Matthew Moore: Sewers in Bentonville are in need of major upgrades, and the Alice L. Walton Foundation is offering a line of credit to the city for those expenses. This story was first reported by Sam Hoisington of the Bentonville Bulletin last week. He joined me on Monday over Zoom to discuss the details, and says he’s been covering the story for about a year.
Sam Hoisington: A friend of mine texted me the other day and started calling me the Sewer King for my work on this. I’ll take it. But if I was going to explain this problem in the simplest possible terms, it is the sewer pipes in the ground are just too small to support any more growth in the core of the city. That is obviously an easy way to put it, but obviously not easy to replace those pipes. It’s going to be expensive. It’s going to take a while. There’s this new financing option on the table and the city is taking a good, hard look at.
Moore: And so what I think might get missed in the people who just look at a headline and see what’s going on, but what you report on here is that just because the pipes need to be replaced, doesn’t mean the city is in danger of, like, spewing all across downtown Bentonville, right?
Hoisington: Right. And so I learned my lesson on this first story when I said the sewer is at capacity. So I know that sounds kind of alarming, like you’re going to have manholes just spewing sewage everywhere, and that’s just not really the case. So the situation is the state has health regulations that basically force you to have a certain amount of empty space in a pipe in case there’s some, you know, weird incident with a pipe or there’s some sort of sudden influx. I guess we all flush the toilet at the same time or something like that.
But there are regulations that you have to have a certain amount of empty space in the pipeline. So on an average day, the sewer is okay in Bentonville, but we need to reserve some of that capacity for those off events. And then that’s where we’re running into trouble. So we are right up at that line where you really can’t add any more and have enough space to stay, you know, current with those regulations.
Moore: Got it, got it. So. So the city knew for some time that they needed to upgrade the sewers. They knew it was going to be expensive. At what point does the Alice Walton Foundation start to come into the conversation here?
Hoisington: Right. So around May of this year, I think it was… A consultant report came out. It was really, it was really, really detailed. So now there are algorithms. There’s models of every single pipe, every single sewer pipe in the city of Bentonville. You can go right now and see. Are the pipes in my neighborhood at capacity or is there still room in there? And so we finally got that detail that the water utility has been looking for for quite some time. So obviously people knew there was something going on here. But really in May that came into focus. And then earlier this year, they finally knew what the problem was. They knew exactly what we needed to do, what projects needed to happen. But the issue was, well, how do we pay for all of that?
So the city leadership was really adamant that they did not want to put this back on ratepayers, so they did not want to increase, you know, my sewer bill, a neighbor’s sewer bill. They wanted to find another way to pay for it.
So this is a loan from the foundation, right? But we still have to find that way to pay it back. And the way that they’re looking at doing that is adding new fees for new development. So you would get a loan from the foundation, a rotating line of credit, complete the projects. And then as new developments come online, the city plans to charge them a certain amount of money for a sewer impact fee. And that’s how they plan to pay back those loans.
Moore: Gotcha. Okay, so not like issuing a bond or not doing any sort of measure in that way. It’s really the onus will be on new development, not homeowners or property owners at current state. Right?
Hoisington: Right. And so this is a very unique financing option. Normally you would be looking towards bonds. They’ve done that for other projects. I think you I think it would be really hard to find an example of this particular situation happening somewhere else in terms of financing options. But there are a couple benefits with this particular option. And one of them that the city leadership has pointed to is that they don’t have to take all the money out at once. They can do it project by project and get reimbursed that way.
So when these consultants came in earlier this year, they kind of gave different trigger points for when each project needs to happen. Some of them need to happen, like probably yesterday, but right now is the second best time to do them. And then there are a few other projects where, you know, they’re looking at inflow here and here and development, you know, maybe over there, and then they’ll know for sure that they want to go ahead and support that project.
Moore: Let’s say, hypothetically speaking, you were a Bentonville resident who is not the richest woman on the face of the planet. You’re just an average Joe who owns a home and has Bentonville water and sewer. How does this affect you?
Hoisington: So I’ve seen some social media comments about, well, hey, just stop the growth, right? And it’s like, oh, I don’t think anybody’s actually, you know, seriously suggesting that. But this really isn’t an abstract problem. So it hasn’t gotten to that point where I feel like it’s affecting every single person every single day. But there are early signs of how this could affect us. So, you know, I’m thinking about something, pretty recently, a project was announced for the former Bud Walton House in Bentonville. They want to take this old home. They want to. It’s, you know, basically a mansion, they want to turn it into a botanical garden for the public. And those are very, very early stage plans. And so they got the approval. They needed that initial approval. And in those documents, the city says they have absolutely no objection to changing the use of that property. But sewer flows are going to need to be calculated. And as things stood, then, quote, no increase in flow will be allowed. So brings up obvious questions. How do you turn a residential home into a public amenity with no change in flow?
So this is also something that is already restricting the ability in certain parts of town to build new housing, and there are ripple effects there if it’s not something that we solve for.
Moore: What are the next steps here? I mean, like, how soon does this start happening? You said just a moment ago. Yesterday was the best time to do it, but today is the second best time. How soon are we going to see movement on this?
Hoisington: So all of this year, since, you know, that consultant report came out, there have been piecemeal planning things that have moved through city council, you know, a consulting arrangement for this project, that project. So the city absolutely knows what projects they need to do first. But this financing option, although city staff has been working on it for a couple of months, this just came into public view and it has not quite been formally approved. So we need to look for that potentially even this month, going to the city council and getting approved. And then from there, it’s a pretty complicated timeline, but the city leaders are treating this as a pretty urgent thing. So nobody’s claiming victory with this, right? So even if we might have identified a financing option, there is a lot of work to be done here.
Moore: One of the things we’ve heard about Bentonville for years now is this idea that it’s a company town. The company runs the city, the people who move to the city move there for the company. What does this action do to combat that idea that Bentonville is just a company town?
Hoisington: Well, I definitely think it is an unusual arrangement for sure. And I would expect that some people would have some questions about that. There was a specific city council member during this meeting last week that was like, you know, we really need to put together a document and answer those questions preemptively. But when you talk to the people that have worked on sewer and water projects in Bentonville recently, they’ll give you examples of there maybe not being a lot of great other options. So an example that was cited when this was discussed last week was the city applied for a $23 million loan through the state, you know, kind of a subsidized loan program that they have that keeps the interest rates lower than you would just get on the free market. They applied for that $23 million loan for a different water project, and they only got $9 million. So wastewater is a concern across northwest Arkansas and also in other areas of Arkansas. So there’s not a ton of other places to get $239 million in credit, you know, ability to spend that money. There’s not a ton of different options for you to pick from.
Moore: Sam, anything I missed, anything you want to make sure we touch on here?
Hoisington: So beyond that, I would say, you know, this is not over. I plan to keep covering it at BentonvilleBulletin.com. And if you’re just joining us, just hearing about this for the first time, there are about four to five other articles that explain kind of what happened here, where we’re going and some other things like that. And they are all linked at the top of the website.
Moore: Sam Hoisington is the founder of Bentonville Bulletin. You can find the full details of that story at BentonvilleBulletin.com.
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