Recent talks between trade officials with the U.S. and China have spawned new optimism for relaxed export requirements that could mean good news for Tyson Foods and the U.S. beef industry in 2014.

During recent talks in Beijing between U.S. Agriculture Secretary Tom Vilsack and Chinese leaders, discussion of opening mainland China to U.S. beef trade was a theme, according to Joe Schuele, spokesman for the U.S. Meat Export Federation. Schuele said this is notable because beef is not always part of the discussion at the these annual trade meetings between the two counties.

China banned the imports of U.S. beef in 2003 after the discovery of Bovine Spongiform Encephalopathy, more commonly known as “mad cow” disease, that was traced to a cow in Washington state.

Demand for beef has exploded in mainland China over the past 18 months, according to Schuele, who said it is being fueled by higher incomes, diet expansion and a robust growth in restaurants such as steak houses. He said mainland China is a $1 billion business for beef – demand now being met by Australia and Uruguay, primarily, as U.S. packers like are shut out because of the decade-long ban.

“It hasn’t been that big of a deal until the last 18 months or so, when beef demand began to really skyrocket in mainland China. Their imports are up 500% over last year, In one month they are doing the volume of the entire year in 2011,” Schuele said.

According to information from the USDA and the USMEF, the value of U.S. beef exports in 2012 exceeded $5 billion and China’s business was visibly absent.

"Whenever the two sides are actively discussing beef access, there is reason for optimism," Schuele told The City Wire. "We cannot predict whether 2014 will be the year that the market finally reopens, but they have set July as a target date.”

Tyson Food reports that 12% of its $2 billion international beef sales went to China in 2012, through Hong Kong, a market that has remained open to U.S. beef. Vietnam and Mexico were also large customers for Tyson beef during 2012, comprising 12% and 13%, of international beef sales, respectively.

Tyson spokesman Dan Fogleman said the bulk of Tyson’s trade with China is for cow hides at this time and Tyson is not selling muscle meats to mainland China nor Hong Kong.

If mainland China were to open to U.S muscle meat imports Tyson Foods and other U.S. packers would be in position to benefit given the steady growth demand since 2011.

Travis Justice, economist with Arkansas Farm Bureau, said it has taken a decade for the U.S. beef industry to recover the full export volume it lost in 2003 with BSE and during that time packers in Australia, New Zealand and South America have capitalized in those regions where the U.S. is still shut out.

He said robust exports also raise the prices of calves for cow calf operators which are already sitting at record highs given the prolonged drought in much of the nation. The two-year drought forced higher slaughter numbers that has led to the smallest herd in 40 years.

The U.S. beef cow herd has decreased an estimated 1.85 million head since January, 2011. Recovery to pre-drought levels will likely take 3 to 4 years at least, said Darrell Peel, livestock specialist for Oklahoma State University.

"The United States is well-suited to produce and ship large volumes of specific cuts that will form the core of China's high-quality beef demand," notes Joel Haggard, the senior vice president for USMEF for the Asia-Pacific region.

He said the rewards would be large, if the trade challenges between the two countries could be overcome.

“With unfettered access, China is poised to gain a place in the top five U.S. beef export destinations, along with Japan, Korea, Mexico and Canada," Haggard notes.

Gov. Mike Beebe, D-Ark., did not mince words today as he said it was time for Lt. Gov. Mark Darr, R-Ark., to resign.

Beebe's statement to the media Tuesday morning (Dec. 31) comes one day after Darr agreed to pay an $11,000 fine after the Arkansas State Ethics Commission found that he violated 11 different ethics laws. The settlement Darr signed Monday (Dec. 30) sets the fines at $1,000 per violation.

"I think it's in everybody's best interest, including Mr. Darr, if he would resign," Beebe said.

Beebe’s statement to the media followed a phone call Beebe made to Darr asking him to resign. Darr, according to Beebe’s office, told Beebe he would not resign.

Darr, who hasn't spoken publicly since the Ethics Commission report two weeks ago detailed its findings of improper spending of tens of thousands of dollars for personal items, tickets to Razorback games and travel, did release a statement to KARK-TV in Little Rock on Tuesday, though he avoided any discussion of resignation.

"The mistakes I've made have been well-documented and my focus now is on making things right with the people of Arkansas."

In addition to the Ethics Commission violations, Darr has also been under scrutiny by legislative auditors, who found nearly $12,000 spent on travel and a state credit card. Some of those items have been flagged for improper documentation and Pulaski County Prosecuting Attorney Larry Jegley is reviewing documents from the investigations for possible criminal charges.

Reports of Darr's misspending of campaign and state funds first came to light in August, just days after Darr announced he would run for the 4th District Congressional seat being vacated by U.S. Rep. Tom Cotton, R-Dardanelle, who is mounting a challenge to U.S. Sen. Mark Pryor, D-Ark.

In a series of posts on the blog Blue Hog Report, blogger and attorney Matt Campbell detailed numerous irregularities in Darr's campaign spending from his 2010 run for lieutenant governor, including football tickets and spending at clothing stores. Campbell also uncovered what appeared to be reimbursement from Darr's campaign account and his state office for travel. Darr dropped out of the race only 17 days after he announced his candidacy, with Campbell subsequently filing an ethics complaint with the state.

Asked why he thought Darr should resign, Beebe alluded to two high-profile political corruption cases that took place earlier in the year that involved Democrats.

Former State Treasurer Martha Shoffner resigned May 21 after being arrested by federal authorities for accepting bribes in exchange for funneling state bonds contracts to a particular company.

Former Sen. Paul Bookout, D-Jonesboro, resigned from his position Aug. 20 after the Ethics Commission fined him $8,000 for misspending of campaign funds for things that included a home theater system, clothing and other items.

"The facts speak for themselves," Beebe said. "What (did) the others do? They resigned."

A Darr spokesman said the lieutenant governor would not resign.

Beebe's statement to the press comes after Chairman Vincent Insalaco called for Darr's resignation earlier in the day.

“The Ethics Commission report confirmed what the Legislative Audit showed- that Mark Darr has a disregard for the law. He has misused more taxpayer and campaign funds than the majority of Arkansans make in a year," Insalaco said in a press release. "Darr’s reassurance that he won’t have the same problems in the future is too little, too late. Our elected officials must be held accountable and Mark Darr’s record of irresponsibility is entrenched. Arkansans deserve better. Mark Darr should resign immediately.”

UPDATED INFO
The two leading candidates for Arkansas Governor weighed in on the controversy, according to this report from Talk Business.

Democrat Mike Ross said, “Our elected officials must be held to the highest possible standard, and they must have the people’s absolute trust and confidence in order to effectively do their jobs. Lieutenant Governor Mark Darr has admitted he improperly spent campaign and taxpayer dollars, and therefore he should act in the best interest of the state of Arkansas and resign immediately.”

Republican front-runner Asa Hutchinson said, “In the case of Lt. Gov. Mark Darr, the ethical violations are troubling and serious and should be reviewed by the prosecuting attorney. As a former prosecutor, I understand the importance of holding public officials accountable for improper conduct. In my view, the public has a right to expect the highest level of ethical conduct by its elected officials and the public should demand resignation when criminal conduct has occurred. It should be noted that only a prosecutor or grand jury can assess the question of criminal conduct and whether there is probable cause for criminal charges. It is my understanding that the Pulaski County prosecutor is reviewing the ethical violations of Lt. Gov. Mark Darr. It is important that the prosecutor assess the violations to determine whether criminal conduct has occurred and charges should be filed. If criminal charges are filed then a resignation should be demanded. Until then, we should let the process work and expect the decision of the Ethics Commission in terms of fine and amended reports to be fulfilled.”

Doyle Webb, chairman of the Republican Party of Arkansas, adopted Hutchinson’s position of waiting to see if criminal charges are warranted.

Also, all 5 Republican members of Arkansas’ Congressional delegation – Sen. John Boozman, Reps. Rick Crawford, Tim Griffin, Steve Womack, and Tom Cotton – today issued the following joint statement calling for the immediate resignation of Lt. Governor Mark Darr: “As elected officials, we are keepers of the public trust. We are bound by a very strict code of conduct that is the basis of that trust. Based on Lt. Governor Darr’s own admissions, it is clear he has violated that trust, and he should step down immediately for the good of our state.”

The equity markets were kind during 2013 to Arkansas’ publicly-held companies, with shareholders of 13 of the 16 companies seeing a price gain during the year. Arkansas’ trucking companies saw some of the biggest share price gains in 2013.

Despite a straggling economy, U.S. corporate earnings rose for a fourth straight year as 2013 wound to a close. Total earnings for S&P 500 companies in 2013 are forecast to increase 5.37%, to a record $109.03 a share, according to data from S&P Capital IQ.

Analysts like Paul Atkinson of Aberdeen Assets Management said, "It's tough to argue that companies are in anything other than good health."

Stronger earnings are generally the basis for higher stock prices, but much of Wall Street’s 2013 wealth is linked to the Fed's easy money policies amid a modestly improving economy. With that, U.S. stocks will close their best year since 1995.

The Dow Jones index is up 29% this year including dividends, while the broader S&P 500 index rose 32% for the full year. Analysts said investors could have sleep walked through 2013 and still made money by investing in one of the major index funds.

TRUCKERS ROLL HIGHER
Some of the biggest Arkansas turnarounds came from trucking firms, Arkansas Best Corp., USA Truck and P.A.M. Transportation, each posting triple-digit stock price gains during 2013.

Van-Buren-based USA Truck (NASDAQ: USAK) closed the year with a share price of $13.60, trading 4.33% lower on the day amid profit taking. The stock rose 297% during 2013, after starting the year at $3.49. Stock volatility was fueled in part by a hostile takeover bid from Knight Transportation.

P.A.M. Transportation (NASDAQ: PTSI), a dry van carrier based in Tontitown, saw its shares close 2013 at $20.61, down 1.20% on the day. During 2013, P.A.M. shares rose 108% from $9.89 where the stock traded on Jan. 2.

Shares of Fort Smith-based Arkansas Best Corp. (NASDAQ: ABFS) closed the year at $33.68, down 15 cents on the day. The transportation stock reached a high price of $35.96 in the past 52 weeks and ended the year up 246%, after trading at $9.72 on Jan. 2. Helping to boost confidence in the company was the completion in 2013 of a new five-year labor agreement with the International Brotherhood of Teamsters.

Lowell-based J.B. Hunt Transport (NASDAQ: JBHT), the largest, most diversified logistics company in this report, saw its shares close the year at $77.30. The share price rose 26.63% from its Jan. 2 closing price of $61.04. 

MIXED TECH RESULTS
As a sector, technology fared well in 2013, but results were mixed among the state’s two publicly-held tech companies.

Little Rock-based technology firm Acxiom (NASDAQ: ACXM) had a big year posting triple-digit stock gains as its shares closed 2013 at $36.98, up 23 cents on the day and 101% for the full year.

Acxiom shares were trading at $18.37 back on Jan. 2 and the steady price gains helped the firm grow its market cap to $2.78 billion this past year.

Shares of Little Rock-based Windstream Holdings (NASDAQ: WIN) closed the year at $7.97, down 5 cents on the day. During 2013 the technology firm’s shares slid 9.43% from the $8.80 share price reached on Jan. 2.

BANKING PROFITS
The financial sector as a whole posted its strongest profits since the 2008 recession but the share gains among Arkansas banks varied widely. Each of the four banks in this report acquired other institutions during 2013, expanding their footprints while also taking on more risk.

Home Bancshares of Conway (NASDAQ: HOMB) closed out 2013 at $37.33 per share. This growing bank’s stock price rose 120% during 2013 from $16.90 where it traded on Jan. 2. The bank holding company for Centennial Bank recently closed its $285 million acquisition of Liberty Bank, which created the second largest Arkansas-based bank behind Arvest.

LIttle Rock-based Bank of the Ozarks (NASDAQ: OZRK) also posted strong gains as its shares closed the year at $56.59. The shares increased 65% in value during 2013, rising from $34.37 back on Jan 2.

Share of Simmons First National Corp. (NASDAQ: SNFC) closed 2013 at $37.15. The Pine Bluff-based bank saw its share price rise 42% during 2013, up from $26.10 on Jan. 2. Simmons recently acquired Metropolitan National Bank which gives it a much larger market share in Little Rock and substantial real estate holdings in Northwest Arkansas. This deal is expected to close in the first quarter of 2014.

First Federal Bancshares of Harrison (NASDAQ: FFBH) reported a closing stock price of $8.70 for the 2013 year. The share value was down 8.61% for the full year of trading and one of the few companies to post negative gains in 2013.

UNPREDICTABLE RETAIL, CONSUMERS
Consumer attitudes greatly impact retail sales from cars to clothes and 2013 was anyone’s guess from month-to-month how fickle shoppers would act. Higher-end retailers returned better results as a group than big box discounters. New car sales outperformed expectations and used car sales were strong as more subprime lending opportunities became available.

Shares of Dillard’s Inc. (NYSE: DDS) closed out 2013 at $96.21, up 59 cents on the day. For the full year, the Little Rock-based retailer’s shares rallied 18% from the opening price of $81.53 to start 2013.

Wal-Mart Stores Inc. (NYSE: WMT) closed 2013 at $78.69, up 6 cents on the day. Shares of the retail giant rose 13.64% during the entire year, up from $69.24 back on Jan. 2. Analysts view Wal-Mart as a safe haven investment given its size and the 2.4% dividend yield it pays.

Shares of America’s Car-Mart Inc. (NASDAQ: CRMT) closed the year at $42.23. The Bentonville-based buy here, pay here used car dealer saw its share price increase just 3.07% in all of 2013. Despite an aggressive 10% growth rate in dealerships during the year, the company missed its second quarter earnings estimate while facing competitive pressures and tougher operating climate.

El Dorado-based Deltic Timber (NYSE: DEL) closed out the year at $67.94, down $1.29 on the day and down from the Jan. 3 closing price of $71.37. Despite the decline, it was a notable year for the timber, manufacturing and real estate-holding company. Deltic Timber Corp. acquired the remaining 50% interest in Del-Tin Fiber, LLC , a subsidiary of Temple-Inland. The $20 million deal immediately boosted Deltic’s bottom line and led to a record year in profits.

FOOD AND FUEL
Springdale-based Tyson Foods (NYSE: TSN) posted solid gains in 2013 as its share price closed Dec. 31 at $33.46, up 68% for the full year. Tyson Foods saw its stock price rise from $19.89 a share on Jan. 2, and recently set a 52-week high of $34.38.
 
Shares of Eldorado-based Murphy Oil (NYSE: MUR) closed 2013 at $64.88, up 74 cents on the day. Year-to-date, the company stock price rose 24%, from $52.31 where it traded on Jan. 2.

Murphy USA shares (NYSE: MUSA) closed Dec. 31 at $41.56, down 1.28% on the day. This company began trading on Sept. 3 at $37.51 after being spun off from parent Murphy Oil. Shares rose 10.79% between Sept. 3 and the end of 2013.

In business and in politics, 2013 saw some major deals reshape the Arkansas landscape. From superprojects to spin-offs to creative solutions, below are the biggest deals of the year.

House Speaker Davy Carter, R-Cabot, was involved in three of our top five deals that Talk Business ranked. He sat down for an interview on the “art of the deal” on this week’s Talk Business TV and radio program. His interview is embedded at the bottom of this post.

Top 10 Biggest Deals Of 2013
1. Murphy Oil Corp. spins off Murphy USA
The separation of El Dorado-based Murphy Oil’s retail and refinery operations into a new, independent publicly traded firm created a new $19 billion standalone company.

2. Big River Steel
The January announcement of the state’s first superproject – a $1.1 billion steel mill in Osceola – could inject new life in northeast Arkansas.

3. Home Bancshares Buys Liberty Bancshares
The July announcement of the $285 million mega-bank merger gave Home Bancshares a major footprint across northern Arkansas.

4. Simmons First Buys Metropolitan National Bank
The surprise $53.6 million auction win for Pine Bluff-based Simmons First will bring a busy round of activity to central and northwest Arkansas.

5. The Private Option
As far as legislative deals go, this one was historic. Using the state’s Medicaid expansion funds for private insurance was a tricky and creative solution to a thorny political problem.

6. Desegregation Settlement
Attorney General Dustin McDaniel’s office brokered an agreeable end to the 31-year old desegregation case involving Pulaski County’s three major school districts.

7. Arkansas Best-Teamsters Contract
After years of protracted battles and frustration, Arkansas Best and the labor union representing many of its workers hammered out an agreement to move forward.

8. Arvest Bank Makes Moves
The Jim Walton-led bank closed on its four-state buyout of 29 Bank of America locations and it acquired National Bank of Arkansas in North Little Rock. It also competed for Metropolitan at auction.

9. First Federal Bancshares Buys Banks
The Harrison-based financial institution’s acquisition of First National of Hot Springs and Heritage Bank in Jonesboro for $74 million may be a harbinger of future moves. Just a reminder that former Alltel CEO Scott Ford is an investor in this enterprise.

10. Deltic Timber Takes Additional Stake In Partnership
Deltic Timber Corp. acquired the remaining 50% interest in Del-Tin Fiber, LLC , a subsidiary of Temple-Inland. The $20 million deal immediately boosted Deltic’s bottom line and led to a record year in profits.

Although the number of fatalities among law enforcement officers dropped to a six-decade low in 2013, Arkansas was in the top five states for the number of fatalities.

Law enforcement officer fatalities dropped for the second year in a row to the lowest level in six decades and the number of officers killed in firearms-related incidents this year was the fewest since the 1800s, according to a report from the National Law Enforcement Officers Memorial Fund (NLEOMF).

The statistics released Thursday (Jan. 2) by the NLEOMF are based on preliminary data compiled and do not represent a final or complete list of individual officers who will be added to the National Law Enforcement Officers Memorial in 2014.

During the past year, more officers were killed in Texas (13) than any other state; followed by California (10); Mississippi and New York (7); and Arkansas (6).

According to the report, 111 federal, state, local, tribal and territorial officers were killed in the line of duty nationwide in 2013. This was the fewest number of fatalities for the law enforcement profession since 1959 when 110 officers died.  This year's total was eight percent fewer than 2012 when 121 officers made the ultimate sacrifice.

"The only good news is zero deaths, but this very significant drop in law enforcement fatalities the past two years is extremely encouraging," NLEOMF Chairman and CEO Craig Floyd said in a statement. "Our organization, in partnership with others, is working hard to create a new culture of safety in law enforcement that no longer accepts deaths and injuries as an unavoidable part of the job.  This year's officer fatality report is strong evidence that this intensified effort to promote law enforcement safety is making a difference."

The number one cause of officer fatalities in 2013 was traffic-related incidents, which claimed 46 lives. Thirty-three officers were killed in firearms-related incidents this past year, which was a 33% drop from 2012 and is the lowest number since 1887 when 27 officers were shot to death. Thirty-two officers died due to other causes in 2013, including 14 who suffered heart attacks while performing their duties.

Just two years ago, officer fatalities spiked to 169, which led to a number of new initiatives aimed at promoting law enforcement safety. Among them were:
• An increasing number of agencies requiring officers to wear bullet-resistant vests;

• The formation of the National Officer Safety and Wellness Group by the U.S. Department of Justice;

• And the VALOR program launched by U.S. Attorney General Eric Holder to provide training to help prevent violence against officers and to help officers survive violent encounters when they do occur.

Since 2011, all categories of officer fatalities have dropped by 34% and firearms-related deaths have declined by 54%.

Following are other results of the NLEOMF report.
Traffic-related incidents declined 4% in 2013 (46) compared to 2012 (48). Of these 46 officers, 31 were killed in auto crashes, 11 were struck outside their vehicle, and four were killed in motorcycle crashes.

Firearms-related fatalities declined by 33% in 2013 (33) compared to 2012 (49). Of the 33 officers, seven officers were shot and killed in ambush attacks, six officers were shot and killed while responding to a disturbance call, five officers were killed while conducting an investigative activity, three officers were killed while responding to a domestic disturbance call, three officers were feloniously killed during a traffic stop, three officers were shot and killed while responding to a robbery in progress and three officers were killed while attempting to arrest a suspect. Two officers were inadvertently shot and killed and one officer was killed during a burglary in progress.

Of the 32 officers who died due to other causes, 18 were caused by job-related illnesses; six officers fell to their death or died as a result of an injury sustained in a fall, two officers drowned while attempting to assist victims during a flash flood, two officers were stabbed to death, one officer was killed in a helicopter crash, one officer was killed in a boat related accident, one officer was killed by an explosive device and an officer was electrocuted.

Nine officers killed in 2013 served with federal law enforcement agencies. Nine of the officers who died during the past year served with correctional agencies.  Four of the 111 fatalities were female. On average, the officers who died in 2013 were 42 years old and had served for 13 years.

Link here for the full report.

Building permits for the month of December across the area showed a 39.2% decline when comparing December 2013 to December 2012 across the cities of Fort Smith, Greenwood and Van Buren.

The total value of permits issued across all cities totaled $13.216 million for the last month of 2013, while December 2012 showed values at $21.737 million.

Even though the cities showed a significant decrease when comparing month to month, the region showed healthy growth for the year with a 29.06% increase in building permit values for all of 2013. From January through December 2013, the three cities posted values of $203.037 million, while 2012 only showed values of $157.32 million.

The city of Fort Smith closed the year with the largest total values at $177.687 million, an increase of 30.42% year over year. The city posted permit values of $136.248 million in 2012. The gains in the Fort Smith market were largely from industrial construction projects at Chaffee Crossing, the construction of Mercy's new orthopedic hospital along Phoenix Avenue and various municipal construction projects across the city.

Van Buren posted the next largest total for 2013, bringing in $17.067 million in building permits for the year, an increase of 38.96% from 2012's total of $12.282 million.

The only city to post a decline in permit values for the year was Greenwood, which posted $8.283 million in permits issued for 2013, a 3.79% decline from 2012's total of $8.609 million.

FORT SMITH
The city of Fort Smith issued 133 permits for the month of December, totaling $10.853 million.

Commercial building construction drove the Fort Smith figures, bringing in $7.4 million, while residential construction brought in an additional $2.457 million in permits for the month.

The largest single permits for the month include a new Mercy Clinic location at 3700 Cliff Drive valued at $2.34 million, a $1.754 million re-model of the Sam's Club located at 7700 Rogers Avenue, and a home valued at $705,360 being constructed at 8415 Howard Hill Road.

GREENWOOD
Greenwood's building permits on a percentage basis appear to have posted a meteoric increase of 3,435.5% from December 2012. But in reality, the city only issued four permits valued at $707,100 last month compared to one permit issued in December 2012 that only had a value of $20,000.

Three of the permits issued last month were for new residential construction valued at $701,100, while the fourth permit issued was for a residential repair or remodel valued at $6,000.

VAN BUREN
Van Buren posted $1.656 million in building permits issued for December 2013, an increase of 175.52% over December 2012's permit valuation of $601,000.

According to Van Buren Building Inspector David Martin, the construction of a new $1.283 million CVS Pharmacy at the intersection of Fayetteville and Rena Roads is a major driver of Van Buren's improved monthly numbers. Construction of the Van Buren location marks the third CVS under construction in the region, following announcements in Bella Vista and Fayetteville.

Residential construction was the second largest driver of building permits in the city, accounting for four of 18 permits issued last month for a total valuation of $351,000.

2012 RECAP
Combined values in the three cities during 2012 were $157.32 million, compared to $201.079 million during 2011. The 2012 value is above the $149 million in 2010, but below the $164 million during 2009.

Fort Smith closed 2012 with the largest share of valuations, logging $136.428 million (a one-year decline from $179.288 million of about 23.9%), while Van Buren was the next largest with $12.282 million (a one-year decrease from $12.39 million of approximately 0.87%). Greenwood posted an additional $8.609 million, which was down slightly from last year’s $9.461 million (down about 9%).

The 2012 figures were compared against a $28.5 million permit in 2011 for the construction of a Mitsubishi wind-turbine assembly plant at Chaffee Crossing. The plant has been mothballed by the company. Even without that permit, the Fort Smith metro area lagged when compared to 2011 showing a decrease of around 8.8%.

The new year is ushering in a new era for the Boy Scouts of America as the organization officially welcomes boys to join and participate in local scouting troops, regardless of sexual orientation. And while organizations like GLAAD (formerly the Gay and Lesbian Alliance Against Defamation) were expecting a large number of scouting troops to leave the program in protest, locally less than 5% of troops in the Western Arkansas Council have departed due to the policy change.

The Fort Smith-based Westark Council has about 6,500 members in its 17-county area – which includes Northwest Arkansas over to Mountain Home and south to Pope County.

Ross Murray, director of news at GLAAD, told The City Wire that he was surprised at how welcoming the organization as a whole has been to the inclusion of gay scouts.

"And what we've seen, the fallout from the policy change (on gay scouts) has been pretty minimal. Most dropped charters have been filled by more inclusive organizations. The fallout has not been as strong as we feared or people had predicted."

He said the policy change approved in May 2013 was a positive step forward.

"We are very thrilled that gay youth are no longer going to be told by the Scouts that they are not welcome because they are gay," he said. "This is a significant step for gay boys who want to be involved in a civic organization. This is a cause for celebration."

In the run up to the May vote, Assistant Scout Executive Christian Swaim of the Western Arkansas Council of the Boy Scouts of America said "support from the council has been to keep the (current) membership standards in place."

Swaim said then that the Western Arkansas Council would support the Boy Scouts of America "and the scouting program here in Arkansas” no matter the vote result. Fast forward more than eight months, and Swaim said there has not been much reaction to the change in policy. But that is not to say all chartered Boy Scout troops embraced the change.

"What we've had is we've had the charter partners…we've had some charter partners that have decided they are not going to continue a relationship with the Boy Scouts since they're the actual owner of the unit," he said.

In all, he said about 10 charter partners out of 221 chose to not renew their memberships with the Western Arkansas Council. While the number represents a 4.53% decline in charter partners, Swaim said the situation is not alarming.

"For the most part, we've been able to find a new charter partner for all of the units," he said. "The charter partners, as far as the number of scouting kids we have, it shouldn't affect the numbers at all."

Even as the Western Arkansas Council has been able to find new charter partners for all of the units that dropped over the policy, what is still unknown is how many individuals will choose to leave the Boy Scouts for other organizations, such as church-based programs.

"A lot of (families) haven't specified. A lot of them, we don't know where they will go. And like I said, as far as numbers, as far as individuals leaving the program, we will know after a re-charter in the Spring."

But if any of the 6,500 individuals involved in the Western Arkansas Council leave the program, Swaim said it would likely be impossible to know why they are leaving the Scouts unless the family specifically says something about how the policy made them decide to leave.

"I don't know that there's a way to determine. We won't know if they were going to just leave Scouting anyway or if it was over the policy."

Of the calls his office has received since the vote was taken in May, Swaim said it has not focused on complaining about the policy at all and instead many of the calls have been about "how do we manage the process, how do we work with our units within the policy change all of that stuff."

Murray of GLAAD said the process of including gay boys in the Boy Scouts should go relatively smooth, especially considering leadership changes at the top of the scouting organization.

"(Former U.S. Secretary of Defense) Robert Gates has been selected to oversee the Boy Scouts," he said. "He was the one who oversaw the end of (Don't Ask, Don't Tell) policy in the military. There was very little fallout. If that's any indication of how he will lead the Boy Scouts policy change, then that leaves us very hopeful."

While Murray calls the policy change allowing for inclusion of gay scouts a "significant step for gay boys," he said there is one wall his organization will be fighting to bring down as they move forward in their fight for gay rights — the ban on gay leaders.

"Part of (fully including gays and lesbians in scouting) will be realizing how little change there will be with the Scouts. There have always been gay scouts, but they've always been afraid to come out."

Resign or face a possible impeachment.

That is the choice the Democratic members of the Arkansas House of Representatives are giving Lt. Gov. Mark Darr following his refusal to resign his position after the state Ethics Commission handed down an $11,000 fine Monday (Dec. 30) against the lieutenant governor for various ethics violations centered around misspending of nearly $44,000 in both campaign and state funds.

The message from Democratic House members is the strongest yet following calls from Gov. Mike Beebe (D), and all five Republican members of the Congressional delegation for Darr to resign.

"We as a caucus are (saying) that if a resignation does not occur, that due to his unethical actions in office he has lost the trust of the people of Arkansas and under Article 15, Section 1 of the Arkansas Constitution, we would move forward with the impeachment process in the House of Representatives," said Rep. Harold Copenhaver, D-Jonesboro, speaking on behalf of the House Democratic Caucus.

Section 1 of Article 15 notes: “The Governor and all State officers, Judges of the Supreme and Circuit Courts, Chancellors and Prosecuting Attorneys, shall be liable to impeachment for high crimes and misdemeanors, and gross misconduct in office; but the judgment shall go no further than removal from office and disqualification to hold any office of honor, trust or profit under this State. An impeachment, whether successful or not, shall be no bar to an indictment."

Copenhaver said Darr's refusal to resign, even after admitting to 11 violations of state ethics laws, showed a disregard for the rule of law and the trust placed in public officials.

"I think with the Ethics Commission (ruling), that basically showed the disregard (Darr) has for Arkansas campaign and ethics rules. They came back and said that he committed 11 violations and that he abused the public's trust," he said, adding that while impeachment was rarely threatened in Arkansas politics, the caucus'"main objective is just to restore integrity and trust back to the office."

"As the number two position in state government, he's lost trust," Copenhaver added.

Democratic membership in the House sits at 48 members out of 100 positions. Minority Leader Greg Leding, D-Fayetteville, said there would have to be some crossover support from Republicans in order for impeachment to be successful, support he says could be within reach.

"I think we need 67 votes in this case," he said, adding that it is a two-thirds threshold that must be met for impeachment. "We need significant help from our colleagues in the House. We're only 48 strong. We'd need 19 or so (Republican votes)."

Arkansas House of Representatives Spokeswoman Cecillea Pond-Mayo, speaking on behalf of Speaker of the House Davy Carter, R-Cabot, said he would need "an indication from 51 members before he moves forward that they want to proceed with impeachment."

House Majority Leader Bruce Westerman, R-Hot Springs, said any decision on whether he would support the Democrats' call for impeachment would largely depend on whether criminal charges are brought against Darr before the fiscal session begins in just a few weeks. Pulaski Prosecuting Attorney Larry Jegley is reviewing documents from the Ethics Commission investigation and a separate legislative audit for possible criminal charges.

"There's a long time between now and then," Westerman said. "I hope the issue takes care of itself before then. We'll just have to address that then."

Republican sources have said they are uncertain how Darr could hope to stay in office given the mounting pressure for him to resign, adding that it is likely he would be forced out should the impeachment articles make it to the House floor resulting in a Senate trial.

Should the House vote to impeach Darr, Article 15, Section 2 of the Arkansas Constitution does state that he would face a trial before the Senate.

“The House of Representatives shall have the sole power of impeachment. All impeachments shall be tried by the Senate. When sitting for that purpose, the Senators shall be upon oath or affirmation; no person shall be convicted without the concurrence of two-thirds of the members thereof. The Chief Justice shall preside, unless he is impeached or otherwise disqualified, when the Senate shall select a presiding officer."

Matt DeCample, spokesman for Gov. Mike Beebe, said Beebe will have to decide on calling a special election if Darr does resign or is removed from office. However, DeCample told The City Wire that initial legal research is not 100% conclusive on if a special election is required and the necessary timeframes. When then Lt. Gov. Winthrop Rockefeller died in office in July 2006, Arkansas Democratic and Republican leaders agreed with the decision by Gov. Mike Huckabee (R) to not call a special election because the general election was less than four months away.

The march to impeachment comes even as the calls for resignation grow louder, even from members of Darr's own party.

Rep. Andy Mayberry, R-Hensley, who announced a run for lieutenant governor shortly after Darr began his short-lived run for Congress in the 4th District last year, became the first Republican member of the House to call for Darr's immediate resignation.

"In light of the recent findings of the Arkansas Ethics Commission and the Legislative Audit Committee, I believe it is in the best interest of the state of Arkansas for Lt. Gov. Darr to vacate his position. I hope he will take this action soon. In his role presiding over the Senate, I believe Lt. Gov. Darr’s presence during the upcoming fiscal session could prove to be an unnecessary distraction as the legislature hopes to focus its full attention on other important issues facing our state."

Rep. David Meeks, R-Conway, said it was time for Darr to "do the right thing."

"If he did do something wrong and knows it and if the prosecutor determines it, then I think it's in his best interest and the best interest of Arkansas to resign."

John Burkhalter, a Democrat seeking to replace Darr in the lieutenant governor's office, also released a statement demanding Darr's resignation.

"I have always believed as an Arkansan and a businessman that the most sacred responsibility any elected official holds is personal integrity and the public’s trust. Arkansans need to know that the second-highest ranking official in state government is someone they can trust and depend on to do the right thing. These admitted state law violations by Mr. Darr cloud the trust people place in the Lieutenant Governor’s office and I believe he needs to resign."

The last time a serious threat of impeachment was used to force the resignation of a sitting member of the executive branch was in 1996, when then-Gov. Jim Guy Tucker was refusing to resign in the wake of his conviction for fraud and conspiracy tired to the Whitewater scandal. Tucker had rescinded his initial resignation, with then-Lt. Gov. Mike Huckabee threatening to call a special session to consider articles of impeachment should Tucker not step down. Tucker resigned at 6 p.m. on July 15, 1996.

Darr's office did not respond to calls seeking comment for this story.

Arkansas’ December tax collection report showed a gain in overall collections but the report continues to suggest collections will not match the almost 5% gain posted in fiscal year 2013.

Year-to-date gross revenue (July 2013-Dec. 2013) totaled $2.922 billion, 3.4% above the same period last year and above forecast by 0.9%, according to the report issued Friday (Jan. 3) by the Arkansas Department of Finance and Administration.

Individual income taxes for the fiscal year totaled $1.36 billion, up 2.3% from last year and just slightly above the budget forecast. Year-to-date sales and use tax collections were $1.1 billion, up 3.9% above last year and just 0.2% above forecast. Income taxes and the sales and use tax collections are the two primary sources of state revenue.

Corporate income tax collections for the first six reporting months of the fiscal year totaled $203.6 million, up 6.4% compared to last year and 4.7% above forecast.

DECEMBER NUMBERS
December gross revenue was $533 million, up 3% above last year and 0.2% above forecast.

Individual income tax collections during December totaled $245.3 million, up just 0.9% compared to December 2012 and below forecast by 0.8%. Sales and use tax collections during the month totaled $186.5 million, up 3.1% from last year and 2.2% below the forecast.

John Shelnutt, head of the Department of Finance and Administration’s Economic (DFA) Analysis & Tax Research division, said income tax receipts are lower because December 2012 saw more activity to avoid higher tax rates in 2013.

“Individual Income tax receipts appear low relative to last year due to the impact of income tax strategy last year as reflected in the comparisons. We expect this adverse comparison to continue across the remainder of the fiscal year in a variety of individual income tax components,” Shelnutt said in the report.

The report also noted a one-time payment of $5.7 million related to securities fees.

“This early deposit, recorded as Miscellaneous in the report, offset small variances below forecast in other revenue categories, including Individual Income, Corporate Income, and Sales tax,” according to Shelnutt’s report.

The revenue forecast for fiscal year 2015 is $6.333 billion, up just 2.1% above the 2014 estimate. The 2015 estimate includes an anticipated reduction of $85.2 million from tax cuts approved in the 2013 Legislative Session.

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2013 - Dec. 2013: $25.7 million
July 2012 - Dec. 2012: $24.5 million

Games of skill
July 2013 - Dec. 2013: $18.8 million
July 2012 - Dec. 2012: $16.3 million

Tobacco
July 2013 - Dec. 2013: $113.5 million
July 2012 - Dec. 2012: $116.7 million

Insurance
July 2013 - Dec. 2013: $44.1 million
July 2012 - Dec. 2012: $42.2 million

COLLECTIONS HISTORY
Tax collections during fiscal year 2013 (July 2012-June 2013) totaled $6.214 billion, up 4.9% above the previous fiscal year and up 2.5% compared to budget estimates. One result of the gains was a budget surplus of $299.5 million.

Fiscal year 2013 marked the third consecutive year of year-over-year gains. Arkansas tax collections reversed a negative two-year slide in the 2011 fiscal year, with collections up 4.5% in the July 2010-June 2011 period.

State tax collections for fiscal year 2011 totaled $5.673 billion, up 4.5% above the $5.43 billion in the 2010 period.

The biggest declines in the 2009 and 2010 fiscal years were with individual income tax collections and sales and use tax collections.

University of Arkansas at Fort Smith Chancellor Dr. Paul Beran took time Friday morning (Jan. 3) to highlight some of the key parts of the university's new 20-year master plan for members of the Fort Smith business community during his address to the Fort Smith Regional Chamber of Commerce's First Friday Breakfast.

Beran started the presentation by quoting Alan Kay, who said, "The best way to predict the future is to invent it."

The chancellor said it was something that former Chancellor Joel Stubblefield had accomplished during his tenure at the university and it was something he and the administrative leadership at UAFS were working hard to accomplish during their tenure, leading Beran to ask for an update to Stubblefield's original 20-year master plan.

"Once we finished (the remodel of) the library, we said, 'Where are we going from here?' That's when I said we really need to go through a process. We really can't just start plopping things on land and hoping that's going to be the best place to be. We need some analysis. We need some help, some outside help to give us a new and fresh perspective about what we might do."

As part of gaining that new perspective, Beran said it was imperative to get input from the community, both on-campus and off-campus.

The process took one year, culminating in a public unveiling on Oct. 9, 2013.

When the plan was unveiled, it was revealed that the university's Bell Tower near the center of campus would remain the focal point around which all future development would take place, eventually moving much of the activity taking place on the campus to the campus green.

As reported in October, the only building that faces the campus green is the Baldor building on Kinkead Avenue, but Beran said at that time construction of a new dorm modeled after The Lion's Den, to be located where the school's gym facility is located, along with construction of the new $15 million fine arts center at Waldron and Kinkead, all of which will bring more campus buildings to the campus green.

Beran told business leaders Friday that much of this will require a realignment of campus functions, moving the student union to a different location as well as moving university administrative offices to what is the College of Business, and ultimately tearing down or remodeling several campus buildings in order to make them functional in a 21st century learning environment.

"The goal of the plan is to create a line of sight from Grand Avenue all the way through to Kinkead so that the Bell Tower really becomes the central focus of the campus, which it currently is but our buildings are not strategically placed to completely support that."

Other proposals in the newly-unveiled master plan include:
• An expanded Stubblefield Center, with an auxiliary gym and offices;
• Three new academic buildings centered around the campus green;
• A greek village and a campus ministry village, both located south of the center of campus;
• Replacing the gym with a student recreational facility along Kinkead;
• The construction of an alumni center on the northwest corner of Grand Avenue and Waldron Road, along with new brick signage signifying the start of the campus;
• Construct either a new soccer stadium or softball fields east of campus;
• A new plaza at the current drop-off area on Kinkead across from the Baldor building in addition to a newly-constructed drop off area along Grand Avenue, allowing a fully-open view of the bell tower from north of campus for the first time; and
• Expanding the dining center at The Lion's Den along with expansions at the Smith-Pendergraft University Center, including moving the campus bookstore to the west end of the building.

Beran said the first building to be constructed as a part of the new master plan will be the new performing arts center at Waldron and Kinkead. The facility will be 58,000-square-feet and will include a 150-seat theater.

The $15.5 million building should open by the fall of 2015.

If there was ever any doubt that Democrat Mike Ross wants to hitch his wagon to popular Gov. Mike Beebe (D), the first TV commercial of the 2014 gubernatorial campaign should clear up any confusion.

Ross’ first TV ad in the Arkansas Governor’s race is a 30-second commercial featuring Beebe, who declares:

“We need a governor and proven leader middle-class families can count on – that’s Mike Ross,” Beebe says in the spot. “I’ve had the privilege of knowing Mike for 25 years, and I’ve watched him work. Mike Ross has the common sense leadership style that will make our economy work for everyone. His commitment to our children and schools is unwavering. And no one is more independent than Mike. So please join me in supporting Mike Ross for Governor.”

According to Talk Business sources, the TV ad will air on cable television stations today and extend into a broadcast run starting tomorrow and lasting several weeks. It will also air in Sunday’s GoDaddy.com Bowl football game, which features Arkansas State University, and during Monday night’s BCS National Championship football game.

The ad can be viewed below and it appears on Ross’ Facebook page.

Ross, the former Fourth District Congressman, provided this statement regarding the ad:

“Arkansas has made tremendous progress under Governor Beebe – which is why he continues to be the most popular governor in America,” said Ross. “I am very proud to have Governor Beebe’s endorsement and his support for our campaign focused on Arkansas’s future. I want to build on the foundations Governor Beebe has laid in the areas of education, job creation, tax relief and fiscal responsibility, and I want to use my experience of bringing people together to unite this state and make Arkansas an even better place to call home.”

Ross is the only announced Democratic candidate for Arkansas Governor. Republican frontrunner Asa Hutchinson is facing a GOP primary contest with Rep. Debra Hobbs (R-Rogers) and Curtis Coleman.

The holiday season is not usually the time when markets rally, but livestock expert Derrell Peel said 2013 was different.

Peel, extension livestock marketing specialist at Oklahoma State University, said fed cattle prices going into the Christmas holiday were slightly more than $130 per hundredweight but they emerged from New Year’s at more than $137 per hundredweight. He said this rally in fed cattle is already above spring prices as indicated by live cattle futures, but he doesn’t expect it to continue as packers will likely resist in the short term.

The recent rally is interesting given reduced slaughter schedules by major packers through the holiday period and a fire which idled production in a Cargill plant the same week.

Peel said choice boxed beef prices increased by roughly $4 per hundredweight since before Christmas, while select boxed beef prices rose $6, but even so that is not enough to compensate for the higher fed cattle prices which continue to squeeze packer margins.

He said boxed beef prices will have to move higher in concert with fed cattle prices before packers ramp up slaughter and production in 2014.

"Fed cattle prices today suggests that boxed beef prices need to be over $210 per hundredweight for packers to break even. Boxed beef markets are still several dollars away from that,” Peel noted in an email.

Beef packers like Tyson Foods and Cargill ended 2013 in the black with average margins of $4.06 per head for the year. This compared to losses of $2.25 per head in 2012, according to Sterling Beef Profit Tracker. Packers saw their margins dip into the red some $54 per head for the week ending Dec. 28, which led to reduced slaughter.

Peel reports cattle slaughter and boxed beef production have been down roughly 4% in the past month. Carcass weights are close to year ago levels, with steer and heifers carcass weights down and cow carcass weights up due to high proportions of dairy cows in the cow slaughter total.

He said it will likely take another week or longer to fully assess post-holiday beef markets. The massive winter storm affecting the eastern half of the country this week will have additional impacts on both beef supply and demand. Most major cattle feeding regions aren’t being affected by big snow totals but that is not the case throughout the corn belt toward the Northeast. Peel said heavy snow combined with brutally cold temperatures, will likely reduce beef demand and product movement for a few days throughout much of the country.

2014 OUTLOOK
“Because of reduced cattle numbers, I expect cattle slaughter to decrease 7% in 2014. Depending on carcass weights, that will translate into a 6.5% decrease in beef production,” Peel said.

While he predicts wholesale prices will be higher (revenue for packers), he said there is more uncertainty about how fast those prices will adjust. He said fed cattle prices are already high and will likely move up, so packers are apt to face a margin squeeze well into 2014.

“An individual packer might further reduce slaughter in an attempt to either push boxed beef prices higher or fed cattle prices lower but that is a very short term action (a few days at most). Packers will be struggling for volume so they won’t be very inclined to do this much or for very long,” Peel said.

Across the board, Peel expects to see higher beef prices in 2014. Beef industry economists worry that higher beef prices will further reduce consumption which has been on a steady decline since it peaked in the mid 1970s.

A report by Priceonomics indicates U.S. beef consumption dipped to 55 pounds per person in 2012, falling behind poultry’s 59 pounds per person that same year. Since the mid-1970’s beef consumption has declined by more 20 pounds per person, while chicken consumption increased that much.

Peel said cow-calf producers are in the driver’s seat because they control supply and will be making decisions about rebuilding the herd. While the high price level likely means a margin squeeze at the feedlot and packing sectors, it likely means record cow-calf profits in 2014.

Mortgage rates are likely to rise in 2014, but recent Federal Reserve actions to curtail bond purchases are not likely to result in higher across-the-board interest rates for consumers.

In short order, the private markets have acted on the Federal Reserves’ recent move to start tapering and have raised long-term rates sharply in recent weeks, and further steepened the yield curve.

“As for interest rates, our view is that while the Fed can target short-term interest rates by setting the Fed funds rates, longer-term U.S. Treasury and private market rates will drift up in 2014,” notes John Silvia, chief economist with Wells Fargo Securities.

Bond yields have risen between 0.93% and 0.85% since May, on corporate debt rated Aaa to Baa, respectively. Silvia notes that the bond markets have at least partially priced in the Fed’s move to taper quantitative easing. 

“In 2014, we expect long-term rates to exhibit an upward bias as Fed tapering moves forward. As for credit markets, while easy monetary policy may provide some support to the aggregate economy, the current Fed policy is clearly altering asset prices at the sector level,” Silvia said.

HIGHER MORTGAGE RATES
Mortgage interest rates are those most likely to rise in 2014, according to Greg McBride, chief market economist for Bankrate.com.

McBride said tied to the 10-year Treasury rates, longer term mortgages (30 years) are sitting at 4.7%, and likely to hit 5% in the first half of 2014, escalating to 5.5% by the year’s end.

He said while the new Federal Reserve Chief Janet Yellen is expected to continue the policy of keeping mortgage rates low by buying blocks of mortgage-backed securities, the Fed’s bond-buying taper will push rates higher and make homes more expensive to finance.

“Historically speaking, 30-year mortgage rates have averaged 7.5% over the past four decades, so even at 5.5% the rate remains quite low, albeit much higher than seen in the past two and a half years,” McBride told The City Wire.

AUTO LOANS
Ample subprime lending activity will likely continue to fuel growth in the auto sector in 2014, according to economists. That growth will likely see no significant change in auto loan interest rates through 2015.

Edmunds.com predicts that the auto industry is on pace to reach its highest annual sales performance in 2014 since shoppers bought 16.5 million new cars in 2006.

"The average age of all light vehicles on the road climbed to 11.4 years in 2013, and an aging fleet will continue to force buyers back to the market in 2014," Edmunds.com Chief Economist Dr. Lacey Plache said in a statement. "With used car prices still elevated over past norms and used car supply still tight, the new car market will remain attractive to many of these buyers."

Plache expects the auto sales environment in 2014 will closely resemble the environment in 2013 — 15.5 million sales. 

Even though the auto industry is expected to post a 6% sales growth in 2014, Plache said economic recovery remains tepid for several large groups hardest hit by the recession — young people, lower income households and small businesses.

"Even though auto sales from these groups have improved from recession lows, their participation in the recovery still lags the rest of the market." Plache said.

CONSUMER RATES
McBride said consumer interest rates on credit cards should hold steady, and investors relying on short term CD rates will not see any measurable rise in their earnings this year because the Fed plans to keep a lid on shorter term rates through 2015.

“This could be the last hurrah for these low, low rates and a good time for consumers to pay down credit card balances and eliminate those home equity loans and other variable interest debt they have acquired in recent years,” McBride said.

Despite stagnant income levels in recent years, McBride said consumers on the whole have shored up their personal balance sheets and are reporting the lowest debt-to-income ratios in 30 years.

The city of Fort Smith and the Fort Smith Regional Chamber of Commerce bet almost $1.8 million in 2010 that Mitsubishi would open and operate a wind-turbine assembly plant at Chaffee Crossing. While a safe bet at the time when the U.S. wind energy market was on the upswing, few now are willing to bet Mitsubishi will operate the facility that has been mothballed since April 2012.

Mitsubishi Heavy Industries announced Oct. 16, 2009, plans to build the $100 million, 200,000-square foot wind-turbine manufacturing plant on 90 acres at Fort Chaffee. The plant could employ up to 400 once fully operational, and Mitsubishi officials initially said full production of nacelles for the 2.4MW wind turbine and the 400 jobs could be in place within the first quarter of 2012.

In December 2009 it was learned that legal and trade disputes between Mitsubishi and GE would delay the opening of the Chaffee Crossing plant. The GE legal dispute, concerns about the long-term availability of a federal tax credit and a slowing economy caused the company to idle the plant before a screw was turned on the assembly floor.

“Since the 2008 banking crisis, demand for wind turbines in the North American market has stagnated, and the commercialization of cheap oil-shale gas and other matters have had a further dampening effect, making it more difficult for MHI to win new contracts,” the company noted in the April 2012 statement. “In this market environment, the company has continued to promote the development of new and more competitive wind turbines, but in view of few signs of recovery in the North American wind turbine market, it was decided to take steps that include write-down of related inventory and to build a solid foundation for this business.”

PLANT OPENING NOW POSSIBLE?
Hopes the plant would open emerged in mid-December when Mitsubishi and GE announced a settlement of a long-standing legal dispute. The deal included GE and Mitsubishi agreeing to the cross-licensing of products – a surprisingly friendly deal considering the tone of both parties during the proceedings.

“We respectfully decline to expand upon our previous statement,” replied Mitsubishi spokeswoman Sonia Williams when asked if the company would open the plant considering the less than ideal North American wind energy market. “We are, in fact, considering all of our options for the future use of the facility and are not prepared to discuss publicly at this time.”

Williams declined to comment when asked if the plant would open for wind energy work only, or if it could be used to handle other Mitsubishi production.

MARKET SHIFT
News and industry reports suggest a slowing in the North American market, which may be more pronounced after the Jan. 1 federal tax credit expiration. That credit was 2.2 cents per kilowatt for 10 years of electricity production. The credit ended Jan. 1. Also, a joint venture with Vestas seems to be moving Mitsubishi more toward development of offshore wind turbine technology and systems.

Mitsubishi is not the only company facing tough market conditions. Nordex USA announced in June 2013 it would shutter its Jonesboro, Ark., production facility that once promised to employ 750 workers. The plant, which manufactured nacelles for large wind turbines said it will complete the orders in its pipeline and then shut the $40 million factory down. The German-based company said the decision was driven by the wind industry’s “global overcapacity” and the “continued uncertainty and instability of the U.S. market.”

Some market reports suggest offshore activity (around Europe, Japan, China) is the new growth area. Bloomberg New Energy estimates offshore could grow from 1.9 GW in 2012 to 8 GW by 2020.

Also, the North American market is not expected to soon see expansion at levels seen prior to 2012. Bloomberg predicts 8,000 MW expansion in 2014 and 3,200 in 2015. Navigant estimates 9,000 MW expansion in 2014 and 3,500 MW in 2015. Both estimates are well below the 13,131 MW in 2012.

‘GLOBAL BRAND’
Ivy Owen, executive director of the Fort Chaffee Redevelopment Authority, has said Mitsubishi has had several offers to sell or lease the building but have refused. To Owen, that’s a sign Mitsubishi officials are interested in using the building.

Tim Allen, president and CEO of the Fort Smith Regional Chamber of Commerce, is neither optimistic or pessimistic. He realizes market conditions are tough in the wind energy, but said “having the Mitsubishi name and having a working plant” in Fort Smith would be good for the region’s image.

“That’s a global brand. ... A lot of towns out there would love to have them, so yes, having the plant open would obviously be good from a jobs perspective and would help us from an image perspective,” Allen said.

The deal to recruit Mitsubishi to Fort Smith included $585,000 in incentive payments from the Fort Smith Regional Chamber of Commerce. The chamber incentives had four components. They are:
• Mitsubishi is paid $166,667 upon groundbreaking;
• Mitsubishi is paid $166,667 when the plant opens;
• Mitsubishi is paid $166,666 upon hiring 300 employees; and,
• Mitsubishi will receive $85,000 for support of temporary office space for “key employees to begin typical start-up activities,” temporary housing for key employees for re-location and a corporate Hardscrabble County Club membership for one year.

The chamber has paid Mitsubishi the groundbreaking incentive.

In addition to the chamber incentives, federal stimulus funds were available to support $3.7 million in tax-exempt bonds as part of the Mitsubishi incentive package. The bonds, issued by the state, will be paid back by Mitsubishi but at a lower interest rate than traditional bond proceeds.

MITSUBISHI MOTIVATION?
Also, the city of Fort Smith committed about $1.626 million in road and water/sewer infrastructure support for the plant. The city also issued $40 million in Industrial Revenue Bonds of which Mitsubishi will make payments in lieu of taxes equal to 50% of the normal property taxes for the first 20 years on building improvements and 12 years equipment. Fort Smith City Administrator Ray Gosack said Mitsubishi is solely responsible to pay off the bonds – and the payments could be an advantage for Fort Smith.

“I think that it’s important to realize that Mitsubishi is having to make bond payments and pay property taxes on a facility that is producing no income. So Mitsubishi has the greatest motivation to make something happen,” Gosack said, adding that that the tax payment made by Mitsubishi in 2012 was $160,000.

Gov. Mike Beebe made available an undisclosed amount to Mitsubishi through the Governor’s Quick Action Closing Fund. But those incentives are paid only when the company hires workers and begins plant operations. Some state incentives also have “clawback” provisions which allow for recovery of incentives.

But clawbacks are not feasible for the $1.6 million in infrastructure work made by the city to support the Mitsubishi plant, Gosack said. He said the state has an advantage because many incentives are performance oriented, wheres cities have to do the infrastructure work to make the project happen.

“I’m not sure how you can issue a clawback on public infrastructure. While the road (Chad Colley Boulevard) was built for Mitsubishi, it serves many other users,” Gosack explained.

The persistent car salesman trying to put a customer behind the wheel of a car they were not looking for is likely a relic of the past thanks to the Internet.

According to Morgan Pierce, sales manager at Smith Auto Group in Fort Smith and Northwest Arkansas, upward of 95% of the customers who come to his dealerships have already done their research before ever stepping on the car lot.

Due to the large numbers of customers going online first, Pierce said Smith Auto has invested heavily in online sales.

“The last couple of years, it’s been really full blown with videos and pictures. We get those in as soon as we get (the cars) off the truck. Get pictures and videos and put them online.”

The days of money hungry sales people waiting to pounce on the next customer have been replaced by sales people hoping for a lead, Pierce said.

“We have people who answer Internet leads and distribute to sales people. It’s its own company, almost.”

As a result, the market for many local dealerships has expanded beyond Arkansas, according to John Stanley, an Internet sales manager with Crain Automotive’s Ford dealership in Little Rock.

“(The Internet) is a venue that someone can reach out far beyond their driving radius, without a doubt.”

Pierce said he has opened Smith Auto’s market from coast-to-coast with potential customers finding the car they want either through the dealership’s own website or listings on GM.com or Cars.com.

“I talk about our out-of-town buyers, that’s still a small percentage. But the Internet has provided a way to do that. Without the Internet, we wouldn’t be able to sell in Oregon, Florida or California, and we’ve sold in all of those states. It’s a great tool, but you’ve got to make sure your site looks good and have the right people.”

Stanley said it comes down to people “knowing what they want,” and if that means buying a particular vehicle from a dealer in a state a thousand or more miles away, so be it. He said it is true of younger to middle age buyers, though older customers still shop traditionally.

“Your older demographic will usually do (business) face-to-face,” he said. “They want to put their hands on the vehicle. They want a more personal experience.”

Pierce said the age of smart phones and the Internet has changed everything though, even for local buyers.

“(Deals are done) all over the phone. Or through texts. We’ve done it by texts. …E-mail and texts, social media have just dominated everything.”

And while dealerships have found a large marketplace online, it is also meeting a lot more demand, especially in the used car market. Stanley said private sellers using eBay Motors and Craigslist have led his company to make deals that some could consider drastic.

“A lot of times, yes, we have to be very flexible in pricing and what we are giving on trade-ins. And yes, selling at a loss sometimes, especially to a repeat customer,” he said. “(Owner) Larry Crain is good at going above and beyond to keep them a client for the future.”

Even though Stanley admits private sellers have posed added competitive challenges for Crain Automotive, he believes customers seeking a quality used or new car will still make a traditional dealership the go-to destination.

“We do indeed do an inspection. And yes, we do a pre-inspection, even on new vehicles, to ensure everything is as it should be. We make sure the vehicle is up to par,” he said. “Buying from an individual, you don’t really have any guarantee. There’s no warrantee. That individual doesn’t own a dealership and has no means to guarantee. You can do a CarFax on it, but it just tells you if it’s been in previous wrecks or if titles are reconditioned or salvaged. But vehicles are unpredictable. When you deal with a dealer, you have more peace of mind with protection in the future.”

Sites like eBay Motors are typically only a good idea when searching for a specialty vehicle, according to Pierce of Smith Auto.

“We have a couple of people here that will (post our inventory to eBay) on specialty cars,” he said. “On the specialty cars, it can be (a good resource) for certain cars that people are looking for that you don’t just see everyday. When a 2010 Corvette comes up with 8,000 miles, that’s a specialty car. That’s when you get calls from Michigan and New York. And we’ve sold cars up there, too.”

Pierce said as the Internet continues to dominate the automotive marketplace, his team will remain on their toes.

“You really have to have people that know the product,” he said. “The worst thing is for the customer to know more about the cars than you do. And people can go online and find out anything from rebates to the engine to what bells and whistles are on it.”

China holds huge opportunity for Wal-Mart Stores and the retail behemoth has pledged to stay the course by building on the billions in annual sales it recorded there last year. Wal-Mart’s plan to grow sales and win consumer confidence in mainland China is linked closely to the burgeoning middle class expected to comprise almost half of the country’s urban population by 2020. Wal-Mart said it does not break out individual country sales, but its international division garnered $135 billion in revenue last year.

A report by McKinsey & Company notes that winning favor with this more affluent segment is a wide departure from serving the lower-income masses that Wal-Mart is known for worldwide.

The consumers in this more affluent segment tend to live in China’s higher-tier cities and coastal areas and enjoy household incomes between 106,000 and 229,000 renminbi ($16,000 to $34,000) a year, according to McKinsey. Their opinions are also strikingly different from those of their mass-market counterparts, the report notes.

“We're building a strong foundation for growth, being disciplined around growth, investing and retail basics and developing strong operations and compliance across the portfolio in China,” Scott Price, CEO of Walmart Asia, recently told investors.

He said Walmart China has made steady progress in key areas of operations like merchandising within the everyday low cost, low price focus; acquiring talent and  shoring up compliance protocol. Price admitted that China presents an enormous opportunity as by 2018 nominal GDP will reach almost 3,300%. But that rise is not without its challenges. He said the frantic pace has created market issues such as uneven infrastructure development, fragmented supply base, a developing regulatory environment and scarce talent.

“We believe that China's complex environment presents unparalleled opportunity and we believe that we are making great progress on that path to high growth,” Price said.

EXPANSION PLANS
In the past quarter Walmart China outlined a three-year plan for success that includes the opening of 110 new facilities by 2016. Walmart China CEO Greg Foran said the primary focus of this expansion will be on Wal-Mart Supercenters and Sam’s Clubs.

At the same time Walmart China will close up to 9% of its stores, those which have been deemed non-performing. Foran said the loss of these stores could dent total sales between 2% and 3% throughout this fiscal year.

Another 45 older stores will get renovated this year, with 100 more store updates slated by the end of 2016.

While the store count in China will expand over the next two years, Walmart said it continues to reduce the headcount in its home and regional office by approximately 25% since 2012 as it works toward centralizing the management within China.

SAM’S CLUB APPEAL
A key component of the retailer’s plan to grow sales in China is linked to the accelerated development of Sam’s Club. Walmart China opened two Sam’s Clubs in Hangzhou and Suzhou this past year, bringing the total number of Sam’s Clubs in China to 10. The company hopes to open several more in the next three years.

Foran said Sam’s outlook is promising and the business model is especially ripe for the burgeoning middle-income and upper-income consumers, and because many cities are well-suited for this format. 

The key to the success of Sam’s Club in China is closely linked to the rapid increase of car ownership. CNN reports that every two seconds somewhere across China a consumer takes delivery of a new car. This consumer buying blitz will add another 21 million new cars and trucks to China’s fleet in 2014.

Foran said Sam’s Club is now exceeding Walmart expectations within China. He said the membership fee is not an obstacle for the middle income shoppers it targets and some 90% of shoppers to Sam’s Club arrive in a car, giving them the ability to stock up and buy more volume.

“This 90% of car shoppers at Sam’s Club compares to as low as 10% at a Walmart China Supercenter,” Foran said recently.

He said having the ability to stock up means that shoppers may only come to the Sam’s Club once a month, where shoppers to a supercenter would come daily. Even with fewer trips, Foran said three of the 10 Sam’s Clubs in China lead the pace for the retailer’s clubs throughout the world.

“We know that Sam’s Club is well-received by the members in China and we want to continue to grow at significant rates,” Foran said.

WINNING MARKETSHARE

McKinsey reports that retailers that remain focused on consumers trying to meet basic needs at affordable prices could run the risk of losing out on millions of Chinese consumers looking to trade up.

With that, retailers must be willing to offer aspirational brands – a change of pace from the pragmatic approach that Chinese consumers have historically used when making their purchases. Aspirational brands, already relevant for China’s new upper middle class, will become even more important as it grows. These are brands that evoke an emotional tug in the consumer.

“The new upper-middle-class opportunity is where the future is,” according to Alan Jope, the head of Unilever’s businesses in north Asia. “It’s huge across categories and even more important than the luxury class of consumers,” Jope noted in the report.

McKinsey’s research indicates that these higher net worth consumers are more likely to buy laptops, digital cameras, and specialized household items, such as laundry softeners (purchased by 56% of the upper-middle-class consumers we surveyed last year, compared with just 36% of the mass middle).

Along with affluent consumers, upper-middle-class ones are stimulating rapid growth in luxury-goods consumption, which has surged at rates of 16% to 20% annually for the past four years. By 2015, barring unforeseen events, more than one-third of the money spent around the world on high-end bags, shoes, watches, jewelry, and ready-to-wear clothing will come from Chinese consumers in the domestic market or outside the mainland, McKinsey notes.

IMPORT DEMAND
Foran said Walmart China and Sam’s Club will benefit from broader inventory selections that appeal to China’s consumers as the retailer delivers more products through its seven distribution centers and seven fresh distribution centers, while also controlling prices and guaranteeing quality.

"We hope that in the next year, Walmart China will become the price leader of the retail industry," he said.

Foran said as customer demand for imported goods increases, Walmart China will continue to add imported products to its shelves. Using the Walmart Qinghe store in Beijing as an example, he said the display floor of imported products increased by around 50% over the last year while sales in this section nearly doubled. Many products such as cocoa dusted truffles from Belgium, pistachios from the U.S. and wines from various countries around the world are directly imported by Walmart China.

"Our merchandising team is adding new imported products every week. A year from now, Walmart China will add another 400 to 500 imported products," Foran said.

He estimates that after a year, sales of imported food products at Walmart's Supercenters will double, and sales of directly imported products at Sam's Clubs, which have performed exceptionally well, can grow more than five times.

The Fort Smith Board of Directors and the Sebastian County Quorum Court approved resolutions Monday evening (Jan. 6) that would add a wave pool to the Ben Geren Aquatics Center while moving a dive well to near the bottom of the governments' priority list for water park amenities, essentially killing a part of the project that had been the focus of much contention just 11 months ago.

The wave pool was added in order to draw in more potential users for the facility, to be built on county land on the north side of Ben Geren Regional Park, according to Andy Smith of Larkin Aquatics.

With the facility's budget now set at $10.9 million and both governments approving the addition of the wave pool, the facility will now consist of three bodies of waters, a 500 foot lazy river and four water slides for a total footprint of more than 20,000 square feet, making it the largest water park in the region. Smith said the water park will also include a concessions and rental pavilion.

"Ben Geren will be the largest facility in the region and it will have some very unique features compared to other facilities in the region with the wave pool and with the tallest slides," Smith said, adding that two slides will be at a height of 40 feet while two additional slides will stand at a height of 30 feet.

"Rogers' tallest slides are 35 feet. Yours will be 40, that's what we're budgeting for," he said. "So you can see this is a substantial facility."

Prior to the vote, city directors and justices of the peace heard from President and CEO Kent Lemasters of Amusement Aquatic Management Group of Tustin, Calif. Lemasters, whose travel expenses of between $1,000 and $1,200 will be reimbursed from the Fort Smith Parks and Recreation Department's operating funds, told the elected officials that adding the wave pool would be the item that would set the Fort Smith facility apart from nearby competitors, offering an amenity often only found at professional facilities in Branson, Little Rock, or Tulsa.

"I have reviewed your plans as they progressed along and the latest plans I've reviewed just today, the final plans I see, you have now stepped into being a full-fledged water park."

Lemasters, who has been in contact with Fort Smith Parks Director Mike Alsup for the last several months but is not being paid any fees by either the city or county, said the next step beyond creating an attraction that will attract tens of thousands of visitors will be to market the facility to those potential visitors and set a price point that will allow the governments to turn a profit.

"You can build the finest facility, but if you don't market that facility you may not hit your numbers, so we're big on marketing," he said.

He said while marketing will be important, it will not amount to a profit unless the pricing model is done right.

Lemasters highlighted the example of the municipal water park in Wichita Falls, Texas, that his company manages through an operating agreement with that city. According to Lemasters, The park, open for six years, operates at a profit based on general admission prices of $21.99 and junior admission of $17.99. In total, he said group discounts and other special admission prices brings the overage ticket price for a visitor to the park down to $17.51 last year, a year that saw about 90,000 visitors (revenues of $1.576 million).

By comparison, a 2010 feasibility study showed a projected fee schedule of only $5 for individuals 5 or older and $2 for age 4 and under, only yielding $709,300 in revenues during the facility's first year of operation. As a result, the aquatics center would post a loss of $113,472 based on the feasibility study.

Due to the success of Wichita Falls' park and based on his expertise, Lemasters said the facility should charge a higher fee similar to that of the Texas municipal water park.

"I think you're set. You're ready to go (with design). Now you start to do the operational things, and you do need to do that," he said. Decide your pricing, what's going to be the promotion and marketing of it, food and beverage. There will be a lot of things you need to do. Some cities look at a water park as a service, some look at it as a profit center. You need to decide what's your goal."

Sebastian County Judge David Hudson told the two government bodies that once final design work is done within the next 10 weeks, he would then be able to begin work on an updated feasibility study correctly detailing operating expenses, admissions prices and expected revenues based on the new design.

"Once the final design is set, then the study will be updated and you'll have that information. Then we'll continue to work jointly. The city and county will continue to work jointly through all these next steps and then thereafter, we will continue to meet with you."

Creditors of Allens Inc. lined up before U.S. bankruptcy judge Ben Barry on Monday (Jan. 6) objecting to several matters involving the stalking horse bid made by Seneca Foods on Dec. 16.

Judge Barry took the matters under advisement and said he would make a quick ruling on the bidding procedure and finalize a date for a sale hearing, while also evaluating Seneca’s offer as the stalking horse bid.

It’s just a matter of time before Siloam Springs-based Allens is auctioned off to the highest bidder, which could negatively impact roughly 120 corporate jobs, which would be a blow to Siloam Springs and the local economy.

Allens reported $420 million in 2012 revenue, down 30% from 2011, and said it has just under 1,000 employees, most of those are hourly. But the higher paying salary jobs are those in the company’s home office and the most at risk during a buyout. Allens' execs helped orchestrate the bid submitted by Seneca Foods last month. Terms outlined to the court include a $148 million cash bid with debt assumption for Allens canning business, which is still subject to court approval.

Counsel for several creditors who hold second-lien debt for Allens argued Monday (Jan. 6) the timeline for the bid procedure was too short and the break-up fee of $5 million payable to Seneca was excessive, should the New York-based fruit company be outbid. The second-lien secured parties also argued that the $148 million cash bid would be subject to a negative working capital adjustment that the debtors currently expect will be at least $45 million, resulting in a cash price that is closer to $100 million.

They said $100 million would not be sufficient to satisfy secured claims, let alone provide for distributions to the second-lien secured parties and other creditors. According to court records, New York-based Cortland Capital Market is the lead second-lien creditor with $65.6 million on the line.

Recently amended court records indicate Allens owes nearly $287.94 million to primary and secondary lenders, with $108 million of that being unsecured claims. Allens reported assets of $294.46 million, which does not include real property.

The second-lien creditors waived their prior objections to setting a Jan. 28 deadline for the bids, a Feb. 3 auction and Feb. 10 hearing to finalize the sale.

Counsel for Allens told the court the Seneca bid was fair and the only viable offer at this time, while there have been a dozen or so inquiries for due diligence. Company attorneys also added that the break-up fees associated with the deal were in line with court guidelines given the risk assumed by being the first bidder.

Allens still hopes to sell its frozen vegetables business in Montezuma, Ga., in a separate transaction. No deal has been announced for this business segment at this time. The frozen food assets total roughly $32 million, according to court records.

NAMESAKE LOST
Allens has been part of the local business fabric for more 88 years since opening its canning operation near Siloam Springs. The company survived the Great Depression and severe droughts of the 1930s but the corporate namesake won’t likely survive the fourth family generation as its bankruptcy case winds down in 2014.

Last month Allens announced that it hoped to sell its canned food brands to Seneca.

“We are pleased to reach this agreement with Seneca and to begin a court-supervised sales process intended to maximize the value of Allens,” Jonathan Hickman, chief restructuring officer of Allens, said last month.

“We are encouraged by the interest Allens has received and are committed to an outcome that provides the most value for our creditors,” he added.

Bankruptcy experts agree the court has an obligation to get the most money possible for the creditors from the sales of the debtor’s assets. But when the company is sold off in parcels there is no guarantee any of its brands or namesake will survive.

Seneca tried to acquire Allen’s in 2011 in hopes that it would operate as a subsidiary, but after months of due diligence the firms could not reach an agreement and abandoned the deal. This time it looks as if Seneca will hold all the strings, should its bid win the auction by the bankruptcy court.

Seneca Foods is the nation's largest processor of canned fruits and vegetables. The company reported weaker net earnings for the fiscal six months ended Sept. 28 of $8 million, this compared to $22.7 million for the same period in the prior year. However, net sales increased $20.1 million, or 3.7% to $568.8 million in the first six months of fiscal 2013.

Anyone who thought Lt. Gov. Mark Darr, R-Ark., would resign from office Tuesday (Jan. 7) was mistaken.

In a lengthy statement, Darr said he was not only staying put but he went to great lengths to challenge what he said were inaccurate representations of his actions in the media about his admitted misspending of nearly $44,000 in campaign and state funds. As a result of his admitted misspending, Darr has been slapped with an $11,000 fine for 11 different violations of state ethics laws.

"I am not downplaying what has occurred, but there is no scandal, no conspiracy and no malicious intentional disregard of the law. If there were, it would apparently involve multiple offices and agencies," he said. "It was an oversight that should have been noticed and corrected long before now and by multiple people including myself."(His full statement is included at the end of this story.)

Darr said since questions were raised regarding his campaign contribution and expense reports, first reported by liberal blogger Matt Campbell on the Blue Hog Report, he has worked hard to fix errors in his reports.

"Over the past few months I have been diligently working with various state offices to correct errors that were either directly or indirectly my responsibility, but are no more than unintentional mistakes. I have walked through the process, worked cooperatively, and taken responsibility, but the facts have not been accurately presented to the public," he said, adding that he was sorry for the mistakes before adding, "and I will now share the actual facts."

Darr said he loaned $170,000 to his campaign for lieutenant governor in 2010, adding that expenses highlighted in media reports were attempts to repay the loans to himself, adding that he "had every legal right to raise money and retire that debt."

"This is exactly what I did. Unfortunately, I erred in how I reported those payments and fundraising activities, which has been incorrectly interpreted as my using campaign funds for personal use. …I want you to know that at the end of the day, the only money that ever came back to me, in whatever form, was a repayment of campaign debt that was legally owed to me."

Regarding the reimbursement of personal travel expenses, Darr said any reimbursements were for official travel, though he still committed errors in his reporting.

"The error was using my home (in Springdale) as the point of origin instead of the Capitol building."

Darr also said he had saved Arkansas taxpayers money due to his use of a personal vehicle for travel instead of the Arkansas State Police, which he said he is given as a constitutional privilege — the same as the governor.

"This means that I could have spent tens of thousands of dollars of the taxpayer’s money over the past three years by using the Arkansas State Police to provide transportation and security. I could have also purchased, like my predecessor (former Lt. Gov. Bill Halter, D-Ark.), a state vehicle which would cost the taxpayers thousands of dollars. Instead, I decided to use my personal vehicle and was reimbursed mileage an average of $3,000 per year over the past three years. This saved the taxpayers of Arkansas countless tax dollars."

The lieutenant governor said there was no notice given to his office that he must use the capitol building in Little Rock as his point of origin on travel reimbursements. He said a previous annual audit found no irregularities.

Darr addressed the personal use of state credit cards last, saying that the purchases "either for official state use or used by mistake while traveling."

"As soon as the errors were realized, I reimbursed the state for those charges. For some unknown reason, it appears that the State Auditor’s office failed to deposit one of the checks, for which I have proof of payment. I will gladly resubmit this check."

Even though the calls for Darr's resignation have been bi-partisan from Little Rock to Washington and all across Arkansas, he said the facts he presented in his e-mail to reporters did not merit his removal from office, adding that they were also "not worthy of personal attacks on my character and on my family." Several media outlets, including The City Wire, have also asked Darr to resign.

The cost of a special election to fill his position, he said, would run in excess of $1 million, yet another reason Darr said he should stay in office, saving the Arkansas taxpayer money.

"I believe that this course would be best for the state."

Darr said he was not staying in office due to the title or needing a job, but instead he would fight the political establishment.

"Today I put a stake in the ground. Not for this office, not for the title or the job, but I put a stake in the ground for those Arkansans who are sick and tired of these types of political games and the people who play them. It would be an immediate fix to tuck tail and run but I would regret it for years to come. I am a normal citizen, who ran for office, who is trying to do my job to the best of my ability with integrity and character. I am doing what is necessary to make things right and I have a peace in sharing the truth with you today. This has been an embarrassing time for my family and me and when history is recorded I want my children to know that I have owned up to mistakes and made them right. Thank you Kim and so many others for encouraging me to share the truth."

DARR’S FULL STATEMENT
Kim and I would like to thank many people across the state for their calls, texts and prayers during this difficult time.  We have been encouraged by your willingness to stand up for us and beside us throughout this process.  Probably one of the most valuable lessons we have learned over the past few years is the value of friendship. We have been encouraged in good faith to share with the people of Arkansas the factual truth, instead of continuing to remain silent.
 
I am not downplaying what has occurred, but there is no scandal, no conspiracy and no malicious intentional disregard of the law. If there were, it would apparently involve multiple offices and agencies.  It was an oversight that should have been noticed and corrected long before now and by multiple people including myself.
 
Over the past few months I have been diligently working with various state offices to correct errors that were either directly or indirectly my responsibility, but are no more than unintentional mistakes.  I have walked through the process, worked cooperatively, and taken responsibility, but the facts have not been accurately presented to the public. For the errors I made, I apologize to the people of Arkansas and I will now share the actual facts.
 
First, what has not been stated is that in 2010, I loaned my campaign over $170,000 and had every legal right to raise money and retire that debt.  This is exactly what I did. Unfortunately, I erred in how I reported those payments and fundraising activities, which has been incorrectly interpreted as my using campaign funds for personal use.  When this was brought to my attention, I immediately became pro-active to be transparent and correct those mistakes by requesting that the ethics commission review my previous filings for potential errors, which included filing an ethics complaint on myself.  I want you to know that at the end of the day, the only money that ever came back to me, in whatever form, was a repayment of campaign debt that was legally owed to me. 
 
Second, over the past three years I collected almost $10,000 in travel reimbursements that were incorrect. These were reimbursements for official travel.  The error was using my home as the point of origin instead of the Capitol building.  As Lieutenant Governor I am constitutionally given the same privilege that the Governor has in regards to travel and security.  This means that I could have spent tens of thousands of dollars of the taxpayer’s money over the past three years by using the Arkansas State Police to provide transportation and security.  I could have also purchased, like my predecessor, a state vehicle which would cost the taxpayers thousands of dollars.  Instead, I decided to use my personal vehicle and was reimbursed mileage an average of $3,000 per year over the past three years.  This saved the taxpayers of Arkansas countless tax dollars. The Lieutenant Governor’s office is different in the fact that we submit our payment requests to the State Auditor’s office for payment.  The State Auditor’s office would pay the bill or contact us when something appeared to be inaccurate.  No one in my office was ever contacted to make us aware of the policy regarding the Capitol building being the point of origin instead of my home. Furthermore, in a previous annual audit, no findings were issued and the travel reimbursement was not brought to our attention by Legislative Audit. 
 
Third, that I misused state funds by using the state credit card for personal expense.  These were purchases that were either for official state use or used by mistake while traveling.  As soon as the errors were realized, I reimbursed the state for those charges.  For some unknown reason, it appears that the State Auditor’s office failed to deposit one of the checks, for which I have proof of payment.  I will gladly resubmit this check. 
 
These three facts are not worthy of my removal from office and certainly not worthy of personal attacks on my character and on my family. The cost of a special election would be in excess of one million dollars. This cost coupled with the facts that I have outlined concerning my actions, convince me that I should stay in office. I believe that this course would be best for the state.
 
Today I put a stake in the ground. Not for this office, not for the title or the job, but I put a stake in the ground for those Arkansans who are sick and tired of these types of political games and the people who play them. It would be an immediate fix to tuck tail and run but I would regret it for years to come.  I am a normal citizen, who ran for office, who is trying to do my job to the best of my ability with integrity and character. I am doing what is necessary to make things right and I have a peace in sharing the truth with you today. This has been an embarrassing time for my family and me and when history is recorded I want my children to know that I have owned up to mistakes and made them right. Thank you Kim and so many others for encouraging me to share the truth.

A mix of extreme cold and precipitation during the winter months could push the completion date of May 2014 for the Interstate 540 rehabilitation project in Fort Smith and Van Buren off schedule.

The revelation by District 4 Engineer Chad Adams of the Arkansas Highway and Transportation Department would be a worst-case scenario, he said, but it is still a very real possibility.

“It could affect (the) completion date if we have two or three more months of weather like this,” he said. “It will obviously set them back. Maybe not a day for day type of thing. But I know they were counting on getting some work done during these winter months,” Adams said. "We're still estimating their completion date to be the end of May and honestly, at this point, I think they're on schedule to hit that date. if the rest of the winter, if we're like this through March, then we'll probably have to revise that."

There are two primary reasons for the delays — exposure risk to construction workers and regulations on the pouring of concrete and laying of asphalt.

When it comes to asphalt, Adams said the AHTD's guidelines state that asphalt cannot be laid when the surface temperature is below 40 degrees or if there is frost on the ground. When it comes to concrete, state guidelines are slightly different.

"If the (outdoor air temperature) is falling, then when it gets below 40 degrees, they're done. If it's rising, then once it gets to 35 degrees, they can get back to work."

When it comes to rain, work resumes when conditions are dry enough to start working on various segments of the construction, whatever those may be.

As far as the temperatures causing work stoppages or delays due to exposure risks for construction workers, Adams said his department does not make decisions for the project's contractor, Kiewit Infrastructure South Co. of Fort Worth, Texas. But even with temperatures hovering in the single digits on Monday (Jan. 6), Adams said crews were still out working.

"They actually do have some crews, very small crews, working on tying steel on on the bridge deck," he said. "They tie it in place and eventually come back and pour concrete to incapsulate steel in the deck. And we have one crew working on guard rail items."

Even though Kiewit had crews at work along I-540 Monday, Adams said the company has a clause in its contract that eliminates penalties for missing work due to weather.

"Between Dec. 21 and March 15, we do not charge any working days due to the weather," Adams said. "Right now they're on what we unofficially call free time. Either they can get ahead or catch up during this time of the year."

Of the work Kiewit has done, Adams said none of it would be any less quality due to the cold temperatures.

"There's a little expansion and contraction (of metal and steel) with heating and cooling, but they're not tying it down to where it can't expand and contract as they need to."

Dr. Bruce Crabtree, an emergency room physician with Mercy Fort Smith, said anyone who has to work outside was facing real risks Monday and any other days when the temperature starts to dip below the freezing mark.

"In this kind of weather, frostbite would be more likely – especially for people outside in these sub-freezing temperatures," he said.

Frostbite, he said, causes damage to the skin which can result in damage to the flesh. The Mayo Clinic website said it can lead to damage of the skin, tissues, muscle and bones and could "lead to complications, such as infection and nerve damage."

Besides frostbite, Crabtree warned that hypothermia was also a risk in extreme cold.

"The biggest risk is if you're working by yourself, get hypothermic and don't realize it and (you're not) thinking clearly. (You) get out there and die. So it probably wouldn't be a good idea to work alone in these temperatures, for sure."

For crews working construction jobs or anyone else who must work outside, Crabtree said dressing in layers was the most important form of protection from the elements. He said avoiding cotton would also be ideal for individuals who could sweat even in the cold.

"Wearing clothing that is predominately cotton-based is not a good idea in the cold. Moisture from your sweat in the cold is certainly not good. You want (the fabric) to (move) the moisture away."

If an individual is wearing cotton and the sweat cannot quickly repel from the fabric, they do run the risk of hypothermia, Crabtree said. If a person is unsure whether they may have developed the condition, he added that there is one way to find out.

"Shivering is the first sign of hypothermia. The hypothalamus tells the body to start to shake. That's a big warning that you need to get warmed up."

For individuals facing the elements, the surest way to warm up quickly and safely, Crabtree said, would be drinking a warm beverage.

"Drinking warm liquids and keeping warm things in your internal core is a good idea," he said. "Drinking something hot certainly does help. You put calories of heat into your insides. That is far better when you're cold."

Adams said should a cold weather-related injury occur to any contracted crews during this latest temperature drop, it would be the responsibility of the contractor and not AHTD.

"If they have any type of injury or fatality to their employees, the (AHTD) is not liable for those choices that they make."