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Committee grills ANRC and Perrin Owensville over missing audits as Central Arkansas Water seeks consolidation
Summary
Lawmakers reviewed the proposed sale of Perrin Owensville Water Authority to Central Arkansas Water, pressed the Natural Resources Division (ANRC) on five-year missing audits and limited enforcement powers (a $1,000 fine), and heard CAW say it expects to finance $6 million and may apply up to an $11 monthly surcharge for customers if the contract closes.
Committee members questioned ANRC officials and Perrin Owensville representatives about long-standing audit noncompliance and the transparency of a consolidation process that would transfer the Perrin Owensville system to Central Arkansas Water (CAW).
Ryan Benfield, deputy director of the Natural Resources Division, said state law requires annual audits or agreed-upon procedures for water systems that hold state loans. He told the committee ANRC’s statutory enforcement remedy is limited to a civil penalty of about $1,000 and the agency has not broadly used fines because the task force concluded the sanction is ineffective. Benfield said ANRC’s practical remedy is to withhold future financial assistance from systems that are not current on audits.
Members cited a task force that estimated roughly 85% of water providers statewide are financially "upside down" and recommended ANRC be given broader authority to review systems proactively, require periodic rate studies on a rotating basis and place chronically noncompliant systems in "financial distress" with additional remedial steps.
David Johnson, general counsel for Central Arkansas Water, told the committee CAW's engineering assessment showed about $4 million in existing Perrin Owensville debt and roughly $2 million in deferred maintenance. CAW expects to finance up to $6 million and said a surcharge of up to $11 per meter per month is a typical mechanism to fund capital needs after consolidation; Johnson said Perrin Owensville must complete outstanding audits by June under the purchase contract or CAW reserves the option to walk away.
Perrin Owensville board president Curt Malone and office manager Jamie Mullins said the system set a December 1 proposal deadline and communicated informally with nearby providers; they attributed missing audits to staff time constraints, said an audit had been requested from their accountant and reported that recent audit material had been submitted to legislative audit.
Public testimony included a regional water-board representative from Salem Water who said his utility could partner on governance and in some cases return a system to local control after stabilization, but he acknowledged CAW had presented the stronger immediate offer.
The committee asked ANRC to provide correspondence and records relating to Perrin Owensville over the past five years and indicated legislators want clearer remedies to enforce audit requirements and protect customers from sudden rate shocks. No formal vote was taken on the contract during the hearing; committee members requested documents and follow-up from ANRC and Perrin Owensville officials.
