The Fort Smith Utility Department presented a $609.5 million 10-year capital improvement plan for 2021 through 2030 to the Fort Smith Board of Directors on Tuesday (Oct. 27). The ten-year CIP is a planning tool to look short- and long-term forecasted projects, said Utilities Director Lance McAvoy.
“These projects range from large maintenance projects and system upgrades to expanding and maintaining customer service to required projects such as Consent Decree and Health Department requirements. Due to COVID-19, many of the 2020 CIP projects were either not started or slowed down to reduce the possible financial impact on the city by reduced revenue and to ensure the financial stability of the department during the crisis,” McAvoy said.
McAvoy noted that just in the water department plan for 2020, 12 were not complete and eight were not started in order to be prepared for the possible financial impact of the COVID-19 pandemic.
Eight to 10 of the consent decree projects in the capital improvement plan for 2020 were not started, McAvoy said. Funding for those projects would roll over as available funds for 2021. He noted that although the 10-year plan was presented to the board, the 2021 projects are the only ones the department will seek funding approval for in the budget. The 10-year water CIP is $217.36 million, which includes funding to complete all of the phases of the transmission line.
“Staff is 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,” McAvoy said in his report.
The total water CIP for 2021 is estimated at $15.042 million. The non-consent decree wastewater 10-year CIP is $145.038 million. The Massard Treatment Plant replacement study, conceptual design and phasing plan will be completed in December, McAvoy said. The total non-consent decree wastewater CIP for 2021 is estimated at $25.350 million. The consent decree 10-year CIP is $246.121 million, with a 2021 budget estimate of $22.09 million.
The CIP is based on required projects, however, it spreads several of the projects over multiple years and reschedules projects to be more financially feasible, McAvoy said. The capital improvement plan was submitted to the Department of Justice (DOJ), Environmental Protection Agency (EPA) and the Arkansas Attorney General’s office for consideration, he added.
“The city is still working to address the multiple challenges we face in the overall compliance and financing of the consent decree,” McAvoy said.
On May 7, the EPA and the Arkansas Department of Environmental Quality (ADEQ) agreed that the city has proved that the sewer improvement program will be “inordinately expensive, accordingly, qualified for an additional five years of implementation time.” At the time, the city said it had received a five-year reprieve on the estimated $480 million consent decree entered into in 2014. That initial order gave the city 12 years to implement changes.
After years of failing to maintain water and sewer infrastructure to federal standards, the city entered into a federal consent decree with the EPA and DOJ 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.
City Administrator Carl Geffken said the city has had “good, frank conversation” with the DOJ and EPA on the consent decree and the city has hopes the total cost to the city will be less than what is in the 10-year capital improvement plan.
“This is what we think we need. Hopefully, the full cost of the consent decree will be less. Those funds would then be available for something else,” Geffken said.