In a meeting Tuesday afternoon, the Little Rock Board of Directors slated two ordinances for next week’s agenda that could change zoning for two properties operating as “short-term rentals” in Ward 3. Next week’s discussion on the ordinances will help determine how the city approaches the growing short-term rental market, which includes properties rented through Airbnb. Directors also received an update on the city’s health care plan and were presented with two options for what city employees’ insurance could look like in 2020.
Directors were presented with two ordinances from the Little Rock Planning Commission in which the applicants were seeking to rezone their properties from single-family districts to planned residential developments. Dana Carney, the city’s zoning and subdivision manager, said the two properties at 201 Crystal Court and 205 Crystal Court are both currently single-family residences and have “accessory structures” separate from the home on the property, which the applicants have been making available as short term rentals through Airbnb.
Carney explained that under current zoning regulations, the city approaches the use of properties for short-term rentals in two ways: If the short-term rental is a room or rooms within an “owner-occupied single-family residence,” it’s considered a bed and breakfast and owners must apply for a special use permit; if the short-term rental is something “beyond” that — whether it’s a separate structure, like a garage or a carriage house, or if someone is making an “entire house” available — then the owners of those properties must go through the planned development process. Such properties are treated as a “planned commercial district” for commercial use, since the “principal use” is no longer just for a single-family residence.
Carney said the Planning Commission is concerned with the “introduction of commercial activity into a neighborhood,” though Carney said he’s “not so naive as to think it’s not already happening.” He added that the Commission also feels it’s important for the ordinances to go before the board so people from the neighborhood have an opportunity to share support or voice concerns in a public hearing on the applications. Carney said the Commission has “dealt with” three short-term rental applications within the past few months, two of which were presented on Tuesday, and all three of which were “brought to our attention as a result of neighborhood complaints about the activities taking place.”
At-large Director Gene Fortson, who also serves on the city’s Advertising and Promotion Commission, said collecting taxes due to the city from short-term rentals has been a “continuing effort.” Fortson said the short-term rental “strikes” him as an area where “the potential for an unexpected and unanticipated change in neighborhood activity could occur” because of poor vetting by “reservation services” — such as Airbnb — of the guests who stay in the rentals.
Carney said that from a “zoning standpoint,” the “whole concept” of short-term rentals is “somewhat of a moving target.” He said they’re difficult to locate, and it’s his understanding that there are over 350 short-term rental properties in Little Rock.
“It just concerns me that neighborhoods where this may be developing may not be aware of what’s about to develop in their neighborhood if we start approving a lot of these,” Fortson said.
Directors will hear discussion on these ordinances next week, and they’ll vote to either approve or deny the applicants’ request to rezone their properties.
Ward 4 Director Capi Peck asked for an update on the Heights tree ordinance, which was passed unanimously by the Planning Commission in April. The ordinance would create a design overlay district in the historic neighborhood, and it requires homeowners who apply for a construction or demolition permit to either preserve or plant certain types of trees on their property in order to maintain the area’s tree canopy. The ordinance has been put on and taken off the board’s agenda a few times over the summer, but at-large director Dean Kumpuris said that after further “negotiating” between the Heights Neighborhood Association, which created the ordinance, and residents in opposition to the requirements, the two parties have come to a conclusion that will work for both of them.
Peck asked for the ordinance to be voted on at next week’s meeting.
After the agenda meeting was adjourned, city leaders moved into the “policy discussion” portion of its meeting. Mayor Frank Scott Jr. began the discussion by reminding directors that the city’s health care plan plays a “vital role” in the creation of the 2020 budget. Scott explained that Little Rock is currently under a “fully insured” plan with United Health Care Group. Over the past year, through July 2019, the city’s health care insurance premiums increased by 24 percent, about $3.3 million. Tom Kane, executive vice president of Stephens Insurance and manager of the city’s health insurance plan with United, negotiated that increase down to a $2 million increase, or 15 percent.
Scott said the city has two options: It can remain under the fully insured plan with United and experience a 15 percent premium increase, or it can move from this fully insured plan to a “self-funded” plan. This self-funded plan would be through a clinically integrated health network, or a CIN, which Scott said focuses on “managing our health care population.”
Kane issued a Request For Proposal for bids for a CIN plan. The Arkansas Health Network (through CHI, or Catholic Health Initiatives) and FocusCare (through Baptist Health) responded. Kane also issued an RFP for third party administrators who would supplement the CIN plan. United Healthcare/UMR, Blue Cross/Blue Advantage, and CIGNA responded to this RFP.
Kane explained that a clinically integrated network helps bridge a gap between employees and clinicians, as the city’s employees are a “largely unmanaged population.”
“We have people who really don’t understand the complex, very expensive health care system, who are accessing it, in some cases, very randomly,” Kane said. “What a CIN does is it brings clinicians into the picture.”
Through a clinically integrated network, nurses, social workers, doctors and other clinicians would work with Little Rock employees and their families “to make sure they’re getting the appropriate amount of care in an appropriate setting, at the appropriate time.”
Kumpuris spoke up often during the discussion to share that he thinks a shift to a clinically integrated network is the best option for the city as the city’s current plan does not actually “manage care” for its employees.
“The real issue to me, and the real reason that I’m tired of doing what we’re doing [with a fully-funded plan], is that basically … they take claims in and they pay money out, and that’s what they do,” Kumpuris said. “The clinically integrated network’s whole program is to honestly manage patients.”
“To me … this is not the way we should be taking care of our the people that work for us,” Kumpuris added. “We’re not helping them take care of themselves, and we have, unfortunately, a huge group of people that have health problems. My thought is that to me, we need to start talking about how we’re going to help our employees be healthier.”
Kane said the city’s current provider, UMR, has done a “great job” of managing claims and maintaining a network of providers, “but as far as actually engaging and driving better health through our population, not so much.”
At-large director Joan Adcock asked what areas of health care the city is not managing well for its employees.
Kumpuris stepped in.
“Here’s the problem: You come to see me and you’re an employee. … I say, ‘Come back after three weeks, and I’m going to monitor your blood pressure because it’s elevated, here’s the medicine you take,’ ” Kumpuris said. “[UMR’s] requirement is that you go one time, they don’t have the requirement to come back, and the office doesn’t have any staff or any way of monitoring [and] making [patients] come back, or requesting them to come back, or cajoling them to come back. So you go and you get your first visit, but after you have your first visit, you’re gone. Your premiums are lower, but your diabetes isn’t going to be followed up [with] unless you come back. So then you have a network that’s saying, ‘We’re going to cut costs because we’re going to be on you all the time,’ [as a clinically integrated network does.]”
Kumpuris said the network has the ability to contact patients directly about keeping up with their care, and it reduces costs by consistently monitoring health — thus ostensibly avoiding large, unexpected costs that can arise because employees don’t engage in regular care.
Scott said he will work with City Manager Bruce Moore, City Finance Director Sara Lenehan and Human Resources Director Stacey Witherell to bring a decision to the board of directors about which health care plan the city will proceed with for board approval. He said the city usually makes this decision in October before the budget is passed in November or December so that employees can go through open enrollment for their 2020 care. Scott said he hopes to bring a decision before the board in the next couple weeks.