SPRINGDALE — Spending $157 million can take time, especially during a pandemic, city staff said.
The city is spending money from a 2018 bond issue as fast as it can, but it didn’t meet the federal requirement that 85% be spent within three years, officials said.
Still, the penalty is minimal, officials said, and the city thinks it has an excuse even the Internal Revenue Service will accept: A pandemic struck.
Voters approved a $200 million bond issue in February 2018. The April 17, 2018, sale of the bonds earned $157 million to spend on new projects. About $100.6 million, or about 64%, has been spent, Bob Wright of Crews & Associates said. The firm represented the city in the bond sale. He added every dollar has been allocated.
Residents enjoy a new city park and recreation center, increased fire protection and new roads to get around town because of work completed with the bond proceeds, reported Wyman Morgan, the city’s director of administration and finance.
Springdale has started at least 70 projects with bond money, he said.
Ryan Carr, deputy director of the city’s engineering department, said the city has built about 11 miles of roads.
‘REASONABLE’ V. PANDEMIC
J. Shepherd Russell III, the city’s bond attorney, said the law requires the city have a “reasonable expectation,” at the time it sells the bonds, officials can spend the money in three years. Russell specializes in public finance with the Friday, Eldredge & Clark law firm in Little Rock.
The IRS can review the city’s expectation of “reasonable” if the bond money is not spent in three years, Russell said.
Money unspent after three years cannot be invested by the city to earn interest greater than the 3.8% interest the city repays on the bond money, Russell continued. The definition of “reasonable expectation” probably will come into play with a lot of bond holders in this time of pandemic, he said.
Mayor Doug Sprouse said he’s not worried.
“In the next two or three months, we will be bidding several more street projects,” he said. “We’re anxious to get those back to know how much money we will have left for other projects.”
He noted the bond money for several departments is about gone.
Morgan said covid-19 in several ways hit construction crews working on the bond projects.
A crew working on the Criminal Justice Center would find themselves in quarantine and off the job for two weeks with one positive test among them, Morgan explained. The Mississippi manufacturer of the concrete panels featured on the outside of the building also closed for quarantine and remained closed when Gov. Tate Reeves declared an emergency and issued a shelter in place order.
Delivery of those and other building material was delayed for several months, leaving other crews without the weather protection needed for inside work, Morgan continued.
Sprouse also noted many of the city’s projects — especially the street projects — require state and federal permits, design, land acquisition and approvals in general. Government offices at all levels sent employees home to work, too, he added.
“The Criminal Justice Center is the holdup,” Morgan said. “But we’ve got documents to show the IRS the delays and the reasons for them. I think the IRS will take it easy on us because of the pandemic.”
“I think everybody’s got a lot of grace as we all go through this,” Sprouse concluded.
Voters across Northwest Arkansas over the past few years have approved the sale of bonds and the extension of city sales taxes to fund projects.
And the cities’ asks are similar — trails, parks, city buildings, police department headquarters and radio system, new fire stations and training facilities, even a cultural arts corridor.
Rogers voters in 2018 approved a $300 million bond program.
Fayetteville approved $226 million in April 2019, and Bentonville $266 million in February.
JUSTICE DELAYED
The Criminal Justice Center, now called the Municipal Campus, will remain downtown as one of the anchors for the revival efforts of the district.
The $41 million project is being built in two phases, Sprouse said.
The northern part of the complex for the Police Department, city attorney and district court lines up along East Huntsville Street.
City officials expect departments to start moving to their new offices in early June.
Then the second phase will begin, which includes renovating city hall for the planning department, engineering department, building department, city clerk’s office and the mayor’s office. Those employees will work in rented space in various buildings downtown for about a year.
The City Council in February reluctantly approved an additional $1.5 million for construction of the Municipal Campus. The original budget was $41,492,000.
A community room will be added to the south side of the building for $530,000, and safety features were added for the Police Department.
The architect and construction companies are charging the city for 287 days beyond the scope of the original contract. They attributed the delays to 80 days of bad weather, three days needed to make the city’s change orders and 170 days on the virus shutdowns.
The words of the contract absolved the construction company of responsibility for the delays in situations of “unforeseen difficulties,” the pandemic among them, Morgan said.
STREET BOND
The street bond money will carry the city for a few more miles.
The trip started with $78,826,355 from the bond. State and federal money was added to eligible projects, Morgan continued.
Six projects have been completed with the bond money, Carr said.
The first was a $1.2 million overlay of West Huntsville Avenue. Other completed projects include improvement of Watkins Avenue in front of the Northwest Arkansas Community College Washington County Campus, an extension of North 48th Street from Elm Springs Road to Bob Mills Road and the northern extension of Gene George Boulevard from West Sunset Avenue to Elm Springs Road.
The city has done its part to replace a popular one-lane bridge over Pump Station Road that was washed out in spring storms of 2017. The city contributed $700,000 of bond money to the project. But because the road held a state highway designation, the Arkansas Department of Transportation was responsible for the design and construction, and the city officials can only wait for its completion.
The city completed an extension of Maple Avenue across the Arkansas & Missouri Railroad tracks downtown. The crossing, which includes lights and gates, was completed with $3.3 million of the city’s money last fall, but the railroad refuses to open the crossing out of safety concerns.
Projects still underway with bond money include improvement of11 64th Street, Ford Avenue, Gene George Boulevard south, Kendrick Avenue, a bicycle and pedestrian crossing of Interstate 49 on Watkins Avenue and North 40th Street from Falcon Avenue to the new J.B. and Johnelle Hunt Family Ozark Highlands Nature Center opened in December by the Arkansas Game and Fish Commission.
The city will extend Dixieland Road from its terminus in Lowell south to Wagon Wheel Road. The project is budgeted at $2.6 million.
Springdale dedicated to the project $777,000 it received from Bethel Heights’ accounts when it annexed from the town, Morgan said. The area was part of Bethel Heights before voters in both cities approved annexation in 2020.
DONE, DONE AND DONE
Morning brings the best part of the day at the new Springdale Animal Shelter, said Courtney Kremer, the city’s director of Animal Services.
“I pull up to work, and I see the dogs looking out of their kennels and wagging their tails. It’s just so cute to see them out enjoying the sun,” she said.
The city’s previous animal shelter did not have outdoor kennels — among other amenities, Kremer said.
The shelter is the only bond project with construction complete, staff moved in and all bills paid, Morgan said. He said the budget was $5,390,676 and the final cost was $5,390,695.
Shelter staff and animals started moving in September from the old shelter on Randall-Wobbe Lane to the new one on East Don Tyson Parkway. Covid-19 has kept the shelter closed to the public, but it opened Monday, Kremer said.
Animals were still available for adoption by appointment, and the animal control staff brought in strays during the closing.
Fire Station 7 on Har-Ber Avenue and Fire Station 8 on East Huntsville Avenue are fully staffed, equipped and operational, said Fire Chief Mike Irwin. Station 9 in the northwest part of town and the Mickey Jackson Fire Training Center are within 30 days of use, he said.
Shaw Family Park celebrated its opening with a ribbon cutting May 1. The 120-acre park in the northwest part of town features a large lawn, splash pad, dog park and extreme exercise course.
The bond brought the Randal Tyson Recreation Complex into compliance with the Americans With Disabilities Act.
A three-part real estate deal saw the city dipping into the bond money to purchase the former All-Star Sports Arena and renovating it to become the city’s recreation center.
The city has also installed lights and security cameras in several parks.
Laurinda Joenks can be reached by email at joenks@nwadg.com or on Twitter @NWALaurinda.
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Northwest Arkansas
Residents gain 70 improvements in bond projects