Cheryl’s note: You will not want to miss this report, in which, true to form, the General Manager, Kelly Hale, is very transparent with both the community and the Finance and Planning Committee. Hale asked for the committee’s help to go over the O and M tables with the POA department heads. He also asked them to work on a pie chart which will be used once a month to update the community on where the assessment dollars are being spent on infrastructure. This report also contains a lot of other important updates and news.

The Hot Springs Village POA Finance and Planning (F & P) Committee met on Monday, June 27, 2022. Committee Chair, Larry Siener, announced that this would be Karl Russ’ (Controller) last F & P meeting as he is leaving the POA. Russ’ resignation is effective July 8, 2022.

The F & P Committee is in the process of completing interviews for new committee members.

Chair Siener said, “I am going to turn the floor over to [General Manager] Kelly [Hale] and let Kelly tell us what he would like Finance and Planning to do to help the Village.”

Hale thanked the committee for all of its work, saying, “it has been a great roadmap for us to follow.”

Arkansas Department of Environmental Quality Permitting Requirements Changed Affecting HSV’s Municipality Status

Hale said, “We met with ADEQ {Arkansas Department of Environmental Quality. They control our water and sewer plant permits. We found there was some new language introduced to the state in 2017. We were just made aware of it, about three months ago. Our permits need to be updated and they wanted to change our municipality status to something else.”

Hale said, Ken Unger [Director of Public Services], Chris Boutzale, [Superintendent of Water and Wastewater Plants] and he met with the committee and the attorney that worked on these new guidelines. We have filed for an extension. We’re taking the position that we would like to be grandfathered in, due to past practice of what they have done for over half a century of how they recognize the Village. We’re going to go forward from there.”

“We’re going to work with Governmental Affairs [GAC]. We’ve got a meeting set up with the Lieutenant Governor here in a week and a half to have lunch. They are saying it has to be changed at the legislative level.” Hale said only one sentence needs to be added to the current language. They have language there for communities that are less than 10,000 people to receive rural funding. We’re never able to get the funding because our population is over 10,000.

The new language states that if you are an HOA or POA, you have to pay into a super fund in case something goes wrong and you have a catastrophic accident. The General Manager said that we have a reserve fund for situations such as a catastrophe. Also, most of the HOAs and POAs that fall into the new guidelines, don’t do things like build their own roads. They receive state funding for their roads because they are not gated communities. . We are asking to be set off as we were as a municipality. Otherwise, it is going to cost us about $55,000 a year to pay for these two permits. That includes the super funding. That could go up.”

“They basically told us, they don’t have an answer for us. We are the exception to the rule. We are going to approach the state legislative [branch] about getting an exception that says, “except for POAs over 10,000 people, which we would be the only exception in the state. That would allow us to do some things. More to come on that… That could be a financial impact.”

Hale explained that they are working to get a grant for part of the infrastructure money that Arkansas received. Hale thinks there is a loophole where we would qualify for this grant. “We’ve got a pretty good case for the size and scope of our Village…It’s a long shot. We’re asking for $20 MM of the $400 MM bucket of money they got….” This ties into an issue with the City of Benton where we were accused of putting contaminants into the Saline River. This was never proven.” Hale emphasized that we want to “be a good corporate citizen with our discharge.”

Gate Guard Service Contract

Hale said, “We are looking at the guard service contract that is going to be coming up. We’re negotiating that with those folks, along with penalties that are going to be added in for the first time. We are going to add a performance base to that contract.”

Basically, they are having high turnover. “Their supervisor here is not up to the standards we would like and I believe the environment that they created has created that turnover. They want to blame it on hourly wages. Nobody is going to leave their job and go right across the street and work for a dollar more an hour. They might, but with their turnover rate, that is the real problem. We will have an answer on what we are going to do with that.”

Supply Chain Issues With Obtaining Needed Vehicles

Our Enterprise Contract… is a very good deal, but at the same time, they cannot get us the vehicles. They have canceled 90% of the orders for 2022 because they just can’t get the vehicles. Dodge Durango SUVs are not being manufactured for the remainder of the year. They are shifting their resources over to other areas. We are trying to get Ford Explorers right now for the police department. We thought we would get a few trucks, but then the order was canceled.

“Because of this, I took the Dodge Durango that was assigned to the General Manager and gave that to the police department,” stated, Hale. Currently, the flashing light bars are being installed for $1,000.” The POA is also repurposing other vehicles in order to keep the police department supplied.

Cost-Saving Ideas for HSV Lake Maintenance

“Last Thursday (June 23) it was discovered that we have two potential vendors who will look at how we are draining out the lakes. Mechanical dredging is the best way to go. Hydraulic dredging is a waste of time. It is super expensive. We fired the contractor that was doing the hydraulic dredging because we found out that he wasn’t dredging the coves. He wasn’t going down far enough in some areas. We located two landscaping vendors that are willing to come in and haul the dredged material out of here for free. We will do the mechanical work with the front-end loaders. We will load up the landscaping vendors’ trucks and they will haul the material out of the Village.

Over the last five years, we averaged $175,000 per lake that we paid to vendors to haul out the dredging material. We can save between $275,000 to $300,000 a year that we have historically paid. This money can be used for other things. The only thing we are going to pay for is the mechanical and the labor. We will do that in-house. One vendor might pay us $2.00 a yard.

Committee member, Jeff Lofgren, said that he and Hale had talked about establishing a metric-based process to determine when dredging is needed instead of doing it on an automatic schedule.

Public Services Director, Ken Unger, is planning to mitigate some of the silt transfer to the lakes by using riprap and hay bales.

7-Year Operations and Maintenance Tables

The department directors will be sitting down with the Finance and Planning Committee and going through the 7-Year Operations and Maintenance Tables. The next six to eighteen months are going to be in flux. Hale said he has asked the directors to give him a realistic plan and focus on what we can control – crack sealing, paint, power washing, etc.

The original O & M plans are being shifted due to the inflationary environment we currently face. For example, three years ago there was a bid for an irrigation system at Balboa Golf Course for $750,000. Now the same work would cost $2.4 MM. Hale said he doesn’t want to “throw good money after bad.”

The POA is taking a look at doing some of the golf course bunker work in-house.

The POA is experimenting with repurposing old asphalt to repair some areas. The cost of asphalt is very high.

Hale said, “If we have a good plan to get us through at least the next twelve months, I think we will have cash sitting in the background and we can go on a buying spree right after that.”

“Cash is going to be king,” stated Hale.

Ambulance Contract

Our ambulance contract with LifeNet is up at the end of this year. Hale said they have put the ambulance service out for bids and he would like the F & P Committee to scrutinize and compare the bids.

“We pay LifeNet about $780,000 every year. They provide a great service…I would really like to run it up the flagpole and take a look at what the agreement states. About one-third of what they do is outside the Village, but that is part of the makeup of geographical territory. I could say the same thing about our police department. It is a first responder type thing. If there is a call out and our guys get there first, it is just the right thing to do.”

Hale continued, “I would like us to kick this contract around and any of the other bids that come in (there are potentially two more companies that will bid on the ambulance contract).


Hale said we need to get in-house construction crews that were eliminated years ago, back on the golf courses. Hale said we have older, but still functional equipment the crews can use. Hale stated, “We need to play catch up.”

Hale would like the Golf Committee to work closely with the F & P Committee to determine what we can do in-house and when we need to bring in a vendor for work on the golf courses.

Investing Reserved and Fixed Asset Funds

Committee Vice-chair, Tom Heau, said, “The next step is allocating more funds to the various reserves or ‘set-asides’. I think once the money gets in there, it is less subject to diversion…”

Currently, we have around $6 MM in reserves and will build this up to $7.5 MM by the end of the year.

Siener said there are two sets of funds – the reserve funds (which are only for emergency use and the fixed asset funds which the POA is saving for the purpose of making improvements at a later date.

Controller, Karl Russ, said that he and the Corporate Treasurer, Jama Lopez, have started looking at options for investing the reserve funds.

Siener said that they need to put some urgency on the matter of investigating how they can invest the reserve funds in a safe manner. He said there is a wide range of conservative investment possibilities.

Controller Russ said, “With Treasury Direct that we have looked at, we don’t need an advisor for it. All we have to do is really determine what amounts you want to put into three-month versus six-month versus whatever else and we can do it ourselves.”

Chair Siener responded, “You are in a situation where you are investing the Emergency Reserves. You can’t put everything in a long-term investment vehicle. You can certainly have a certain amount of money rotating in three-month intervals and a certain amount of money rotating in six-month intervals and the rest of it can be invested in longer-term stuff…”

Vice-chair Heau said, “The question is, and this is just purely for illustration, would we be comfortable taking some portion of that and buying five-year treasuries? To me, the risk of reserves is primarily the length [of investment time]. ” Heau said he would say “no” to ten-year treasuries. “Five years, maybe.” Heau said that at one time, the operating reserves were ten-year CDs.

Heau said that we have been using Regions Bank for years. “They have a lot of our money. My initial reaction is, I would think Regions should be providing to us investment counseling.”

Board Member, Gary Belair said, “They have to be paid with salary or commissions.”

Heau said, “I so totally disagree with that. If Regions Bank has $20 MM of our money, if they do, they are loaning 80% of that out. All banks do that.”

Belair said, “Or they wouldn’t be in business.”

“That’s true. But if I am any bank in the universe and I see Hot Springs Village with that amount of cash, I’d want to manage their money so that some of that money I can loan out at 4% and it soon will be 5 or 6% and that is my gross margin.”

Siener said that it is incumbent on the bank to maximize our rate of return.


Hale said, “We’ve been knocking out anywhere between eight to twelve culverts a week.” These are mainly the smaller culverts. They have located parts in the woods to make these culvert repairs. “We have pulled everything out of the woods and the materials we had in the pipe yard. That is the stuff that is going in the ground now. We are using up every asset we had.” Hale continued, “Some of this material has been sitting around for five years.”

Getting Creative – Possible Asphalt Solution

We have over 350 tons of old asphalt millings and the City of Hot Springs and also the County wants to give us their millings. The Public Works Department is investigating and experimenting with melting asphalt millings in order to recycle and save money. Reuse of the milling is about 1/10th of the price of new asphalt. This may be a way to cut our asphalting cost by one-third. The jury is still out on this process and currently, the POA is in the experimental stages. Click here to read about recycling asphalt.

Siener said that recycled asphalt is more durable than regular asphalt.

Here is a video that demonstrates asphalt recycling. This video is for informational purposes only and is not something provided by the POA. I do not know if this is exactly what Mr. Hale is talking about, but it may be something similar to the process used in the video. Nonetheless, the video is still interesting.

New Police Chief Repainted Police Station

The new Chief of Police, Kristi Bennett, along with her husband, son, and mother repainted the police department. She paid for the new paint herself, which cost her $120. The chief’s office and hallways have a fresh coat of paint. Hale said, “That is the attitude we have going on right now. All hands on deck.”

Communicating Better and Transparency to the Community

The F & P Committee will be providing the monthly piechart update to the Villagers that the Board previously promised. This chart will show where the assessment dollars are being spent.

Board Member, Gary Belair asked, “Is the conversation going to be ‘money was budgeted for these major items, but we’re focusing on this portion of those major items, and the rest [of the money] is going to be saved until the prices break?”

Hale agreed with Belair.

Belair continued, “We don’t want it to look like money is being diverted from the roads to something else. That is not the plan… We are spending money wisely and saving the rest until the prices break, which we believe is coming.”

Hale said they can use the E-blast for communications and use a couple of other platforms. “We have a lot of friends here in the Village that have their own networking abilities. “I say we use every avenue we can. Just transparency to the community.”

Siener said they should let people know what they are doing and how the money is being spent and what the result is. For simplification, this should be done by discussing one issue such as streets or culverts.

Hale said that this communication would be a great contribution from the committee.

What is the Plan?

Committee member, Jeff Lofgren asked how they would address the question, “What is the Plan?”

The 7-year O and M Table items have been rearranged as to timing because of inflation and inability and or difficulty in obtaining certain equipment, supplies, etc. Currently, the staff is working on low-cost maintenance items. Hale said, “We are rebuilding Rome.”

HSV Gazette Publisher Cheryl Dowden