Fort Smith Board approves bond ordinance and crisis unit, consent decree appeal update 

The Fort Smith Board of Directors approved on Tuesday (July 24) the bond ordinance for $160 million in water and sewer refunding and construction revenue bonds expected to save the city approximately $9 million.

City directors also gave the go-ahead to an interlocal agreement with Sebastian County on the county’s new crisis stabilization unit (CSU), and Fort Smith City Administrator Carl Geffken provided an update on the city’s next moves for appealing the estimated $480 million federal consent decree.

On the bond ordinance, approval was unanimous at 6-0 (Director André Good appeared following the vote). The bond offering passed at an April 17 meeting. A memo from Deputy City Administrator Jeff Dingman stated most of the savings would come from a $67 million refunding of the Series 2008 bonds. Another $82 million of the $160 million total will finance new water and sewer projects identified in the utilities department’s capital improvement plan, including water transmission projects and capacity and repair work required for compliance with the consent decree.

The remaining $11 million will go toward “premiums, reserves, or in case estimates change slightly due to changes in bond pricing as we near the date of issuance,” Dingman said, adding the amount “also ensures that we do not need to start the process over should there be changes, such as if the purchase of insurance is required.”

The Board approved issuance prior to Tuesday’s bond ordinance at a meeting on July 10. Moving forward, the bonds will be priced and offered for sale after a 30-day waiting period has expired and the ordinance has gone into effect. A supplemental ordinance will then be prepared for the Board’s approval after Aug. 23 with final pricing terms and numbers.

Bank of America Merrill Lynch was selected as the city’s lead underwriter on the project. The company requested this process change from the former practice of selling bonds on the day of the ordinance’s approval but holding the proceeds until the 30-day period had passed.

CRISIS STABILIZATION UNIT
In other items, the Board approved the CSU interlocal agreement 6-0 with one abstention (Director George Catsavis). During the meeting, Catsavis cited a lack of information for his abstention. Terms of the agreement were reviewed by the Board at a study session on July 17. The program is to divert non-dangerous, non-violent individuals with mental illnesses or substance abuse problems who would otherwise be arrested for incidents involving law enforcement into the appropriate treatment programs.

For year one, the facility will operate at an overall expense of $1.675 million, funded mostly through a $1.6 million state grant. It is one of four facilities statewide and the first one to go online. Pulaski County has since followed suit with Washington and Craighead counties to follow.

Under the interlocal agreement approved Tuesday, participating entities would make up the difference — in this case, around $75,000 — at a daily cost of $5 per patient. By comparison, Geffken said the city pays a $20 booking fee and a $54.01 fee per day for detainees housed at the jail. The program also helps with overcrowding at the jail. Sebastian County Judge David Hudson said at the July 17 meeting there were “409 detainees, which is 53 over-capacity” at the jail. The CSU is a 16-bed facility, located at 3113 S. 70th St. and staffed by therapeutic and medical personnel. Reimbursements are private insurance and Medicaid-eligible.

CONSENT DECREE APPEAL UPDATE
After Tuesday’s meeting, Geffken told Talk Business & Politics the city has set an in-person date of Aug. 10 to continue federal consent decree appeal efforts. City officials will meet with the U.S. Environmental Protection Agency (EPA), Department of Justice (DOJ), Arkansas Department of Environmental Quality (ADEQ), and Arkansas Attorney General.

“We don’t have the time yet, but it’ll be in Dallas, and it will allow us to be able to bring to the EPA, DOJ, ADEQ, and the Arkansas Attorney General our positions and requests for modifications to the consent decree in written form,” Geffken said, adding the goal was to “improve the consent decree so that we can complete it successfully, in a reasonable timeframe, and in a way we can afford.” Geffken said the city wants to “make changes that are prudent and proper and not overly punitive because we have complied with the consent decree, and now that we’ve been in it for three and a half years, we know the changes that need to be made.”

The city has spent around $100 million to satisfy the terms of the decree thus far, which doesn’t count monies the city spent toward correcting its wet weather sanitary sewer overflows (SSOs) prior to entering into the agreement. According to Fort Smith Utilities Director Jerry Walters, the main issue that remains is dry weather SSOs, which the city is dealing with, in part, through its Fats, Oils & Grease (FOG) program, which went into effect in January 2017.

In November, the Board approved a five-year capital improvement plan for the city’s wastewater program that will budget $153.8 million in consent decree spending from 2018 through 2022, an average of $30.76 million per year. The consent decree mandates improvements to the city’s 500 miles of sewer lines and 23 pump stations. This does not count necessary non-consent decree improvements and maintenance, estimated at an additional $48 million over the coming five-year period.