01-09-01Minutes
Board of Directors Room
City Hall — 500 W. Markham
Little Rock, Arkansas
January 9, 2001
4:00 P.M.
The Board of Directors of the City of Little Rock, Arkansas, met in a reconvened session
with Mayor Dailey presiding. City Clerk Nancy Wood called the roll with the following
Directors present: Directors: Hinton, Lichty, Cazort, Keck, Stewart, Graves, Kumpuris,
Wyrick, Adcock. Director Pugh was absent at roll call but enrolled at 6:10 P.M. With a
quorum present, Mayor Dailey declared the Board of Directors in session and the
proceedings of the meeting are recorded as follows.
A motion was made by Director Hinton to add the listed modifications to the reconvened
meeting; Director Lichty seconded the motion. By unanimous voice vote of the board
members present, Items M -1 and M -2 were added. Item M -1, replaced Item three on
the printed agenda.
M -1. Resolution to authorize a request from the City of Little Rock, Arkansas, to Little
Rock Newspapers, Inc., to sublease property to the Arkansas Museum of Science and
History, Inc., to ratify various documents to the lease; to authorize an increase in lease
payments for certain space; and for other purposes.
M -2. Abstract of Votes; To ratify the Abstract of Votes for City Directors and
Municipal Judges at the General Election held November 7, 200. (Filed in the City
Clerk's Office on January 9, 2001.)
1. PUBLIC HEARING & ORDINANCE - To annex additional lands to the St. Charles
Municipal Lighting Improvement District No. 1 of Little Rock, Arkansas; declaring an
emergency; and for other purposes. Mayor Dailey read the ordinance the second time,
and re- opened the Public Hearing. Director Keck stated the board was waiting on a
response in the Administrative Report as to whether the board had to approve this issue.
Mr. Carpenter said yes, that was correct. Mr. Carpenter said there was some question last
time whether the majority in value of the property owners were represented and that he
had received a call from Mr. Stephens and they had missed connections, and had received
some materials from him, but had not been able to get back in touch with him to make
sure he understood the issues. Director Keck asked this item to be held on second
reading. He stated he had heard from some of the residents, and all they wanted was to
get their lights fixed, and because of that confusion there may have been agreement to
this, that might not otherwise have taken place. Mr. McSpaddin, council to the St.
Charles Water Improvement District was in agreement. The public hearing was closed.
The item was held on second reading.
2. ORDINANCE NO. 18,410 - Authorizing the City of Little Rock, Arkansas to enter
into an interlocal agreement with the City of North Little Rock, Arkansas providing for
the consolidation of their water systems and creating a public body corporate on politic to
own and operate the consolidated water systems; declaring an emergency; and for other
purposes. (Third reading.) Director Lichty publicly recognized the water merger -
planning group, and thanked them for their participation. Mr. Carney stated that each
board member should have a copy of the Consolidated Water Agreement and a sheet of
paper with one additional change that has been proposed. He stated that the agreement in
front of the board incorporates that one change and its basically what he has talked about
to each member individually over the last twenty four hours, and that modification speaks
to the possible sale in the future of certain water related facilities owned by both utilities
and what would happen to the proceeds of those assets that might be sold. The new piece
that has been incorporated is that if in fact some of the water utility ownership assets are
sold, related to the water supply, or the water treatment facility, those proceeds would go
to the new utility and must be used and reinvested in the utility for those types of uses
such as supply or treatment. If there were an asset deemed as administration, such as a
building, the proceeds would be to the utility and used to reinvest in either supply or
treatment or administrative assets. If an asset was sold that was labeled or determined to
be distribution, like a water tower, or water storage facility, in Little Rock, then those
proceeds would be re- invested in the distribution system in Little Rock or in North Little
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Rock if the facility was located there. He stated that was the modification, and had been
told that it was accepted by North Little Rock as well. The changes mentioned
previously, namely the issues related to proceeds received by the city each year from cell
tower leases, other sources, are satisfactory and do meet the current level of funds
received by the City of Little Rock, and could exceed that in future years. The issue of
the City continuing to own the assets, the existing real estate which Little Rock owns now
and lease back to the new utility have been worked out and are listed in the document
before the board tonight. Mr. Carney stated as a result of those negotiations over the last
couple of weeks, stated that his concerns as he originally addressed are addressed and
feels confident this is a solid document that should proceed and would recommend it to
the board. The thing not addresses and still questioned by the board in meetings past is
the issue of future rates. Mr. Carney said there is no information about future rates other
than new language, language in this document that speaks to future rates related to the
improvements in the distribution system, other improvements in North Little Rock, as
those are identified and made then the cost of those improvements must be paid for by the
North Little Rock rate payers and improvements on the Little Rock side must be paid for
by Little Rock rate payers after studies are re -done. He stated there have been no rate
studies done. He said the previous study, the Black and Beach Study, on the Little Rock
side and others in North Little Rock, as he understands it, none of the studies address the
question of cost of the future supply so that issues has not been costed, and therefore
could not be applied to any kind of rate recommendation and must be studied in the
future. Ms. Jane Dickey, Little Rock Water Commissioner, stated she would answer
questions by the board. Director Adcock stated the board had just been handed three
pages by Mr. Carpenter, City Attorney, and asked Mr. Carpenter if he could explain the
memo he had given the board. Mr. Carpenter stated they were language issues, and
recommendations for new language, and went on to explain what the language issues
were and his concerns regarding those issues. Director Adcock moved to table the issue
for one week. She stated she hoped in that time the City Attorney could come to the
same agreement that Mr. Carney had, to work out all the details so that the draft that the
board actually votes on is a final product and it does have the input of the City Attorney,
The City Manger, and all the board. Director Wyrick seconded the motion. A roll call
vote was taken on the motion and recorded as follows; Director Pugh, yes, Hinton, yes,
Lichty, no, Cazort, no, Keck, no, Wyrick, yes, Kumpuris no, Graves, no, Adcock, yes,
Mayor Dailey, no. The vote was 4 yes, 7 no. The motion failed. Director Adcock sated
she could not support this until Mr. Carpenters concerns were addressed. Mayor Dailey
stated there might be a way to resolve this as discussion takes place. Mr. Carpenter stated
the memorandum sent to the board the other night raised certain issues with the board,
one that was the equalization of rates issue. He sated there is a change in the statute that
is substantially what he was recommending. The concern being whether rate equalization
had to be immediate. He stated he thought the concern is real, but suggested if the
legislature indicated that immediately upon a merger, if there were a discrimination in
rates among similarly classed customers, that would be okay as long as the entity
undertook a rate study and an engineering study to determine what led to the
discrimination and how to get it equalized and what a rational time basis would be, and
then statutorily indicated there would be no extension whatever a rational basis proved to
be beyond at ten year period of time. He sated there is language in the proposed statute
now that sets that up as alternatives, that you can do a rate study or you can do an
engineering study allows the ten years, and has some good language about he fact that
there is an equalization doesn't mean you are at risk. The problem he had, and said he
would have worded it differently and worked through it a little bit differently, but did
think that he concepts gets the city into more of a legislative determination as to how you
have unequal rates when two entities merge and what is a reasonable time frame for
getting there and that's much better than saying there will be an equalization of rates that
will occur over ten years. That change has come forward. There was a concern about an
aspect of rationalization that he stated he had discussed with the board, that is not in any
of the documents and the concept was that when one of the boards studied the extension
or the exterritorial extension of water utilities, the cities have had across the country is
that as they extend to suburban areas, these areas become their own tax bases without
many of the problems the downtown area has, then they refuse to participate in the needs
of the community, so the question becomes what happens if and when Little Rock is
surrounded, how can you deal with that. The idea discussed and found some currency,
although they could not actually figure out a way to say it was what if a condition of the
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extraterritorial extension of the utility service beyond the Little Rock and North Little
Rock boundaries included with it a requirement that the customers receiving the monies
would participate in those regional issues the local government said were such issues. A
provision would be in the agreement where the discretion to give that water by the
consolidated entity would include the ability to impose a special fee for this type of issue.
The concept he had discussed with other attorneys is the fee would not exceed any
franchise fee imposed by any of the participating governments. He stated he did not
think it a good idea to have a situation it seemed where the North Little Rock City
Council, or the Little Rock Board of Directors in conjunction with each other or
separately started second guessing the decision of this joint commission to extend water.
Their job needs to be to give clear, cool, cheap water to people and do that in the best
way for all the people within this area. He stated it seemed counterproductive to have
their decision to extend water, seconded guessed by the two cities. The concept of taking
the two cities out of that was recommended and is in the Consolidated Agreement.
Director Lichty asked Mr. Carpenter if there were anything in the agreements before the
board, which would preempt achieving exactly what he (Mr. Carpenter) had just said,
providing cheap drinkable water to everyone. Mr. Carpenter addressed the following
issue saying, of the transfer of millions of dollars of assets to this entity, and what has
been recommended and is in the agreement in some form, but not totally in there is that
the city would maintain title to these properties and the use of the water would extend to
the consolidated commission, what is not in the language before the board that caused
him concern was in terms of development around water sources such as Lake Maumelle,
Lake Winona; thought the commission should have an absolute veto as long as there is
any rational believement the development could impact negatively the water supply. He
stated that if the City keeps title to Lake Maumelle and wishes to develop hiking trails
along the area, does the absolute veto, because of the concern about the water, still exist.
The recommendation he stated he was trying to bring forward to the board which is not in
these documents, is essentially the city should be able to say, that we wish to use the
property for a park purpose, we can demonstrate it is not going to negatively impact the
water quality, and produce the evidence, and present that to this joint commission, and
unless that commission can refute the information then the part use would be allowed to
be developed. Director Wyrick stated she was confused about what Mr. Carpenter had
just said. She asked if he were saying in the event there is an issue to extend water
outside of the city, that it is or it is not, the power of this new commission to do that. Mr.
Carpenter stated that it is in their power. She then asked Mr. Carpenter if his issue was
that there was no veto power from the Little Rock and North Little Rock Boards. Mr.
Carpenter stated under the prior drafts, the extraterritorial extension of waters outside
Little Rock's boundaries, could be stopped even though the commission thought it was a
good idea, if both the Little Rock Board of Directors and the North Little Rock City
Council vetoed it. That raised a series of concerns as to why should North Little Rock be
making extraterritorial decisions for Little Rock and vice versa. The real issue is why
should either city board be addressing the extraterritorial extension of water services by
utility dedicated to that one issue. The concept is that you regionalize water, and you
extend the utility because it's going to help the utility, which is going to help everyone
receiving the water. Therefore neither city should be able to join together or separately or
otherwise deal with the question. He said that amendment has been made that it is
uniquely a commission decision. Director Wyrick wanted to know what impact the city
boards would have in approving or disapproving those rate increases. Mr. Carney stated
the same double veto power is in this document. If both the Little Rock Board and the
North Little Rock City Council disapproved of the rate increase it could not be done.
Director Wyrick stated there would be notices and public hearings and if both boards
vetoed it would not pass, was this correct. Mr. Carpenter answered yes. Director Stewart
stated she was under the impression, after talking with Mr. Carney, that Mr. Carpenter
was pretty much on board with the agreement, and then they received more information
today, and that Mr. Carpenter had been slow in providing them information. She said she
was disappointed in how slow the information had come to them from Mr. Carpenter.
Mr. Carney stated that just to clarify, as he had talked to several board members, each
one, or several had asked about City Attorney concerns, and that he did not want to speak
for Mr. Carpenter but just to clarify his statements, he believes, and Mr. Carpenter
believes that much of the legal questions raised before have been addressed by some of
the things that have been changed in the document, and he said he believed he responded
to everyone that Mr. Carpenter still had some concerns related to some other issues, the
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timing and other things, but in terms of the legal concerns much was addressed by the
changes. Director Stewart stated that she had received information that at three o'clock,
Mr. Carney would meet with the board, and anyone that wanted to meet to finish hashing
out this issue, could meet. Director Stewart stated that apparently the meeting took place,
and she was under the impression with that, it should have been pretty much ironed out
by now. Mr. Carney stated to clarify that, he stated he was here at three o'clock and a
total of five board members were here during different times, starting at three on and off
to talk about the issue, to ask questions, and they were there, but it was not really a
meeting. Mr. Carney stated they had just made themselves available, some board
members came and some did not. Director Pugh stated she supported the water merger,
and felt it should have been done a long time ago, but the reason she voted to table it, was
because at the ninth hour the board got information they should have been getting all —
along. Mr. Carpenter said he did not disagree and some of the concepts had been
included but final language is not. Mr. Carpenter said there is noting about this document
that is illegal, it is a policy document, the questions about trying to do the best you can to
preserve the rate structure have been done, the questions about title to the property which
created the question of sending all the assets over for no consideration have been
addressed, the questions about how to deal with the trust fund in such a way that the city
is not going to open itself up in such a way to some sort of ratepayer matching, are
addressed adequately. He said he did have some problems with language, but there is
nothing in the document if it is passed today, that he would not go home and ask how
would he defend that lawsuit. Director Stewart said the board does care about what
your opinion is, because you are our legal advisor. She said she did appreciate how Mr.
Carpenter how dissected this issue and had given them this information, it is the time
frame, that it was given. Director Graves stated she thought she was hearing some
consensus on how Mr. Carney and Mr. Carpenter felt, and asked Ms. Dickey how she felt
about the document. Ms. Dickey stated she felt very positive, the officials and the
members of the water merger group in North Little Rock are all willing to live with, and
was in favor of it. Director Keck stated he had some questions regarding a memorandum
the board had received from Mr. Carpenter that had some proposed amendments to the
ordinance approving the consolidation agreement, and asked Ms. Dickey if she had had a
change to review it. Ms. Dickey said she had glanced at it briefly. Director Keck stated
it has some statements and issues that besides the consolidation agreement; the board
needs to make sure Ms. Dickey had a chance to review it, that some of it is some _
wordsmithing that has been done, but a portion of it requires the Attorney Generals
review, which would probably have to be done anyway, which was not in the previous
section, the severabilty clause is quite a bit different. Ms. Dickey said she would say the
submission to the Attorney General is something that must be done under state law. She
stated she would ask the board to consider the ordinance that has already been placed on
first and second reading without any alterations. Director Adcock asked Mr. Carpenter if
there was part of this that he would like to be put in the form of an amendment. Mr.
Carpenter stated the parties have indicated a willingness to go forward with the language
in the original ordinance, and they have been working on this a lot longer than he has and
said there were two issues the board had not discussed that he was still concerned about,
that were brought up but had not been addressed, one was the issue of service to areas
annexed and one is the rationalization issues, but if the board is comfortable these two
issues can go forward. Director Kumpuris asked how this principal before this group to
see how these issues can be incorporated. Mr. Dickey stated that the UALR report did
have two key things that had to be done, and the issue before the board include step one,
and then think about step two as the process moves forward. Director Kumpuris said if
the consolidated group was going to be given this much responsibility and power, then if
people outside that we are extending to take our water then they need to take some
responsibility to be regional in some other issues that have been discussed. Director
Lichty stated he thought this board would have every opportunity once this combined
board is constituted to communicate to them what the boards wishes and desires are.
This board board is responsible for the appointment of four of the members of that combined
commission. Mr. Carpenter stated if the board is interested in moving forward, to move
forward and approve this, and then turn around and indicate by motion, that this concept
is some sort of participation in regional issues as an additional aspect of the statute would
not be deemed a material change or alteration that allows the parties a chance to put the
language together. North Little Rock can be told about this and he was sure that Ms.
Dickey would do so, and he said he could not image that they would disagree, and then
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the actual amendment to the language as it goes to the legislature can go forward and the
parties would be comfortable that they have addressed the issue. Mayor Dailey stated
that was a great idea. Director Lichty stated lets approve it first, and stated he wanted to
draw the attention to Section 601 that says the consolidated commission shall
immediately announce its intention to begin planning for a third water source,
acknowledge it recognizes other municipalities and other governmental and not for profit
entities also will have interest in a new source and expresses desire to proceed in a board
based process to arrive at a regional decision. Director Kumpuris stated he had read that,
and that by acting as Mr. Carpenter suggested, adding the language, would make this
even stronger. Director Lichty stated that if the board votes to approve the merger, then
if Director Kumpuris makes the motion, he would second it. Mr. Don Darnell, citizen,
asked a few questions about the utility, as far is if a better way comes along, is it possible
for the two entities to divorce, so to speak. Mayor Dailey answered it was, and Ms.
Dickey explained what the process would have to be, and asked about the rate structure,
and if any alternate model was considered, such as the Southern California model.
Director Lichty stated there was peripheral discussion about other types of regional or
quasi - regional operations in the country. Director Lichty made two motions, the first,
that the board adopt the current draft of the Consolidation Agreement dated today's date,
(1- 9 -01), as being the official exhibit A to the ordinance that subsequently would be
voted on. The motion was seconded by Director Cazort, and by unanimous voice vote of
board members present, the motion was approved. Director Lichty stated his second
motion was to read the ordinance the third time. Director Kumpuris seconded the
motion, and by unanimous voice vote of board embers present, the motion for third
reading was approved. The ordinance was read the third time. Director Lichty made the
motion for adoption of the ordinance, seconded by Director Cazort, and by unanimous
voice vote of board members present the ordinance was adopted. Director Kumpuris
made the motion that the principals of Mr. Carpenters thought about extension of water
being socially responsible for other regional issues be incorporated in the document that
was just adopted. Director Lichty stated before he seconded the motion, he stated there
was an emergency clause that needed to be acted on. Mayor Dailey asked for a vote on
the emergency clause, by unanimous voice vote of the board members present, the
emergency clause was adopted. Director Lichty then seconded Director Kumpuris'
motion. By a unanimous voice vote of board members present, the motion was
adopted.
Ms. Dickey stated she was very gratified by the vote tonight and it was an incredibly
significant step, not he last step, there are many, many things to be done. She stated that
where this boards real control will be, is in communication with the new commission, and
holding their feet to the fire in regionalism efforts.
Mayor Dailey announced that Item M -I on the Agenda Modification would replace Item
3 on the printed agenda.
M -1. RESOLUTION NO. 10,975- To authorize a request from the City of Little Rock,
Arkansas, to Little Rock Newspapers, Inc., to sublease property to the Arkansas
Museum of Science and History, Inc., to ratify various documents to lease; to authorize
an increase in lease payments for certain space; and for other purposes. Director Keck
motioned to adopt the resolution, with Director Adcock seconded the motion, and by
unanimous voice vote of board members present, the resolution was adopted.
M -2. To Ratify the Abstract of Votes for city directors and municipal judges at the
general election held November 7, 2000. Director Adcock made the motion to ratify,
Director Keck seconded the motion, and by unanimous voice vote of board members
present the Abstract of Votes was ratified.
There were various questions by some board members concerning cleanup from the
recent ice storm.
A motion was made by Vice Mayor Cazort to adjourn, Director Keck made a second, by
unanimous voice vote of board members present, and the meeting was adjourned at 6:40
P.M.
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ATTEST:
•' � 1 1
CITY CLERK
In
APPROVED:
JIV DAILEY
MAYOR