2 cities to end water dispute

FORT SMITH — Fort Smith directors have instructed city staff to draft a settlement agreement to end a months-long dispute with Van Buren over money it owes for water it bought from Fort Smith.

City Clerk Sherri Gard said the directors told the staff at Tuesday’s directors meeting to have the agreement ready for them to consider at their Jan. 17 meeting.

The directors took the action after local attorney Mark Moll submitted a legal opinion concluding that Van Buren had no obligation to pay $253,706 that Fort Smith claims Van Buren still owes for water it purchased from Fort Smith in 2009.

The directors hired Moll for a second opinion after City Attorney Jerry Canfield told directors last month the city had no legal way of collecting the money.

Both attorneys concluded that Fort Smith missed a deadline for providing Van Buren with figures to “true up” the actual cost of the water that Van Buren bought from Fort Smith in 2009. Van Buren pays Fort Smith based on estimates, then the rate is later recalculated.

“I agree with Jerry Canfield that whether you’re in an arbitration situation or in a courtroom, it would be very difficult for Fort Smith to prevail in terms of the 2009 adjustment,” Moll told directors during a special study session Tuesday afternoon.

So city officials agreed Fort Smith will not pursue the balance it claims for 2009.

According to figures from Van Buren, it paid Fort Smith more than $3.9 million for nearly 2.1 billion gallons of water in 2009.

The “true up” figure is a complex calculation that accounts not only for the cost of water but also for the cost to Fort Smith for providing it to Van Buren. Van Buren starts the year with a water rate it estimates it will pay for water during the year. At the end of the year, that rate is replaced by one that accounts for the actual cost to Fort Smith.

A 10-year-old supplement to the water purchaseagreement between the two cities set up the “true up” process. City Administrator Ray Gosack said calculations were performed by a city staff member and submitted to Van Buren for payment for the years 2004-10 but not for 2009.

Gosack said in a Nov. 14 memorandum to directors that Van Buren officials also disputed calculations for the years 2006-08 and never paid the additional amounts. He wrote that after a review of the calculations by the engineering firm Burns and Mc-Donnell of Kansas City, Mo., Van Buren officials agreed to pay Fort Smith an additional $327,226 for 2006, $129,227 for 2007 and $124,720 for 2008 for a total of $581,173 on top of contract amounts Van Burenalready paid for Fort Smith.

For 2010, Fort Smith calculated it owed Van Buren $30,884, which Van Buren had overpaid.

A Nov. 21 letter to Gosack from C.E. Dougan, chairman of the Van Buren Municipal Utilities Commission, statedthat the Van Buren City Council voted Nov. 20 to increase water rates charged to its residents to raise the $581,173.Mayor Bob Freeman estimated Tuesday the rate increase would add about 12 cents to most Van Buren water customers’ monthly bills.

A Nov. 10 memorandum to city officials from city Internal Auditor Mitzi Kimbrough offered an explanation for missing the 2009 “true up” deadline. The memo stated that the city had a staff member who performed the calculations each year. In 2010, when the 2009 calculations would have been done, the employee resigned, and the position was not filled by then-City Administrator Dennis Kelly.

In the memo, Kimbrough stated that she spoke with Kelly in October. According to the memo, he said he told Finance Director Kara Bushkuhl that he planned to hire another staff member to take over the job after the November 2010 election. However, Kelly was fired the night of the election and the position went unfilled.

“Based on my research, I do not believe that Kara Bushkuhl or Dennis Kelly were aware of any deadline regarding the ‘true up,’” Kimbrough wrote.

Since the dispute arose, steps were taken to ensure that the city doesn’t miss another deadline, Gosack told directors Tuesday.