FORT SMITH -- City directors may decide this week whether to enact water conservation efforts or raise rates for the city's water utilities customers in order to meet future use demands with the Foreign Military Sales mission.
Directors heard an updated presentation for water rate designs and financial planning scenarios from David Naumann, senior project manager with 1898 & Co., during a study session Tuesday.
After Naumann's previous presentation to them in December, the 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.
A sales tax election is still not being considered at this time.
Naumann said water use is decreasing 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. 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, he said.
Lance McAvoy, director of the city's Water Utilities Department, 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, referring to the sales tax.
Josh Buchfink, public relations manager for the city, said the sales tax is being considered for the $160 million needed 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 city directors also have discussed issuing bonds or raising water rates.
Naumann's initial proposal had a Fort Smith monthly water bill of $16.37 in 2023 increasing to $33.27 by 2028. His amended proposal presented Tuesday had the same bill increasing to $21.70 by the end of 2024 and $41.83 by 2028.
Naumann said the 2024 increase just helps the city recover its current water operational costs.
In February, engineering consulting firm Hawkins-Weir gave its presentation during the board's study session of the city's updated water master plan and the new system-wide hydraulic model Hawkins-Weir created. The presentation focused on the Chaffee Crossing area because that is where the most development is expected as a result of the Foreign Military Sales project.
Foreign Military Sales is a security assistance program authorized by the Arms Export Control Act. The act allows the U.S. to sell defense equipment, conduct training and provide services to a foreign country when the president deems doing so will strengthen national security and promote world peace.
Ebbing Air National Guard Base was selected last year as the location for the pilot training center. Lt. Col. Drew "Gus" Nash, who is in charge of getting the Fort Smith base training center at Ebbing operational, said the earliest foreign planes and pilots would arrive at the base is this year, and he expects Polish pilots to arrive first. Poland is purchasing 32 F-35 Lightning II aircraft from Lockheed Martin.
Wes Lemonier with Hawkins-Weir said Fort Smith has two water treatment facilities -- the Lee Creek and Lake Fort Smith water treatment plants -- which treat a combined 50 million gallons of water per day. He said with the additional demand from Chaffee Crossing, 2024 projections for maximum day demands are at 49.9 million gallons a day. He said if the city started pulling more water from Lee Creek and Lake Fort Smith, they would become depleted.
Water treatment plant improvement projects are required to increase the capacity, which would take four to five years to complete, Lemonier said.
The projects are scheduled in the Utility Department's capital improvements program projects and are expected to cost $200 million to $300 million, McAvoy said. The projects would allow Fort Smith to treat 65 million gallons of water per day, he said.
At-Large Director Kevin Settle asked at Tuesday's meeting why these plans aren't on an eight-year timeline. He said a 1% sales tax over eight years could almost pay for the city's portion of the transmission line and treatment plant.
Settle referred to the sales tax election in 2022, where voters agreed to extend the 0.25% split between the city's Fire and Parks departments and 0.75% split for city bonds and utilities for eight years.
"If Van Buren said, 'We know what the rate proposal is, but if we pass a sales tax to cover our part, is that OK?' We're going to say sure. We don't care where the money comes from as long as we get our allotment," Settle said.
Van Buren contracts water from Fort Smith.
Ward 3 Director Lavon Morton suggested passing the rate increase for a couple years and in the meantime look for other solutions, especially federal money to help pay for these projects. He made a motion that was approved to consider passing the two-year rate increase as an ordinance at the next regular board meeting on Tuesday.
"None of the solutions are perfect, because we want the best for our residents," Mayor George McGill said. "And if we could do it without rate increases or asking for an investment in a tax issue, that would be great, but I don't think that's available to us. So I'm asking the board to make some decisions so people can see that we're doing the best thing."