FORT SMITH, Ark. — The Fort Smith Board of Directors decided to table a water rate ordinance that would increase costs at Tuesday's meeting. The directors will soon hold a special study session to talk about some more options.
"Nobody likes to raise water rates, and they want to ensure that they have looked at every angle," said Lance McAvoy, Director of Water Utilities for the city. "They're wanting to make sure that our residents are taken care of and look at other funding sources to lessen the impact."
A consulting company brought the water rates study to the Board of Directors study session last week. According to a memo, the study "took a holistic look at the entire rate structure."
Proposed changes to the structure include:
- Residential Rates going from a 3-tier structure to a 4-tier structure,
- Consolidating the industrial rate from 2-tiers to 1-tier,
- Establishing rates for contract water users north and south of the Arkansas River, and
- Establishing a surcharge of 1.5 times the normal rates for those retail customers living outside the City of Fort Smith
The board said they simply needed more time to talk about how to fairly charge customers.
"Those that use more water would pay for it more. And those that use less wouldn't pay as much," McAvoy said. "The biggest issue is we're looking at 13 years since the last rate increase."
The city hasn't seen an increase in water rates since 2011, and McAvoy said due to inflation, the city is currently selling water for less than what it costs to produce it, meaning the city is losing money.
"Chemical costs are up, our electrical costs are up, the minimum wage has gone up, and so have salaries, materials have gone up, equipment has gone up," McAvoy said. "What it cost to manufacture, deliver water and maintain the system catches up and you end up paying more than what you're bringing in."
He said an increase in rates would give the city a chance to complete some projects that are well needed.
"Some of that would have gone to replacing those water meters. Our lines are getting old," McAvoy said. "Expanding our transmission line, the 48 inch that we're trying to get built that would go through the east side of town, and possible upgrades to the lake Fort Smith plant to produce more water to not only provide to the city but the region."
Ward 2 Director Lavon Morton agreed it's time to decide as the city is losing money.
"To go through this whole year and not take some kind of action on these rates. We're not doing our job for the people or the businesses here, or the military, or the Chamber of Commerce, or any other organization trying to move this city forward. We are hauling it back, because we're selling water for less than what it costs us to produce it," Morton said.
Director at Large Kevin Settle said he isn't fully sold just yet and wants some more options.
"Times get tough. People don't raise rates, people reduce spending. And in this economy, what's going on, if we have a bond covenants issue, we should reduce spending, and maybe come back to us with a fair and ethical rate that makes sure that people outside the city are paying just as much as people inside the city," Settle said.
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