Fort Smith asks staff to negotiate sewer rate with Arcoma after town raises past-due, developer offers to cover some costs

The Fort Smith Board of Directors and Town of Arcoma officials used a May 20 study session to open negotiations over wastewater service, past-due charges and a lapsed 2013 service agreement. Board members directed city staff to pursue talks and return with a proposal and asked administration to consider a short temporary stay on implementing new rates for Arcoma while negotiations proceed.

Mayor Joshua Johnson of the Town of Arcoma told the board his town seeks a "fair and equitable" volume-based wastewater rate as a municipal (wholesale) customer rather than being billed at full retail residential rates. Johnson said Arcoma—s wastewater fund is "not self-supporting" and that, after infrastructure challenges and a 2019 flood event, the town has struggled to keep up with past charges. He said Arcoma—s current customer base is about 613 service connections and the town population is roughly 1,900.

Johnson described recent infrastructure work funded in part by grants and loans: a roughly $1.2 million forgivable loan that replaced about 5,349 feet of sewer main and refurbished 33 manholes; a prior $3.2 million USDA loan addressing water and sewer infrastructure; and a $500,000 project to remediate manholes. He said the town has roughly an 80% water-loss rate on the water side and continues to pursue additional improvements.

Fort Smith staff and board members disputed applying retail residential sewer rates to Arcoma. Lance (Fort Smith utilities staff) calculated that Arcoma—s tiered billing (Arcoma's July 2024 rates: $35 base, then $11.40 per 1,000 gallons for the first 2,000 gallons, $12.80 for the next 1,000, $14.20 for the next 2,000, and $15.60 beyond) roughly converts to $8.53, $9.57, $10.62 and $11.67 per CCF for successive tiers. City staff noted Fort Smith's retail sewer framework and argued wholesaler/retailer distinctions and measurement warrant a wholesale rate calculation tied to total metered flow rather than to Arcoma's billed volumes, because Arcoma reports higher outflows than the metered water sold to its customers caused by inflow and infiltration.

Mayor Johnson and Arcoma vice mayor Bobby Weatherford said the town had been operating under the expired 2013 agreement with Fort Smith by mutual understanding but acknowledged they did not submit a formal written extension. Johnson said the town is prepared to reassess its internal rates but requested Fort Smith treat the town as a wholesale customer and seek a negotiated wholesale rate. Arcoma representatives said one nearby developer, Fianna Properties LLC, has proposed a new 75-lot subdivision and offered, through its representative Dalton Persson, to pay up to $120,000 of Arcoma—s past-due wastewater balance to allow development to proceed.

Board members expressed competing priorities. Director Settle argued for uniform treatment of customers and cautioned against special discounts that would invite other outside customers to demand the same terms; other directors urged negotiation and asked staff to bring back options quickly so the developer and Arcoma can proceed. Several board members emphasized the need for a documented current service agreement rather than continued operation under an expired contract.

Mayor McGill and Administrator Dingman were asked to pursue talks with Arcoma. Directors moved to have administration and staff negotiate and return with a written proposal; several directors proposed a short pause on implementing the June ordinance rate for Arcoma while talks continue. Staff said producing an agreeable written proposal will likely take more than three days; the board asked staff to aim for an expedited follow-up (board members discussed a 14-to-21-day window) and to place any proposed temporary stay or agreement on an upcoming agenda for formal action.

No formal ordinance change or final rate decision was made at the study session. The board—s direction was procedural: staff is to negotiate a wholesale-rate approach, test terms with legal and billing staff, and return to the board with a written recommendation within weeks.