Fort Smith officials hear from public about proposed water rate increases

Fort Smith Board of Directors members agreed Monday (May 20) that more citizen involvement might be necessary before they make any decisions on increasing water rates later this year.

Because not all board members were present at a special study session on the water rates, the board did not agree to take the item off the agenda for Tuesday (May 21) night’s board meeting. The item is listed as No. 8 on the agenda for the meeting.

However, directors present at the study session agreed it would be good to give the public more time to attend public meetings before making decisions. City Administrator Carl Geffken said the city would work to set up more meetings, even a Saturday meeting, in order to give more people the chance to ask questions and be heard.

Fort Smith residents attending a public meeting on water rates Monday afternoon were largely in favor of a water rate increase considering the city’s situation. Fort Smith has not had a water rate increase since 2011, though it had large sewer rate increases in 2015, 2016 and 2017.

Utilities Director Lance McAvoy has said suggested water rate increases for the first year, which are proposed to begin July 1, are needed to cover operating costs and debt service ratios needed to comply with bond covenants. Without the increase in revenue, the city would fail its bond covenants, city administrators have said.

According to a memo on the plan from McAvoy, proposed changes to the rate structure include:
• Taking the residential rate structure from three tiers to four tiers, and consolidating the industrial rate from two tiers to one tier;
• Establishing rates for contract water users north and south of the Arkansas River; and,
• Establishing a surcharge of 1.5 times the normal rate for retail customers outside the city limits.

For a customer using 3ccf of water in a month, which is what the majority of customers billed use, rates would go up about $2 a month. A water bill for 3ccf of use is $11.81, and with fees and taxes added it’s $13.37. Proposed rate increases would bring that bill to $13.98 or $15.75 with fees and taxes, according to city information. A second round of increases, proposed to start Jan. 1, would increase bills to $19.05 or $21.30 with fees and taxes.

If the proposed rate increase were to be implemented, it will double water revenue coming into the utility department, Geffken said.

“The largest number of bills we send out are for 3 ccf use. Those bills (after the second increase) would be paying $85 more a year. That will give us sufficient funds to do all the work I just outlined (and) also allow us to raise rates on our contract users. … It would double the revenue coming in. We have many projects that need completed in short period of time,” Geffken said.

Customer’s would have the new water rates added to their monthly utility bill, which also includes sewer and solid waste charges.

The city’s water rate revenue does not fund the ongoing federal consent decree that since 2014 has mandated significant improvements to the city’s sewer system. In May 2022, Fort Smith voters passed a 0.75% sales tax – to be in place between Jan. 1, 2023 and Dec. 31, 2030 – with 83.3% of the revenue going to federal consent decree work on the city’s water and sewer system, and 16.7% directed to the police department.

City officials estimated in late 2023 that consent decree work will cost $428.068 million over the next 12 years. Over the past six years, the city has spent approximately $127 million in capital costs for required improvements.

While most of those attending Monday afternoon’s information session, including Van Buren, Barling and Mountainburg officials, were not happy about a rate increase, they agreed that the increases were needed. Van Buren, Barling and Mountainburg are three of the contract customers receiving water from Fort Smith.

It has been suggested that contract users, who account for about 44% of the water use for the city, should have rates raised before Fort Smith residential customers have to pay for the needed expenses. But by state law, the city cannot raise rates on contract customers without raising rates on all customers.

“I think part of the reason we are not the second largest city in Arkansas anymore is that we are spending so much on the consent decree and we can’t spend bettering the city in order to attract more people to move here. I think even an incremental increase (in water rates) would help us to bring more to our city,” said Fort Smith resident Drew Smith.