Fort Smith residential customers should not see any rate increases for at least another four years, if findings from third-party consulting firm Arcadis have any influence over the city’s Board of Directors.
At a Tuesday (Sept. 26) study session, project engineer Cindy Eckert and technical expert Thomas Henderson presented the firm’s findings. In the report, they said rate revenues are meeting current requirements and that “No near-term increase for residential or commercial clients is recommended,” though a slight increase to industrial/rolloff customers and an increase to landfill tipping fees should be considered.
City directors were unified in their agreement that residential, commercial, and private haulers should cease “subsidizing” the industrial side. Arcadis recommended a gradual increase for industrial customers over a three-year period to help avoid “sticker shock.”
For example, the city currently charges $264.13 per 20-yard rolloff container. A one-time change would bump up the total to $340.62 for 2018. But taking the three-year approach would gradually bring up rates to $294.50 in 2018, $328.37 in 2019, and $366.14 in 2020. Industrial/rolloff is the only category of service in the red, and that would worsen over the next five years. The sanitation department is billing about $493,168 less than it should to break even. The category’s annual deficit is expected to grow to around $722,500 through FY2022.
That said, a rate increase for residential customers could become necessary by 2021 when projected expenses of $4.994 million show to finally outpace the revenue side ($4.992 million). The deficit would increase to $41,414 by 2022. Commercial projections, however, would continue to show a surplus along with private hauler tipping fees through the same period.
Additionally, Arcadis’ report found that existing equipment in the department is largely outdated. The findings showed that 55% of the sanitation department’s units have outlived their economic lives. Out of a total of 118 pieces of heavy equipment, 10 residential side loader packers and spare units are beyond their economic lives, while 11 residential rear loader packers and spare units are twice as old as their economic lives with “some from last century” still in use, Henderson said. Commercial and industrial spare units were also considered beyond their economic lives. Henderson recommended the city contribute $3 million per year to its sinking fund in a phased replacement plan.
In 2016, the city served 29,459 customers producing 28,676 tons on the residential side; 1,781 customers producing 20,191 on the commercial; and 625 producing 36,348 on the industrial/rolloff. The Fort Smith Landfill also hosts 112 charge accounts accounting for 177,909 tons. Altogether the city serviced 30,373 accounts producing 263,124 tons.
The department has been under the supervision of Fort Smith Deputy City Administrator Jeff Dingman since May 10 following the firing of then-Sanitation Director Mark Schlievert, who was terminated abruptly during the city’s well-documented recycling controversy. In a previous interview, Fort Smith City Administrator Carl Geffken said the city likely wouldn’t replace Schlievert until late 2017 or early 2018.