City, County & Local Affairs Comittee Senate and House
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Speaker 3
4:30
Thank you. First of all, let me just say, Governor Hutchinson, thank you for being
here. I know you have a very busy schedule, and I know you probably would rather be a lot of other places than here this morning. So we appreciate you being here
to answer some questions. uh before we say anything before you do anything else uh co-chair do you have anything to say
we do need a motion to accept the minutes of the last meeting so i have a
motion all those in favor all right governor i understand that you have an opening statement that you would like to
Speaker 8
5:25
make before we begin questioning so you're recognized to make that opening statement Thank you, Senator Subblefield, Representative Fite. Thank you for the invitation to speak on my decision to support the resettlement of a limited number of refugees
from war-torn countries into our state. First, it is important to understand who qualifies as a refugee. A refugee is not someone who crosses our borders illegally or someone who enters our country and claims asylum. A refugee coming to America is not an illegal entry. A refugee often waits years to be authorized to come to the United States legally, and the refugee is vetted and has more security checks than any other type of immigrant who
comes to the United States. The vetting process includes biographic and interagency security checks, homeland security interviews, fingerprint scans, and biometric security checks, and a medical exam. Once screened and selected, the refugee goes through a cultural education program by the United States. Now let me take you back in time. Four years ago, information was floating around the state that thousands of Syrian refugees were coming to Arkansas. Despite the welcoming
nature and compassion of Arkansans, I was concerned about security and the lack of information that was available to me as governor. I opposed a mass relocation of Syrian refugees because I did not have the information to give confidence to my decision. For these reasons, I issued a statement that I oppose the mass relocation of Syrian refugees to Arkansas. Some of you have asked, well, what has changed? The answer, a lot has changed. The Trump administration has
made a number of changes. They have limited the number of refugees nationwide to 18,000, with likely fewer than 50 coming to Arkansas in 2020. Second, the priorities for refugee resettlement have changed, from focus on balancing geographic regions to placing a priority on those suffering religious persecution and those who have cooperated with the United States in the war against terrorism. The vetting and security checks have been dramatically increased
and very importantly, the state and local governments have been included on the decisions and have been provided essential information that was previously unavailable. As a result of these changes, I have been briefed on the security checks by my former colleagues at Department of Homeland Security. I have closely examined the process both at the Department of State and with the sponsoring Arkansas Resettlement Agency. Based upon this due diligence, I have confidence in the high standard of security checks and that the incoming refugees
will have the community support needed to get jobs, to pay taxes, and to be assimilated into our American culture and way of life. As a result, I communicated by letter to Secretary Pompeo Arkansas's willingness to accept refugees, and of course this took also the approval of Washington County, which I'll reference. My authorization is until December 31, 2020. My administration will continue to monitor the assimilation of the refugees, their employment
and their compliance with our laws. At the end of the year, I will advise the Department of State as to whether Arkansas will continue to participate in the program. I certainly hope that will be the case because the refugees settled to date have been successful. In fact, 98% of refugees become self-sufficient within 90 to 180 days of arrival. And so some of you have asked, well, who are they and where do they come from? The refugees in the resettlement program are fleeing persecution or other hardship in their home country.
For many, such as Watata Mwenda and his family, leaving the Democratic Republic of Congo literally made the difference between life and death. In fact, before they fled, Mr. Mwenda's son and daughter-in-law were murdered, and he was kidnapped and held hostage until he escaped and sought refuge. Mr. Mwanda was settled in Fayetteville. Many of the refugees come from African nations that are embroiled in conflict or war. Some come from countries such as Iraq and Afghanistan,
where they are at risk because they have cooperated with U.S. officials. Now let me introduce a special guest, Ms. Lucia Akili Mali. Ms. Lucia Akili Mali. Please stand, if you would, please. She and her husband fled the Democratic Republic of Congo in 2000 because of the Civil War. They fled to Kenya, where they waited for the next 18 years to be resettled. But while they waited, they made a difference in their refugee camp.
Lucia opened a small grocery store, and her husband, Kalula, planted a Baptist church. About 10 years into their time in Kenya, the Kenyan authorities reached out to them about fostering a pair of Congolese girls who had just arrived to the country unaccompanied. Their parents had been killed back in the DRC, the Congo, and they made their way to Kenya with a group of other refugees. Clululu and Lucia agreed to take them in and adopt them as their own.
They were all resettled in Arkansas in 2018 and have continued to work hard and have become a part of our community. Lucia has recently completed training as a certified nursing assistant and is working at a senior care facility. Oh, yes. Her husband works for a manufacturing company in Springdale. Her oldest son attends NWAC, Northwest Arkansas Community College, and is hoping to transfer to the university next year to complete a bachelor degree in engineering.
They are active members of Cross Church in Springdale. I also wanted to introduce two additional ones. Hamayun Abdullah from Afghanistan. Hamayun, would you stand, please? Thank you. He is here, and I asked him why he is here, why he became a refugee, and the answer was because he worked for years in Afghanistan with United States authorities, including the USAID. He was at risk.
He went to a safe house, and he became a refugee to the United States of America. He lost his son because of his commitment to the United States of America. And then we have Manga Mukadama of the Congo. And Manga came here also from the Congo in a very similar story that you've heard previously. But I want to welcome them here to this distinguished committee, and I know that you'll want to welcome them as well.
Let me also introduce Emily Crane-Linn, the Resettlement Director for Canopy of Northwest Arkansas. And Emily, I understand Canopy, for some of those you might not be familiar with, that is associated with Lutheran Immigration Services and has a relationship with Catholic charities as well. In 2017, they helped relocate 52 to Arkansas. In 1857 and 1954, in fiscal year 20, five have been resettled thus far. Now, some have inquired about the cost to
our state. The simple answer is that the refugees find employment, pay taxes, and the cost-benefit analysis is a net plus for our state. In fact, there's a physical cost analysis through the Trump administration that President Trump requested that demonstrated nationwide that there's a net positive impact of $16.9 billion as a result of refugees paying taxes, employment, and their work. The transition support for the 54 refugees who resettled last year in Arkansas
came from the federal government and private donations. No state dollars are involved in the refugee support. Most of these refugees find a job within three months. After 90 days, they can apply for the same public assistance that is available to any other person who is here legally, but as I said, 98% transition off within 90 to 180 days. They also are subject to the same qualifications and requirements, including a work requirement when that is for a particular benefit.
Under President Trump's executive order, it is necessary also to have local community support. I am pleased to say that Judge Joseph Wood of Washington County, along with the mayors of Springdale and Fayetteville, have submitted letters indicating their support and willingness to accept the refugees as they have in the past. At this time, the relocation will only take place in Washington County. And before I turn it over to questions, let me conclude by saying America was founded
by immigrants and through the years they have fought to preserve our freedom and made the United States the greatest country on earth. Arkansas is a welcoming state. We have benefited from Vietnamese refugees who fled communism and a war-torn country. Wherever they come from, we benefit from their energy, devotion to freedom, and we want them to be a part of the fabric of our nation, our future, and our state. If we say no to them, then we lose the talent, entrepreneurship, and humanity of those who love America. Yes,
they can go elsewhere, but Arkansas will benefit from their presence. Security is foremost, but I have confidence in the security measures taken by this administration. Let's welcome lucia and others who come here for all that america has to offer with that mr chairman i yield for any questions from the committee thank you governor governor you
did a radio interview i think a couple of weeks ago
with mr ellswick i understand and during that interview one of the questions you were asked was where do the refugees come from and I think your statement was it has been our experience that these refugees come from certain locations. Do you have do you have a more specific answer to that than it's been our experience that these refugees come from certain locations in Africa or the Middle East or even South America? Well I can
Speaker 8
16:41
give you a very specific breakdown as to where
the refugees came from in terms of the last three, four years that we have been brought here to Arkansas. Now, the reason you look at 2020, you base it upon history as to where they come from, but there's, I can't say for certain how many is going to come from the DRC, how many come from African nations, how many will come from Iraq out of the less than 50 that will
Speaker 8
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So Canopy has settled refugees from the DRC, Democratic Republic of Congo, Liberia, Rwanda, Iran, Iraq, and Afghanistan. And also we had some from Columbia. there's a sheet that has
Speaker 19
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a specific number for each year and so I
Speaker 8
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think you can based upon the experience that we'll see a similar pattern this coming year because the Department of State likes
to bring those in here to different areas that have support adequate support and they feel a part of community so and and there's no
as far as the demographics of this group of 50 to 70 refugees do you know what the demographics of that group is who they're made up of in regard to in regard to age in regard to families do those do those refugees have families that are already here
because in most cases, many times refugees already have family and friends in
Speaker 8
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the United States. Many of them are family units. Those are the ones I've recited. There's different circumstances that refugees come. Some are individuals. Some have families with them. And so the refugees, the key thing is that in the process, they are first put into a resettlement or a refugee camp ordinarily,
in which in some instances they say one 18 years, but on the average two to three years in a refugee settlement camp. And then the High Commission on Refugees will allocate some to different countries and some will be allocated to the United States. That's when the vetting process starts. And that vetting process I've already outlined. and then the Department of State, once they've been vetted, will determine where they have the best opportunity for success.
They will assign them to different states. And so I can't tell you who will be assigned to us this next year, but the Department of State has indicated to Canopy that it will be fewer than 50 and that we can be assured that they will come in a similar fashion as families, individuals that have been vetted in previous years. They did provide me with the sheet that gives the specific numbers and I'll just take last year we
had eight from Afghanistan, five from Liberia, four from Rwanda, one from Iraq, one from Iran, and then we had the rest which looks like about 25 to 30 from the Democratic Republic of the Congo. That totals 54 arrivals in FY19. I think that gives you a good flavor as to what's ahead. In FY20, we've received five from Columbia and that's the extent of what we've received thus far in FY20.
Would you agree, Governor, would you agree that even with this enhanced vetting that has been
put in place. And I've studied the enhanced vetting process that the federal government has put in place in regard to refugees. Would you agree that even with that type of vetting, there's always a possibility that there's someone who could slip
Speaker 24
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through who would be a national security threat or public safety threat
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to our country? It's not any different than, you know,
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people who are granted visas that come to our country. We're a free country, we're human beings, and
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certainly you can, while I have confidence in the vetting process and the checks that have been made, you know, there's never a guarantee that one of the 150 that have come here over the last few years might violate a law of some kind. I mean, that's always a potential.
would you also agree that refugees allowed to enter the United States represent
a cost not only to the U.S. government, which a lot of times I've heard statements saying, well, these are federal funds. We have a tendency sometimes to distinguish between federal funds and state funds. All those funds are still taxpayer dollars. I mean, Washington operates. Washington money is Arkansas money Because without Arkansas taxpayer dollars, the federal government would not have the funds they have to do the programs and implement the programs they have.
So those dollars really represent Arkansas taxpayer funds. And when you take into consideration the fact that, and I have a good friend who's, and you do too, you know this lady real well, Representative Kathy, former Representative Kathy Webb, who was head of the Arkansas Hunger Alliance. and when you consider the fact that Arkansas has one out of four children who go to bed hungry every night and we are ranked as one of the top poorest states in the country can you understand
the reaction that the public would have when they read about uh refugees being allowed to enter and the benefits that they are being given uh they are also eligible for other assistance and services through Health and Human Services. In addition to that, they also are eligible for mainstream federal means-tested public benefits as well as assistance they might receive under state law, even assistance otherwise that's unavailable to our own citizens.
And when I look at the... In my community, we have veterans, veterans who have fought for this country, for the freedoms that we enjoy in this country. Who are going without needed assistance, and yet we take in individuals from other countries and provide them with financial assistance that we don't even give our own citizens.
Speaker 28
23:51
Can you understand that? Well, Senator Subblefield,
Speaker 8
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first of all, I disagree with, you started off the question by saying, is there a cost to us?
And as President Trump initiated through an executive order early on, as he was considering the issue of refugees, he challenged, he asked the State Department, Human Services, and other agencies to determine the net cost of refugees to the United States of America. And I'd be happy to share this with you, but the fiscal cost was analyzed with expenditures and revenues. And again, the conclusion of the Trump administration was that the refugees and their non-refugee spouses and children were a net physical benefit overall estimated at $16.9 billion.
And so, yes, I believe that, again, to my statement, it's a positive thing that we bring immigrants to our country, that they benefit to us in terms of their work, their paying taxes. And the veterans that you mentioned, absolutely, they have the same access to benefits as any citizen would have or any legal resident of the United States. So it's a net plus for us, but the veterans, I think you talk to any veteran who served in Iraq or Afghanistan and they would say, don't leave someone behind who cooperated and supported our United States military that's at risk.
Could we, the audience, could you hold down your applause? I agree with that, too. I agree with that, too, if that is the case, Governor. But are you absolutely certain that is the case, that these refugees that are coming in actually assisted our military? Can you verify that beyond
Speaker 8
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a shadow of a doubt? I have verified that with the acting secretary of the Department of Homeland Security and with Secretary Pompeo's Department of State
because they changed the priorities. I couldn't vouch for that under the previous administration. I can vouch for that because they have represented to me that these are the priorities in relocating refugees to the United States. Okay. All right, we're going to go on. Some other
members have questions. of seat 92. Senator Garner, you're recognized. You're recognized. Thank you, Mr. Chairman.
Senator Trent Garner
Unverified
26:39
Thank you, Governor. Per President Trump's executive order, in order to have their placements of refugees at a location, it requires the consent of the states and locality. From the executive order section two, it says that the consent must be in writing. The written consent must be released publicly. Further, the same section, the consent must be given or the refugees cannot be placed at a location. So the executive order creates an opt-in situation instead of an opt-out, which means unless there is written consent from a location where the refugees could be resettled, they cannot locate there. So President Trump didn't just give this decision
to the governor. He gave his decisions to the local governments as well, per that kind of conservative principle of the best kind of government is local government. We're seeing this in other states. In North Carolina, some cities and counties have accepted refugees. In Tennessee, roughly one-third of the 95 counties decided against accepting refugees, going so far as to pass a resolution where they said they would not accept refugees. I think that last part is important for people listening here and people who may be listening at home. You still have a decision to be made in this process. I know you said that
the Washington County judge gave you a letter of consent. I have not seen that letter of consent. I don't know if anybody else has. Per the State Department's website, it's required that that consent be listed there. They have Arkansas's consent letters. They have other consent letters from cities and counties. They do not have any from Washington County, Springdale, or Fayetteville. But besides that, if you look at what the law actually says, the refugees can settle not just in Springdale and Fayetteville. Per the law, they can be within 100 miles of Sprint Fayetteville now I did an informal map and just looking at it
that looks like that's a dozen or more different counties it goes all the way to Bull Shoals Flippin Mountain View or Mountain Home excuse me Fort Smith Clarksville Russellville if you look at it it seems that we have to get acceptance from each one of these different county and location so here's my question first what is the letter of consent that we got from washington county springdale and fayetteville secondly what is your administration going to do to ensure that
no refugees are placed in the counties did not either actively accept them or decide not to accept them because the people here still can call their local county officials and decide whether they want to make this decision or not so
Speaker 8
29:15
the letters from uh the washington county judge uh joseph woods and the letters from the mayor of springdale and the mayor of fayetteville is a matter of record it was sent to a secretary pompeo be happy to furnish those to you
and so that means that they have communicated pursuant to the executive order that they're willing to accept the relocation of refugees. The Canopy, Northwest Arkansas, that's why they're there. They're working with those communities to relocate the refugees that are assigned by the Department of State. Now that goes to those cities. That's as simple as it can get. Now there
is a freedom of movement in the United States of America. That's one of the great freedoms that we have, and so a refugee is here legally, and a refugee can decide that, you know, he's working for Walmart, and Walmart wants to transfer them to Michigan. They have the freedom to go to Michigan to work, and so there is freedom of movement, but so the initial requirement is that the city that they're going to be initially relocated to has approved, and so Senator Garner
in your area, there's not going to be initial relocation of refugees in your area or Senator Subblefield's area. Now, they might go down there to Mount Magazine sometime because we have the freedom of movement in the United States of America. But they're going
Speaker 26
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to be relocated to the cities that have signed off on their approval. Well, I think that's the
Senator Trent Garner
Unverified
30:56
question, Governor. So it appears to me that unless a county government, and this is what it
says on the Department of state's website actively writes the consent that they cannot be relocated there so while you might
have consent in washington county what everybody here needs to know is if you have a issue or you support it or don't support it call your local county government because unless they give that letter and it's posted on the secretary department's website i believe does not have the illegal authority to resettle people there you still have a decision in this process thank god President Trump gave us another checks and balance in order to make sure we do this properly. Thank
Speaker 7
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you, Governor. Yeah, and thank you, Senator. And please be assured that let's educate our communities.
Speaker 8
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Yes, they have the right. If they want to pass a resolution and we don't want to accept refugees, they can do that. But it's a little bit irrelevant because the relocation intent is for Springdale, Washington County
Speaker 26
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area. There's no intent to relocate any refugees in other parts of the state.
Senator Terry Rice
Unverified
32:05
Senator Rice, you're recognized. Thank you, Mr. Chair. Good morning, Governor. I appreciate you being here today. Since your latest trip to China, your staff released a response to troublesome revelations
that multiple Chinese companies who received substantial grants from the state, state tax dollars, were also clients of the Hutchinson Law Firm. And while illegalities has not been alleged, ethical optics have been concerning to many people. This has led to some skepticism of your administration regarding foreign interests, and that's some that has bled over in this today.
When I first started receiving contacts after your announcement, I think on Eve of Christmas Eve, legislators, as far as my knowledge, had not been contacted or let anybody be known. I feel like that it should have been known that legislators were going to be contacted about this to be able to answer questions, and we were not. The release that your staff released stated that the law group participates in international business and immigration work
and assists in U.S. visa legal work. Does the Hutchison Law Group have working relations with the Canopy Group or any other groups that are engaged in refugee processing? I have no association
Speaker 8
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with my son's law firm. I can't speak to who their clients are. You can address that question with the Hutchinson Law
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Group. I'm not aware of any connection with any of the issues surrounding this hearing.
Senator Terry Rice
Unverified
33:52
One of your statements, Governor, I heard you say is my role as governor is to understand the
public sentiment. Do you remember saying that recently? Well, that's certainly one of my responsibilities. I wrote it
down. to have public knowledge will create public sentiment and and we weren't given that in advance of this and again some of this bleed over is is maybe natural some of it is is not factual
i didn't have factual answers for my constituents that contacted me i said i'll find out and then as we went forward we got some of that so we are having cuts is already been said i'm not going to reiterate in some programs for elderly and disability and some proposed cuts that didn't go through there's concern government governor and i think for public sentiment to be heard people have to know about it so while i appreciate the situation we have some fantastic stories that
you've brought today and success stories, and we want to be welcoming. I invite everybody to join relief efforts. I contribute to some that are international from reputable groups that help, want to help, not against that, but we, Governor, we need information. I would appreciate more time on this to let some of this flesh out. Thank you. Thank you, Senator
Rice. Representative Mr. Bowsier, you're recognized for the question.
Representative, who's in seat 20? 20, okay,
Chair
Unverified
35:48
sorry, Megan. Representative Godfrey, you're recognized. Thank you, Mr. Chair, and thank
Representative Megan Godfrey
Unverified
35:52
you, Governor, for being here. Thank you for your work in this matter. I'm Louisa's state representative, So I'm very glad that she's here, and I'm glad to represent her. She lives in my neighborhood. Her children go to my daughter's elementary school, and I just wanted to name, too, that she's a part of the family literacy program at her school, that she takes time four days
a week to learn English, to learn how to support her kids in American schools, and just wanted to congratulate her for that. And I know that a lot of her focus is community connection and cultural integration. Governor, would you say that that is reflective of the experience of most refugees who are coming to be
Speaker 8
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resettled here in Arkansas? Absolutely, Representative Godfrey. The issue of assimilation is very important, and we want them as Americans to be assimilated into our culture,
to become understanding of our freedoms and our history and our culture and our education systems and our communities. They want that as well. It's full of challenges. Whenever you have language barriers, whenever you have cultural differences, a lot of challenges that are there. And that's why we're grateful for the support of the community, of the churches, to help them to overcome those challenges and barriers and to be assimilated. That's the ultimate objective we have, but I'm delighted that
there is that Strong's Church connection and support from the community
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for those refugees that are in your district. Thank you, Governor. We're glad to welcome Lucia,
Representative Megan Godfrey
Unverified
37:31
Utah, our neighborhood to our state. Also, Senator Garner, I have been in communication with my mayor, with the mayor of Springdale, and I have a
copy of his letter if you'd like to see it. We can visit about that offline. Thank
you. Thank you, Mr. Representative Godfrey. Thank you. Speaking of assimilation and integration, Governor.
One of my favorite shows when I was growing up
as a kid was The Wizard of Oz. And I remember one of my favorite sayings in that movie was when Dorothy said, you know, Tuttle, I don't think we're in Kansas anymore. Every morning when I wake up and turn on the national news, sometimes I ask myself a question, am I still in the United States of America? Because I hear some of the craziest ideas and I wonder where they're coming from. And the idea of assimilation, every refugee, whether it be a refugee or an immigrant coming into the United States,
taking for granted the fact that you say they are assimilating, not all are assimilating. I don't think there's an individual sitting in this room today that doesn't agree with someone coming here through the legal process. and I understand the difference in refugees and illegal immigration. I don't think there's a person here who disagrees with the process of someone coming here legally through a process where they learn our language, they learn our customs, they learn that we are a constitutional republic,
they learn that we have laws, and they do not come with the idea of setting up their own communities, establishing their own laws and their own culture therefore vastly changing American culture and I see I see that I see that happening across the country to varying degrees some in other parts more than here in the state of Arkansas but I also see it in Northwest Arkansas you have schools like in Springdale
where they speak 46 different languages you have schools that are stressed out in Northwest Arkansas you have federal schools that I understand and correct me if I'm wrong who have now made it a policy to not have any thing that relates to Christmas and also they disallowed any type of patriotic speeches or any patriotic material in school and I'm open if someone could correct me, those things are not assimilating into our society as a constitutional republic country
that was founded on Judeo-Christian principles. So that in itself troubles me a lot when it comes to, hey, could you please hold it down? Those things are troubling to me and a lot of the people that live within my Senate district and a lot of people in the state of Arkansas. Could you
Speaker 8
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address that? Well, we've had Italian immigrants come to the United States of America. In New York, they have the Italian district.
In Arkansas, we have Tawny Town, and it is a source of cultural pride where the Zupols and the Pinaldos, because those of a cultural heritage, They naturally like to live together and celebrate their Americanism, but also celebrate the fact that they are of Italian descent. You know, the Irish Americans love that culture. And so there's not anything unusual about having a cultural identity with where you came from
at the same time being as steadfast and loyal Americans as anyone that's been here since the Revolution. And it usually takes a generation. It takes time to assimilate and get over the language barriers. But that's what America has done successfully for 200-plus years. And, you know, just because we have challenges today doesn't mean we can't. We have to make sure that we have the right number.
President Trump has made sure that instead of 100,000, it's down to 18,000 refugees. Can we successfully integrate 18,000 refugees in the United States of America? I think we can, and I think that's consistent with the greatest values of our country. Each of you are leaders in your community. You've got a choice to make. You can create fear or you can help resolve fear. I challenge you to help resolve fear, have the facts, and to talk about those. And I know that many of you are doing that. And, you know, I make tons of decisions every day affecting our state.
I try to communicate as well as I can with the members of the General Assembly. I'll continue to try to do that. Senator Rice, I want you all to have all the information that you need. Sometimes it's not a perfect system, but we try to communicate this is an executive branch decision that I was called upon to make. I made that decision. I tried to communicate as much as we could. We'll always try to do it better. But Senator Stubblefield, you know, I'm a native Arkansan.
I understand change, and I understand resistance to change. We're not changing the culture of Arkansas. We're just sharing the culture of Arkansas to those who also are troubled, coming from terrible circumstances, and I think we can embrace them. All right. We
have another question. Representative Whitaker. Do you have a question? Seat 23?
Representative Johnny Rye
Unverified
43:48
43. Okay, you're recognized. Representative Rye. Thank you, Senator Stouffield. Governor, good to see you this morning and glad you came because actually we have had a lot of calls statewide pertaining to this, And I think that you're answering a lot of questions that we needed to know. But let me ask just one question, sir. From the history at the beginning of this program,
have you ever had any record of any terrorists that have come from this? No. All
Speaker 8
44:27
right, Mr. Chairman, you know that I have an engagement to go to. I appreciate the opportunity to testify
Speaker 7
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before you to answer questions. but with that I'll ask permission to be excused. Governor thank you again
for coming we appreciate you taking time out of your busy schedule thank you
the agenda concerning the Perrin-Owensville Water Authority contract with Central Arkansas Water Association and I'm going to turn this
over to Representative Fite because this is more along his lines of
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expertise in his area. Okay thank you Mr.
Speaker 64
45:48
Chair. At this time I'd like to ask Deputy Director Ryan Benefield to come forward.
Speaker 65
46:20
Mr. Benefield, would you identify yourself for
the record? Yes, thank you. I'm Ryan Benefield. I'm the Deputy Director at the Natural Resources Division of
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the Arkansas Department of Agriculture. And I'm Debbie Dixon, one of the Program
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Coordinators at the Arkansas Natural Resources Division. We appreciate you all coming today to answer some questions. uh you know i visited with you earlier this uh or late last week i guess it was concerning the
parent owensville water authority and the sale of it to central arkansas water one of the things i had was we talked about was the audit they have not had an audit since 2014 and that audit in 2014 showed several discrepancies in it and my understanding
Representative Johnny Rye
Unverified
47:14
you all are supposed to require an audit from them is this correct so so yes typically
folks who have loans from us do are required to do an annual audit
Speaker 79
47:27
now are you required to get this audit we
are required under our bond agreement with Owensville to get a copy of the
Representative Johnny Rye
Unverified
47:38
audit. Okay. How come you did not have the last audit was 2014? Sure. So our remedy under the
statute is to fine them $1,000. That's our remedy, should we not. So we have a lot of facilities we work with to
Speaker 83
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get their audits in. We did not at this time fine Parent Owensville $1,000 for their audit.
Speaker 80
47:59
Did you write them a letter concerning the audit, that they had not filed one in over five years?
We did write them a letter regarding their audits when they initially came to us in 2018 to receive an additional loan themselves regarding their lack of audits and requiring that they come up to speed with their audits before we would give them
Representative Johnny Rye
Unverified
48:18
a loan. Do you check every month, I mean every year, to make sure every water prevails, I mean everyone you have a loan with has an audit in
place? No, I can't say that we check every month whether their audits are in place.
Speaker 65
48:30
I looked on your website and it says that it is required, is that correct, under the loan process? So we
write into our bond agreements what the state law requires, which is an annual, well, it's either an audit, an agreed-upon procedures, or another document based on their size,
Speaker 65
48:51
on what their requirements are. Okay, is there a reason? I know there's others in the state who've not done audits. uh you know in this particular item right here it appears that local water purveyors
failed the people the board failed the people and i feel like the state did nothing either am i correct so
i said our remedy would have been defined under the law us or several other entities have the ability to require the to find them for failure to submit an audit in addition to natural resources in this case. When it came to our attention, when they applied for their original loan, the loan we're currently considering is not with them, but when they originally came in to upgrade their system, we notified them they needed to get current on their audits
Speaker 94
49:37
before we would make them a loan. Okay. All right. At this time, I'd recognize
Speaker 96
49:50
Senator Wallace. Thank you, Mr. Chair. five years as i'm over here five years is a long time how many other rural services rural water departments are in this same
Speaker 82
50:05
situation so i'm not aware of how many we would
only have the authority really to look
at the ones that are currently with loans with us it's a requirement that they submit audits that's separate from anything that we require that's a state law that's required. We do have the ability to enforce that requirement along with several other state entities, but we don't have a number of all
Speaker 83
50:26
systems. That's not a primary duty of ours. It's when we make financial assistance to those systems.
Speaker 96
50:32
Follow-up question, Mr. Chair? Yes. Over and over, I hear from the people on my part of the country, and I hear from the mayors
we're having an issue with our rural water divisions just being a closed society over and over i hear that it's just not one or two who's in charge of these people so so actually that came up the legislature
had a task force and the conclusions of that task force it was that additional authority was needed by the anrc to be able to to take this to the next step so So we do receive audits when we make financial assistance, but that task force recommended that we be given the authority to look at the financial condition of systems outside of when we're making financial assistance to them.
And there's several, the chairmen of the task force are sitting in the room, so I don't want to misspeak, but that's how I understand the conclusions
Speaker 96
51:26
of the task force. Follow up? Yes. Thank you, Mr. Chair. This system's broke.
Speaker 100
51:31
It's been broke for a long time. we need somebody to fix that are you all going to be able to fix it or are
we going to fix it for you so so the conclusion of the task force was that we needed additional legislative authority to be able to go and look at financial system look at the financial systems of of systems
outside of when we're making financial assistance to them so it would have required an annual review of their financial situation by anrc to put them in a maybe a physical distress situation so then we could start addressing situations more proactively was that was the conclusions of the task force. Mr. Chair, one last
Speaker 100
52:13
question. Yes, sir. Go ahead. Many times I hear of cases where there's almost closed door elections. Are
Speaker 108
52:20
you all going to be involved with cleaning that up as well?
So I don't believe the legislation had a provision regarding us overseeing the election and how they elect their members we would be looking at the finances of the situation of
Speaker 83
52:35
the of the uh system under that proposed legislation from the last full session we would have been looking at their financial situation whether or not they were adequately treating their water or wastewater and if they were charging enough revenue to fully fund their system is what we would have been looking at thank you sir all right thank you
Speaker 111
52:58
are you 42 yes sir uh now i'm on um maybe i'm the only one on here but could somebody please fill me in as to what exactly we're talking about because i with everybody exiting i didn't quite follow what's going on and i typically find that if i don't know what's going on there's usually other people on the committee that don't know what's going on so could somebody just give me an outline of of what the issue is here that we're talking about because i'm not following okay representative
Speaker 65
53:30
i will give you an overview of this uh i had a constituent here last week
approach me about the sale of
Representative Johnny Rye
Unverified
53:37
this there are five water purveyors that border parent owensville and my question was they've been out of compliance for over five years no one has done anything the sale has been pretty quiet there and these others i would consider did not have the proper opportunity in which to offer the people a parent may be a better deal i don't know if there's a better deal out there but as i say it's been not operated properly for at least five years there's
not been an audit for five years and now the sale and i found it great difficulty to get a copy of the sale of what was happening i'm not saying anything's going wrong i'm just saying it's moving pretty fast and it's going to be ruled on next week i was at nrcs friday excuse me thursday yes and anyway i didn't feel like i i was getting proper answers at that time and that's the reason we asked to add this on to this is and we're not alone uh we have several others here that are
probably going to talk about rural water systems but there's existing laws that i feel like if enforced would improve the situation. Okay, thank you. Thank you, Mr.
Speaker 111
54:54
Chair. I just literally had no clue what was going on, so thank you for the explanation. All right, Senator Clark,
Senator Alan Clark
Unverified
55:05
you're recognized. Thank you, Mr. Chair. As the co-chair of the task force that you mentioned, you, I know how, excuse me.
Excuse me. I know that you were there for a lot of the meetings and also have read the report. Yes. So you're aware that it was estimated that 85% of our water providers across the state are upside down financially? Yes. And I know, having worked with you guys, that that's not the way you would like to see it. and that we also discovered that the reason for that is that there's one of the reasons for that
is there's not enough oversight not enough oversight and not enough education that a whole lot of the people on these boards don't understand long-term depreciation long-term maintenance etc and the cost of water we also found would you agree attorney general's office testified that there's no consumer protection on water all laws protect the water provider and none protect the customer that's great that's what we found and so and we've tried to tackle this before the task force and then but
since the task force with that study and so I'm glad that we were doing this with not just three or four members that were on the task force here, but so many of us. The major impediment that we ran into, the major obstacle was actually one group. You're not going to want to answer yes to this question, but that was the Municipal
League, wasn't it? yeah I'm not I'm
not I'm not aware how that yes so it was so but it but we did come down that that ANRC did support the legislation ADEQ supported the legislation the governor's office supported the legislation and we just couldn't get the Municipal League on board in spite of the problems the and and the fact that we have systems failing across the state.
Speaker 81
57:41
That's a question. Oh, I'm sorry, yeah. The details of why the legislation did not pass, I'm not, wasn't privy to,
but we did support the legislation passing and we do think it would have helped address this circumstance. Well,
Senator Alan Clark
Unverified
57:53
and let me address the reason we couldn't get them on board is because Senator Wallace talked about the closed meetings and some of these, is because one, is the sticking point was more representation of the people that was the sticking point
and you don't have to agree because i would normally ask wouldn't you agree but thank you
Speaker 65
58:12
thank you mr chair yes representative love you're recognized
thank you mr chair um ryan just so just to kind of bring this issue full circle So moving forward, what have you all put in place in order to receive those audits? Because I think that's kind of the basis of the issue here is receiving the audits. So there's a state law that's in place to get the audits.
What have you done since this issue has arisen to?
So the one thing we do is we do not provide financial assistance to a system that is not up to date on their audits. Now, I will note, we're here talking Perrins Owensville. The loan that we're proposing to make is to Central Arkansas Water. We're not making a loan at this time to Perrins Owensville. Central Arkansas Water will be consolidating with Perrins Owensville. They will take over that system, and they've asked us for a loan.
So when Perrin Owensville did come to us a year in 2018 asking for an additional loan before they decided to do this merger with Central Arkansas Water, we did notify them they would have to come up to speed on their audits in order to qualify for financial assistance from the commission. The one thing that we came out in the task force is our only remedy under the law is to fine them $1,000, which we have found is an ineffective tool to get someone to do an audit. Typically, either their audit costs more than $1,000, and so they're welcome that option to unity,
or the ability for us to go enforce that $1,000 fine on them is very onerous to get accomplished, and ultimately we don't get the audit that the law requires. Okay,
so in essence, you're saying that you're going to do
nothing with the law, because I just ask you. It's just simple. What are you going to do to collect the audits? You just told me that you're going to do nothing because it's going to be honors on you to actually enforce a $1,000. We're going to withhold financial assistance
Speaker 83
1:00:18
to systems that are not up to date on their audits is what we're going to do.
We're not going to make grants and loans to systems until they come up to speed with their audits. Okay. Are
you collecting? So did you make a loan to parents? We did five or six years
Speaker 83
1:00:35
ago. They have an existing loan with us, but this loan we're proposing is to Central Arkansas Water. No,
no, no. Okay, okay. You made a loan to Payron's water system. Yes.
The state law says that you're
supposed to collect an audit each year. Is that correct?
Yes. So there's some other submitted, and we send a reminder every year. Just a yes or no. Okay. So you did not collect an audit
for five years. 2015. Or three years or five years. Yes. They were several years behind. So what I'm asking you is, for all the systems that you have loans outstanding to, what are you putting in place to actually adhere to the
Speaker 82
1:01:23
law? So I think just as the conclusion of the task force, we believe additional authority would be
in place for us to adequately be able to enforce that requirement more than seeking to find the system's $1,000.
Speaker 143
1:01:37
So are you saying that you're not going to
collect any audits? I'm saying the only remedy we have under the law is to fine the systems $1,000. That would be our next step. If we were to move forward, we would seek to fine the systems that did not submit $1,000 would be our remedy under the law. The
Speaker 83
1:02:03
that remedy? At this time, we have not sought to fine these systems $1,000 at this time.
Speaker 106
1:02:12
compliance with the law. So they are out
of compliance with the law. No, no. And we're not the... Hold on, hold on, hold on. Let's not argue about this. ANRC is out of compliance because there's a state law that says that you all should do something. And you're not doing it. I mean, that's simple, Ryan. I mean, we need to put something in place in order for you all to begin to collect the audits. I mean, that's the premise here. the the chairman fight came because that you all haven't collected audits for
five three five years or seven years or whatever so i'm asking you for those systems which we have a state law are you all going to begin to implement something no i mean that's so if it's a if it's a no then tell me no and then we i mean we'll have a discussion about that sure so so the
Speaker 82
1:03:05
state laws for them to submit an audit, us and several other state entities have the authority to enforce
Speaker 83
1:03:10
that through a $1,000 fine. At this time, we have not, we are seeking to get the
audits without using the fine provision, as we found that as an ineffective tool in the past of trying to seek a $1,000 fine. But that is not something we are currently doing, something we could do, and several other state entities have that authority under that same statute.
Speaker 65
1:03:34
Okay. All right. Thank you, Mr. Chair. Yes. Representing Barry,
Representative Stephen Meeks
Unverified
1:03:44
you're recognized? Oh. Yes. Thank you. I have a somewhat similar situation going on with constituents in my area where a sewer system essentially went defunct.
A company came in, and in order to get the system up to par, rates went from essentially $30 a month to over $65 a month. They more than doubled, and you can imagine the consternation that that caused folks in our area. I know you've been talking about water systems. I'm assuming sewer systems are in a similar vein. Are you all looking at that? Is that something that the task force is looking to address? And then my follow-up question is, is there any liability for the original system that didn't do the job that they were supposed to do by keeping the system up that is now forcing residents to endure this doubling, essentially, of their rates because the previous owners didn't do what they were supposed to do?
So I guess there's two parts to that question. One is the task force did look at sewer systems as part of their analysis. Whether or not, so if it's, we deal in public and nonprofit sewer systems. If that was a private sewer system, we actually would not make financial assistance loans to that system. So we would not be involved in looking at their rate structure. However, under the task force, if we were to do a financial review, one thing we were required to do under the law that was one of the versions of the law that was
proposed is we'd have to look to see whether or not they were currently funding their current operations and debt and future depreciation so that you would not have a situation where someone underfunded for, say, 10 years and then had to overfund to make up for that loss. That was one part of the review that was contemplated by the task force under
Representative Stephen Meeks
Unverified
1:05:44
a version of that bill. And so going forward, who would be the best agency to provide oversight of not only the water systems and the sewer systems to make sure, A, they're staying in compliance, and that, B, that we don't have these situations that you're talking about?
Is your agency the best? Is the Public Service Commission the best? Who's the best person to provide that oversight going forward? So when you're talking about
the financial portion of the system, the task force concluded that ANRC, I believe, would be the best one to handle that duty. Now, when you're talking about maybe how the quality of how they're treating the water, that would fall under ADEQ or the Department of Health. We typically deal, because we are a financial aid organization, we give out loans and grants to these systems.
We're the most qualified to look at their financial situation. as long as it's a public entity and some non-profits if it's
separate that would be a separate in um idea altogether we really only deal in public entities okay it's
Representative Stephen Meeks
Unverified
1:06:50
a new system that took over as a um as a private uh company and so but they said it looks like it's a problem there's no oversight on any of these systems and it sounds like y'all really aren't even fully uh in a position where you guys can provide the oversight that we probably need
Speaker 83
1:07:08
to have on these systems yes so that way and actually that was
Representative Matthew J. Shepherd
Unverified
1:07:22
the conclusions i believe of the task force all right thank you thank you mr chairman yes mr speaker you're recognized thank you mr chairman uh i guess i have a question or two related to this i understand that the $1,000 fine is what you've indicated is really your only remedy under the law but with regard to these grants and these loans are there any contractual
provisions within the grant and loan documents themselves that would require the providing of the audit on an
Speaker 161
1:07:45
annual basis? Yes we do repeat the law
Speaker 83
1:07:50
provision in our bond documents with our bond holders, our grantees our grantees are our borrowers so that is in the contract um with the uh with each borrower also but is it so is it a to
Representative Matthew J. Shepherd
Unverified
1:08:02
not provide it is it would it actually be a default under the uh bond agreement so i i would say
Speaker 83
1:08:12
potentially now our remedy there would typically be to maybe set point a receiver you know that would be where we're heading under that provision is to head
Representative Matthew J. Shepherd
Unverified
1:08:23
point some sort of receiver if they were to not well you would agree with me that if someone is not complying with the law nor is complying with the
Speaker 82
1:08:33
bond provision, to have a receiver appointed actually would
Representative Matthew J. Shepherd
Unverified
1:08:36
be a very good thing. Yes, that was one of the remedies the task force discussed at length. And how often has ANRC sought to enforce the contract provisions of
under the bonding agreements? We have sought
our annual, where someone has not submitted, we have not appointed a receiver. In a lot of these systems appointing a c receiver is a very difficult idea to get someone to take over that job as receiver because a lot of the systems are not generating the revenue to run the system adequately and mr chairman if i could have
Representative Matthew J. Shepherd
Unverified
1:09:09
a little bit of leeway yes you may i get that and i understand and it's just uh it's to me it's uh it's somewhat analogous to as i practice law occasionally have individuals that need debts collected or they have a contract they seek to enforce and there is
you have to take into account what's the expense to collect or to seek enforcement versus what's the benefit. But in this case, based on what I'm hearing today, ANRC does not utilize the provisions of state law to penalize systems that are non-compliant, nor does ANRC seek to enforce the provisions of the bond agreements and I understand that if you were to do this in every
circumstance that it would be it would it would it might overwhelm the system and certainly for all of us we want the systems to comply we want the systems to be able to manage themselves but at the end of the day these provisions are in there and the contract provisions in the bond agreements are in there to protect the investment of the state but also to protect the customers of that system because it's in nobody's interest for a system to go under or to not be able to provide for maintenance or be able to provide the services that they that they are there to provide and so
it just seems to me that I hear that it's ineffective to penalize a system and that it may be difficult to seek to appoint a receiver but it is absolutely ineffective to not seek to utilize the provisions and the tools available under the law and in the contracts themselves. And so I would hope that ANRC, particularly after this being brought to light now, I would hope that ANRC would evaluate and look at this and that, you know, I think that it's
one of those things that if you take the tools available and enforce these things, or maybe it's going to take to appoint a receiver as to one or two of these systems, I would think that word would get around pretty quickly and that other systems would seek to come into compliance because it's it's ultimately in nobody's interest for them to have to be taken over and so i'd appreciate i appreciate the work that y'all do i understand it's uh it's very difficult work but for the for the protection of the state of arkansas and the citizens of arkansas i would
hope that arc would take a close look at this as
Representative Johnny Rye
Unverified
1:11:35
we move forward into the future thank you Okay, Representative Rye, you're recognized. Representative Rye,
are you in seat 47? Yes, sir. Or 43, I mean. Thank you, sir.
Okay. Thank you, Mr. Chair. I'm really glad this came up. About two
years ago, I received a call, and it was about water bills in a certain area.
It wasn't a town. It was an outskirt around a town in my area. And basically what they were telling me that the average water bill was $95. Okay, now that's not counting sewer. That's just water and water alone. So they asked me if I could do something about it, which I did. I came down here and I spoke with some folks at the Division of Legislative Audit. Now, they told me that every year there's a sheet, a deposition sheet, that's supposed to be sent out to every water association in the state.
Now, this particular association has been in business since 1978, and they've never filled out a deposition. So that
requirement, so the audit requirement is not necessarily an ANRC requirement, So that form that you're referring to would probably come from a different entity. We're dealing with people who are asking for financial assurance. The audit requirement is not an ANRC requirement. It's just a state law requirement. So I'm assuming you're referring
Speaker 83
1:13:08
to another entity would be sending out that form if they were.
Representative Johnny Rye
Unverified
1:13:13
I guess it sounds like they were not, not us. The state's full of these. The state's full of these small associations. And what I'd like to know is why, you know, the Division of Legislative Research, I mean, not research, but audit, they say they don't have near enough people to make sure that these folks are doing this job and doing it right. And they sent these folks, you know, a letter and a deposition on what they should do. And they really don't even do anything. So, I mean, what are we supposed to say?
Our people are getting shafted or what? I mean, you know, they go up on what they want to go up on, and they don't say anything about it. They don't
Speaker 82
1:13:56
run it past anyone. So each of those bodies are
made up under some law. They elect or have appointed their directors that set the rates. And the audit requirement is under state law. They actually only send us a copy. We are not the primary entity that the audits get submitted to and not the primary entity to review the audits,
except for we do when we're putting out financial assistance to an entity. I will tell you, it is something we look at. We do make sure that minimum rates are collected. Maximum rates, as we talked about earlier, there is not a consumer
Speaker 83
1:14:28
protection for maximum rates. We are really making sure they can pay back the debt to the state and maintain their system. Those other actions are something that was also talked about in the task force. But let me ask
Representative Johnny Rye
Unverified
1:14:41
you. Follow up, please. Follow up. Well, how do you correct this? because these folks can just do what they want to do
and they kick these folks around and they go up on their water bill when they want to go up. And there's nothing, no recourse at all
that they can come back with. So I guess I will keep going back to, I think the task force had
Speaker 83
1:15:01
some really good recommendations on where to go. And as Senator Clark mentioned, we did support the bill that was placed before the House committee that would put some protections in place and put ANRC in a role where we could actively or proactively address systems on their rates as opposed to only waiting to when they come to us
Representative Johnny Rye
Unverified
1:15:19
for financial assistance. One more. Okay. Yeah, one more follow-up. Well, what can we do to enforce this? I mean, who's going to give an account for every one of these folks that are in place and why they're doing it and where the money is going? And how is it going to
be audited? So, you know, one option would be what the task force recommended, And that was, in a staggered approach, all systems would have to do a rate study. And they would have to account for all the different costs of setting rates.
And they'd have to submit that to ANRC for review. There was a rotating basis, not every year, but every few years. So ANRC would look to make sure. We actually have probably more systems that we believe are undercharging what the true costs are, meaning they have this giant balloon payment, you could say, to come in the future. more than one's
overcharging but that system would we do believe and why we support it would help to solve
Speaker 65
1:16:22
this issue okay representative boyd you're recognized
Speaker 178
1:16:24
thank you mr chair um just wanted i have a couple questions here if you'll give me so So are
Speaker 179
1:16:35
you familiar with the consent decree in Fort Smith regarding the sewer system? I am, yes. Okay. Just out of curiosity, are other communities across our great state facing the risk of consent decrees with the federal government? So I
will say, and I give a disclaimer, I was at the Department of Environmental Quality when that consent decree was negotiated.
And so any knowledge I have would be from my time at Environmental
Speaker 83
1:17:03
Quality. There are other entities across the state from their sewer system that are under a federal order in the past to address their system. The Central Arkansas Water Reclamation, Little Rock Water Reclamation, for example, is working under an agreement. It's actually an additional agreement to address their INI inflow and infiltration concerns. I'm unaware of future, where they're going in the future with that program,
but I do know there are other communities of Fort Smith's size and larger that have been asked and put under either a
Speaker 130
1:17:35
state or a federal consent order to address their issues. So what I'm
Speaker 179
1:17:39
hearing from you is the reason Fort Smith got caught. I mean, it sounds like there are issues all across, whether it's water or sewer. That's what we discussed in the task force is it wasn't just limited to Fort Smith. It was seemed to be communities all across. So what I'm hearing from you, it's the size of Fort Smith is what caught the attention of the federal government and
Speaker 185
1:17:58
why. they're the ones that are holding a hammer down on the community.
Speaker 83
1:18:02
That's correct. At the time, there was a size in which the federal government was enforcing, you know, we're overseeing more directly more than just smaller systems in the state.
Speaker 73
1:18:17
Okay. Representative, excuse me, Senator Clark, you're recognized. Thank you, Mr. Chair.
Senator Alan Clark
Unverified
1:18:32
Mr. Benefield, I believe we found there was 649, but somewhere around 650 water providers across the state. So quite a few to deal with. And the real thing that we have to be concerned with is that Arkansans have water. And we also found, did we not, as you said, that the big problem is not folks overcharging
but undercharging. That's why 85% of our water providers estimated are upside down financially. That's correct. And I think it comes from an engineering group, but in 97, I think our estimated water infrastructure needs were, and I'd have to go back and look at the report, but I want to say were $7 billion. And in 2017, they were $14 billion. So we're going the wrong way fast.
And so we found lack of education, lack of authority to do anything or anything meaningful. and of course if you if ANRC was putting people in receiverships etc I think that the calls you would be getting from legislators would be just the opposite from today and so
we also found a need and you don't have to answer this one for the legislature to step up and to say we've got to make sure that Arkansans have water and to do that we've got to make sure that the boards are educated and in a way that's not burdensome for them we really we tried to cover every base that is not burdensome to them but but they've got to have some idea of what they're doing and we've got to be
sure that they're collecting they know what rates should be we've got to be sure that they collect enough to pay their bills so that you don't have somebody running to lower the rates when somebody is to lower the rates below cost. And so we need a comprehensive solution, don't we? I agree with the
Speaker 91
1:21:11
task force recommendations, yes, sir.
Senator Alan Clark
Unverified
1:21:13
Okay. And so I appreciate, Mr. Chair, I appreciate you having this meeting today because just as you're having this problem in Perrin and we had the, down in my district, down below, well, it's actually not in my district, it's down below my district, the area that their well and pump was out, haul water, Carthage, for the longest time. We're going to keep, this infrastructure, a lot of it's 40, 50, 60 years old,
and this is just going to get worse and worse. You're just beginning to see what's going to happen. And by the way, you know, I always tend to be pointed, all this has got through the Senate with no problem. Thank you.
Speaker 65
1:22:02
Okay. Representative Richmond, you're recognized. Thank you, Mr. Chair. Over here on this side. i'm going to ask
Representative Marcus E. Richmond
Unverified
1:22:10
i'm going to make it one question but it's got like three parts here so try to keep up with me first of all just uh listing this would consolidation of the some
of these water districts and stuff would that improve the situation and why i listen to your testimony it seems to me that you have a great deal of responsibility but hardly any authority to carry out those responsibilities and finally legislatively what we proposed this last time around would it have provided you that authority necessary in order to address some of these issues and problems and why did the municipal league stand against it thank you all right
Speaker 83
1:23:01
anrc has been promoting where appropriate regionalization or consolidations of systems. Matter of fact, that is what we're here. Actually, the basis for today's discussion is Central Arkansas water consolidating and regionalizing the Pear and Owensville system. That was a strong recommendation of the task force. Not in
all circumstances, but a lot of times you get the economy of scale. You get a larger system can come in and provide a more sustainable water source for our citizens.
I do believe that in time, maybe not quick enough to catch this circumstance today, But in time, the legislation that passed would have provided us the tools. We would have placed Perrin Owensville under what we
Speaker 83
1:23:40
call financial distress, based on that bill, for failure to submit audits. And then that would have led to several more steps under that law if you get placed in financial distress. Lastly, I
guess I can't really speak for the Municipal League
Speaker 165
1:23:56
on their concerns with the bill.
More directly than ANRC did support the final version of the bill. Follow-up,
Representative Marcus E. Richmond
Unverified
1:24:02
Mr. Chair? Yes. Senator Clark, I remember going through this on City, County, Local, but I can't recall why the Municipal League took the position that they did. Do you recall that, and could you re-educate me on that? Yes, Senator, you're recognized. Yes, thank you, Mr. Chair.
Senator Alan Clark
Unverified
1:24:28
Thank you, Representative Richman. Yes, I mentioned education,
I mentioned lack of authority, and selling water too cheaply. The third problem, and lack of consumer protection, the third problem that we came up with was lack of representation. and the especially we have we had some water suppliers cities specifically that have over
half their customers outside their city limits and in the United States we the Boston Tea Party was not about taxes it was about representation and so there was a proposal and we would look at any other proposal, that was the one we finally came back to, was that a county judge could put, depending on the population outside the district, outside those who could vote for board members, could put one or maybe two on a water board.
It would not be on a city council, on a water board, and so that those that did not have representation would have representation the city would still have by far the majority could do anything what they wanted to do but at least they would feel like they had some say so and that was
Representative Marcus E. Richmond
Unverified
1:25:56
the sticking point all right thank you sir thank you senator
Speaker 65
1:26:00
and thank you mr. chair okay i see no other questions at this time i just asked that uh if you would send me any correspondence you have
over the last five years with Perrin Water. Okay, you're excused. At this time, we would ask Senator Johnson with Central Arkansas Water to come
Speaker 79
1:26:23
forward. He's the chief counsel for Central Arkansas Water. Please identify yourself for the record.
Speaker 199
1:26:39
Thank you, Mr. Chairman. Thank you for having me. I'm David Johnson,
Speaker 73
1:26:47
General Counsel at Central Arkansas Water. We
Speaker 65
1:26:50
appreciate you being here today. We had some concerns about the speed at which this was taking place and considering that Perrin Water's debt would go up 62% and it's possible that their water bill is going to go up around the average bill around $60 a month.
In an area that is a low income, this was quite a concern, especially without a process taking place with the surrounding water providers having an opportunity in which to place a bid in with them. Anyway, I got the contract late last week and was able to read some of that contract, and it talked that you will have all the audits in place by June am i
Speaker 202
1:27:40
correct that's correct one of the provisions of the contract requires
Speaker 199
1:27:45
the parent owensville water authority to complete those audits and if they fail to complete those audits and get those audits up to date then the contract affords central arkansas water option to walk away okay
Speaker 65
1:28:00
are you are you planning on applying that 11 surcharge on the on the meters out there?
Speaker 199
1:28:09
It will be a maximum of $11. When we receive the invitation to submit a proposal for the water system, Central Arkansas Water, as it has done in the past with other
consolidations, hired an engineering firm to assess that water system. And so we were already aware, of course, of the $4 million existing debt. That engineering survey analysis of that system identified other you might say deferred maintenance or other capital needs of that water system that we believe are necessary to get that system in proper operating condition and so and and so that will be an additional two million dollars to finance that total six
million dollars debt issue that we plan on on issuing assuming the contract is closed it will require a surcharge it's very it's typical and we've we've experienced other consolidations in the past and some of those surcharges that have even been greater just depending on the capital needs of the system all male is an example but it is done to assess the or to address those capital needs we're otherwise keeping their rates the same as they are now for
a period of three years so um but but yes and it's a maximum of eleven dollars per month what is the average uh
Speaker 204
1:29:39
bill in central arkansas water or little rock maybe a little rock that would be easier you know and i look at my
Speaker 199
1:29:47
own bill and it's so easy to look at the total we we do billing services there's some efficiency in providing billing services for numerous local utilities and so we do that and all of the utilities benefit from doing that and it's easy to look at the it's called easy to look at the one number for everything but I think the
water portion um 17 dollars is what other staff is telling me okay but the reason I say I looked
Speaker 65
1:30:11
at a little rock bill and it was 11 dollars and something you know so uh I wouldn't name them but you might go up on them if I do that okay uh is there any questions seeing no questions i appreciate you being here today and it's good to see you again good to see you thank you for having me all right thank you uh at this time uh jamie mullins we'd ask come forward and also kurt malone he's the
board president he is here also would you please come up and identify yourself for the record
Speaker 208
1:30:56
i'm jamie mullins i'm the office manager board secretary and plant operator for parent owensville please turn your microphone on if you
Speaker 79
1:31:08
would thank you i'm kurt malone board uh
Speaker 211
1:31:13
president for powa okay do y'all have an opening statement you'd like to
Speaker 208
1:31:19
or anything no other than it has been expressed that they're the parent Owensville system didn't give an opportunity to other systems or saline providers and Kurt can speak to this better than I can but they were aware of of the feasibility study going on with Central Arkansas Water back in June.
They met again in September to discuss it and were told they had a deadline to provide a proposal. There were no requests from anyone other than Central Arkansas Water. prior to us meeting with Central Arkansas Water to discuss the contract and to vote on it. Like Jamie said, I can address this better.
Speaker 210
1:32:22
In June 2019, I had a meeting with Jason Temple, who was on the, I believe he was on the board for saline water users, and informed him at that time that we were in the process of starting a feasibility study for to merge with central arkansas water at that time i told him and he asked and i told him that we would accept any other bids from anyone else out there that wanted to
but there was a december 1st deadline 2019 to get those bids in because we wanted to make a decision by december 31st didn't hear anything until the first week of September 2019 and I had a meeting again with Mr. Temple and Mr. Lashley and he was president of Saline Water
Speaker 209
1:33:26
the water authority water authority saline water which is the overall
Speaker 210
1:33:32
overall group organization for saline water users anyway we met at that time and again I told him the same thing we were looking for the primaries where we were looking for someone to come in and completely merge with our system and that we were talking to Central Arkansas water we're in a process of a feasibility study and if
they wanted to submit proposals they were a contact the water office and go from there and establishing contact with us to gather information that they would need to submit a proposal and the proposal deadline was December 1st 2019 I never heard a word from them there was no contact whatsoever until December 6th And then all of a sudden I get I get the phone calls and texts
Oh, they want they want to propose they want to propose put everything on hold wait for them and You know we had a proposal at that time from Caw Caw is willing to work with us Again, there was a six-month period That they had to respond they did not do it and in my past business practices when i had my own company i'm retired you know i made proposals i had bid deadlines if i didn't meet that bid deadline for whatever
reason that was my problem you know i was not able to bid and that's the way this was conducted we had a very good bid from relationship and proposal from central arkansas water and that's the proposal we considered so as addressing this this fact that the other water users in saline county did not have the opportunity to submit a proposal is not true that's a false
statement they had six months the same time frame basically the caw had thank you
Speaker 65
1:35:45
all right mr malone With that being said, did you all send out a request for proposals, a formal request for
Speaker 94
1:35:53
proposals from these other water purveyors? No,
Speaker 210
1:35:57
sir. Okay. As I said, I assumed that talking to a board member of their overall organization and also talking to the board president at that time of the overall organization, that was sufficient.
and they discussed because we have a member of our of our board that sits on their sets on their board and they've discussed through that six-month period the fact that caw and paranormal water were considering a merger so they were aware well of it i mean they were well aware of what was going on, what
Speaker 65
1:36:43
was happening. Okay, Mr. Malone, also audits not being filed for the
past five years. Can you explain that?
Speaker 207
1:36:53
What, audits not being done? Yes. I'll answer that because that would be
Speaker 208
1:36:59
on me. And it came at the time that we began the treatment plan, which my duties expanded from at that point and it was more a matter of time constraints than anything else. Also in the past Arkansas Rural Water Association has been funded to assist
small systems to do rate studies to assist with audits where they find themselves coming up short. we were able to take advantage of that early on and that funding is no longer there which is a detriment to a lot of the other small systems in the state they could that would be of great advantage to them again you know five years
Speaker 175
1:37:49
without an audit it's a long time that there
Speaker 208
1:37:54
has been an audit since then and it has been requested from our accountant and my understanding is that was turned over and we're currently bringing everything current at
Speaker 65
1:38:09
this point my understanding that was turned in last week to legislative audit is that correct the 2014 15 15 yeah again the the The board has the responsibility
Representative Johnny Rye
Unverified
1:38:24
of reviewing that audit.
Can you tell us, Mr. Malone, how come you all didn't ask
Speaker 210
1:38:30
for that audit? We have had, I would assume, an audit because we have reviewed our finances every year, annually, in order to look at our rates and what we can do about our rates as far as adjusting rates or do we have to adjust rates to meet our current financial obligations and to do the maintenance that is absolutely
Representative Johnny Rye
Unverified
1:38:53
necessary the system okay also in the 2014 organ audit it spoke you were a high risk
minutes were missing nine months of minutes were not available the the rate was not available the water rate
Speaker 65
1:39:04
was not available to the audit did did you all look at this in 2014 the board yet excuse me yes we
Speaker 210
1:39:15
were aware of it and we looked at it but again um and those items were brought current and those items you know jamie brought those items current um again you gotta you gotta look at the fact that we are two you
know two full-time employees is what we have to operate a water plant maintain the system and keep everything running you know the board is is a volunteer group under no and it received no compensation or in any way any other favorable consideration for anything and I'd like to point out to the committee that you know I drink I get my water off this water system so therefore I want
it to be as good as I as it can get I also pay the same rates that everybody else pays so I'm not I'm not in favor of paying anything more than I have to in order to get good quality water and that's what that's what our board tries to do and that's what our board strives to do is is put out the best quality rate water at the lowest possible rate we can did you ever receive
Speaker 65
1:40:30
a letter from central i mean nrcs anrc yes okay could you provide that letter to this committee yes okay
Speaker 209
1:40:39
saying you were out of compliance requesting
Speaker 208
1:40:45
the the audits i i i don't want to specifically speak to what the exact language was well it was requesting the
Representative Johnny Rye
Unverified
1:40:53
audits could i ask why you didn't reply to
Speaker 208
1:40:59
that properly with the audit it was a matter of time constraints and it was not a lack of wanting to do one of my biggest problems was our QuickBooks system because I work at it on it at home a lot and I had when I transferred
it back and forth between computers I had eliminated parts of it and had to go back in and redo it and so that added to the additional time frame okay
Speaker 198
1:41:31
I see no other questions y'all are excused is there is there anyone in the audience did anyone sign up okay has anyone signed up yes please come forward and
Speaker 227
1:42:05
You can identify yourself with the record. Good evening. My name is Dickey Kentner, I am with Salem Water, chairman of that board, and I've been
there since 2000. There's several things I would like to speak to here and go back in the early part. We went through a similar thing back in 2000, and we got rid of a board that we didn't think did a good job. They denied us a lot of things. And I'll go as fast as I can. And our board was sworn in at 1.30 in the morning by a gentleman that's here today.
And been there ever since. I take it very serious. And one thing I will do, I wouldn't mind being under oath, but I will tell the truth. so when we also have what they're referring to is our water users board Salem and Southwest make up that approximately 12,000 to 13,000 customers with both of them and we take Central Arkansas water I am not here to speak
about them today they are good to us and i want to keep that relationship my problem is with parent and we were asked back when they contacted the people on the committee they came to us probably about september somewhere in there and we gave them full go ahead y'all they contacted you then you negotiate with them so we assumed that was going on
now they started with CAW like nine months out there so and that's fine but when we got word sometime and also this person they were talking to denied the December 1st deadline I don't know i i didn't talk to him this is coming second hand to me but i've never known him to lie to me but they they didn't say anything about a deadline so we were assumed this was ongoing and we had time
all of a sudden uh it hit us that uh caw was going to make an offer that's fine so we got a meeting with perrin and went up there and um we had an offer we had mailed them they got one in the mail from our attorney to make it legal and i am here today because a group of people a few people in perron asked me to see if we could do something so that they wouldn't be taken over
and that they might be able to get their water association back one day that's why i'm here ladies and gentlemen so I went up there and spoke to them and I told them in that meeting that the letter they got spoke to legal stuff and what we could do would do and I said I will tell you now our llc has two members from each water association y'all can put two members on
that board you'll know everything going on if we don't have to go up two million dollars or any at all we won't and so give us an opportunity to do this and it's in saline county we want to keep it in saline county i guess that was our motive so uh i said no it's a done deal caw's already done it i said okay i get it but i said let me finish my offer two seats on the board
you'd know everything going on and in two or three years if we can put this back on its feet And ladies and gentlemen, I assure you, LLC can do that. We are one of the success stories in Saline County. We run a very good ship. Our books are open. Anybody here can get anything they want, anybody. I never have figured out. That was one thing that came out in that 2000 when we took over this thing.
I've never figured out what there is to hide in the water business. It's silly. so you're welcome to dig all you want to and i said in two or three years we can turn this back to pair if possible if not you can stay here as long as you want to we can work together on this last comment no caw has got the better offer we're going with them i said that's fine i'm not here
debate with CAW. They're a great organization. I may not agree with everything, but they do good. So Salem has, and Southwest, we, I told you how many customers we have. We have loans, 13, 15 million dollars. We're fixing to build a tank. um it'll be uh above ground 140 feet in air and uh over 2 million gallons in storage
and we are mandated to do that and i would guarantee you that our audit has always been turned in i do not understand why if and let me put it this way you know when a ball team doesn't win when they don't do good it comes back to the coach i did it for a long time i know that's what that's where it falls so if you have the key word in this whole thing is accountability
i think if you have accountability and you have the right people in place this is not a hard thing I sit back there in total shock today at the percentage of water associations in this state that are in trouble. I don't understand, but I'm going to dig into that. I'm also on a regional water board in Saline County, and we are looking for another source.
We're working on that. We intend to participate with CAW way on down the road. If there's customers up there and they'll work with us that we can get cheaper water to, then that's who we get it from. We go to the best deal. If somebody showed up at my table, ladies and gentlemen, at the last minute with a pretty decent offer, I would listen. Thank you very much. I've enjoyed this. This is, to a country boy, this is really nice.
I have the greatest respect for y'all. I've enjoyed it. I'll be back just to watch. Thank you. And let me tell you, I need to go to the bathroom. I drank coffee all the way up here, but I don't want to miss a word. I'm good, and I guarantee you I'm not going to
Speaker 93
1:50:21
make a mess. So thank you. I appreciate you. Is
Speaker 231
1:50:24
there any questions? Yes. Can I redirect? Yes. Oh,
Representative Johnny Rye
Unverified
1:50:29
sorry. No. At this time, is there any other questions?
If there's no other business to
Speaker 235
1:50:46
come before the committee, we are adjourned.
Agenda
A. Call to Order
B. Comments by Committee Chairmen
C. Motion to Consider Approval of the December 10, 2019, Meeting Minutes [Exhibits C]
D. Discussion Concerning Arkansas Allowing Refugees and Legal Immigrants into the State
E. Discussion of Paron-Owensville Water Authority (POWA) Contract with Central Arkansas Water (CAW)
F. Other Business
G. Adjournment
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — CITY, COUNTY & LOCAL AFFAIRS COMMITTEE - SENATE AND HOUSE, Jan 13, 2020 | Agenda | 1 | Official source ↗ |
| EXHIBIT C - 12 10 19 Minutes Approved 1 13 2020 | Exhibit | 2 | Official source ↗ |
Speakers
Speaker 3
Senator Gary Stubblefield Chair
Unverified
Speaker 8
Speaker 18
Speaker 19
Speaker 24
Speaker 26
Speaker 7
Speaker 28
Senator Trent Garner
Unverified
Speaker 21
Senator Terry Rice
Unverified
Chair
Unverified
Representative Megan Godfrey
Unverified
Representative Johnny Rye
Unverified
Speaker 58
Speaker 65
Speaker 64
Representative Fredrick J. Love Chair
Unverified
Speaker 71
Speaker 79
Speaker 83
Speaker 80
Speaker 94
Speaker 96
Speaker 82
Speaker 100
Speaker 108
Speaker 105
Speaker 111
Senator Alan Clark
Unverified
Speaker 81
Speaker 143
Speaker 106
Representative Stephen Meeks
Unverified
Representative Matthew J. Shepherd
Unverified
Speaker 161
Speaker 178
Speaker 179
Speaker 130
Speaker 185
Speaker 73
Speaker 91
Representative Marcus E. Richmond
Unverified
Speaker 165
Speaker 199
Speaker 202
Speaker 204
Speaker 208
Speaker 211
Speaker 210
Speaker 209
Speaker 207
Speaker 175
Speaker 198
Speaker 227
Speaker 93
Speaker 231
Speaker 235