Fort Smith Board bond approval gives ArcBest a $2.4 million tax incentive over the next 10 years

The Fort Smith Board of Directors has approved an ordinance for $46 million in Industrial Development Revenue Bonds on behalf of ArcBest Corp. to support its corporate headquarter expansion.

The bonds will be paid by ArcBest for an industrial project consisting of the acquisition, construction and equipping of the 205,000-square feet headquarters at 8401 McClure Drive in Chaffee Crossing. Construction is ongoing on the facility.

Fort Smith Deputy City Administrator Jeff Dingman said the primary advantage of industrial revenue bonds is “reduced property taxes on the project.” In a memo to City Administrator Carl Geffken dated Dec. 15, Dingman writes, “Pursuant to the Payment in-Lieu-of Taxes (PILOT) Agreement (also authorized by the proposed ordinance), the company will pay the equivalent of 50% of the normal property taxes for a period of ten years.”

Responding to a question from City Director Tracy Pennartz during the board’s Tuesday (Dec. 20) regular meeting, Dingman said total tax incentives to ArcBest are estimated at $2.4 million. In exchange, ArcBest will invest $46 million, creating 975 new full-time positions that pay an average hourly wage of $26.07. As Talk Business & Politics previously reported, ArcBest President, CEO and Chairman Judy McReynolds first announced the expansion in May 2014, saying the job additions would be in place by 2021. At that time there were between 1,300-1,400 ArcBest corporate jobs in the Fort Smith area.

The company will retain its 191,000-square-feet corporate headquarter building on Old Greenwood Road in Fort Smith as well. That facility, which opened in early 1995, is expected to provide space for ABF Freight — one of the nation’s largest less-than-truckload carriers and the largest ArcBest subsidiary — and ArcBest Technologies employees. Moving corporate and logistics jobs out of the existing corporate headquarters will allow room for expansion at ABF Freight and ArcBest Technologies (formerly Data-Tronics).

BUDGET TALK
Also Tuesday, the Board approved adjustments to the 2016 General Fund and Street Maintenance Fund revenues as well as the 2017 operating budget. The 2016 General Fund total fell to $45.959 million from a budgeted amount of $46.715 million, a reduction of 1.6%. The Street Maintenance Fund finished at $7.929 million against a budgeted $7.959 million.

“General Fund reductions are due primarily to lower than estimated revenues in Franchise Fees and Ad Valorem,” said Fort Smith Finance Director Jennifer Walker. “Street Maintenance Fund Ad Valorem and Gasoline Turnback revenues have been adjusted to reflect actual revenues received in 2016. The net impact of these changes to the Street Maintenance Fund for 2016 is a reduction of approximately $30,000 (0.4%).”

On the 2017 side, the city budgeted $41.539 million in General Fund revenues and $41.512 million in expenditures for a lean-but-balanced budget with a $27,131 surplus. The Water and Sewer Operating Fund shows $60.009 million in revenues against $49.507 million in expenses, which will give the embattled department a surplus of $10.501 million for the year, bringing working capital to $35.37 million by the end of 2017 — needed capital as the city works to comply with the $480 million consent decree mandated by the Environmental Protection Agency (EPA).

On that topic Tuesday night, City Directors agreed to pass a Fats, Oils, and Grease (FOG) ordinance requiring better accountability from FOG generators (mainly restaurants) throughout the city. The ordinance is a requirement of the consent decree. Not passing it, City Attorney Jerry Canfield said, would have likely landed the city a “five-figure fine” for non-compliance. Vice-Mayor Kevin Settle was unhappy with the tight window of time the Board had to review the 14-page document, and Director George Catsavis was concerned about the hardship the “typical government bureaucracy” of the ordinance might create for restaurant owners.

However, Director Keith Lau advised prior to the vote it was in the city’s best interests to pass the ordinance to demonstrate compliance so the city would have “bargaining power” as it considers renegotiating payment terms. The Board voted to approve the FOG Program 6-0 with Catsavis abstaining. The Board also approved $3.325 million in items related to the consent decree, including $1.98 million for fleet trucks and vehicles and $631,650 for final payment on the Mill Creek Pump Station and Equalization Tank improvements.

In other actions, the Board authorized a $1.829 million software license and services agreement with Tyler Technologies, Inc., as part of the implementation process for the city’s Enterprise Resource Planning program. Additionally, there are estimated travel expenses for Tyler staff in the amount of $199,848 over the two-year implementation period. The ERP system will be implemented and maintained on-premise using the city’s IT hardware and network infrastructure.

OTHER ITEMS
• Director Kevin Settle was reappointed as Vice-Mayor for the city of Fort Smith.

• The Board commended Internal Auditor Tracey Shockley after a performance review while in executive session. Fort Smith Mayor Sandy Sanders, speaking on behalf of the Board, said, “We are pleased with her performance and progress made the past year. She has strengthened the position.”

• Sanders expressed similar sentiments for City Administrator Carl Geffken, noting, “We are very pleased with his performance and accomplishments over these first few months as well. Since he has been here, he has wrapped his arms around the challenges the city has faced, and we look forward to continued progress.”