Consent decree, financial transparency discussed at Fort Smith Board strategy session

When the Fort Smith Board of Directors met April 23 for a strategic workshop all had ideas of what needs to be at the top of the city’s list of to dos, but one topic remained consistent among them — the federal consent decree.

After years of failing to maintain water and sewer infrastructure to federal standards, the city entered into a federal consent decree with the federal Environmental Protection Agency and U.S. Department of Justice in late 2014. The consent decree requires the city to make an estimated $480 million worth of sewer upgrades over 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. In May of last year, City Administrator Carl Geffken announced the EPA and the Arkansas Division of Environmental Quality agreed the city had demonstrated its sewer improvement program would be “inordinately expensive” and qualified for five more years to implement the changes. Along with the five year extension, the EPA and ADEQ agreed to provide additional flexibility with certain interim program deadlines that will allow Fort Smith the ability to stretch out expensive system improvements over the whole of the remaining program implementation schedule.

Geffken told the board in June the city would pursue additional time to fulfill the decree requirements due to the COVID-19 pandemic and the historic flooding of the Arkansas River in May 2019. City Director Lavon Morton said Tuesday (April 27) there is a reasonable belief that the city would be given another three to six years to complete consent decree work because of the delays caused by the 2019 flooding and the pandemic.

“So that is eight to 11 years at the end of the 12 in the consent decree, which is a substantial time,” Morton said. “Now we need to know where we stand financially, and we need to plan.”

CONSENT DECREE SPENDING, TIMELINE
A conservative estimate given by city administration at the workshop shows the city has spent about $300 million on sewer improvements. In order to properly budget for the work that needs to be completed in the next 11 to 22 years, city leaders need up-to-date financial information, Morton said.

“At the start of the 12 years, (the city) gave a forecast. We need to see how that forecast is now, how much have we accomplished, what did it cost. And then we need them to give another forecast,” Morton said.

Director Neal Martin agreed that the city has to better communicate the progress of the consent decree. He said the board and the citizens need to know where everything stands.

“We are we in the process? Are we 25% done, 30%. There needs to be more communication on it. The citizens need to know what is going on,” Martin said.

Some of the repair work completed in the past six years has come in under what was budgeted, Morton said. The city has come up with some innovative ideas that have saved money, like using inserts in some instances instead of having to dig up and replace certain lines, he said.

“I applaud them for doing that and saving money,” he said.

Geffken said the city’s utility department has hired a professional engineering firm to do an analysis on where the department stands in terms of the department’s future costs, the consent decree and financial future for rate setting purposes.

“We are examining the impact of the 2019 flood and COVID on the timeline to completion in order to request additional time, we are looking into state and federal funding streams that come with little to no interest or may be partially considered grants, and we are adopting new construction and rehabilitation methods that reduce the cost,” Geffken said Tuesday of the consent decree.

At Friday’s workshop, Director Robyn Dawson said the average city resident cannot afford more increases to sewer rates to help the city pay for the work and adding two or more rate increases would cause residents to have more hardship. She suggested the city find creative ways to generate the funds needed to pay for the remaining work without raising sewer rates.

Director Kevin Settle said he wants the city to get away from the bond structure it has been using to fund consent decree work so the city does not have to pay interest.

“We need to make it like we do the street department, pay as you go. It would help eliminate debt and save the taxpayers some money,” Settle said.

Geffken said the city is always concerned about being forced to raise rates for any utility or service and what those increases mean to residents.

“We do our best not to raise rates unless absolutely necessary,” he said.

FLOOD RESPONSE
Along with progress on the consent decree, directors brought other times of interest to the table for discussion during the workshop. Those topics ranged from more city financial information being provided to the board, to the need for more low-income housing to solutions for the homeless in the city.

There was more talk about what the city could do to prevent flooding damaging homes on the north side of the city like what occurred in 2019. Morton said he again brought up his proposal to buy houses repeatedly flooded. He proposed looking into the possibility of life estate arrangements for those who do not want to leave their homes. A life estate is property that an individual owns only through the duration of their lifetime. The homeowner would sell the property to the city, but could remain in the home through their life. The property could not be sold or left to anyone else and would belong to the city after the death of the homeowner. This does two things: It gives the homeowner money now to help with issues they have and allows the city ownership of the property later. Once the city owns the property, it can be razed and turned into greenspace with trees, which would help some with flooding, Morton said.

“This will not alleviate the (flooding) problem, but it is a step in that direction,” Morton said.

Settle raised the idea of Vision 2030 for the city, a plan of how city leaders can position Fort Smith in the next nine years.

“We need to look at things post pandemic. Manufacturing is coming back, but remote work is something many are holding on to. How can we position Fort Smith so it comes out ahead in that structure,” Settle said.

AMENITY, TOURISM DEVELOPMENT
Settle said city leaders need to look at what can be done to be more attractive to families, business and industries. He suggested the city look at continuing to expand Parrot Island Waterpark and creating a Riverfront Amphitheater at Harry E. Kelley Park with a bigger venue to help draw more people to Fort Smith and to the city’s river.

Settle had previously suggested that if the city could replace facilities at Harry E. Kelley Park with an amphitheater that seats 5,000 or more and move the stage in front of the river, so people could look at the river during events, it would create a nice outdoor performance venue.

“We need to look at these big amenities we can use as a draw to stimulate economic growth and draw more business to the city,” Settle said Tuesday. “We have a great water supply. There is a great cost of living, a great workforce, and a beautiful city, but what else do we need to draw families and businesses here and to keep them here.”

Along with the need to bring more business to the city, Martin said the city needs to work to bring more tourism dollars to the city.

“We need people coming here, spending their dollars here,” Martin said. “It’s a way to raise tax revenue without raising taxes.”