Highlights of the Fort Smith Board of Directors Meeting 2/10/26

At the Fort Smith Board of Directors study session meeting held 2-10-26, the Board discussed reinstating a budget allocation for the spay/neuter voucher program. The program previously allowed for vouchers of up to $100 for the sterilization, rabies vaccination, and microchipping of cats and dogs until funds budgeted for the program run out. In 2024 and 2025 a total of $378,940 was spent on the program. In 2024, 2318 animals were sterilized through the voucher program. In 2025, 1546 animals were sterilized through the program. Funding for the vouchers ran out in August of 2025.

Director Rego suggested that $150,000 be allocated for the program for the remainder of 2026. Director Good agreed with Director Rego.

Director Christina Catsavis voiced her support for the program and expressed that she was confused when originally discussing the budget and thought that the funding for the program was to be included in the 2026 budget. Acting City Director Dingman said “The way it was presented was clear.”

Director Martin expressed the “need to start looking at other things that were excluded” from the budget that was designed to be operationally balanced and prioritize what is added back. He voiced his concern about adding things back to the budget causing it to no longer be balanced. He said that the voucher program has “been a good program for us” but that in adding back things that were cut that there might be higher priorities like the Police and Fire departments.

Director George Catsavis mentioned that the general fund that the voucher program funds come out of has a strong reserve balance. He also said that the program will save money in the long run.

Though he acknowledged that while the program has not yet yielded results in the two years that it has existed, Director Kemp said we “don’t wanna give up on it.” While the City is not seeing reduced Animal Services activity, he said it is “early in the program.” Director Kemp suggested that there be a discussion of “tensions department heads are facing” with regards to budget cuts.

Dingman said that if the program were funded that the budget “still would be operationally balanced.”

Director Christina Catsavis said that the program was a “highly utilized program” and she is “surprised” it was cut.

Director Settle questioned the voucher program being under the Communications Department. Dingman said that the long-term plan is to eventually move it to being under Animal Services.

Director Rego mentioned that sales taxes were up for December.

The issue will be added to next week’s meeting agenda for a vote.

The Board discussed potentially adding an ordinance that third-party intermediaries working with the City (including contractors, operators, management companies, consultants, advisors, brokers, and agents) would have to

• provide a disclosure prior to Board approval of a transaction about the nature of their role, financial interests, compensation received, relationship between the third party and and the vendor manufacturer, contractor, or financier involved, whether pricing and timelines presented are binding or estimated and the basis for those figures

• submit to the City a signed Certification of Accuracy that any pricing, cost estimates, financial projections, delivery terms, or material representations are accurate to the best of their knowledge, no material facts have been omitted, and are not knowingly misleading

• owe the City “a duty of good faith, fair dealing, and honest disclosure”

Failure to meet the standards set in the ordinance would result in voiding or rescinding the contract or transaction, seeking reimbursement or damages for losses, disqualifying the third-party from participating in City transactions for a period of up to 5 years, referring the matter for civil legal action, and imposing administrative sanctions.

The ordinance was proposed by Director Christina Catsavis. She said that the ordinance was inspired by the situation in which it recently came to the Board’s attention that there was no written agreement in place regarding American Resort Management (ARM)’s involvement in the price estimates for the water slides and their installation. She called the lack of requiring written agreements a “deficiency in our process” and said that the City “should have documentation of everything.”

Director Settle voiced his view that the ARM issue was “one issue, one time” rather than an ongoing issue that needs to be addressed by an ordinance.

Director Christina Catsavis said that the ordinance is aimed at having written agreements and “no more backroom deals. No more handshake agreements.”

Director George Catsavis asked if anybody ever gave ARM authority in writing to broker the deal. Dingman answered no, that ARM learned of the opportunity and brought it to the City. Director George Catsavis asked if there was any recourse against ARM in the matter. Dingman answered “I don’t believe so.” Director George Catsavis said having legal recourse is “just good business sense.” He requested that ARM be invited to come and talk about the deal at a study session meeting. Director Christina Catsavis said that the Board can request them to come per the management agreement in place.

Director Kemp said “The Board is running the risk of over correcting” by adding the ordinance. He said “Estimates are inherently fluid.” and mentioned that where the slides were originally planned to be installed was changed in response to a soil test. Director Christina Catsavis added that they were also moved to save money on concrete by placing them closer to the existing parts of the water park. Director Kemp voiced his concerns that the ordinance would discourage “reputable firms” from working with the City. Director Christina Catsavis said that “reputable firms” would be fine with working with a written agreement. Director Kemp said that the new ordinance requiring projects over $100,000 to go to a study session would already serve as the “checkpoint” the proposed ordinance would aim to be. He also voiced his concerns about the proposed ordinance causing increased insurance costs for vendors and slowing down procurement timelines. He said the ordinance is “not an idea I can get behind.”

Director Good expressed his view that the City may have made a mistake moving forward with just emails and estimates and without a written contract. He said that the City “should have done our due diligence” and that the City “dropped the ball on this one.” He also expressed his view that with the ordinance requiring projects over $100,000 to go to a study session already in place adding the proposed ordinance would be “doing the same thing twice.”

The issue will be added to next week’s meeting agenda for a vote.

The Board reviewed the budget carry over and carry forward requests from 2025 into 2026. The $2,992,155 in carry forwards are for the things that are obligations that are already owed from 2025 that will legally need to be paid. The $1,821,918 in carry overs are requests to use money that was budgeted for in 2025 for projects that were not finished in 2025 as planned, but that are not already obligated to be paid for via a contract or purchase order already in place.

Chief Financial Officer Richards said that the revised reserve fund balances for 2026 are 32% for the general fund, 61.9% for the streets fund, 41.7% for the water and sewer fund, and 37.2% for the solid waste fund. He said of approving the carry overs and carry forwards that the City will “still have healthy fund balances by doing this.”

Director Martin called the fund balances “healthy fund balances across the board” and said it “doesn’t look like we’re broke, does it?” Richards responded “I think we made the right moves at the right time.”

The issue will be added to next week’s agenda for a vote.

The Board discussed renewal of the City’s auto, equipment and property insurance policies with Arkansas Municipal League (AML). The renewal for auto and equipment is estimated to cost $820,151. The renewal for property would cost $1,833,950. The total of $2,654,101 would be an increase from last year’s cost of $2,451,546.

Denise Ingal with Arthur J. Gallagher who has been collaborating with Phillip Merry from First Western under the services contract with the City for consultation on insurance said that the City last year received 2 dollars paid to them for every dollar they paid in to the insurance company on property insurance and 1.5 dollars paid to them for every dollar they paid in to the insurance company on auto insurance. She called the increase in cost from 31 cents per $100 of property to 36 cents per $100 of property a “very modest increase.” She said that the deductible is the “lowest deductible available” for property insurance. She said that while other companies on the market were found to have lower premiums for auto insurance, they had higher deductibles. She recommended renewal with AML.

Director George Catsavis asked about insurance on the water park. Merry and Dingman clarified that ARM carries liability coverage on the park (for things like injuries) and that the City carries coverage on the park property and equipment itself. Director Christina Catsavis added that the cost of the insurance the City carries on the park is about $49,000. Ingal mentioned that it may increase because AML intends to check and appraise again when the park is in operation and it will also increase with the expansion.

Director Kemp asked how the insurance increase would impact the budget. Dingman said that little increase is projected.

The issue will be added to next week’s meeting agenda for a vote.

The Board discussed the Water System Master Plan crafted in 2022 and the 2026 water capital improvement plan (CIP). The funding needed for the 2026 CIP would be $53,771,534 and only $25,072,226 is available to fund the projects. This would leave the plan in the negative by $233,181. The funding for years 2027-2035 has not yet been identified.

Engineering Director Mittge said that there is “a lot more work to do and not enough funds to do it.”

Director Christina Catsavis asked what the typical water loss is for a system of a similar size and age. Mittge answered that 15-20% is optimal and that at 36% for unaccounted for water Fort Smith is “a little bit high.” Mittge voiced his support for hiring a satellite leak protection system in which a satellite flies overhead and scans for underground leaks. He mentioned Arlington, TX and Midland, TX as places that have used that system successfully. Director Christina Catsavis expressed enthusiasm for the idea of the system as it could through reduction of leaks reduce the lost water and reduce the need for building the expensive transmission line. Mittge said that that would not remove the need for the transmission line. Director Christina Catsavis said that it would buy more time on the need for the transmission line. Mittge said it “wouldn’t hurt.” He said that the system would cost $60,000-$150,000. He said that there could be “real money” saved and that it is “worth pursuing.” Multiple members of the Board expressed their agreement.

A representative from Hawkins-Weir that helped craft the plan mentioned the increased demands for water from growth at Chaffee Crossing. He said that without improvements including the transmission line and water treatment plant upgrades that by 2027-2028 the demand for water would exceed the capacity to provide water on max days (typically the hottest days of the summer) and that the demand would exceed the capacity on average days in 2041.

Director Martin asked if the plan takes into account the drop in demand in response to recent rate increases. Hawkins-Weir answered that it does not and acknowledged there could be a “slight dip” in demand.

Director Kemp mentioned that there were 20 days in 2024 that demand came within 10% of capacity. Hawkins-Weir agreed and said that demand never exceeded capacity in 2024. Director Kemp asked about the role that conservation could play on the max days. Mittge mentioned that during the hot weather that the City encourages citizens via social media to conserve water by doing things like watering less. Dingman also reminded of the mandatory water conservation measures that can be implemented.

Discussing funding for the projects in the plan, Mittge said “I’m going after every grant I can find.” He also said “Arkansas is growing” and “I want to be ready for it.” and expressed a desire to make the best decisions now for their impact on future generations. He also mentioned that not taking action in a way that results in not keeping up with capacity needs could result in being put under a consent decree for water.

Director Martin voiced his concerns about raising rates and called funding the projects a “pretty significant challenge.”

Director Kemp mentioned faulty meters and asked for an update on the plan to test meters for lines 3 inches or larger. Public Works Director Meeker said that he is waiting on the testing equipment to return from calibration and then work will start on testing the large meters. Director Kemp expressed his desire to recover lost revenue from unaccounted water through inaccurate meters or leaks. He asked if the remaining leaks are more involved and if the Public Works Department has what they need to fix them. Meeker said that he has what he needs and that there are around 65 leaks left and that the “low-hanging fruit” has been taken care of leaving only new leaks and more difficult to fix leaks. He mentioned that February leak repair has gotten off to a slower start because of snow related delays.

Director Rego said “The quicker we can move on from this unachievable structure, the better.” He suggested breaking down the plans into smaller 2 or 3 years chunks and looking at all options or setting a maximum spending for each year and working backwards prioritizing projects.

Director Settle mentioned that 42% of Fort Smith’s water goes to customers outside of the city. He said that the plan should involve infrastructure cost sharing by everybody not just Fort Smith. He said “The citizens of Fort Smith have done their fair share.” and “We should be able to do what we want. It’s our water.”

Utilities Deputy Director Jimmy Johnson said “I would like to be able to operate in non-crisis mode.” He acknowledged the transmission line and water treatment plant projects are a “big ask.” He said that in the system’s current condition that if there is a drought that water rationing could be needed as soon as this summer.

Director Kemp asked about potential to refinance bonds. Johnson said the bonds that are to be paid up in 2031 have already been refinanced once. He said that there are currently funds in the reserves to fund the CIP projects for 2026 if the reimbursements from the State come in as planned, but then the reserves will be depleted completely going forward. He mentioned that the transmission line has been in the master plan since 1995.

Water Resources Director McAvoy said that the satellite leak detection could be funded in 2026 because the watershed management projects in the CIP will not be done in 2026 because no grants could be found for those this year. He mentioned that the amount of unaccounted for water has gone up 2% since October even with the large number of leaks that have been fixed. Some of that extra loss may be from meters going out or more flushing of hydrants. He said “We are one catastrophe away from being the next West Helena or Jackson, Mississippi.” He said that so far Fort Smith has “dodged bullets.” He mentioned the “big impact” on revenue that could be achieved through better meter accuracy.

Director Kemp suggested that the discussion of replacement of meters be revisited. He suggested discussing a plan that involves more basic meters “not the techy meters” (referring to the AMI meters discussed recently). Meeker said that AMR meters are the “best direction”, rather than the AMI meters or mechanical meters. He said that the industry is moving away from mechanical meters. He attributed the trouble with the AMR meters that were installed in Fort Smith having a 25% failure rate to the choice to go with the cheapest brand but recommended that another better brand would not have that problem. He said that money could be saved by replacing the meters in-house and that his department could replace 10,000 meters per year if they could afford to buy the meters. There are 40,000 meters in the city.

Director Christina Catsavis asked the cost of the recommended AMR meters. Meeker answered $2.6 million each year for 4 years to replace them all based on a replacement rate of 10,000 per year.

In discussing that eliminating unaccounted for water would not be enough to fund the needed big water improvement projects, Director Rego mentioned that even if the normal practices were thrown out and all $65 million in all four of the funds’ reserve balances were used to fund the water CIP projects that it would not be enough to fund the water CIP through the decade.

During the Citizens Forum section of the meeting, Andy Posterick spoke and praised the reduction in water leaks. He also praised the Board’s decision to raise the landfill gate fee instead of choosing to raising residential rates to address the shortfall between solid waste revenues and the costs of providing solid waste service.

Glen Forte spoke and expressed his dissatisfaction with his treatment at a recent visit to the Police Department. He also criticized Director Rego’s response and praised Director Kemp’s response in a matter involving a disagreement between himself and a vehicle repair shop.

Kristen Kitchens spoke and mentioned a manhole in her neighborhood that has been replaced twice in 2 years and still looks bad. She also mentioned that the GIS maps are incorrect in not showing the age of manholes and not properly showing completed consent decree sewer work.

Krystal Cadelli spoke and mentioned the importance of having written agreements with companies doing business with the City. She also expressed her support for prioritizing infrastructure when budgeting. She voiced her support for building only the storm water mitigation ponds at the former ACME site, not the parks amenities.

Christina Cadelli spoke and voiced his opposition to the water slides and the no-bid contract for their installation. He expressed his concerns for Royal Ridge’s qualifications.

Dan Williams spoke and praised the number of leaks fixed. He also voiced his view that the Board made a mistake on the water slides. He expressed his concerns about former Director Morton’s continued participation in meetings and continued influence on Board of Directors affairs.