The Alice L. Walton Foundation is offering a $239 million line of credit to overhaul Bentonville’s sewer system, city staff said at a special City Council meeting Thursday morning.

The meeting was informational only, with no official action taken. It was the public’s first glimpse at the financing plan city staff have been developing behind the scenes for months.

Consultants earlier this year recommended major upgrades to the sewer system to keep up with growth. Already, development is paused in parts of the city because of sewer capacity constraints.

The city would borrow the money from the foundation at a 5% interest rate.

For comparison, recent loans secured through a state government program for a wastewater plant upgrade carried a 4% rate, but deputy water utility director Preston Newbill said there weren’t other financing options for a project of this scale.

“To be honest with you, I'm not sure that there's any other organization out there that can offer the dollar amount that we're looking for,” Newbill said.

As an example, he said the city recently applied for a $23 million loan through the state for a water line project but received only $9 million.

“So the need is great, the offer is unmatched and the opportunity is here, and I don't know that we have any other option than to take advantage of this,” he said. “It's a little bit different of a financing opportunity, and based on the need of the interceptors, it's urgent now, and that's why we've got to get rolling on it.”

The city would be able to access the funding project by project on an as-needed basis rather than taking on the full loan all at once.

The foundation is loaning the money, not giving it as a grant, meaning the city has to find a way to pay it back. The city plans to front the cost of putting new infrastructure in the ground, then recoup the expenses through new one-time fees on development over the next decade.

Fees could be adjusted over time, but are expected to start at $7,800 for a new residential unit. 

The city already charges developers one-time “impact fees” for fire, police, parks and library services. Bentonville previously had sewer impact fees as well, but they were repealed around 2009 during the Great Recession.

City Council Member Octavio Sanchez said he felt the city “didn't charge enough for the previous 10 years of growth in the city.”

Newbill said that given the economic downturn at the time, it didn’t seem “appropriate” to continue charging sewer fees for new development.

“You're right, if we would have known in 2009 what we know today in 2025, we would have been collecting those fees and spending those fees on the projects that we need today. We had no idea what was coming in 2009,” Newbill said.

City staff estimate that if the city had continued charging those fees, it would have added up to $50 million to $70 million. That’s “a pretty good chunk” of the money needed for upgrades, but not all of it, Newbill noted.

City Finance Director Patrick Johndrow agreed it made sense to repeal the fees at the time.

“When they suspended that, the US was coming out of one of the largest financial crises that we've had in this country. So the decision was right to suspend it,” Johndrow said. “We just never went back to it. We're coming back to it now.”

City Council Member Bill Burckart, who is a residential developer by trade, said he was “grateful” for the financing option, but expressed concern about how additional fees could affect housing costs in Bentonville.

With the added fees, “we're going to drive the inflationary pressure of our housing two times the national average,” Burckart claimed.

“The market is at a place where the bulk of our citizens are tapped out. The rents are at a place where they're not affordable,” Burckart said. “So it's not a matter of whether we can raise everything. … Can the market accept it, or will the sales drop off, or the rents drop off to such a point that it causes development to pull back?”

Newbill said he understood those concerns but argued that the alternative was worse.

“The offer that we have is a path forward,” he said. “If we don't accept some kind of offer like this, those developments you're talking about don't get constructed.”

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