt issue.”
At a previous meeting prior to Geffken’s hiring last May, the Board had voted on the 80/20 split. Settle reminded fellow directors the issue was one they had previously discussed placing in the hands of a new City Administrator.
In terms of what the 50/50 shift would mean to Stephens’ bottom line, Dennis Hunt, the company’s executive vice president, estimated a loss in fees of “approximately $100,000.
SIGNAGE, UTILITIES, BUDGET
On its first order of business, the Board approved amendments to the city’s Unified Development Ordinance regarding electronic message centers and digital signage/billboards. The city defines an “electronic message center/digital sign” as a sign that utilizes computer-generated messages or some other electronic means of changing copy. Such signage can use incandescent lamps, LEDs, LCDs, or a flipper matrix.
The amendments enacted on Tuesday are governed by three main guiding principles — the first being that signage cannot operate at more than 0.3 foot candles above ambient light, as measured by a foot candle meter; the second, each display must have a sensor mechanism that adjusts brightness as ambient light changes; and the third, that existing digital signs be grandfathered in as legal, but nonconforming.
An existing digital nonconforming sign must be removed or modified if more than 50% is destroyed; undergoes significant alterations via remodeling, replacement, structural changes, and relocation; or becomes a traffic hazard or danger to the public.
The Board voted 6-0 in favor of the amendments with City Director George Catsavis abstaining.
Also Tuesday, the Board authorized an additional $341,000 to Burns & McDonnell for “staff augmentation” services in relation to the interim director of utilities position held by Bob Roddy. Geffken said the city has received “a stronger class” of applicants in its second attempt to fill the position, stating that job search consultants SGR had received 11 applications with six warranting further review.
Still, the possibility of filling the post by Jan. 1 is slim since interviews are not yet scheduled with only two months to go in the year. The new contract with Burns & McDonnell will extend to June 30, 2017. The city’s first choice for director of utilities — Francisco Martinez — turned down an offer of $102,000 to take the job in September.
Finally, the Board set dates for two budget hearings in mid-November — the first on Monday, Nov. 14, and the second on Thursday, Nov. 17. The meetings will take place at the Fort Smith Police Department’s Bartlett Community Room starting at 6 p.m.