Delay in insurance money delaying flood damage repair work at port of Fort Smith

A hold up on insurance funds through the Arkansas Municipal League could set back the reopening of the Port of Fort Smith even longer than expected.

The Fort Smith Port Authority hired Cameron Hubbs Construction Inc. in December as the construction manager for construction to rebuild two warehouses, an office building, parking and a truck scale at the Port of Fort Smith, all of which were damaged during record flooding of the Arkansas River in May 2019.

At the first of the year, the authority expected costs for the rebuilding and repairs to be about $2.7 million to $2.9 million, which Deputy City Administrator Jeff Dingman said the estimated insurance payout would cover. FEMA funds were expected to add to that amount. Since that time, it was determined that the two docks at the port were damaged and along with repairing that damage, work needed to be done to keep floods from doing the same thing in the future. The docks were also insured and qualify for FEMA reimbursement, but the port authority is still waiting on funds.

Costs to complete work needed on the two docks will add up to $845,791 to complete the two docks projects, said Cameron Hubbs, president of Cameron Hubbs Construction at a Fort Smith Port Authority meeting Thursday (June 18). Most of that should be covered by insurance, and FEMA reimbursement should be available for the project as well, Dingman said. But no one knows when the money will get to the authority.

“We are still in a hold pattern,” Dingman said, noting that it is common for some insurance payments to be held until work is complete. “I have told them we have a contractor doing the work and we have to pay him. I’ve tried to compel them.”

The insurance in this case is not typical insurance. It is through the Municipal Property Program operated by the Arkansas Municipal League. It’s a pooled risk fund that operates similarly to insurance, but it is technically not insurance, Dingman said. So far, the authority has received about $2 million for the port projects. That money is already designated for other projects needed to reopen, including rebuilding two 30,000-square -feet warehouses and a stand-alone office building to replace ones damaged in the flooding.

The board discussed approving construction on at least one of the docks because without them, the port cannot reopen. The thought was to take money approved for paving or other projects and reallocate it the docks and utility work that needs to be done. But after much discussion, it was decided to put the dock work on hold until funds arrive.

“I do not want to spend any money we don’t have,” said Eddie Norman, port authority member.

Marty Shell, Ports of Fort Smith and Van Buren operator and owner of Five Rivers Distribution in Van Buren, said opening one dock before the remainder of the work is completed would cause complications for him and Hubbs. Waiting for all the funding before starting the remainder of the work needing to be done presents its own problems.

“Like Hubbs said, when you are purchasing for two smaller, or actually large, projects you won’t get the same cost breaks as for one very large project,” Shell said.

Construction was expected to be completed on the port by the end of July or first of August. Because funds have not been received yet, that timeline will be extended, Shell said.

“I have been out since May 22, 2019. We lost all that business. I can’t go out and get new customers when we don’t have a working facility,” Shell said.

In October, the port authority authorized Shell to purchase and install a new scale at the port at a cost of $54,000 and to do necessary railroad work at the site at a cost of $50,000. The port received a grant for $295,593 from the Arkansas Waterways Commission Oct. 30 to “reconstruct and repair the port facility from damage caused by the 2019 flood event.” The grant was a matching grant with the Fort Smith Port Authority responsible for matching 10%. All but $67,000 of those funds have been spent on authorized projects that qualify for the grant funds. The remaining work to be paid by the balance of that account will be billed by the end of June, Hubbs said.

Construction on building two is almost complete, Hubbs said. Framing is finished on building one, with trussing started. Framing should be completed this week on the office building, he said.

The authority also approved $73,625 for demolition of the smokestack at the site by DT Specialized Services, Inc. of Tulsa.