The Fort Smith Board of Directors passed ordinances at its regular meeting Tuesday night (Nov. 16) that set a special election Feb. 8 for the continuation of a city sales tax that will support the fire and police departments, the parks department and consent decree sewer work.
The first ordinance passed will extend the one-quarter of a 1% sales tax within the city being collected for 20 more years if approved by the voters in February. The sales tax is set to expire on Sept. 30, 2022. The extension would continue the sales tax until Sept. 30, 2042. Of that one-quarter of 1%, 50% will go to fire department purposes and 50% will go to park and recreation purposes. The sales tax generated $5.7 million in 2020.
The second ordinance will extend a three-fourths of 1% sales tax within the city being collected for 10 more years. The sales tax is set to expire on Dec. 31, 2022. The tax was originally approved by the voters to pay the debt incurred for water and sewer projects. Those bonds will be paid in full during the third quarter of 2022, according to a memo from City Administrator Carl Geffken. The sales tax generated $16.998 million in 2020.
The ordinance passed Tuesday will continue the sales tax, splitting it between the police department and consent decree work. Two amendments to the ordinance, introduced by Director Lavon Morton, assured that 83.3% of net collections from the tax will go toward consent decree sewer projects and 16.7% will go to police needs. If approved, the sales tax would be collected from Jan. 1, 2023 until Dec. 31, 2033. An amendment introduced by Director Kevin Settle set the time period for the tax at 10 years rather than the original suggested 20 years.
“I believe that is the very transparent thing to do,” Settle said, noting that the city will no longer be paying on bonds and will be paying as it goes on consent decree work, which should save the city approximately $3 million a year on interest.
Continuing the tax for 20 years might not be necessary to pay for all the consent decree work. If more work is still needed at the end of 10 years, the decision should once again go before the voters, Settle said.
Section Nine of the ordinance states that if “the voters approve the Sales and Use Tax, the Board of Directors commits to freeze sewer rates at existing levels for two years, commencing January 1, 2022, so long as the City is meeting its rate covenant with holders of the City’s bonds secured by water and sewer revenues.” Director Andre Good said the rate freeze is an important promise to the city because it guarantees residents will not be out more in their monthly utility bills.
CONSENT DECREE BACKGROUND
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 required the city to make an estimated $480 million worth of sewer upgrades over the course of 12 years. Because of inflation and the state of the city’s sewer system, that number is estimated to be closer to $650 million.
Over the past six years, the city has spent approximately $127 million in capital costs for required improvements added to the $200 million on storage tanks and equalization basins to reduce wet weather sanitary sewer overflows, the basis for the consent decree requirements, spent prior to the consent decree. Utilities Director Lance McAvoy estimates the city will need to spend more than $600 million more in order to complete the necessary work.
In May 2020, 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.” The city received an additional five years added to the 12 in the order to implement changes. Because almost six years have passed, that means the city has 11 years to complete the improvements, said Paul Calamita, with Richmond, Va.-based AquaLaw, the firm hired by the city to help with legal relief.
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, according to the update to the decree provided by the city in 2020.
FIANNA HILLS DEVELOPMENT
The board on Tuesday also voted to approve an ordinance amending the master land use plan map and rezoning to a Planned Zoning District (PZD) that will facilitate the development of three commercial lots on the southwest corner of Brooken Hill Drive and Jenny Lind Road.
The PZD will allow for a mix of light commercial, retail and professional offices at what was once the site of the second tee box of the Fianna Hills Golf Course.
The amended ordinance, which was unanimously approved, will not allow for a median cut in association with the development approved by the Planning Commission. Directors Settle and Morton raised concerns on the dangerous traffic conditions such a cut in the median on Jenny Lind Road would cause. Residents of the area agreed during recent neighborhood meeting to the development as long as the cut in the median was not made. Jeffrey Holmes with Mickle Wagner Coleman presented plans for the development without the cut in the median. But the planning commission put the cut back into the proposal before sending it to the board.
David Millé, owner of Fianna Hills Country Club and golf course, closed both Dec. 31, 2018. On-again and off-again efforts to buy the country club and golf course by a group of local investors fell through in September. Millé said in a letter to property owners Sept. 21 that he did not believe the investment group could make it work. He began working to sell parts of the golf course to homeowners immediately adjacent to the course. When the replatting resolutions were approved in May, Millé said 140 of the 283 pieces of land on the golf course are under contract.