Fort Smith Board denies nonprofit extra $8,000 payout on city-caused water issue, cites tort immunity

The Fort Smith Board of Directors denied an exception to its $5,000 sovereign immunity policy on Tuesday (Aug. 15) for damage incurred to nonprofit Midtown Apartments due to city negligence.

During the town hall portion of the Aug. 1 board meeting, Kerry Norman of Midtown Apartments and her representative, Philip Merry at Gallagher Merry/AJGRMS (also a former City Director), urged the city to go beyond its $5,000 limit on sovereign immunity and pay for the full cost of repair in the amount of $13,209.87. At issue were damages incurred to Midtown when city officials insisted on a meter replacement and addressed a mistakenly diagnosed water leak, but used “the wrong-sized bolts” causing pipes to “break loose” and flood the facility, Norman explained.

Director George Catsavis made a motion the matter be taken up by the Board at its next regular meeting and was seconded by Director Don Hutchings. On Tuesday, the two men along with Director Andre Good voted to approve the exception, but Directors Kevin Settle, Keith Lau, and Mike Lorenz voted against for a 3-3 deadlock, which deferred to existing policy. Director Tracy Pennartz was absent.

In October 2014, the Board, which included then-Director Merry, voted to up the sovereign immunity limit from $500 to $5,000. After the Utilities Department reviewed Norman’s case, city administration decided to pay Norman the maximum amount, leaving her nonprofit with a shortfall of more than $8,000 and three years of increased premiums. If a person or entity does not agree with the Administrator’s decision, it can be appealed to the Board of Directors; however, the policy does not allow the amount paid to exceed $5,000.

“Payments per this policy are intended to reimburse for the insurance deductible after filing an insurance claim,” City Administrator Carl Geffken said.

The state gives cities tort immunity and “approving a payment that violates the policy jeopardizes the city of Fort Smith’s immunity” because it sets a precedent for future incidents.

Geffken continued: “Furthermore, when asked if Midtown Apartments had filed an insurance claim for the cost of repairs, the Board was told that Ms. Norman was directed not to do so because Midtown Apartments viewed the leak as the city’s fault. I do not recommend changing the policy or paying more than the $5,000 limit because it could harm the city.”

Director Lau was sympathetic to Norman’s plight, but felt violating the policy would leave the city vulnerable. In comments prior to the vote, he urged fellow directors to give closer consideration to future motions in regard to existing policy before moving forward.

“We’re being forced to be judge and jury on a specific incident pertaining to a charitable organization who operates as a nonprofit, and I’m sure they’re tight on money. But we did a motion without regard to our policy, and our policy should be implemented and policed by our administrator. So the policy is out there, and we’re forced into a bad position to make a hard choice because we didn’t put thought into the motion whether or not we had the policy in place. If we want to change the policy, great, but to come in here and be judge and jury on a case-by-case basis, I don’t want to be there. That’s why we hired Mr. Geffken to be our city administrator. So once again, we put ourselves in a bad light by having to vote — and unfortunately I’m going to have to vote no — for a good organization.”

In other business Tuesday, City Directors voted 5-1 (Hutchings dissenting) to allow alcohol sales and consumption at Cisterna Park, Pendergraft Park, and the Farmers’ Market on 2nd Street in downtown Fort Smith with proper permitting. The parks will join Harry E. Kelley Riverfront Park, Fort Smith Park, and riverfront developments as allowable zones. The request came to the Parks Department by way of the recently formed Fort Smith Downtown Business Association (FSDBA).