Almost 37% of the more than $684.821 million 10-year capital improvement plans for Fort Smith’s water and sewer system is related to federal consent decree requirements, with those requirements estimated to cost $31.42 million in fiscal year 2020.
Such are just some of the proposed 2020 budget numbers the Fort Smith Board of Directors will discuss with city staff Tuesday (Oct. 29) during a study session.
After years of failing to maintain water and sewer infrastructure to federal standards, the city entered into a federal consent decree with the U.S. Department of Justice and Environmental Protection Agency in late 2014. The consent decree requires the city to make an estimated $480 million worth of sewer upgrades over the course of 12 years. Funding for consent decree work has come in part from water and sewer bill increases, which are up 167% since 2015. Funding for water and sewer work also comes from bonds supported by sales tax revenue and revenue from wholesale water buyers.
“The funding is a mix of bond proceeds from the 2018 bond and pay-as-you-go capital. Pay-as-you-go capital is funding from revenues that exceed operating expenditures,” Fort Smith City Administrator Carl Geffken noted in a statement to Talk Business & Politics.
Total funding for the combined 10-year plan is comprised of three segments: $250.701 million for consent decree work; $234.995 million for non-consent wastewater work; and $199.125 million for non-consent decree water system projects. (Link here for a PDF of details of the proposed water and sewer capital improvement program.)
According to Lance McAvoy, interim director Utility Director for the city, the consent decree capital improvement plans are based the existing schedule for completion by 2026, “but does not factor in possible outcomes from the ongoing discussions with DOJ and EPA on modification of the Consent Decree.” Of the 22 consent decree projects in 2020, which have a cost estimate of $31.42 million, only $7.62 million are funded.
Non-consent decree water projects proposed in the 2020 budget are estimated to cost $30.195 million, with funding determined for only $7.52 million of the work. Non-consent decree sewer-wastewater work in 2020 is estimated to cost $23.294 million, with funding set aside for $2.994 million.
“Although the ten-year CIP is presented, the projects for 2020 are the only ones the Department is seeking funding approval,” McAvoy noted in a memo to Geffken. “Projects that may be approved by the Board of Directors for 2020 and that may not have funds available for implementation will be moved to 2021 accordingly. For each CIP, the projects have been prioritized. Some of the projects are ongoing projects that are funded and have already been before the Board in 2019. Other projects will be funded from revenue that is set aside for the CIP.”
A bulk of the spending for water system improvements is completion of the ongoing work to install a 48-inch transmission line from Lake Fort Smith to the Fort Smith system. The city has estimated $16.5 million in fiscal 2020 and the same amount in fiscal 2021 for the project.
“Staff are working with the design engineers to utilize value engineering and exploring the most cost effective method to cross the Arkansas River with the transmission line and complete the project. As the design is completed in 2020, the CIP will be updated accordingly,” McAvoy noted in his memo.
The city’s budget hearing is scheduled to begin at 8:30 a.m., Nov. 22, in the Bartlett Community Room at the Police Department.