Possible consent decree change on Fort Smith Board agenda

The City of Fort Smith could receive an extension to 2036 on a federal consent decree mandating costly sewer system improvements. If provided, it would total 10 years of extensions since the decree began in 2015. it would also result in sewer rate hikes beginning in 2026.

On Tuesday (Aug. 27), the Fort Smith Board of Directors is scheduled during a study session to hear from Fort Smith City Administrator Carl Geffken about possible changes to the consent decree. It will not be the first change to what has been a complex and costly federal order.

Following are some of the key chapters on the consent decree history.
• After years of failing to maintain water and sewer infrastructure to federal standards, the city entered into a federal consent decree with the U.S. Environmental Protection Agency (EPA) and U.S. Department of Justice (DOJ) in late 2014. The consent decree, which began in January 2015, required the city to make an estimated $480 million worth of sewer upgrades in 12 years.

• Historic flooding on the Arkansas River in May 2019 added new problems for the city. The flood damaged more than 270 homes and damaged or destroyed 10 sewer pump stations. The city built temporary pumping facilities at each of the 10 pump stations to maintain operations and began the work needed to replace them.

• In 2020, the city was granted another five years after it was shown that mandated sewer work within the previous time frame would be “inordinately expensive.”

• As of late 2023, the city has spent approximately $127 million in capital costs for required improvements. That does not include about $51 million in work done prior to the consent decree, according to the city’s utilities department. Utilities Department Director Lance McAvoy said in late 2023 that if the city has to do what is demanded of the consent decree within the time set to be in full compliance, it will cost the city more than $600 million because of additional problem areas that had emerged. (Talk Business & Politics has asked for an update on how much the city has spent on consent decree work through July 2024 and will update this story when that info is received.)

• In May 2022, Fort Smith voters passed a 0.75% sales tax from Jan. 1, 2023, to 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.

CHANGE OPTIONS
According to the city, the DOJ on Aug. 8 presented a revised financial plan that adds another five years to the previous five-year extension. The proposed revised plan includes customer sewer rate increases up to 19% beginning in 2031.

Geffken said any consent decree changes would have to be approved by the board.

“The Board of Directors will need to review all information from DOJ, discuss it in an open meeting, and then give me direction after they decide the next steps in the negotiations.  Whatever is agreed to must be approved by the Board of Directors,” Geffken noted in an email interview.

Following is a proposed schedule of rate increases, recommended spending on sewer system improvements, and the sewer rate costs per median household income (MHI). The consent decree prohibits the DOJ or EPA from requiring a sewer rate costs that exceeds 2.5% of the MHI.

2024
sewer rate increase: 0%
system improvement spending: $22.7 million
MHI: 1.84%

2025
sewer rate increase: 0%
system improvement spending: $21.3 million
MHI: 1.13%

2026
sewer rate increase: 3.5%
system improvement spending: $22 million
MHI: 1.14%

2027
sewer rate increase: 3.5%
system improvement spending: $19.3 million
MHI: 1.14%

2028
sewer rate increase: 3.5%
system improvement spending: $20 million
MHI: 1.15%

2029
sewer rate increase: 3.5%
system improvement spending: $20.6 million
MHI: 1.16%

2030
sewer rate increase: 3.5%
system improvement spending: $22.6 million
MHI: 1.16%

2031
sewer rate increase: 19%
system improvement spending: $100.9 million
MHI: 1.44%

2032
sewer rate increase: 19%
system improvement spending: $113.6 million
MHI: 1.6%

2033
sewer rate increase: 15%
system improvement spending: $116 million
MHI: 1.75%

2034
sewer rate increase: 12%
system improvement spending: $112.6 million
MHI: 1.99%

2035
sewer rate increase: 11%
system improvement spending: $114.8 million
MHI: 1.99%

2036
sewer rate increase: 8%
system improvement spending: $112.5 million
MHI: 2.07%