Highlights of the Fort Smith Board of Directors Meeting 6/3/25

The Fort Smith Board of Directors meeting held 6-3-25 began with a unanimous vote without discussion in favor of approving a zoning change for an undeveloped lot at 1017 Cavanaugh Rd to allow for the construction of a duplex.

The Board vote unanimously without discussion in favor of approving a zoning change for an undeveloped lot at 7201 Texas Rd to allow for the construction of a duplex.

The Board voted on whether to suspend the sewer rate increase that would go into effect June 1, 2025 for Arkoma for 21 days to allow for Fort Smith and Arkoma to negotiate a compromise and craft a new agreement for Fort Smith to provide sewer and water services to Arkoma. This issue was discussed at the 5/27/25 meeting.

Chris Cadelli spoke about the situation and called Arkoma’s bill being delinquent for so long “disappointing” and expressed concerns about the Board being “kept in the dark by administration” on the Arkoma water/sewer matter.

Director Christina Catsavis mentioned a discrepancy in the figures provided by Arkoma for how the rate increase would affect Arkoma customers versus the figures provided by the Fort Smith Utilities department. Arkoma said that the average customer bill (one for a user of 3000 gallons per month)would go from $69 to $176. Fort Smith calculates that it would go from $69 to $95. Utilities Director McAvoy said of the number provided by Arkoma “I don’t know where that number came from.” Director Christina Catsavis said that the difference between $95 and $176 is a “whole different discussion.” She said that the Board cannot have an “accurate discussion” till they know the true impact on customers in Arkoma. Arkoma Mayor Josh Johnson said that the rates he presented were calculated from averaging the total flow for 2024 on a monthly basis, not a “snapshot.” McAvoy said the Fort Smith calculations did not include any catch up for total volume. Director Christina Catsavis requested that the Board be provided with Arkoma’s calculations. Arkoma Vice Mayor Bobby Weatherford agreed to provide them. Acting City Administrator Dingman also said that he would make sure the Board is provided with Fort Smith’s calculations “in a way that makes sense” when the Board discusses the new agreement with Arkoma at the the 6-17-25 meeting.

Director George Catsavis asked what Fort Smith residents pay and what Arkoma residents pay for sewer. McAvoy answered that Arkoma residents pay $2.69 and Fort Smith residents pay $8.75. Director George Catsavis pointed out that $2.69 does not cover the costs of treatment of the wastewater. McAvoy agreed that it does not. Director George Catsavis said “I don’t think 21 days is gonna hurt to see what we can work out.”

Director Rego pointed out that the Board received notifications via email about the past due bill in June of 2021 and in April of 2023.

Director Settle said that it is “unfortunate” that Arkoma residents have paid such a low price for so long. He voiced opposition to suspending the rate increase or negotiating a rate that would be different for Arkoma residents than Fort Smith residents pay. He said “It should be everybody pays the same” if Arkoma gets a lower rate “everybody in the City should get a lower rate.”

Director Martin mentioned that the $8.75 rate for sewer is devised based on the cost of maintenance of the pipes and systems, conveyance of the wastewater, and treatment of the wastewater. He pointed out that Arkoma pays for the maintenance of their own pipes. He requested seeing a rate calculation with the cost of the maintenance removed. He said that there “cannot be, should not be, an incentive” to move outside of Fort Smith. He said that the rate has to be “equitable, has to be good” but not an incentive.

Director Christina Catsavis said “With 80% water loss, I don’t know they’re doing the maintenance.” She said to Arkoma, “We want to be good neighbors.” but also said Fort Smith is “not in the financial position to provide the help you’re looking for.”

Director Kemp said “We don’t need to subsidize a municipal government.” He said that the he would like to see “real calculations” and calculations that account for the maintenance Arkoma does on their side. He also suggested the new agreement include milestones for future maintenance to Arkoma’s system. He suggested potentially a shorter term agreement be made. He said that Arkoma should be recognized for the improvements that they’ve already made to their system’s infrastructure.

Director Martin asked how difficult it would be for the billing to keep Arkoma at their current rate for the 21 days while the other customers have already switched to the increased rate. McAvoy said that Arkoma already has their own billing rate, so it would not require any extra work to keep it the same. He said, however, if there was not a new agreement in place after the 21 days, workers would have to be sent out on a Sunday to ready the meters on 6-22-25 and it would be “a little extra work.”

Director Good expressed his support for an agreement that discounts for Arkoma maintaining their own lines.

Director Christina Catsavis asked if it costs $8.75 to provide service to Arkoma. McAvoy said that there may be some room to reduce that figure slightly with reducing the portion included for maintenance. Director Christina Catsavis asked if Fort Smith is subsidizing Arkoma. McAvoy answered “I would not disagree with that at all.” He said that Fort Smith did recently lay additional pipe to increase capacity to be able to provide service to Arkoma but that pipe is good for 50 years and that he would also look at the maintenance costs for the pump stations for their percentage of the sewer flows.

Director Martin said “I will not be in favor of a subsidy.” McAvoy said that as a citizen of Fort Smith “I won’t either.”

Director Rego asked about any other cities that have a tiered structure for sewer charges like Fort Smith has for water instead of a flat rate. McAvoy said that there aren’t any in Arkansas but that there was one in California that tried a tiered system and after 5 years they went back to a flat rate system. He said that it is costly to do the sampling and analysis that is required to keep a tiered system legal.

The Board voted in favor of suspending the rate increase with only Director Settle and Director Christina Catsavis voting against the suspension.

The Board voted unanimously to apply for a $10,190,700 federal Community Noise Mitigation Grant. The grant would be used for sound reduction measures for existing residential buildings near the Ebbing Air National Guard Base to mitigate the jet noise. The City’s required match contribution would be a total of $1,132,300 that could be spread out over 5 years at $226,460 per year.

Directors Good and Kemp both mentioned having heard feedback from the public supporting pursuing federal grants for residential noise improvements, especially after the grant for noise mitigation for schools was awarded.

The Board voted unanimously without discussion to approve Hero’s to apply for a liquor license to relocate to a new location at 301 Garrison.

The Board voted unanimously without discussion to renew the 3 year software and licensing contract with Microsoft. The renewal will cost $441,531.54 for the first year and $400,948.84 each year the second and third years.

The Board voted on entering into a solar service agreement with Blue Path Finance for the financing and Entegrity for the ongoing operations of a 6.2 MW array in partnership with OG&E and a 2.4 MW array in partnership with AVECC. The arrays will produce a combined 15 million KWH of electricity per year. The municipal facility electricity needs that the arrays will be offsetting average 35 million KWH of electricity per year. The project was approved at the 9-17-24 meeting.

Director Settle asked if the federal government cancelling energy grants likely will affect the project. A representative from Entegrity answered that these two arrays are not related to any federal grants. Only the project for the array for Nelson Hall Homes was grant funded. Sustainability Officer Robertson agreed that these two arrays are the ones that are being financed and added that the grant for solar for Nelson Hall was paused at one point but was opened back up.

Jo Elsken spoke in favor of the project and praised the 40% savings in energy.

The Board voted to enter into the agreement with all but Directors Settle and Martin voting in favor of entering the agreement.

The Board voted unanimously to add $602,244.50 to the existing contract with Forsgren for the resurfacing on Phoenix to cover sewer line replacement work that needs to be done at the same time as the streets project.

Director Martin asked if the sewer repairs are consent decree projects. Engineering Director Snodgrass said that at least 2 of them are and that the one on South 28th is not.

The Board voted unanimously to enter into an agreement of understanding with ARDOT regarding traffic improvements to be done near Ebbing Air National Guard Base to accommodate increased traffic from the Foreign Military Sales program. The projects include intersection and signal improvements at Phoenix and Airport Blvd, an additional access road along Phoenix south of Airport Blvd, and a traffic signal on Phoenix at the north end of the base. The projects were awarded $2.5 million from Senator Boozman’s Congressionally Directed Spending funds. The City’s required match contribution will be $500,000.

Director Martin asked if the new signal would be near where Sodies is. Snodgrass answered that it would not, but would be “on past it” just to the south of where Sam’s Furniture is being built.

The Board discussed potential future steps for hiring a Director of Internal Audit to fill that vacant position and/or other plans for obtaining internal audit services. The Internal Audit Department is currently being supervised remotely by the outside company Baker Tilly.

Director Kemp mentioned that the City has been approached by DPI staffing with an offer for the firm to recruit for the position for free except for the cost of job postings and travel to bring interviewees to Fort Smith.

Director Martin who has been serving as the Board’s liason with Baker Tilly reminded that he originally voted against contracting with Baker Tilly. He feels that 30 hours per month is not enough time spent on the job and the City is “not really getting the full breadth of Baker Tilly’s expertise.” He mentioned that at the Audit Committee meeting on May 1st there was discussion indicating a desire for Director Martin and Audit Commissioner Ralston to speak with Baker Tilly about potential for a new future contract that would include more work hours, conducting a risk assessment, and conducting a specified number of audits. Director Martin said that a selling point for Baker Tilly is that they have individuals with expertise in specific fields like IT, utilities, etc. on staff. Of a contract with Baker Tilly, Director Martin said “This presents a good option for us” if the City “can’t hire someone we feel is a homerun.”

Director Rego voiced his support for using DPI. He also expressed that the has “no interest” in involving the City’s Human Resources Department in hiring for this position. He voiced his desire to have someone to interview for the position by July.

Director Kemp expressed his desire to have “no ambiguity this is a Board hire.” He said that DPI would report directly to the Board. He said “we lose nothing” to try DPI.

Director Christina Catsavis called DPI’s offer a “generous offer.” She mentioned that there are websites that cater specifically to jobs for auditors and accountants and that she did not see DPI working in that field at the level of audit department head.

Director George Catsavis asked who Baker Tilly reports to. Director Martin answered that they only report to him and that Chief Financial Officer Richards cuts them a check but there are no other communications between Baker Tilly and anyone else (outside of Internal Audit Department staff). He said that they would serve at the pleasure of the Board.

Director Kemp asked what the broader contract with Baker Tilly might cost. Director Martin answered $300,000 to half a million dollars but said that those are “just some numbers that were thrown out.” Director Settle mentioned that the current budget for the Internal Audit Department is $607,000 per year.

Krystal Cadelli spoke in favor of hiring a Director of Internal Audit. She said that the hiring process for the position has taken too long and has been “extremely embarrassing” for the City. She suggested posting the job on the City website and on Linkedin. She said that a recruiting agency may not even be needed.

Lavon Morton spoke regarding the rates charged by Baker Tilly. He said that $333 per hour is “not an unusual” amount. He said that you cannot use a person just out of college for the duties required in a doing a risk assessment. He said that Baker Tilly has high level experienced people and that the reports they produce will be “top-level.” He also said that more work hours in the contract with Baker Tilly “would be useful.”

Director Christina Catsavis asked if DPI would post the position on job boards. Director Kemp said that they would and that the City would pay for the posting charges but not the labor for doing the posting. Director Christina Catsavis suggested that they should post on sites geared to that specific field. She asked about how the Board could work with DPI without involving Administration. Kemp suggested that a liaison could be appointed from the Board like Director Martin is with Baker Tilly.

Director Settle suggested that the Board “go down both paths” by gathering a proposal for a new contract with Baker Tilly and also simultaneously using DPI to try to find someone to hire for Director of Internal Audit.

Director Christina Catsavis suggested that HR be directed to post the job listing on the City website. Directors Settle, Kemp, and Rego suggested all of the resumes be sent to the Board.

Director Christina Catsavis asked about a budget for the job postings. She mentioned that when the Advertising and Promotion Commission was hiring for a new Director they spent about $2000. HR Director Lolley said that in the past HR had spent about $2000 for similar positions. Mayor McGill asked the top number for hiring for that kind of position. Lolley answered $3000. Director Kemp mentioned that money might also be needed for travel to bring candidates to Fort Smith to interview.

Director Kemp motioned for Director Martin to pursue a proposal for a new contract with Baker Tilly, to appoint Director Kemp liaison to DPI and to mobilize their recruiting efforts, to direct HR to list the position on the City website, and to set a budget not to exceed $5000 out of the Internal Audit Department budget for DPI recruitment services. The Board voted unanimously in favor of the motion.