FORT SMITH -- Rates will remain as they are for customers of the city's water utilities -- for now.
City directors unanimously agreed to indefinitely table a special election for a 0.5% sales and use tax that, if approved, was anticipated to raise more than $14 million annually to support the water utilities.
City directors considered the sales tax election after hearing the results of an independent water rate study during a session Dec. 12.
David Naumann, senior project manager with 1898 & Co., said water use is going down nationally as households implement low-flow appliances and conserve water. He said that puts a strain on the Water Department because its revenue is generated by use.
Naumann said customer water bills in Fort Smith average $17 a month, compared to an area or state average of $22 a month. He said possible solutions are to place a sales tax on an upcoming election ballot with the revenue going to the water utilities or to raise rates for all water users inside and outside Fort Smith. The first proposal would mitigate a rate impact for water customers, he said.
Lance McAvoy, director of water utilities, said the sales tax was proposed to last 20 years.
"The reason why this was put forth was to have half of it pay for debt and half of it pay for ongoing needs, pay as you go, because what we're looking at here is to pay for generational projects, especially the 48-inch transmission line, which will get hopefully to the age of our 36-inch and 27-inch transmission lines, which are 100 years old," City Administrator Carl Geffken said.
Josh Buchfink, public relations manager for the city, said the sales tax is being considered to pay for the $160 million project to complete a 48-inch water line, the $144.6 million project to expand water treatment capacity at Lake Fort Smith, the $35 million in equipment upgrades and repair at the Kelley Highway plant and other projects.
The sales tax collection would not cover the total cost of these projects, so the directors have also previously discussed issuing bonds or raising water rates.
Ward 3 Director Lavon Morton said the matter isn't urgent and proposed tabling the issue to have consulting firm Hawkins-Weir attend a study session, discuss the results of a water availability study it did for the city, answer the board's questions and potentially propose a short-term project that could alleviate some of the city's water issues.
At-Large Director Neal Martin said he's learned a lot from the board's discussions, but since directors haven't reached an agreement on what to do, it's important to get more information before taking it to the public for a vote.
"I thought we were going to have a fight tonight, and I am pleased that it sounds like we're in a good spot," he said. "I'm not saying things are off the table, but let's talk it through and let's work it out and let's figure out a way forward."
Naumann's proposal had a Fort Smith water bill of $16.37 in 2023 increasing to a cost of $33.27 by 2028.
Geffken said the sales tax money would be to help keep rates down for water customers, as city visitors also would contribute to that amount.
McAvoy said if the city had raised water rates since 2011 at an average of 5% per year, it wouldn't have to look at having larger increases now.
Mayor George McGill said at the study session the board will have to decide on the best option to make sure the city continues to have the best water available.