The sale of “distressed” real estate produces different results in Northwest Arkansas and the Fort Smith area.

In the hot Benton County market, 15% of homes sales in October were a direct result of foreclosure, up 8% a year ago. Washington County reported 7% of its home sales in October were for distressed properties, up from 3% a year ago.

There were no real estate owned (REO) or foreclosure sales via auction in October across Crawford or Sebastian counties, according to a report from Irvine, Calif.-based RealtyTrac.

Distressed homes continue to sell for discounted prices compared to non-distressed sales, but in several markets the prices on both categories are up from a year ago.

In Benton County where the foreclosure market is heating up, the distressed home sales prices of $101,526 were discounted some 25% from the median non-distressed sales price of $127,500. One year ago, the median distressed home sales price was $90,500, compared to a non-distressed median price of $130,000.

Washington County non-distressed home sales prices rose to $155,000 in October, up 5% from a year ago. When compared to the distressed median price of $113,000, buyers of these foreclosed properties received an average discount equaling 37% in October.

All median home prices ticked higher in Sebastian County during October. The non-distressed price of $128,000 in Sebastian County rose from $119,000 a year ago. Foreclosed home sales were priced at a discounted $91,000. A year ago the discounted price was $85,000.

Crawford County reported a non-distressed median price of $111,000, down from $119,000 a year ago. The distressed median price of $81,000 was flat with a year ago.

REGIONAL HOME SALES
Distressed properties are not harming the overall residential market in Northwest Arkansas or the Fort Smith area, according to the recent Arkansas Home Sales Report.

October home sales totaled 567 in Northwest Arkansas, up 12.72% compared to October 2012, and up 34.36% compared to October 2011. In the Fort Smith area, home sales totaled 149, up 15.5% compared to October 2012, and up 14.6% compared to October 2011.

The value of the sales during October were up 10.49% in Northwest Arkansas, but down 5.99% in the Fort Smith region.

For the first 10 months of 2013, the number of homes sold in Northwest Arkansas is up 18.74% and up 8.33% in the Fort Smith area.

NATIONAL NUMBERS
The national median sales price of all residential properties — including distressed and non-distressed sales — was $170,000, unchanged from September but up 6% from October 2012. It was the 18th consecutive month median home prices have increased on an annualized basis.

The median price of a distressed residential property — in foreclosure or bank owned — was $110,000 in October, 41% below the median price of $185,000 for a non-distressed property.

“After a surge in short sales in late 2011 and early 2012, the favored disposition method for distressed properties is shifting back toward the more traditional foreclosure auction sales and bank-owned sales,” Daren Blomquist, vice president at RealtyTrac, said in a statement. “The combination of rapidly rising home prices — along with strong demand from institutional investors and other cash buyers able to buy at the public foreclosure auction or an as-is REO home — means short sales are becoming less favorable for lenders.”

An expected mix of Arctic air and wintry precipitation has regional and local power companies making preparations as the National Weather Service in Tulsa has placed Northwest Arkansas and the Fort Smith area in a winter storm watch starting Thursday afternoon.

The NWS issued the watch in the early morning hours on Tuesday, saying that the area would see all forms of wintry precipitation and in heavy amounts.

"Freezing rain will arrive in southeast Oklahoma and west central Arkansas Thursday afternoon," the NWS statement reads. "The precipitation will transition to a freezing rain / sleet mix then just sleet. Eventually the precipitation is likely to change over to snow."

The watch included an estimate that "a quarter inch or more of ice accumulation is possible."

OUTAGE RESPONSE PLANS
Due to the heavy icing that could occur, Greg Davis of Arkansas Valley Electric Cooperatives said plans are underway to respond to possible outages. Arkansas Valley has 58,000 customers in its service area.

"This is something that we prepare for year-round and when we start seeing something like this, when it starts looking like it's imminent, there's not a lot of jumping through hoops that we do because we are prepared," he said. "We have the plans in place for various scenarios. Tomorrow we have a meeting scheduled to run through all of that again. At that point, we feel like the forecast will be pretty solid."

Davis and Peter Main, a spokesman for Southwestern Electric Power Company (SWEPCO) in Fayetteville, said each of their respective power companies had agreements in place to bring in additional crews to restore power should lines come down under the weight of heavy ice accumulation. SWEPCO provides service to more than 114,000 customers in Arkansas, with most of those in Northwest Arkansas.

"Utilities are members of mutual assistance networks, which allow us to call on resources from other utilities and contractors, as well, to provide crews and resources to other utilities as needed," Main said, adding that SWEPCO has not yet called in additional crews as they wait to see a more solid forecast tomorrow (Dec. 4).

"We have not called any crews at this time because we are still watching the weather developments, but our internal preparations with our own crews are proceeding."

Rob Ratley, a spokesman for Oklahoma City-based OG&E, said the utility – which provides services to a large part of western Arkansas – is working within its “command system” to best respond to disruptions. OG&E has about 65,000 customers in western Arkansas.

"For starters, we closely monitor the weather with the National Weather Service and we have a meteorologist on staff. Our strategy is to anticipate the storm as best we can and then align our resources to those areas that are likely to be affected,” Ratley explained. "A few years ago, we implemented an ICS (incident command system). This is very similar to the same type of structure that police, fire and the military have. It enables us to stage our resources and personnel according to the extent of the storm."

CUSTOMER OUTAGE PLANS
Arkansas Valley and SWEPCO officials said it was important for electric customers to make plans for a prolonged outage due to ice, which Davis said has been happening about once every five years in the Fort Smith and Northwest Arkansas regions.

"The big thing and this is always our biggest concern – is if it is going to be a prolonged outage, anyone who is compromised, especially in rural areas, should have plans to endure the outage," Davis said, adding that plans should be made now to stay with someone in town or make plans to rent a hotel room.

The NWS also advised individuals who choose to weather the storm at home to make emergency preparedness kits.

"Make sure you have an adequate supply of food…water and the necessary medication to last through the duration of the winter storm."

Ratley said OG&E does not anticipate significant power disruption.

"(We're) not really (expecting a lot of widespread power outages). Right now we're in the likelihood of sleet and snow with the possibility of some ice accumulation. But typically unless it's very widespread with a lot of broken poles, we're typically able to concentrate our resources to minimize the duration of outages,” Ratley said.

OUTAGE SAFETY
Main said it was important for residents making preparations to be not take unnecessary risks, such as attempting to cut limbs or branches near power lines prior to the storm, saying it is "an unsafe practice."

"The clearing of limps from lines should only be done by qualified individuals. SWEPCO's tree trimming efforts are done on a year-round basis. Any line clearing efforts for customers should only be done by utilities or qualified tree (trimming) companies. Typically those are not things you hurry up and do in preparation for a storm."

Should an individual encounter downed power lines, Main said to stay away from the downed lines and do not touch anything the line may be in contact with.

Main also made sure to warn residents about the use of generators, saying the generators should not be plugged directly into the house. Instead, he said appliances and lighting fixtures should be plugged directly into the generator.

"Customers should (also) follow all the safety instructions for the proper and safe operation of generators," he added. The U.S. Fire Administration advises on their website to keep gas generators away from homes and garages due to the risk of carbon monoxide poisoning, which it said "can kill within minutes."

The expected winter storm in the Fort Smith and Northwest Arkansas areas is part of a larger storm system that could cause disruptions across a large swath of the country, according to an AccuWeather report.

The ambitious effort to expand broadband capability in Arkansas public schools moved forward on Tuesday (Dec. 3) as two working groups accepted an engineering report and recommended the state proceed with a potential public-private partnership.

Administration and industry officials have been working on a plan to boost the state’s public schools to a nationally recommended broadband capability of 100 Mbps per 1,000 students and staff. The average Arkansas school district with 1,800 students currently has 40 Mbps of bandwidth and needs at least 140 Mbps more, according to an earlier Department of Information Services report, but industry leaders dispute that assumption.

The Quality Digital Learning Study (QDLS) committee and the FASTER (Fast Access for Students, Teachers and Economic Results) panel – both of which consist of business, economic and state policy leaders – forwarded an Engineering/Infrastructure Task Force report to the Governor. The report outlines four major recommendations.
• Connect school districts with a robust fiber-optic network.
• Centralize management for statewide network support services.
• Adopt the State Educational Technology Directors Association (SETDA) recommendations for K12 bandwidth as minimum targets. – Efficiently aggregate statewide demand to achieve greater economies of scale, reduce costs, improve access, and deliver high-quality content.

The QDLS committee also recommended the state pursue a public-private partnership to accomplish its overall goals; however, several broadband industry representatives on the panel abstained from the vote. The next step is producing a final report on an overall strategy for the Governor and, eventually, state lawmakers.

Also, an invitation for bid for Internet Service Providers (ISPs) to build out their infrastructure to the public schools in their territories to meet the group’s goals was extended to Dec. 27.

CONCERNS RAISED
One of the major discussions the groups have been debating is whether or not to tap into an existing statewide data network known as ARE-ON. The Arkansas Research Education Optical Network (ARE-ON) serves Arkansas institutions of higher education and hospitals with a high-speed fiber network capable of transporting enormous amounts of data used in research and medical cases.

Some industry officials have privately expressed concerns that tapping into ARE-ON could undermine private industry broadband efforts. State officials supportive of the move contend that private companies will benefit from the build-out needed for rural communities to access ARE-ON.

At Tuesday’s meeting at the Department of Education building in Little Rock, industry officials representing cable, telecommunications and broadband providers on the QLDS panel raised concerns about the data that will drive final decision-making, a price tag for the broadband expansion, and potential statutory concerns that could prohibit ARE-ON from being used for K-12 purposes.

Cox Communications director of government affairs Len Pitcock said, “I think our position is in the absence of complete and accurate data and the absence of certainty of funding, and statutory concerns … we are going to abstain. We’re not in opposition or support of this.”

‘HUMAN PIECE’
Kendall Gibbons, Arvest Bank’s EVP for Information Technology, said tapping the ARE-ON network makes sense. He noted that the high-speed network is “top tier” with 18 access points, or nodes, across the state. By contrast, Mississippi’s comparable network only has four access points.

“It is a very rich resource Arkansas should take advantage of, in my opinion,” he said.

Dr. Jay Barth, a member of the State Board of Education, emphasized that while the group has been focused on the network, it was also important to have a “human piece” to the final proposal.

“We have to have the right people in place at the district level to have everything in place,” Barth said. “How can we help districts get the right folks there, have them be trained and train educators to use the new tools. We need to remember that.”

The QLDS group is not expected to meet in person again before the end of the year. Once the invitation to bid from ISPs are collected at the end of December, the group is expected to debate a potential price tag for what it would cost to build out school access across the state in conjunction with the panel’s goals.

Voters in Arkansas House District 77 now know the name of at least one candidate running to replace term-limited Rep. Stephanie Malone, R-Fort Smith.

In statement issued Tuesday (Dec. 3), pharmacist Justin Boyd announced he would run in the Republican primary for the seat, which encompasses a large portion of Fort Smith.

"Fort Smith's future is about meaningful work for people, quality of place for families and education that inspires students to make a difference," he said in a statement. "Each of those concepts is intertwined and absolutely crucial to our growth."

His announcement touts 15 years of experience in the health care field, having held positions at Mercy Hospital in Fort Smith, Washington Regional Hospital in Fayetteville and owning Coleman Pharmacy of Alma since 2009.

Boyd's background in the medical field will be a cornerstone of his campaign, he said.

"Without a doubt, (health care) is (an) important issue to me and one I am passionate about," he said. "But running for this office means I can make positive changes in all areas for my family and other families in Arkansas. Being a State Representative isn't a license for mediocrity. (It) means you get in and roll your sleeves up and make things work for your neighbors."

While Boyd is the first to announce for the District 77 seat, other races in Fort Smith are already off and running.

Republican Mat Pitsch has announced a run for House District 76, a seat held by term-limited Rep. Denny Altes, R-Fort Smith. It is the second campaign Pitsch has made for the seat, having previously lost in the 2012 Republican primary to Altes.

Rep. George McGill, a freshman Democrat representing District 78 in northern Fort Smith, has announced a 2014 re-election bid.

"I've been blessed to serve the Fort Smith community in the Legislature," he said. "There are so many wonderful opportunities for Fort Smith and being a part of the work to make those opportunities become reality has been exciting."

So far, none of the three announced candidates in Districts 76, 77 or 78 have announced opponents.

Other Fort Smith-area Districts do not appear to be moving toward a major challenge, as no other seats except District 21 south and east of Fort Smith are represented by term-limited representatives or senators (House members are limited to three two-year terms while Senate members are limited to two four-year terms):
HOUSE
• District 21: Rep. Terry Rice, R-Waldron (Term-limited)
• District 74: Rep. Jon S. Eubanks, R-Paris (2nd Term)
• District 75: Rep. Charlotte Douglas, R-Alma (1st Term)
• District 76: Rep. Denny Altes, R-Fort Smith (Term-limited)
• District 77: Rep. Stephanie Malone, R-Fort Smith (Term-limited)
• District 78: Rep. George McGill, D-Fort Smith (1st Term)
• District 79: Rep. Gary Deffenbaugh, R-Van Buren (2nd Term)
• District 81: Rep. Justin Harris, R-West Fork (2nd Term)
• District 82: Rep. Bill Gossage, R-Ozark (1st Term)

SENATE
• District 5: Sen. Bryan King, R-Green Forest (1st Term)
• District 6: Sen. Gary Stubblefield, R-Branch (1st Term)
• District 8: Sen. Jake Files, R-Fort Smith (2nd Term)
• District 9: Sen. Bruce Holland, R-Fort Smith (2nd Term)

Link here for more info about legislative districts in the Fort Smith area.

The Fort Smith Board of Directors passed a Fiscal Year 2014 operating budget at its regularly scheduled Tuesday (Dec. 3) meeting without much of the fanfare and disagreements seen during the last month of budget meetings that included one budget scenario that would have resulted in the layoffs of 14 city employees.

At issue during the last three meetings dealing with the now-approved budget was the city's use of previous year's ending balance in the upcoming year's budget, which has the city spending more than $2 million more than it brings in in revenues.

City Director Keith Lau has contended that such budgeting showed the city operating at a deficit based on revenues. The budget for next year has expenditures of $47.919 million and revenues of $45.716 million.

All members of the Board with the exception of Lau voted in favor of approving the original budget as proposed. Speaking before his no vote, Lau said he could not vote for the budget in good conscience.

"I just want to go on record as being opposed to this budget. I think that we haven't gone far enough to cut our expenses or increase our revenues – a $2.2 million difference between revenues and expenses."

City Administrator Ray Gosack said even with all the back and forth regarding the budget, the process served its purpose for the Board, which could result in changes when the city begins work on the FY2015 budget later next year.

"It served a very good purpose for the Board because it's made them more aware of the fundamental assumptions that go into balancing our budget and I think what they've indicated is they want to make sure they understand those assumptions and possibly modify them for the 2015 budget."

The Board also approved raising fares on the city's public transit. According to a memo from Transit Director Ken Savage, the rate increases approved include:
• Fixed Route - $1.00 to $1.25 per trip;
• Demand Response - $2.00 to $2.50 per trip;
• Additional Services - $3.00 per trip (demand response when fixed routes are closed; this is a new service);
• Private Charter-First Hour - $125.00 to $200.00; and
• Private Charter-Additional Hours - $65.00/hour to $100/hour.

In Savage's memo, he detailed the purpose for the rate increases.

"Higher fuel and equipment prices necessitate the need for the associated increases," he wrote. "Adjusting the rates would provide approximately $30,000 in (additional) revenues and would help establish equality among current rates for urban transportation services across Arkansas."

Area resident Pauline Novack spoke against the increase, saying it would price many transit users out of the system at a time when the economy is still struggling in Fort Smith.

The Board also declined a request from the Utility Department to acquire 3.59 acres of property along Navy Road through eminent domain. The property, which the Utility Department was attempting to acquire for $86,000, would have been used to construct a 3.5 million gallon equalization tank as part of the Mill Creek Pump Station project.

At issue was a request by the property's co-owner, Steve Beam, who said the city was not giving him fair value for the land, which he said is mortgaged at more than $200,000. He had asked the city to pay him $209,000 for the land, which would have also come with infill and gravel. Beam told the Board he would be willing to accept $146,000 as payment for the land, but Utility Director Steve Parke would not negotiate beyond the $86,000 offer.

With the eminent domain plan rejected, both parties will go back to negotiating this week with Mayor Sandy Sanders explaining that the city could possibly call a special session next Tuesday (Dec. 10) in association with an already-planned study session to vote on a resolution authorizing the sale in order to move the project forward.

Parke explained that the project is part of a fulfillment of a Department of Justice consent agreement associated to wastewater runoff problems dating back to the 1970s.

In other business, the Board:
• Approved an ordinance amending the zoning map at 1000 South Waldron Road to create a Planned Zoning District;
• Approved an ordinance amending the zoning map from 201 Riverfront Drive to 3201 Riverfront Drive creating a Planned Zoning District;
• Approved amendments to the 2009 Unified Development Ordinance;
• Approved an ordinance amending the 2013 operating budget; and
• Approved an ordinance establishing salaries and benefits and related procedures for city employees.

Most people would not believe it if someone told them they made a living selling used items on eBay. But for one Northwest Arkansas company, selling merchandise on the popular auction site has turned into a major business.

Fayetteville-based NR Group Inc. operates Hot Liquidation Spot. HLS is one of millions of sellers on eBay. But what makes the company different is how they get their merchandise, according to CEO Chad Hudson.

"We are liquidators. And what we do is basically have agreements with companies like Amazon.com and Groupon.com, BestBuy.com and several sites like that – we go through sort of a brokerage firm and we help to move products that they no longer have interest in moving," he said.

The products Hudson's firm receives come in the form of a pallet full of merchandise, generally returned items that companies are unable to re-sell.

"If you think about it like you take something to Walmart (that) you don't want anymore, that would be a returned product – whether you return it because it's broken or you return it because it's missing something or you return it because you changed your mind and you don't like purple. You change your mind for various reasons. So basically, that product has to go somewhere in the marketplace and this industry is relatively new at this level," Hudson said, adding that previously "some mom and pop guys who would do (this) on the side."

But that has all changed in the four years Hudson has been in the business, starting with the purchase of a single pallet of items which netted about $100, losing all the money he had invested in the third pallet and eventually creating a $40,000 per month business that has three full-time employees and several sub-contractors in addition to Hudson and his wife.

According to the National Retail Federation, about 9% of all products are returned which equals about $54 billion in returns divided between in-store and online retailers. A 2010 study entitled "Creating value through product stewardship and take-back" said the secondary retail market now represents 2.28% of all gross domestic product in the United States.

So how does a company make money buying unwanted merchandise and re-selling it in auctions on eBay? Hudson said it all boils down to his past experience in the car industry and using those skills to determine whether a pallet would be a good investment based on the manifest of goods he receives from the retailer.

HLS now subscribes to software that helps determine not only what items are worth, but what they are being sold for in online auctions not only on eBay but on other sites. Hudson also developed his own proprietary pricing models to assist in the business.

And even before a pallet arrives and all items are product tested for quality and condition, the staff of HSL is already finding keywords to use on eBay and maximizing the chance of their products being seen through the effective use of search engine optimization (SEO).

Purchasing software and using proprietary pricing models are not the only methods HSL uses to make money, according to Hudson. He said in the world of liquidation, you have to spend money in order to make money.

"We've learned in this business that you have to take on more product to be competitive with these big major retailers, because they're not really interested in selling you a pallet. They're really not. That's just minuscule in what they have to do. So we've kind of figured we need to be able to purchase more product to be more desirable to them. That's why we had to keep getting bigger space and taking on more product."

Moving into larger spaces, he said, has meant five different moves in the last four years – from the company's start in his garage, to a storage unit and eventually to an 8,500-square-foot facility on Martin Luther King Jr. Drive in Fayetteville.

And even though sales have climbed each year, with this year likely to see sales just under $500,000, Hudson said he is already looking to the future in a business where he typically sees a 75% to 80% return on investment.

"Well, at the rate that we'd like to go, there's some possibility on the horizon of maybe franchising a little bit bigger around the country," he said. "If there's one thing that limits us, I guess, is because we watch our costs so closely, we really have to be within a region that is easy to ship to a lot of people and Northwest Arkansas is great for that. But it's also has to be in a region where we have to be able to receive product in from our suppliers."

With that in mind, Hudson said expanding operations to the West Coast was a long-term goal, especially now that a private unnamed investor has come on board to help support HSL's growth plans.

But in the end, Hudson's skills and a lot of hard work are keeping the business thriving in a national economy that has been turbulent for much of HSL's history.

"We're still growing and we're not where we want to be. As an entrepreneur, you still want to keep stabbing at it. But I think where we've been, like any business growing up it's hard – you go through times (asking), 'What am I doing? I'm not going to make it.' And our biggest thing between my wife and myself is we've just learned to trust in our faith."

A legislative delay of new hours-of-service rules is being sought by the U.S. trucking industry, but the head of Arkansas’ trucking industry says the legislative effort will not work and rising shipping costs resulting from the new rules may be the only path to regulatory relief.

The U.S. Department of Transportation began in 2004 a series of rules designed to regulate hours worked by truck drivers in an effort to reduce accidents and promote driver health. On July 1, a more restrictive hours-of-service rule was issued that not only limited the amount of hours a driver could work, but also mandated rest and break periods.

“The goal of this rulemaking is to reduce excessively long work hours that increase both the risk of fatigue-related crashes and long-term health problems for drivers,” noted the opening line from a Q&A posted by the DOT.

Continuing, the DOT noted: “The objective of this rule, therefore, is to reduce both acute and chronic fatigue by limiting the maximum number of hours per day and week that the drivers can work. The rule reduces a driver’s average maximum allowable hours of work per week from 82 hours to 70 hours, a 15% reduction. The 15% reduction in the average maximum allowable hours of work based on the new rule results from the restrictions on the use of the restart period.”

THE RULES
Following are some of the key changes in the new rules.
• Provision: Limitations on minimum “34-hour restarts”
Previous rule: None.
New rule: Must include two periods from 1 a.m. to 5 a.m., home terminal time. May only be used once per week, 168 hours, measured from the beginning of the previous restart.

• Provision: Rest breaks
Previous rule: None except as limited by other rule provisions.
New rule: May drive only if 8 hours or less have passed since end of driver’s last off-duty or sleeper berth period of at least 30 minutes.

• Provision: On-duty time
Previous rule: Includes any time in CMV except sleeper berth.
New rule: Does not include any time resting in a parked vehicle (also applies to passenger- carrying drivers). In a moving property-carrying CMV, does not include up to 2 hours in passenger seat immediately before or after 8 consecutive hours in sleeper berth.

• Provision: Penalties
Previous rule: “Egregious” hours-of-service violations not specifically defined.
New rule: Driving (or allowing a driver to drive) more than 3 hours beyond the driving-time limit may be considered an “egregious” violation and subject to the maximum civil penalties. Also applies to passenger-carrying drivers.

The DOT estimates that the new rule will boost annual trucking industry expenses by about $470 million, but said benefits from safety, driver health and other factors will produce an overall net economic gain of up to $280 million a year.

‘FUZZY MATH’
Greg Carman, president of Fort Smith-based Carman Inc. and a board member of the Arkansas Trucking Association, said the federal rules have little to do with the reality of what is needed among trucking companies that have different routes, client needs and business models.

Carman, who operates a company that has 45 tractors and has worked as a driver in the fleet, said the new rules have already caused two experienced Carman drivers to retire instead of see their hours and pay reduced.

“The agency used logic that forcing break, rest, or driving periods at a particular time was a one size fits all proposition. Cardian rhythms and all types of fuzzy math were introduced by people that have never experienced being in a truck,” Carman said.

That sentiment was also expressed by Duane Long, chairman of Raleigh, N.C.-based Longistics and the first vice chairman of the American Trucking Associations’.

“Simply put, the July 1 hours-of-service rule changes were unnecessary; the regulations adopted in 2003 were working and the administration offered rhetoric but little data to explain why they needed to be changed,” Long said during a Nov. 21 hearing before the U.S. House Small Business Committee. “Unfortunately, the gap between the administration’s rhetoric and the trucking industry’s operating reality is very wide. These changes are having a very real, and very negative impact on hundreds of thousands of drivers and motor carriers.”

Jeff Lester, executive vice president and chief risk officer of Van Buren-based USA Truck, said the new rule does not consider the practical aspect of forcing all drivers around the country into a similar driving window.

“The 34-hour restart requirement that requires 2 consecutive rest periods between 1 a.m. and 5 a.m. was based on science however does not give the same consideration to the commercial and public impact. To further illustrate this point the change creates increased traffic during peak drive times and could limit a drivers available drive time,” Lester noted in a statement to The City Wire.

USA Truck has about 2,200 trucks and more than 3,000 employees.

FEWER DEATHS
The DOT has rejected the notion that the new rules will force drivers to change schedules or make other adjustments that force travel during busy traffic times.

“The (Federal Motor Carrier Safety Administration) knows of no reason why drivers would stop driving at night to avoid the extra hours that may be needed to meet the 2-night requirement. Most drivers who regularly drive overnight do not work enough hours to need a restart and, therefore are not subject to the 2-night requirement,” according to a Q&A posted Dec. 22, 2011 by the DOT.

DOT officials have pointed to fewer crashes and deaths from previous rules to gather public support for the rules implemented earlier this year. Fatal truck crashes totaled 3,215 in 2009, down from 4,766 in 2006. The number of fatalities from truck crashes fell from 5,027 in 2006 to 3,380 in 2009.

Carman maintains that the new rules will require shifts, just as previous hours-of-service rules created “irrational” changes.

“We have not and are not complaining about the total weekly hours a driver can drive. The deterioration in how a driver may operate and rest within these boundaries though has been irrational and based on dubious reasoning. I have several drivers here that enjoy driving at nighttime when traffic is low. The new rules have not allowed them to operate as they safely have for many years. I would argue that their millions of miles of safe driving has not been an accident. They know better than some bureaucrat when they need to rest,” Carman said.

EFFORT TO DELAY
HR 3413, the TRUE Safety Act filed by U.S. Rep. Richard Hanna, R-N.Y., seeks to delay implementation of the new rules until after a study can be conducted to determine if the soundness of the methodology behind the changes. Hanna claims the new rules will have a negative annual impact of $376 million on the trucking industry.

As of Dec. 3, the proposed legislation had 41 Republican sponsors and four Democratic sponsors. U.S. Reps. Rick Crawford, R-Jonesboro, and Tim Griffin, R-Little Rock, are listed among the sponsors. Claire Burghoff, a spokesman for Rep. Steve Womack, R-Rogers, said he has agreed to be a co-sponsor. Rep. Tom Cotton, R-Dardanelle, is reviewing the bill to consider becoming a sponsor.

Lane Kidd, executive director of the Arkansas Trucking Association, said Hanna’s bill may pass the House, but will not see success in the Democratically-controlled U.S. Senate.

Kidd also acknowledged that it’s a “tough sell” to explain to those not in the industry that a 70-hour work week is not the same as a 70-hour week in most other occupations. However, he said the rules could push some drivers out of the business – as has happened with Carman – and make worse a driver shortage problem now facing the industry.

If the rules are relaxed, it will be from pressure exerted by companies who contract with the trucking industry, Kidd said. Retail and other economic sectors may see shipping costs rise as a result of the new rules.

“The only way that the rule is relaxed is if the shippers of the United States, collectively, see that these new rules are increasing their costs of transportation. And if it becomes a significant increase, then they will apply pressure to see that the (HOS) rules are reduced,” Kidd explained.

As a fifth generation Arkansas family farmer, Fran Free set off to the University of Arkansas to study agriculture so she could learn the latest innovation to keep the farm relevant and profitable.

Two degrees later, “I had a whole agri-tourism business plan worked out. I was going to turn my grandparents home into a bed and breakfast, maybe start a micro brewery, do all sorts of things,” said Free. “Then we found out we were pregnant, and decided to put those plans on hold.”

But Free didn’t exactly take to her bed idly during her pregnancy. Instead, she began researching baby food companies. “No one was using all U.S. products,” she said. “They didn’t have herbs that helped digestion. They weren’t organic. I thought, ‘I can do better than that!’”

So she did.

Oh Baby Foods, the first baby food company in the world to have all its products verified through the Non-GMO Project [Non-genetically modified organisms], celebrated its fourth anniversary in November. From offices on the Fayetteville Square, Free has put her healthy products in stores in 20 states, including the notoriously stringent Whole Foods.

“She’s fearless with venture capitalists and passionate about her product,” said Stephanie McCratic, a business associate and friend.

Free isn’t so sure about “fearless” but she says the best part of her job is meeting customers and talking to parents about their children and food.

“The end goal of the company is to put more healthy food in the mouths of more babies,” Free says.

She explains the decisions to use only U.S.-grown, non-GMO products are about supporting family farms, but also about food safety and sustainability. Between the USDA organic certifications and transportations costs of food from other countries, Free believes food grown locally is the most responsible way to be sure her products are fresh and the quality is unsurpassed.

It’s a commitment she made to herself in 2009 when she first started out. She tested a variety of recipes on her friends and their kids until she narrowed the selection to four products. She hired a food scientist as a consultant. She rented an industrial kitchen and started selling to stores out of an 18-foot refrigerated truck outfitted with a baby seat.

Oh Baby Foods has expanded to six products. Free’s company has grown to the point of working with a large manufacturer and distributor in California, and she’s hired food brokers who are selling to grocery stores to move her products from regional stores to a national presence.

“Originally, we were in cups in the frozen food section of the store,” Free said. “That’s slightly problematic when your customer life is roughly six months, and then they’re done with pureed food. So we were constantly educating a new customer. First, they had to want to buy us, and then they had to find us in the store. Most people aren’t willing to work that hard just to experiment with a different brand. By the time we got them to try it, they were over us.”

So 18 months ago, the company moved to a squeeze pouch technology, making it shelf stable and also increasing the customer life by as much as two years. Suddenly, the difficult-to-manage product that required spoons and cups became a convenience food to toss in a lunch or bag for a snack. It’s now also on the baby food aisle.

Sales soared.

The company is in a new fundraising round. Free has been talking to capital investors and the Arkansas Economic Development Commission about tax credits designed to incentivize entrepreneurship in the state. She anticipates bringing on more staff in the new year.

She’s also keenly aware of how carefully she must thread the needle in the baby food industry. Multi-national companies gobbled three of her main competitors up this year.

“We constantly have to monitor and adjust to be sure we’re filling the right niche,” she says. “But every morning when I get to work, I am gung-ho about the day.”

While the battle of the fiscal year 2014 operating budget is now concluded, it does not mean the city of Fort Smith's finance department can sit back and relax.

The department is looking to next year and beyond in an effort to improve communications with the Board of Directors, which should better prepare them for the FY2015 budgeting process at this time next year, according to Director of Finance Kara Bushkuhl.

"(We) will go to the Board early in March to give them an overview of where we are in 2014. (It will) only (be) for two months, so it won't give us much information."

City Administrator Ray Gosack said presenting information more regularly to the Board could allow members of the Board to indicate early in the year if they would like to make a shift in fiscal policy, such as increasing the amount of funding the city places in reserve, set at 7.5% of the total budget, and using those reserve funds to balance the next year's budget.

"(We'll) have discussions with the Board of Directors about a fund balance policy and our past practice of using prior year's balances to help balance the next year's budget and see if the Board wants to change that philosophy or modify it."

As for more cost cutting measures to be taken during the upcoming year, Gosack does not see a real way to reduce expenditures enough to not rely on the end of year balance to pad the next year's budget, explaining that "we've been cutting for five years."

And even though he is fairly certain the city has cut to the bone, he has not stopped looking for ways to save money, a move that will continue next year as the city begins work on the 2015 general fund budget.

"We're always looking for better ways of providing services, more economical and efficient ways of providing services. And we're also looking to identify services that perhaps citizens don't value any more," Gosack said. "I'm sure there's services we provide that we've been doing for years and years that a Board member or a citizen 25 years ago asked for it and we keep doing it. And so I've challenged employees at all levels in the organization to help us identify those things that we may be doing that citizens don't really expect or value."

A potential issue already on the city's mind is the development of a 70-store shopping center in Barling, near the intersection of Arkansas Highways 22, 59 and the future Interstate 49, Bushkuhl said. Such a store could reduce sales tax collections for Fort Smith.

"We know that's out there and it's a possibility. But because we have no estimates or anything, we don't know if there's going to be some Fort Smith stores transferring out there. We don't know what the impact is and until I get this new information from the state on commodities and things - we're supposed to get some better information on sales tax numbers. We haven't gotten one yet. We'll get one in January. But maybe we'll have a little better idea," she said. "And since we don't know what's going out there, it's kind of hard to estimate that. But we do have it in the back of our minds. We know it's there and it's a possibility that some monies could be transferred and we could only get the county sales tax and not all of the sales tax."

Gosack elaborated, sayingthe city would still receive county-wide sales tax collected at the shopping center which would benefit public safety and the general fund. But other city services could be impacted by the new development and the loss of revenues in Fort Smith.

"It can impact those sales taxes and it would impact the street sales tax, as well, because that is a city-wide sales tax. But the main sales tax in our general fund is a county-wide sales tax, so as long as the retail activity is occurring in Sebastian County, we benefit from it regardless of where in the county the retail activity occurs."

One thing the city is trying to avoid when it comes to stabilizing the city's budget situation is any increase in taxes, according to Gosack.

"You know, increasing revenues is one option. The most desirable way to increase revenues is through economic growth and letting the economy grow our revenues. But so far, the economy has been very sluggish and slow to recover, so we've not seen the normal economic growth we would expect. You know, I think the Board's going to be very careful about increasing tax rates or fees to generate additional revenue because of the impact that can have on the economy."

Even if the regional economy shows a slight uptick, Gosack said the city would likely be in the same shape when the hard work begins on the FY2015 budget in mid-2014.

"Yeah, I mean it's hard to predict revenues two years from now. But the growth so far has been slow, so there's no reason to think 2015 is all the sudden going to become a bumper crop."

Bushkuhl said as tough as this year's budgeting process was with so much back and fourth from the Board, the process resulted in a greater understanding of the budgeting process that will serve the public well as preparations for FY2015 get underway.

"I understand that it's not an easy process and for people who are used to what I say normal accounting versus governmental accounting, I think that it's a little difficult for them to get a grasp on it. But I think they're just doing their job and they just want to make certain that we have enough money to cover our core services and anything above that, they want to be very careful with how much, how far out that we go."

They say necessity is the mother of invention and that’s certainly the case for ARROWSigns founder Rhonda Pieracci. The southern California entrepreneur has invested more than two years into developing a cardboard sign business with the help of Wal-Mart Stores Inc.

“I was helping a friend with a garage sale back in 2010 and when I left her place around 7:30 p.m. I decided to run by the store and pick up some signage. I went to Wal-Mart looking for temporary directional signage, that was already printed ‘Yard Sale,’ but it didn’t exist,” Pieracci said.

She visited Office Max for the products and the found of the cost of signs she needed would be $54. That revelation sent her back to Wal-Mart where she purchased poster board and markers.

“I spent more than two hours that night on the floor in my living room making the directions signs for the nine turns to her home. All this time I was thinking this is ridiculous, there should be a product on the shelf for times like this, Pieracci said.

BIG IDEA
At the time Pieracci owned two other businesses but said she became infatuated with designing this product.

“I spent hours after work each night on the computer trying to figure out how we could make this product that I envisioned, tearaway directional signs out of sturdy, colorful poster board that could be printed at home with a typical inkjet printer and some that were preprinted for yard sales,” she said.

After a year of research, she came up with a prototype, applied for patent and then found a local manufacturer in Southern California who agreed to make the signs at $2.99 retail price point that would be attractive for discounters like Wal-Mart.

PITCHING WAL-MART
Pieracci heard about Wal-Mart’s Local Supplier Program and its initiatives to empower women-owned businesses and to support U.S. manufacturing. Her idea fit all three.

“I got an appointment with the local Wal-Mart Store manager to pitch my product as part of Wal-Mart’s Local Supplier Program. I took all of the products he had in the store to make signs, my signs and the cost of signs at Office Max and told him my story. He liked the product and told me that I need to get five other local stores managers on board, which I did,” Pieracci said.

Wal-Mart’s Local Supplier Program is just one way small product suppliers like ARROWSigns can tiptoe into retail world. The program works like Pieracci described it. The first pitch is to a local store manager, who will then refer the product up the chain to a district and regional manager. But it is a Wal-Mart buyer who ultimately approves or disapproves the product, according to Wal-Mart’s website.

At any given time Wal-Mart is working with 16,000 to 20,000 suppliers, according to Duncan Mac Naughton, chief merchandising officer at Walmart U.S. That includes around 3,000 with the retailer’s Supplier Diversity Program and another 5,000 through the Local Supplier Program.

Pieracci said she also got the paperwork rolling for the supplier diversity program two years ago because she owns her business.

“I am now a certified member of Women’s Business Enterprise National Council and we hope that at some point we can work with Wal-Mart to expand this U.S. business beyond the two ARROWSigns products,” she said.

But the big excitement for Pieracci now is how well her signs have been selling throughout California and the response she has received from Wal-Mart’s regional managers. She said Wal-Mart is using the directional signs with some of its store remodeling projects, which is the ultimate endorsement.

“We started with 55 stores in Southern California about six months ago and got that increased to 142 stores across the entire state. I have to pinch myself to believe this is really happening. We are awaiting a national rollout at this time,” Pieracci said, adding that she had an early December meeting planned with a Wal-Mart buyer.

SUPPLIER LEARNINGS
“My company would not be where it is today, without the help of Wal-Mart. People can’t believe that I took my idea to Wal-Mart before I had a single sale. But I did, only after I had done the legwork, product prototype, patent, secured U.S. manufacturing and built in margins that Wal-Mart liked,” Pieracci said.

Just like in any business, she said there have been plenty of lessons to learn.

“People think you can just sell your stuff to Wal-Mart and that’s it, but that’s not it. At the end of the day it’s your business and you have to be in those stores making sure the product is properly displayed, restocked and priced correctly,” she said.

It wasn’t long after ARROWSigns got in the first 55 stores, that Pieracci noticed consumers were tearing the perforated boards. The signs are sold in groups of four, but shoppers were tearing off two and putting the others back in the bin.

“We had to stop that, so we quickly figured out a way to put sticky tabs on each side to hold the two sheets of poster board together so shoppers couldn’t rip them apart. We had 55 stores across Southern California with hundreds of signs to fix — it was me, my son and my husband. I didn’t think we would ever get finished,” she said.

That was a flaw in the packaging that no one detected until it was out on the floor.

“We were so thankful to just be in 55 stores then. Wal-Mart understands how difficult it can be for some startup companies to take on more stores and they are cautious about giving you more than you can handle,” Pieracci said.

She said ARROWSigns had to make a substantial inventory investment before the sales  starting coming in, but any new business requires a certain amount of capital outlay.

“Wal-Mart has been a great partner for ARROWSigns, I think back to how far we have come in two years and feel like I have been competing in the Olympics and gotten a place on the podium,” Pieracci said.

Former Fort Smith Parks Commission Chairman Bobby Aldridge resigned from his volunteer position in September in order to pursue contract work with the city of Fort Smith and it has not taken long for Aldridge to land a $156,000 contract with the very city department for which he served.

The contract was awarded without a bidding process and allows Aldridge's company, Frontier Engineering, to design the River West Trail along the Arkansas River near downtown. The project is funded partially by a $1 million Walton Family Foundation grant, with the city of Fort Smith's eighth-cent sales tax funding an additional $1 million.

Asked by The City Wire weather Aldridge's past position with the Parks Commission factored into a decision to use Frontier as the engineering consultant on the River West Trail project, Parks and Recreation Director Mike Alsup said Aldridge's background and familiarity with the Parks and Recreation Department was a benefit.

"Bobby was very familiar with the Trails and Greenways Master Plan and he's very much aware of the value and the benefits that trails have not only for our health and fitness, but also for our economic development and the future of the city. So those did weigh into ... did have a contribution to the selection."

ABOVE BOARD
Alsup said he did not believe there was any appearance of favoritism with Frontier's selection, saying that previous members of the Parks Commission were likely recipients of contracts during their service to the city, which Aldridge has avoided since his resignation was before coming under consideration for the engineering contract for River West Trail.

"There was architects and engineers before that have been on the Park Commission and they may have held …some contracts while they were on the commission. And that may have preceded me, too. But I don't have a good answer for you on that."

Even though Alsup said consideration was given to Frontier due to Aldridge's knowledge of the parks system, Aldridge disputed there was any difference in how his company was treated versus any other.

"No. I don't agree with that. It's the same process whether I was on the Parks Commission or not. The city has a statement of qualifications for all wanting to do work with the city. They identify firms that can do the work and narrow to a short list and interview those firms they believe are most qualified to do the work. That's essentially what happened on this project and happens on all projects."

He also said competitive bidding of projects, which typically grants projects to the lowest bidder, is forbidden under state law for engineering projects based on safety issues, adding that the selection of his company was above board.

"If you put it out on a bid, it goes to the lowest bidder regardless of qualifications. You don't want the lowest bidder designing if they are not qualified. (They use) qualification-based selection. That's what they did and in my opinion, I was the most qualified for the work and that's why the city chose me, not based on my relationships with the city."

In response to a request for any notes or records regarding the selection process, which included Alsup, Administrative Secretary Aaron Lee and Recreation Supervisor Jennifer Oberste, Alsup said, "I did not remember keeping any notes and have not found any."

‘AWFUL HIGH’
But it was not Aldridge's past with the Parks Commission that got the attention of City Director George Catsavis at Tuesday's (Dec. 3) Fort Smith Board of Directors meeting, it was the cost of the contract.

Catsavis initially raised questions about whether the engineering contract was competitively bid, saying the charge "seemed awful high." Alsup said the contract was not bid, but instead fell under an alternate method for establishing the city's contracts.

"No. The process for engineering is we get three or more qualified firms, we go through the statement of qualifications and selected three or four and interview. Out of those, we select who we feel is the most qualified to do the project."

Alsup told The City Wire that in addition to Frontier, two other firms were interviewed for the engineering contract – Mickle Wagner Coleman and Jacobs Engineering.

Jacobs has been involved with Parks and Recreation Department projects, he said, including the construction of the two new ballfields the city is constructing for $1.2 million at Ben Geren Regional Park. The engineering for the project, according to Alsup, cost taxpayers $107,000.

The contract for the engineering of the River West Trail accounts for about 7.8% of the total cost of the project, Alsup said, which was less than the 8.9% of the budget set aside for the ballfields that went to Jacobs Engineering.

A challenge that has brought extra cost is lighting the trail along the river, something other city trails have not had to previously include in engineering and designs, Alsup said. But he added once the trail is designed and new additions are made, economies of scale could kick in to reduce costs, though it is not a guarantee.

"Seven or 8% is typical for this size project. You may get, because of economy of scale, a lower percentage on professional services if it's a really big job – if it's a $20 million project instead of a $2 million project. If there's a lot of repetition in what you're doing, say if you're doing a $20 million road expansion, there may be some repetition where you're sort of just building the same road continuously."

COMPLEX PROJECT
He also said construction of the River West Trail would be very similar to the construction of a road, something echoed by Frontier Engineering President Bobby Aldridge.

"Due to the complexity of this project, it will also have vehicular traffic for maintenance (of the trail) and so forth," he said, adding that a large amount of geological testing much be "done on the front end of it and that increases the cost."

Adding to the fee is the city's desire to have an increased level of observation by his company throughout the project to ensure quality work. An electrical engineer has also been brought in to design the underground electrical distribution system, Aldridge said, adding even more cost.

"I arrived at my fee based on what it will cost to design it. That fee just happened to fall out at 7.8%. Considering that construction observation is included, I think that fee is actually lower than state parks of typical nature or the river walk trails built in Little Rock."

Alsup said construction of the River West Trail is expected to begin in early Summer 2014 with completion by Summer 2015.

A special joint meeting of the Fort Smith Board of Directors and the Sebastian County Quorum Court will be held Monday (Dec. 9) at 6 p.m. at the Elm Grove Community Center to address funding issues associated with the Ben Geren Aquatics Center and possibly amend an interlocal agreement between the governments that lays out funding and operating expectations for the project.

It was revealed in November that the aquatics center would cost close to $11 million to construct should all amenities desired by the public and both governments be included. The original budget was $8 million.

The meeting Monday will present a revised aquatics center design that would bring the project to an $8.8 million price tag with fewer amenities. Requesting additional funds would require additional monies from both governments therefore necessitating the amended interlocal agreement, according to Fort Smith Deputy City Administrator Jeff Dingman.

"The whole thing is anticipated to be equally divided, including the cost of in-kind services," he said, adding that the amended agreement would bring the city's total additional funding  to $457,000 while the county would contribute $342,500 extra to the project. The amount of in-kind services (labor, materials, etc.) provided by the city would equal $335,000 while the county would contribute $450,000 in in-kind contributions.

Dingman also said the public wanted the additional amenities, elected officials have not provided a way to fund such a project.

"We (the city staff) liked the $11 million design better because it incorporated everything we want, but without the elected officials giving us instruction to do something different, we have to do (what we can afford)," he said, adding again that while the city staff wants the larger project, "we don't feel like we can advance a design that is that far out of our budget."

Simply asking both governments to approve additional funds is challenging, as the Quorum Court has previously turned down a request from the city for more funding.

"We are taking a little bit of a chance asking for $8.8 million to get a few more amenities in this thing. If they want to do something different, we'll do something different. But we feel more comfortable with the $8.8 million."

Dingman said he felt this request could result in a positive vote from the Quorum Court and the Board of Directors (the Board previously approved the attempt early this year to get $800,000 in additional funding for the project). The previous request for the additional funding would have had the county loaning the city it's half of the extra funds with payback over a three-year period.

"It's my understanding that that was one of the reasons the county didn't like the proposal and didn't approve that. We have cash flow now that we didn't have at that point if we were going to start the project earlier. Cash flow is not an issue for us now like it was eight months ago. …The additional funds would come from the eighth-cent sales tax dedicated to park capital improvements. With the project schedule as it is at this point, we don't think there will be any problems with cash flowing that amount from the sales tax."

The Board and Court will be presented with a newly-revised concept designed jointly by Larkin Aquatics and the project's construction manager, Flintco. The revised concept will eliminate the diving well and reduce the length of the lazy river, according to a PowerPoint presentation included in materials prepared for elected officials to be present at the meeting.

"There's some pretty significant changes," Dingman said. "The most significant changes they'll see is we originally had three different bodies of water. The scaled down has only two separate bodies of water. Also, it eliminates a separate concession stand building and incorporates it into the bathhouse."

Additionally, structures in the kiddie pool will be smaller, while the aquatic center's four slides will now empty into the lazy river instead of a separate pool.

"It certainly doesn't include all the features we want, but it is a lot closer to the budget that we've got," Dingman said. "We can't have it both ways. If we want all the features, we have to have more budget. But look, we don't like it either. We'd rather have the larger facility. But we've had more time to look at the realities of what we can afford."

And even though the aquatics center design will now be smaller in scale, Dingman said "we've always had the idea that we could design this to expand in the future."

Sebastian County Judge David Hudson said he believes the meeting will help solidify plans that must stay on schedule in order for a guaranteed opening date for summer 2015.

"This will bring clarity and focus to the project by specifically presenting an action plan and a time frame so we can move forward and continue to meet the projected opening date of Memorial (Day) 2015. That's the real focus of the meeting," he said. "Any other ideas or funding concepts that come out of this discussion, I guess that's subject to what develops in the meeting. But we have a specific course of action that's being laid out."

The meeting will take place Monday at 6 p.m. at the Elm Grove Community Center on Greenwood Road in Fort Smith.

A Fort Smith budget battle, technology tussle, fuzzy trucking math and more notes on a U.S. manufacturing renaissance are part of the Nov. 8 Friday Wire for the Fort Smith region.

NOTES & ANALYSIS
• Construction impact
Residential and commercial construction in the Fort Smith area continues to be a bright spot – one of the few – in the regional economy.

Building permits in Fort Smith, Greenwood and Van Buren were a combined $5.944 million for the month of November, a drop of 64.82% from the same month last year when permits totaled $16.899 across the three cities. However, the three cities have continued an increase of building permit values for the year as a whole, posting a 40.12% increase in value from January through November 2013 ($195.226 million) compared to the same period last year ($139.329 million).

The city of Fort Smith posted the largest 11 month total, bringing in $166.834 million, while Van Buren had permits totaling $15.411 million and Greenwood posted only $7.576 million in permits so far this year.

• Watching consumer spending strength
Consumer spending in Arkansas bears watching. The collections, considered a barometer of consumer confidence, ended fiscal year 2013 on a down note. Collections in the segment for the fiscal year totaled $2.124 billion, up just 1.1% compared to the 2012 period, and 1.4% below forecast.

Sales and use tax collections during November totaled $175.2 million, up 1.2% from last year and 0.5% below the forecast. October collections of the tax were up just 0.3%.
Northwest Arkansas is not necessarily immune from a possible slowdown in consumer spending.  In Benton County, sales tax collections totaled $2.829 million in the November report, down 2% from a year ago. Washington County reported November sales tax revenue of $2.789 million, up 2.12% from a year ago.

ICYMI
Following are a few stories posted this week on The City Wire that we hope you didn’t miss. But in case you missed it ...
• Technology tussle
The fight between Sebastian County Judge David Hudson and County Treasurer Judith Miller over financial software to be used in her office continues following a vote of the Quorum Court on Nov. 26 that would force Miller to allocate $115,000 to the county's information technology department to maintain software she said is not used by her office.

• Better connections
The ambitious effort to expand broadband capability in Arkansas public schools moved forward as two working groups accepted an engineering report and recommended the state proceed with a potential public-private partnership. Administration and industry officials have been working on a plan to boost the state’s public schools to a nationally recommended broadband capability of 100 Mbps per 1,000 students and staff.

• Revenue predictions
Economic uncertainty combined with concerns about income growth have resulted in a lower Arkansas tax revenue estimate for fiscal year 2014 and a small projected increase for fiscal year 2015.

NUMBERS ON THE WIRE
$47.919 million: Estimated expenses in the fiscal year 2014 Fort Smith budget recently approved by the Fort Smith Board of Directors. Estimated revenue in the budget is $45.716 million.

71,171: Number of enplanements at the Fort Smith Regional Airport during the first 10 months of 2013, down 2.5% compared to the same period in 2012. The decline is an improvement compared to the 7.4% year-over-year decline at the end of the first quarter.

$376 million: Estimated negative annual impact to the trucking industry by the federal implementation of stricter driver work rules. However, federal officials say the overall economic benefit of safer conditions is $280 million annually.

$91,000: Average price of foreclosed home sales in Sebastian County during October, up from $85,000 in October 2012.

OUTSIDE THE WIRE
• Manufacturing renaissance?
U.S. manufacturers are enjoying a 21st-century renaissance that is riveting stock investors to industrial companies, and many analysts predict this “Made in the U.S.A.” theme could be a winner in 2014.

• Razorback renaissance?
Bret Bielema's first season as the head coach at Arkansas was less than successful as the Razorbacks went winless in the Southeastern Conference for the first time in school history (first winless conference season since 1942 in the Southwest), 3-9 overall and ended the year on a nine-game losing streak.

WORD ON THE WIRE
"I just want to go on record as being opposed to this budget. I think that we haven't gone far enough to cut our expenses or increase our revenues – a $2.2 million difference between revenues and expenses."
– Fort Smith Director Keith Lau

“The agency used logic that forcing break, rest, or driving periods at a particular time was a one size fits all proposition. Cardian rhythms and all types of fuzzy math were introduced by people that have never experienced being in a truck.”
– Greg Carman, president of Fort Smith-based Carman Inc. and a board member of the Arkansas Trucking Association, about federal Department of Transportation rules that regulate hours of service for truck drivers

"(We are) putting a metal detector at the front door here. It's just the way it is today and we don't want to pull someone off patrol."
– Van Buren Mayor Bob Freeman about budgeting money for a new police officer to provide security at the city offices

Small year-over-year gains in the Fort Smith metro workforce and the number of employed saw the October metro jobless rate fall to 7.3% compared to 7.5% in October 2012. However, the October rate increased from 7.2% in September.

October did see record employment levels in the region’s Trade, Transportation and Utilities sector and the Education and Health Services sector.

Metro employment of 133,430 was relatively flat compared to the 133,231 in October 2012 and the 133,460 in September 2013, according to figures from the U.S. Bureau of Labor Statistics.

October was the 58th consecutive month the Fort Smith metro jobless rate has been at or above 7%.

Six of the eight metro areas in or connected to Arkansas had jobless rate increases in October compared to October 2012, and five areas (Fort Smith, Hot Springs, Little Rock/North Little Rock, Memphis and Pine Bluff) had jobless rate increases compared to September.

During October, the lowest metro jobless rate in the state was in Northwest Arkansas with 5.1% and the highest rate was 9.6% in the Pine Bluff area.

FORT SMITH METRO NUMBERS
The size of the Fort Smith regional workforce during October was 133,430, down from the 133,460 during September, and above the 133,231 during October 2012. The labor force reached a revised high of 140,253 in September 2007. The average annual monthly labor size was 133,028 during 2012, 133,275 during 2011, 135,590 during 2010, 134,751 and during 2009.

Unemployed persons in the region totaled an estimated 9,705 during October, up from the 9,705 during September, and below the 10,0032 during October 2012.

The Fort Smith area manufacturing sector employed an estimated 18,500 in October, unchanged compared to September, and below the 18,900 during October 2012. Employment in the sector is down almost 35% from a decade ago when October 2003 manufacturing employment in the metro area stood at 28,700. Also, the annual average monthly employment in manufacturing has fallen from 28,900 in 2005 to 19,200 in 2012 – the first year the average has dropped below 20,000 since surpassing that level.

Jobs in the Trade, Transportation and Utilities sector — the region’s largest job sector —  totaled 26,100 in October, up compared to 25,600 in September, and above the 24,800 during October 2012. The October estimate is a new high for employment in the sector.

Employment in the region’s tourism industry was 9,400 during October, unchanged compared to September and above the 9,000 in October 2012. The sector reached an employment high of 9,800 in August 2008.

In Education & Health Services, employment was 18,200 during October, up from 18,000 in September and above the 17,200 during October 2012. The October employment level is a record for sector employment in the Fort Smith area. Annual average monthly employment in the sector has steadily grown since 2005 when it reached 14,000. In 2012 the average was 17,100.

In the Government sector, employment was 19,700 during October, up from 19,300 in September and above the 19,600 in October 2012.

NATIONAL NUMBERS
Unemployment rates were lower in October than a year earlier in 280 of the 372 metropolitan areas, higher in 79 areas, and unchanged in 13 areas, noted the broad BLS report.

The U.S. unemployment rate in October was 7.3%, down from 7.9% from a year earlier. Arkansas’ jobless rate was 7.5% in October, up from 7.4% in September and up from 7.2% in October 2012.

Oklahoma’s jobless rate during October was 5.5%, up from 5.4% in September, and up from 5.2% in October 2012. The Missouri jobless rate during October was 6.5%, down from 6.9% in September and down from 6.7% in October 2012.

ARKANSAS METRO AREAS
Fayetteville-Springdale-Rogers
Oct. 2013: 5.1%
Sept. 2013: 5.2%
Oct. 2012: 5%

Fort Smith
Oct. 2013: 7.3%
Sept. 2013: 7.2%
Oct. 2012: 7.5%

Hot Springs
Oct. 2013: 7.8%
Sept. 2013: 7.6%
Oct. 2012: 6.9%

Jonesboro
Oct. 2013: 6.4%
Sept. 2013: 6.4%
Oct. 2012: 6.4%

Little Rock-North Little Rock-Conway
Oct. 2013: 6.5%
Sept. 2013: 6.4%
Oct. 2012: 5.9%

Memphis-West Memphis
Oct. 2013: 9.5%
Sept. 2013: 9.4%
Oct. 2012: 8.6%

Pine Bluff
Oct. 2013: 9.6%
Sept. 2013: 9.4%
Oct. 2012: 8.5%

Texarkana
Oct. 2013: 7%
Sept. 2013: 7.3%
Oct. 2012: 6.2%

FORT SMITH METRO AREA HISTORY
Past annual average unemployment rates
2012: 8.2%
2009: 7.9%
2008: 4.8%
2007: 5.3%
2006: 4.9%
2005: 4.5%
2004: 5.2%
2003: 5.5%
2002: 5%
2001: 4.2%
2000: 3.7%

The Sebastian County Quorum Court voted Monday night (Dec. 9) to amend an interlocal agreement with the city of Fort Smith that would see both governments adding about $800,000 combined in funding for a planned aquatics parks. But even though the Court approved the additional funding, there remains very little that is certain about the project.

The Court was presented with revised conceptual plans at a joint meeting with the Fort Smith Board of Directors on Monday after it was revealed Nov. 12 that the project presented to the public through conceptual drawings would cost $11 million to build, which would be $3 million more than the original estimate of $8 million.

At Monday's meeting, Andy Smith of Larkin Aquatics presented the Board with a design that would make a number of changes to the aquatics center, which would reduce the cost of the project to $8.8 million. The changes included:
• Removal of the diving well, therefore reducing the number of swimming pools from three to two;
• Reducing the length of the lazy river;
• Combining the concessions area with the bathhouse under one roof instead of two separate buildings; and
• Converting one water slide from tube-accessible to simply a body slide.

The vote to amend the interlocal agreement and provide additional funding for the project showed a split Quorum Court, with Justice of the Peace Danny Aldridge casting the deciding vote (seven votes for, six votes again) to approve additional funding. But Aldridge's vote for the project did not come without his publicly ridiculing Smith for multiple changes in both cost and capacity estimates since February.

"Tonight, still, you're changing the numbers and the interpretations. You are not giving us correct and factual information on a timely basis for us to sell the voters. We are responsible to the voters and their money. And we are not getting good information and I resent it."

Aldridge added that he did not want a park missing the amenities the public made clear in February that it wanted, saying that he wanted a water park “we'll be proud of."

Justice of the Peace Tony Crockett also spoke up, adding that "people were adamant in wanting (the bigger design)."

Fort Smith Director Pam Weber said students from Ramsey Junior High School who spoke in favor of a dive well and other amenities at the February joint meeting of the governments would be disappointed should the final design be missing those features.

"I heard loud and clear from those students. When they came, there were a lot of them that spoke. What they asked for is completely gone and what we promised them is completely gone. This is basically a water park that is for toddlers and adults and we've left out that middle group. And we really need that middle group to have entertainment in this area. So I'm very concerned about that because I heard loud and clear that they wanted that diving area and it's gone."

Aldridge said while he was the deciding Quorum Court vote on amending the interlocal agreement to provide an additional $800,000 for the project, he would still like to see the city and county find some way to fund the project with all the desired amenities, even if it means collectively spending $11 million to see it come to pass.

"We've got to keep taking baby steps forward to get us what we want for the people," he said, adding that he would like for both bodies to explore funding methods, such as the county issuing bonds against future countywide sales tax revenues.

As for the city of Fort Smith, City Parks Director Mike Alsup said not only is the city able to fund its additional portion of the $800,000 should the Board of Directors approve the amended interlocal agreement at its regular Dec. 17 meeting, but the Parks Commission may decide to use some of the city's eighth-cent sales tax for parks capital improvements for the aquatics center.

"We would have to delay some other projects in order to do that," he said.

The vote of the Quorum Court was seven in favor and six opposed to the additional funding for the aquatics center, which now requires two additional readings of the ordinance with additional votes. Should the city and county not be able to secure the additional funding to build an $11 million facility, Aldridge said he is not above changing his vote by third reading in January 2014 and further introducing a resolution to dissolve the interlocal agreement with the city, which would essentially kill the entire project.

"If (the additional funding does not come through), I'll pull the plug on the project. The city can do what they want to do with their part (of the funding already set aside for a water park)."

City Administrator Ray Gosack said any push to dissolve the interlocal agreement would require approval from not only the Quorum Court, but also from the Board of Directors. The idea of both governments going their separate ways caught Gosack off guard following the vote by the Quorum Court to approve the additional funds.

"Yeah, it does because the county approached the city about this project two and a half years ago. So it does catch me somewhat off guard that the county might consider abandoning the project. The feedback I've received from the community is they want this aquatic center and they want it sooner rather than later."

The Fort Smith Parks Commission will meet at noon Wednesday at the Creekmore Community Center to discuss capital improvements funding for the Parks Department. The Board of Directors will meet in regular session Dec. 17 to vote on the amended interlocal agreement.

Two weeks after Wal-Mart Stores Inc. chose Doug McMillon to be the next CEO beginning Feb. 1, the retail giant has tagged David Cheesewright as president and CEO of the Walmart 
International, the position now held by McMillon.

Cheesewright was the name most mentioned to succeed McMillon given his global resume that spans 25 years of international retail management expertise.
 The 51-year-old Cheesewright oversaw the acquisition of Massmart and managing the retailer’s aggressive growth strategies in Canada and the United Kingdom since 2011.


"David will lead the division at an exciting time," said McMillon. "We have strengthened our business and gained market share in the majority of our international markets, and he had a key role in that success.”


Wal-Mart's international division represents a major growth segment for the retailer. It has more than 6,200 retail units and generates nearly 30% of its revenue. During the third quarter, Walmart International's net sales grew 4.1% on a constant currency basis. 

This outstripped the U.S. division's net sales growth, which rose 2.4% during the period.

In recent years, much of the retailer’s revenue growth has come from its international division as same-store sales in the U.S. segment have fallen into a flat to 2% range which analysts expects will continue.


McMillon noted in the release that Cheesewright’s wealth of experience and proven track record of innovation and governance were key to this promotion.
 After joining the company in 1999 and working at Asda, its U.K. operation, Cheesewright rose through the ranks, serving as the chief operating officer for Walmart Canada and Asda. Before that, he was in a leadership role with Mars Confectionery.

“With his deep knowledge of the company, our customers, and our purpose, he is the ideal person to steer our next chapter of continued, long-term growth,” McMillon said.

He helped develop and expand Asda's online grocery delivery program and serves on the board of Walmart's China e-commerce business, Yihaodian. 


"I'm honored to be named to lead our international business at a time when our customers around the world need us more than ever," said Cheesewright.

"Through strong capital discipline, we will continue to invest in new stores and e-commerce growth, as well as productivity improvements that drive profitable growth and returns."

Wal-Mart said it will name a replacement for Cheesewright in the next few weeks.

A project announced at Tuesday's (Dec. 10) Board of Directors meeting will not only improve the appearance of one of the city's busiest intersections, but it could lead to a new city commission tasked with making Fort Smith a city of beauty.

According to Nancy Smreker, president of Beautify Fort Smith, the group has raised about $90,000 in funding to transform the interchange of Rogers Avenue and Interstate 540 into an area landscaped with more than 4,000 shrubs and more than 100 trees.

Funding for the project comes from various groups, including the city of Fort Smith, First National Bank, Arvest Bank, the Family Enterprise Institute at the University of Arkansas at Fort Smith, Westphal Companies, Steve Forsgren and state turn back funds, she said. Landscape design and installation would be provided by Frank Sharum Landscape Design of Fort Smith.

“(Frank Sharum) has agreed to design this landscape…plant it at less than his cost,” she said. “He's planting 4,400 shrubs and plants, 119 trees, he's installing the sprinkler system, laying Bermuda sod and putting mulch around all of this. I want to say it could not happen without Frank Sharum because he has the eye for the design, but he is also willing to donate above and beyond what anybody would ask him to do.”

While Beautify Fort Smith made news Tuesday with their announced plans for the Rogers Avenue and I-540 interchange, the group has already begun a project on private property along Phoenix Avenue to enhance the street's appearance and is working toward becoming a city commission.

The goal of the commission will be not only beautification but also awareness, according to Director of Sanitation Baridi Nkokheli, whose agency will work with the commission to accomplish its goals and mission.

"The purpose and goal of the (commission), as we see it, will be to create public awareness by involving local citizens in beautification efforts, neighborhood cleanups, litter reduction, and solid waste diversion," he wrote in a memo to the Board. "The (commission) will act as the liaison for the City of Fort Smith with Keep American Beautiful (KAB) and Keep Arkansas Beautiful."

Furthermore, the commission will research and develop strategies for keeping the city's appearance up to standard, targeting areas that fall below set standards with beautification efforts such as littler removal, landscaping and the planting of flowers and trees, Nkokheli said.

"The (commission) will provide the resources and support required to assume the lead in coordinating all interested parties concerned about beautification, litter reduction, and recycling to bring about a concerted effort of all interested parties doing their part to effect real change."

While the commission will receive limited funding from the city, it will also be able to solicit sponsorships to assist in beautification efforts, Nkokheli wrote.

"Sponsors could donate goos such as garbage bags, gloves, and equipment to help with these projects," he said. "The costs associated with these programs would include advertising and producing brochures and/or flyers for promotion."

Additionally, the city's Fiscal Year 2014 budget includes funding for a part-time beautification and recycling coordinator "to administer the work of the committee and serve as a liaison between the City and the volunteer committee," Nkokheli said.

Smreker said all of the work her group plans to do once it is officially a commission of the city, which should happen sometime during mid-2014, would not alter the groups goal – beautifying the city of Fort Smith.

"We feel like the beautification of our city is an economic investment and we really feel like this will draw people to want to live here, to buy into business here, or maybe bring other businesses (from outside Fort Smith to the city) because we want to make the city of Fort Smith a very appealing place to live. Part of that has to do with the beautification."

In other business, the Board met in a special meeting to approve a resolution authorizing City Administrator Ray Gosack to accept an offer made by property owner Steve Beam of $147,500 for property the city is acquiring in connection to the Mill Creek Pump Station and Equalization Tank Project. The Board previously voted down a resolution that would have acquired Beam's property through eminent domain for a rate of $86,000.

Jim Dunn said Tuesday (Dec. 10) that the U.S. Marshals Museum leadership and staff have a lot to do in the next few months as they work to meet a Sept. 24 groundbreaking. The focus of that work will be on securing more than $25 million in donations for a museum expected to cost more than $50 million.

Dunn, president and CEO of the U.S. Marshals Museum, said part of that activity includes boosting national exposure of the museum effort and working with the U.S. Mint on a Marshals Service commemorative coin.

“We’ve got a lot to accomplish in the next six to nine months ... so stay tuned,” Dunn said during Tuesday’s meeting of the Marshals Museum Board of Directors.

Groundbreaking for the U.S. Marshals Museum, which will include 20,000 square feet of exhibition space and will be located on the riverfront in downtown Fort Smith, is set for Sept. 24, 2014, to coincide with the 225th anniversary of the creation of the service in 1789. The U.S. Marshals Service is the oldest American federal law enforcement agency and was established by President George Washington.

In January 2007, the U.S. Marshals Service selected Fort Smith as the site for the national museum. The cost to build the museum — including exhibit work — is estimated at around $53 million. Although the announcement was made in 2007, formal fundraising activities did not begin until the latter part of 2009.

A museum cornerstone ceremony was held Nov. 9, at which high-profile attendees included U.S. Marshals Service Director Stacie Hylton, the first female director of the service; Bill John Baker, principal chief of the Cherokee Nation; former U.S. Attorney General Edwin Meese; and Howard Safir, former associate director of the U.S. Marshals Service and the former commissioner of the New York Police Department.

Dunn said in mid-August that the museum effort needs between $10 million and $15 million more to reach the “threshold” of between $30 million and $35 million needed to break ground and begin construction. Dunn is also banking on new market tax credits for partial funding of the museum, which he said should bring in nearly $10 million.

Financials from the museum show $5.26 million in cash, cash equivalents and pledges. Riverfront land for the museum site, donated by the Robbie Westphal family, is valued at $1.868 million.

Between $4 million and $5 million could come from sales of a U.S. Marshals Service commemorative coin. The coin is scheduled to be minted in 2014 to coincide with the 225th anniversary of the establishment of the Marshals Service. Money from the coin that go to the museum are restricted to fund “the preservation, maintenance, and display of artifacts and documents” at the Marshals Museum. Revenue from coin sales will also go to the Federal Law Enforcement Officers Association, the National Law Enforcement Museum, and the National Center for Missing and Exploited Children.

Dunn said Tuesday that about 98% of all coin sales happen through marketing and efforts of the U.S. Mint. Generating the most revenue from coin sales will require the Marshals Museum aggressively pursuing the remaining 2%. He said recent meetings with U.S. Mint officials have been positive.

“The Mint stands ready to cooperate with us by any means possible,” Dunn said, adding that Jessica Hayes, vice president of museum operations, will work with the Mint on coin sales.

OTHER NEWS
• The museum has secured the rifle used by German-born George Maledon who became the hangman for Judge Isaac Parker’s federal court. Dunn called the 1873 Winchester rifle a “prize artifact” for the museum, and thanked Board Member and Fort Smith businessman Rick Griffin for his help in securing the rifle.

• Former U.S. Sen. Blanche Lincoln, D-Ark., has been appointed to the National Leadership Council for the Marshals Museum fundraising campaign.

• Museum finances received a “clean” audit report from accountants at Lawrence, Schluterman & Schwartz and from Beall Barclay & Co.

• The Museum Board of Directors approved a joint policy that prescribes how funds will be transferred and recorded between the U.S. Marshals Museum and the U.S. Marshals Museum Foundation.

The Sebastian County Quorum Court remains uncertain regarding its funding obligations to Ben Geren Aquatics Center after Monday's (Dec. 9) split vote. Ditto for the Fort Smith Board of Directors.

The Quorum Court voted 7-6 on Monday to amend an interlocal agreement with the city of Fort Smith, which would allocate an additional $800,000 in combined funding from both governments to the Ben Geren Aquatics Center project, bringing the aquatics center budget to a combined $8.8 million. Since the measure did not pass with a super majority of nine votes, it must come up for two additional readings before the Court before it is approved.

All Fort Smith City Directors were asked Tuesday (Dec. 10) if they would vote in favor of the amended interlocal agreement at their upcoming Dec. 17 meeting and why. Their answers are as follows:

• Director George Catsavis: "No, I'm not. It just comes down to money, you know? I originally voted against it and I'm keeping the same position. It just boils down to finances and money, to me."

• Director André Good: "I don't know how I'm going to vote Tuesday. I'm kind of perplexed. I don't know how to address it. I don't know how to vote right now. Whatever the city does…if we move forward, we're going to be taking money from other park projects. Whether it's community projects or capital projects, they're going to be pushed back so we can fund this right. I just don't want to make any rushed movements, any rushed judgments. I'd like to meet with the Parks Commission and see what their thoughts are. But honestly, I really wish we could just start all over. I wish we had more time - I wish we weren't rushed and pressured by time - to go back, start over and honestly probably get another bid or two for building this thing."

• Director Keith Lau: "I'm undecided right now and the reason is I don't feel good about it. And I don't know whether it's better to over promise and under deliver or to not deliver at all or to say the citizens voted for a water park no matter what. So I'm still undecided. I haven't decided."

• Director Mike Lorenz: "I'm for it. The whole thing was started initially by the county. You know, I'm coming in here second hand now and yeah, questions probably should have been asked earlier about how accurate the pricing estimate was they got. But we've got to work with what we've got and I think we can build a very suitable park for that amount and plan for future expansion."

• Director Philip Merry: "I am studying it and here's where I'm at: I want to find a balance in my mind of what is the most right way possible we can do this without wasting money. I'm researching. I'm not sure how I'm going to vote yet because here's the deal - I want to make sure voting for less doesn't end up costing us more. Voting for not enough park, what if that creates not enough interest to cash flow the thing later? The paradox could set in that not doing it right cost more in the end because it won't cash flow. I want to make sure we build something fun and attractive and will cash flow. And so if we have kids there but not the teenagers, eating french fries and watching their little brother or sister, then I'm worried about the cash flow. I'm for the park, I want the park. But I still want answers on how it got from $8 million to $11 million. Not to fuss, but to learn. I don't even know which features are in at what level. It went from $8 million, to $8.8 million, to $9.2 million, to $11 million and now it's back to $9.4 million. So I'm for a water park, I don't understand the mix of the numbers. And I don't want to waste money. So I'm looking for how much will get us the right program without wasting money."

• Director Kevin Settle: "I'm going to vote for changing the interlocal agreement because we've already approved it. That's where I'm at with that…The Board's already approved it, we're just changing the terms of it."

• Director Pam Weber: "I'm not for anything less than what we told the voters we were going to get them. ... I'm going to suggest that we go back and study and see if there's anyway that we can get our plan back to where we had it. I'm very firm that the young people in this community need a seat at the table. And we've all talked about how we need to attract young people here and most importantly, we need to keep the young people that we educate. We want them to feel good about their community, to feel like there's a place here for them. That's why I'm so adamant in pushing to get the original water park design.

"I want to go back and say what do we have to do to get where we promised the voters we were going to be."

Most of the Fort Smith and Northwest Arkansas business leaders who responded to an informal survey from The City Wire are optimistic about overall economic conditions in 2014, but worry that federal regulations and changes in healthcare will curtail the potential for growth.

The survey followed a Bank of America Merrill Lynch report released Tuesday (Dec. 10) finding that chief financial officers around the country are more optimistic about U.S. economic growth than they were a year ago. Also, most of the CFOs expect their companies’ sales to increase in 2014, with growth coming from doing more business with current customers and winning new customers.

However, concerns remain about healthcare costs, which the CFOs cited as having the biggest potential impact on the U.S. economy.

Of the financial executives who participated in the annual survey of middle market companies (annual sales between $2 billion and $25 billion), 54% said their companies’ 2014 sales will be higher than in 2013. Another 37% expect sales to remain at the same level, while 8% expect a decline. When asked about potential negative impacts on the U.S. economy, CFOs most often named healthcare costs, with 67% ranking it as a significant concern. That was followed by the effectiveness of the U.S. government (62%) and the U.S. budget deficit (57%).

CFOs gave the U.S. economy an average score of 53 out of 100, up from 49 a year ago. In the 2013 CFO Outlook Mid-Year Update – a smaller survey with 250 respondents – the score was 58. CFOs gave the global economy a score of 50, up from 45 a year ago and comparable to the mid-year score of 51.

‘WELL-POSITIONED’
Gary Head, CEO of Signature Bank of Arkansas, said he is optimistic about Northwest Arkansas and U.S. economic growth in 2014, but has concerns about business costs.

“Heath care costs are impacting Legacy and will require a hard look at structure and benefits going forward,” Head said.

Sam T. Sicard, president and CEO of Fort Smith-based First Bank Corp., said he is “slightly” optimistic about 2014. First Bank operates several banks in Arkansas, including First National Bank of Fort Smith and First National Bank of Rogers.

“The housing market appears to be relatively healthy again, the rapid increase in the stock market will spur additional spending in early 2014 from capital gains, and consumers are in a better position to spend and borrow as they increased savings and reduced debt during the Great Recession,” Sicard said.

Sicard also believes economies in Northwest Arkansas and the Fort Smith region will see positive trends in 2014.

“Both regions are well-positioned to recruit industry with the quality of their workforce, quality of life they provide, and the financial and economic resources they have to recruit industry. Both regions had several job expansion announcements in 2013 that will come to fruition in 2014,” according to Sicard.

SOME PESSIMISM
Mike Callan, president of Fort Smith-based Arkansas Oklahoma Gas Corp., and chairman of the Arkansas State Chamber of Commerce Board of Directors, is “moderately pessimistic” about 2014 economic conditions.

“The fundamentals for economic growth, such as consumer confidence, regulatory certainty and the condition of foreign markets, are still questionable. Consumers and business owners are understandably moving cautiously,” Callan noted. “Foreign markets as well as our own, are still being propped up with and through government policies. Until some comfort with respect to future polices is restored, I believe the economy will continue to limp along.”

However, Callan is “cautiously” optimistic that economic conditions will improve in the troubled Fort Smith regional economy. October was the 58th consecutive month the Fort Smith metro jobless rate has been at or above 7%.

“We have seen a number of positives occur recently which bodes well for the coming year. Company expansions along with new companies moving to the (Fort Smith) area provide a ray of hope, especially when coupled with the efforts of the state in incentivizing economic development throughout Arkansas,” Callan said.

Callan also believes Arkansas’ economy will do well in 2014.

“Energy production will continue to generate jobs, economic opportunity and growth, if we can avoid overreaching regulations. We have what it takes to attract and retain businesses. However, we are competing for a small number of opportunities with every other region in the U.S. Therefore, apathy must be avoided. We have what it takes to quiet the naysayers and complainers, who, while very vocal, seldom present solutions,” Callan said.

CAUTIOUS OUTLOOK
Don Gibson, head of Springdale-based Legacy Bank, also is “cautiously” optimistic about economic conditions improving in 2014. He sees more jobs coming to Northwest Arkansas “in the coming months which should spur the economy.”

Mike Harvey, chief operating officer for the Northwest Arkansas Council, is “slightly” optimistic about U.S. economic conditions “if we can just manage to get out of our own way.” As for the Northwest Arkansas economy, he is bullish.

“Growth in the Northwest Arkansas economy is across the board. Housing is back, and look for job growth around a number of new locations/expansions announced in 2013,” Harvey said. “Also look for continued growth in the retail complex – especially around big data. Transportation and food will hold their own as well.”

WALMART SUPPLIER IMPACT
Cameron Smith, founder and CEO of Rogers-based Cameron Smith Associates, is neutral on his outlook for the U.S. economy in 2014. He said the pace of recovery following the 2008-2009 recession has been “frustratingly slow.” But like Harvey, he’s bullish on Northwest Arkansas and he’s encouraged by regional cooperation.

“My predictions for the Northwest Arkansas region are very encouraging. Following the lead of the NW Arkansas Council, many of the individual cities have brought in companies like Market Street Services to help evaluate regional strengths, weaknesses and opportunities backed by participation from many local business leaders. The cities in this region are more collaborative today than I have seen in the past 20 years, which gives me confidence that that there will be strong economic development,” Smith explained.

Part of Smith’s optimism is fueled by the growth he sees in the Wal-Mart supplier community. Smith’s firm works to find talent and leadership for many of the supplier companies.

“The Walmart supplier market that we work within is expected to grow. As the millennials enter the job market, they will be reinventing the job descriptions needed to manage the ever-changing Walmart business. By 2015 they will represent over 50% of the Walmart supplier jobs,” Smith said in a statement to The City Wire.

HEADWINDS
But it’s not all positive. Following are some of the concerns listed by respondents to the brief survey from The City Wire.
• Don Gibson, Legacy Bank
“The largest headwinds are those created by our President which is tighter credit limitations from Dowd-Frank and the unbelievable cost of Obamacare.”

• Mike Harvey, Northwest Arkansas Council
“Health and financial regulation will continue to cause difficulties for businesses and consumers. Legislators will avoid much-needed tax reform – again. And the end of QE (quantitative easing) and normalization of (interest) rates will require some adjustment in the near term.”

• Sam Sicard, First Bank Corp.
“One headwind we will continue to face is the increasing government regulations many businesses are dealing with and the challenges many businesses are facing with increasing healthcare costs. A potential additional headwind is uncertainty on whether the federal government will be governed in a responsible manner. The governing by crisis through shutdowns and the threat of debt defaults we faced in 2013 could continue in 2014.”

• Cameron Smith, Cameron Smith Associates
Possible negative economic factors in 2014 are “Uncertainty in the business community regarding healthcare costs, dysfunctional government, 2014 elections, and possible changes in the Fed.”

• Craig Rivaldo, Arvest Bank-Fort Smith region
“When the government stops Quantitative Easing, it could start to drive up interest rates.  It is anticipated the 10-years Treasury could go over the 3.0% mark. Additionally, the government has indicated that once Unemployment got below 7% they would start considering moving up short term interest rates ... Fed Funds Rate. Any movement up in rates could have a negative impact to businesses and ultimately could impact the economy.”