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Special Sales Tax Election July 11, 2017

The City of Tontitown will hold a Special Sales Tax Election on July 11, 2017. In 2016, Tontitown entered a new Water Service Agreement (“Agreement”) with the Springdale Water Utilities. This Agreement is for a term of 5 years and concludes in the year 2021. Springdale has provided Tontitown with water service since 1971. Tontitown appreciates and values our long relationship with Springdale, however there is no guarantee that Springdale will be able to provide Tontitown with water service after the expiration of this current agreement. In negotiating the current Water Service Agreement, it was made clear to Tontitown that our city should be exploring future water service possibilities, as Springdale may not be able to provide us with the amount of water that our city will need in the future.

 

Current Agreement with Springdale:

Terms:

  • Tontitown is limited to a strict 600,000 gallons of water per day limit.
  • Instantaneous flow cannot exceed 1,000 gallons per minute. Exceeding this daily limit or instantaneous flow limits will result in fines to the city from $2,000 to $5,000 per occurrence.
  • Tontitown customers today pay water rates substantially higher than the water rates charged by Springdale to its own customers. 
  • Springdale can raise the rates it charges to Tontitown customers based on increased charges from the Beaver Water District or based upon a determination by Springdale that it must raise the base monthly rate (for operation and maintenance).
  • Springdale has raised water rates for Tontitown customers 3 times in the last 2 years. 
  • The last water rate increase by Springdale took effect on January 1, 2017 and was an increase of $.14 per thousand gallons.
  • Continued water rate increases on at least an annual basis are foreseeable for the remainder of the term of the Water Service Agreement with Springdale.
  • Tontitown is experiencing sustained growth and the water usage limits in the current Agreement will soon begin to inhibit proper and orderly future growth.

Water Service from Benton and Washington Regional Public Water Authority (“Two Ton”):

  • Two Ton is agreeable to providing future water service to Tontitown.
  • Tontitown would need to construct an 18-inch waterline in order to connect to the nearest Two Ton water transmission line. This 18-inch waterline would allow Tontitown to become a water wholesale customer of Two Ton instead of a water retail customer of Springdale.
  • The 18-inch waterline would be 9 miles long and would run west alongside Highway 412.
  • Water purchased from Two Ton would be at a substantially lower rate than what Tontitown customers currently pay for Springdale water. The lower rates from Two Ton would allow the city to be able to consider reductions, instead of increases, in water rates charged to customers.
  • According to Two Ton authorities, there are no water rate increases planned or expected in the foreseeable future. 
  • There will not be any water usage limits on Tontitown by Two Ton.
  • Tontitown could resell water to other communities to increase water revenues and expand the user base.

Costs of the Project:

  • The current cost estimate for the 18-inch waterline project to Two Ton is $7.5 million.
  • The use of existing right-of-way along Highway 412 for the proposed water line will provide cost savings for the project.
  • An additional ¾ cent sales tax will allow the City to receive $7.2 million in bond financing for the project with the remaining funds to be provided by the City.
  • Under current calculations, the ¾ cent sales tax would fully pay off the bonds by 2039. This estimate is extremely conservative and is based on the city experiencing no growth in sales tax collections. Increase sales tax collections will result in the bonds being paid off sooner.
  • 100% of the ¾ cent sales tax would be dedicated to the 18-inch waterline project.
  • Unlike water rates, the sales tax is paid by people who live both inside and outside of Tontitown, meaning that this waterline project would be paid in large part by people who live outside of the city rather than the rate payers who live inside of the city.
  • The proposed 18-inch waterline could sustain and provide Tontitown’s water needs for the foreseeable future, allowing for the proper and sustained growth of the city.

Click here to view a Sample Ballot.

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