City attorney for LR faults utility merger

Memo on Wrightsville plan says move lacks legal basis

Central Arkansas Water’s merger with the wastewater treatment system in the city of Wrightsville lacks a legal basis, Little Rock City Attorney Tom Carpenter said in a recent memorandum circulated to city leaders.

The consolidation plan came about after state environmental regulators approached Central Arkansas Water in 2022 about the possibility of the Little Rock-area drinking water utility lending support to the troubled Wrightsville system.

Central Arkansas Water is a regional water utility created in 2001 as a result of an agreement between the cities of Little Rock and North Little Rock. It already provides drinking water to the Wrightsville area.

Most of the daily flow to the Wrightsville wastewater treatment plant comes from the Wrightsville Unit of the Arkansas Department of Corrections. The treatment plant also receives wastewater from a separate collection system to the north.

Central Arkansas Water’s board of commissioners as well as the Wrightsville City Council approved consolidation measures last year.

To run the Wrightsville system, Central Arkansas Water has sought the assistance of Little Rock’s municipal wastewater utility, known as the Little Rock Water Reclamation Authority.

According to the plan, Central Arkansas Water would operate the Wrightsville treatment plant and pump stations while the Water Reclamation Authority, acting as a contractor, would maintain the collection system.

The Water Reclamation Authority’s governing body approved the partnership with Central Arkansas Water in February, but the agreement has yet to get the approval of the Little Rock Board of Directors.

In his memo dated Tuesday, Carpenter opined that Central Arkansas Water and the Water Reclamation Authority each lacked the “unfettered authority” to move ahead with the consolidation plan.

“Although the City has extended sewer services extraterritorially — e.g., with Pulaski (County) to carry out part of the — the City has never

entered into a consolidation agreement with another municipality as to sewer services,” Carpenter wrote.

Central Arkansas Water did not have the authority to agree with Wrightsville to take over its system, meaning Little Rock “cannot sanction an unauthorized” agreement between Central Arkansas Water and the Water Reclamation Authority, Carpenter wrote.

The city attorney also raised concerns that Little Rock may open itself up to litigation if it permits the Water Reclamation Authority to get involved in Wrightsville in light of the problems affecting the system there.

Additionally, Carpenter questioned whether ratepayer funds would be used for a purpose that Central Arkansas Water does not have the authority to pursue.

In response to a request for comment on Carpenter’s memo, David Johnson, Central Arkansas Water’s general counsel, provided the Arkansas Democrat-Gazette with a memo he had prepared for the water utility’s chief executive officer.

In his memo dated Thursday, Johnson wrote that Carpenter was incorrect when he asserted that Central Arkansas Water lacked the authority to own and operate a wastewater system and when he asserted that Little Rock residents may have to pay for Central Arkansas Water’s work in Wrightsville.

State law as well as the consolidation agreement between Little Rock and North Little Rock both grant Central Arkansas Water broad powers, according to Johnson’s memo. A 2001 state law specifically confirms that consolidated waterworks systems can own and operate a wastewater system, he wrote.

With regard to revenue, Johnson wrote that bond covenants restrict Central Arkansas Water’s use of water revenues, meaning the utility cannot apply Little Rock water revenues to wastewater services and related projects in Wrightsville.

“None of CAW’s water ratepayers including ratepayers in the City of Little Rock is exposed to expenses associated with Wrightsville,” Johnson wrote.

During a meeting last month, despite reservations expressed by Chair Jay Barth, Central Arkansas Water’s board approved four measures tied to the Wrightsville project, including a resolution establishing wastewater rates and a debt surcharge for the city’s customers.