Expansion of a health and rehab center in Alma and the Sykes call center operation in Fort Smith could add up to 220 jobs in the Fort Smith region – an economically struggling area that has seen several positive job announcements in recent months.

An official with Tampa, Fla.-based Sykes confirmed Tuesday (July 16) that the global “customer contact management solutions” provider will expand its Fort Smith operation located in what was once a portion of Phoenix Village Mall.

"Thanks for your inquiry. SYKES is excited to be expanding our site in Ft. Smith, Arkansas. We are adding about 15,000 sq. ft. to our current facility to support the support needs of a new client. We are currently hiring qualified individuals to join our growing team in Ft. Smith!,” noted an e-mail from Dan Hernandez, executive vice president, global strategies, for Sykes.

Sykes’ expansion in Fort Smith had been rumored, but on Monday night (July 15), Fort Smith City Director Mike Lorenz said during a public meeting that Sykes would be “adding another couple of hundred jobs there.”

Sykes, which employs more than 46,000 at more than 75 locations in 23 countries, opened the Fort Smith operation in early 2011. Sykes was initially recruited to Fort Smith by FSM Redevelopment Partners, the company that purchased the more than 35-acre former Phoenix Village mall property in January 2009.

PHOENIX JOB GROWTH
Lance Beaty, a partner in FSM Redevelopment, told The City Wire that temporary space has been provided for immediate needs, with complete build out of the new space set for the middle of September. The build out costs are estimated at around $600,000, which does not include furniture, fixtures and equipment costs to be paid by Sykes. The total project could be a more than $1 million investment.

Sykes reported 2012 revenue of $1.127 billion, and cash flow from ongoing operations of $86.5 million. Sykes employment in Fort Smith is estimated at 450, with the expansion potentially adding between 150-200 jobs.

“In 2009, buying this old mall seemed like a big risk, but I’d say it’s paid off. It’s been a long time since more than a thousand people came to Phoenix Village to come to work,” Beaty said. “Our little corner of Fort Smith will soon have an annual payroll in excess of $30 million.”

Naples, Fla.-based Health Management Associates announced plans on April 4 to operate a regional service center in Fort Smith that will employ more than 500 with average annual salaries potentially exceeding $40,000. The almost 90,000-square-foot facility also will be housed in what was once a portion of Phoenix Village Mall. HMA estimates the annual payroll will be $21.5 million, with the center at full employment within 12 months. The company is also investing $4 million in furniture, fixtures and equipment for the new center. The facility is scheduled to be ready for operations in early September.

Other businesses located on the Phoenix property includes the Cooper Clinic Pro Med urgent care office, a regional office for AFLAC, Sebastian County Solid Waste office and several retail stores.

Beaty also credited Fort Smith city staff for “being very cooperative to expedite the permitting” for the Sykes project.

ALMA EXPANSION
Alma Healthcare and Rehabilitation, owned by Rogers, Ark.-based Cornerstone Healthcare, is investing $2.4 million in a three-phase expansion that could add up to 20 jobs in the Crawford County community. Cornerstone Healthcare is owned by Allen Kilgore.

A formal groundbreaking is planned for 10 a.m., Thursday (July 18) at the facility located at 401 Heather Lane in Alma.

The expansion will add 10,800 square feet to the existing building, and will include parking lot renovation. A majority of the new jobs will be certified nurse assistants, according to Administrator Debbie Fort. The pay for CNA begins at about $11 an hour, she said. Fort said most of the jobs could be filled within six months.

In a statement prepared by the Alma Area Chamber of Commerce, Fort said the operation is not just a nursing home.

“We discharge an average of 10 to 15 residents a month out of a short­term rehabilitation plan,” Fort said in the statement.

Many patients are recovering from a fracture or stroke and do not require assisted living or long term care. Fort said the work of the facility was to “enhance life and get everyone up to an optimum level of functioning.”

Fort said the new rehab center will allow area residents access to medical services without long trips to other regional facilities.

Lisa­Marie Norris, executive director of the Alma chamber, said the 20 jobs are important to the Alma economy.

“Expanding existing businesses is the heart and soul of economic development. Twenty new jobs in Alma, and especially such high­quality jobs from a top­shelf employer, is fantastic economic development news for the entire region,” Norris said.

The project architect is Guest Reddick Architects from Fort Smith. The structural engineer is Myers­Beatty Engineers from Van Buren. The mechanical engineers are HSA Engineering Consulting Services from Fort Smith, and the contractor is CR Crawford Construction from Fayetteville.

THE JOBS PICTURE
With the possibility of 220 new jobs from the Sykes and Alma Healthcare expansion, new job announcements in the region during the past six months total almost 1,000.
• Phoenix Metals (Chaffee Crossing): up to 40 new jobs, announced March 21

• Health Management Associates (Phoenix Village-Fort Smith): 500 jobs, announced April 4

• Tankersley Food Service, (Van Buren Industrial Park): 20-40 new jobs, announced June 11

• Gerber Foods (Fort Smith plant): $150 million expansion estimated to add up to 90 jobs (The Fort Smith Board of Directors approved on June 4 a bond issuance for the expansion.)

• Answer Fort Smith (Fort Smith): up to 90 jobs, announced June 14

• Sykes (Phoenix Village-Fort Smith): 150-200 jobs (estimated), announced July 16

• Alma Healthcare and Rehabilitation (Alma), up to 20 jobs, announced July 16

Those jobs and more will be needed to return the Fort Smith region to pre-recessionary employment levels. The average annual employment during 2007 in the region was 131,185, according to the U.S. Bureau of Labor Statistics. Following are the annual average employment levels for the five years following 2007.
2008: 130,484
2009: 123,811
2010: 124,532
2011: 122,167
2012: 122,790

As of May 2013, employment in the Fort Smith region was estimated at 123,501.

State education leaders are concerned that a supermajority of Arkansas public schools don’t have the broadband capability to meet forthcoming Common Core testing standards and other digital academic opportunities necessary for the future. Business representatives say the situation is not nearly as dire as projected.

Last Wednesday (July 10), Gov. Mike Beebe (D) convened a group of leaders representing Internet service providers (ISPs), political and educational representatives, and members of the state’s business elite to discuss the subject, which could carry a price tag for upgrades as high as three-quarters of a billion dollars.

“When it became apparent that things weren’t moving fast enough to suit me in the private sector with the proliferation of broadband capabilities, particularly in rural areas, I called everybody together. One of the good things about being Governor is when you send out invitations, they all come,” Beebe said in an exclusive Talk Business interview.

While there is debate about how deficient Arkansas schools may be in positioning themselves for digital learning, there is consensus that the state must improve its efforts.

The 2012 “Digital Learning Now” report from the Foundation for Education Excellence in Education gave Arkansas an “F” for digital learning opportunities. A TechNet Broadband Index listed Arkansas 50th among all states for broadband access in 2012.

According to the Arkansas Department of Information Services (DIS), only a handful of the state’s public schools may have a nationally recommended broadband capability of 100 Mbps per 1,000 students and staff. The average Arkansas school district with 1,800 students has 40 Mbps of bandwidth and needs at least 140 Mbps more, the department concluded.

Business leaders with leading ISPs contend the situation is not nearly as negative as the DIS report projected, and there are myriad solutions to bring the state’s education system up to speed, literally.

Without bandwidth expansion to schools, however, state officials suggest Arkansas students cannot access Common Core testing requirements scheduled to begin in 2014. Common Core is a voluntary set of educational standards for K-12 students to advance their proficiencies in English language arts and mathematics. The standards are designed to ensure that students graduating from high school are better prepared to enter two-year and four-year colleges.

Additionally, more and more course offerings and education materials are requiring Internet access with substantial bandwidth.  For example, the 2013 legislature passed a bill requiring every public school district and public charter school in Arkansas to create a pilot program of at least one digital learning course for students to take.

As other states and countries utilize broadband for distance learning, Arkansas risks falling further behind without action.

TWO WORKING GROUPS
From the Governor’s meeting on July 10, two working groups emerged.

“I charged them with the idea of let’s work together and get this figured out,” Beebe said.

FASTER – which stands for Fast Access for Students, Teachers and Economic Results – will be chaired by Acxiom executive Jerry Jones. It has a heavy business influence in its composition.

The group also includes:
Jeff Gardner, Windstream CEO
Dr. Richard Abernathy, Arkansas Association of Educational Administrators
Kendall Gibbons, Arvest Bank VP for Information Technology
Dr. Don Bobbitt, University of Arkansas System President
U.S. Senator John Boozman (R )
U.S. Senator Mark Pryor (D)
Ed Drilling, Arkansas AT&T President
Morril Harriman, Gov. Beebe’s Chief of Staff
Susan Harriman, Arkansas Department of Education Director of Policy
Walter Hussman, Arkansas Democrat-Gazette Publisher
Dan Rahn, UAMS Chancellor
Jim Walton, Arvest Bank Chairman and CEO
Dr. Charles Welch, Arkansas State University System President
Dr. Sherece West-Scantlebury, Winthrop Rockefeller Foundation CEO
Randy Veach, Arkansas Farm Bureau President
Grant Tennille, Arkansas Economic Development Commission Director
Kathy Smith, Walton Family Foundation
Archie Schaffer, Tyson Foods
Dr. David Rainey, Dumas Public Schools Superintendent

The group was tasked by the Governor with bringing back potential solutions to accelerate broadband activation where it exists and finding alternatives in areas that lack infrastructure. A subset of the FASTER group includes ISP representatives – cable, Internet and phone company executives – who are expected to improve on the accuracy of the DIS broadband capability map.

Cost estimates on how significant of an investment might be needed from the public and private sector vary widely. It could cost as little as $17 million or as much as $765 million, according to state education officials. Business leaders are not willing to make any estimates until they review the broadband inventory data. How the bill might be footed will be a point of debate.

Some variables on the costs involve activating bandwidth in areas where fiber has been laid, but is not in use or is not being used to its full capacity. A Federal Communications Commission program called E-rate 2.0 subsidizes school and library phone and Internet service by as much as 90% of costs.

Lawmakers recently passed legislation to add an earmarked fee to phone bills that could generate $22 million annually for broadband to rural areas of the state, although it has restrictions that could be perceived as discouraging competition between ISPs.

Also, all of the state’s higher education facilities and UAMS are connected to a high-speed fiber network known as ARE-ON (Arkansas Research and Education Optical Network). However, a state law passed in 2011 restricts options for K-12 schools from tapping into this system. The bill prohibits a government entity from providing “directly or indirectly” broadband service. Beebe says he’s aware of the law and sees it as a bargaining chip to encourage the private sector to come to the public school’s aid for K-12 broadband needs.

“There are current restrictions, statutorily – which I understand and I know where it came from,” Beebe said. “So I’m giving the private sector the opportunity to step up and do right and help us solve these problems and invest and that’s the first option. There’s always the option that those restrictions could be removed, you know.”

The second working group tasked with addressing the problem is known as the Quality Digital Learning Study committee. It is working on an educational component to solving the problem. The group, chaired by Dr. Ed Franklin, executive director of the Arkansas Association of Two-year Colleges,  includes:
Dr. Richard Abernathy, Arkansas Association of Educational Administrators
Dr. John Ahlen, former Arkansas Science & Technology Authority director
Claire Bailey, Department of Information Services director
Dr. Jay Barth, State Board of Education
Elizabeth Bowles, Aristotle Internet President & Chairman
Katie Burns, CenturyLink
Cody Decker, Arkansas Department of Education IT Director
Representative Dan Douglas (R-Bentonville)
Adrienne Gardner, Arkansas Science & Technology Authority VP
Susan Harriman, Arkansas Department of Education Director of Policy
Senator Johnny Key (R-Mountain Home)
Dr. Tom Kimbrell, Arkansas Education Commissioner
Representative James McLean (D-Batesville)
Len Pitcock, Cox Communications

This group is charged with identifying the short-term and long-term infrastructure, broadband and digital learning needs of Arkansas public schools as well as devising methods to establish and maintain sufficient broadband capacity for the digital learning environment of the future.

Both groups are pushing to complete their work before the end of this year in anticipation of the 2014 legislative fiscal session. Lawmakers could carve out budget funding for a solution to ramp up the state’s efforts and it is possible that enabling legislation may have to be considered to address the problem.

NEXT: Business, Education Leaders Speak Up
NEXT: Legislative Leaders Address Concerns

Home sales in the area were down for the month of June, pulled down by a more than 50% decline in sales in Crawford County.

The county sandwiched between the region's two largest metro areas saw only 35 home sales during the previous month, totaling $3.096 million in value, a 51.21% decline from the same month last year. At that time, there were 49 homes sold with a value of $6.346 million.

Realtor Jason Kilbreath of Ron Calhoun & Associates said many factors are playing into the decline in home sales north of the Arkansas river.

"There's several factors. One can be the I-540 road work," he said, adding that the construction is causing many people to evaluate commute times when searching for a home.

Other factors Kilbreath mentioned include high gas prices and the possibility of the rural development loan going away. The loans are part of the farm bill, which has become a contentious issue as Congress has been debating renewal of the bill.

"I think the loss of the rural development loan is definitely going to continue to hurt sales. That's what a lot of people, especially first time buyers, that's what they use."

The beneficiary of Crawford County's woes appears to be Sebastian County, according to Kilbreath, who points to the sales for the same period, which only declined 1.9%, holding at $17.138 million with 118 homes sold. In June 2012, the county saw 127 homes sold at a value of $17.470 million.

For the first half of the year, Sebastian County had an increase of 7.78% in home sales, with 564 homes sold with a value of $76.824 million from January to June. The same period last year saw 532 homes sold with a value of $71.277 million.

In Crawford County, only 219 homes were sold during the first half of this year at a value of $23.127 million, a 26.76% drop from the same period last year, when 271 homes were sold at a value of $31.578 million.

With more people looking to buy closer to their workplaces and with more jobs coming to Fort Smith, Sebastian County is ripe for growth, Kilbreath explained.

"I absolutely see Fort Smith outpacing Crawford County with the uptick in jobs and the Barling I-49 interchange, with the 700 jobs that will come in there. That will spur a lot of activity in Sebastian County."

He also sees a housing rush beginning as interest rates on 30-year mortgages have started to increase during the last month. He said as more people try to lock in lower interest rates, the result will be a surge in home sales, especially of mid-sized homes, even into late next year.

"I think for this area for the time, medium-priced homes are the ones that are going to sell pretty quickly. Sebastian County is definitely going to keep the momentum even with the (I-540) construction completed. I think the (potential) loss of the rural development is definitely going to hurt sales (in Crawford County). With the jobs in this area and the price of gasoline, I think you're going to see that Fort Smith is where home sales are going to continue to rise."

Home Sales Data
(January-June)
• Crawford County
Unit Sales
2013: 219
2012: 271

Total Sales Volume
2013: $23.127 million
2012: $31.578 million

Median Sales Price
2013: $104,500
2012: $109,950

• Sebastian County
Unit Sales
2013: 564
2012: 532

Total Sales Volume
2013: $76.823 million
2012: $71.277 million

Median Sales Price
2013: $114,900
2012: $113,000

Environmental consultants hired by Whirlpool submitted a final remedy work plan to the Arkansas Department of Environmental Quality yesterday (July 16) to address pollution of trichloroethylene (TCE) in the area north of its former Fort Smith factory.

In the plan, Whirlpool still pushes for "institutional controls" in order to address the risk posed from the cancer-causing chemical that was used as a degreasing agent by the company during the 1980s.

"These institutional controls will be used as an enforceable mechanism to control potential current exposure to on-site soil and groundwater and potential hypothetical future exposure to off-site groundwater. These institutional controls will be maintained until concentrations of COC meet the remedy objectives for a period of at least four consecutive quarters," the plan read.

An institutional control previously proposed by the company was a ban on the drilling of groundwater wells in the area of the TCE plume north of Ingersoll Avenue. The Fort Smith Board of Directors voted down the proposed ban, though Whirlpool still pushes for what is assumed to be some sort of a ban in this latest report.

"Whirlpool will record restrictive covenants on the site that will require future owners of the property to adhere to the recorded restrictions. In order to meet obligations associated with the off-site restrictions, Whirlpool will pursue off-site institutional controls after the acceptance of the final remedy by ADEQ in cooperation with residents and the City of Fort Smith."

In a memo to Fort Smith City Administrator Ray Gosack dated June 18, Whirlpool's Corporate Vice President of Communications and Public Affairs Jeff Noel said such a ban was still under consideration, even though it was voted down by the Board on March 27.

"Whirlpool Corporation remains committed to a longstanding plan to work with the property owners that were part of the original proposed well drilling ban area. Whirlpool is open to and considering various options to amicably resolve property owners' concerns and claims. Options under consideration include the implementation of a well drilling ban as well as enhanced residential assurances. It is important to note that any potential resolution must be assessed and carried out according to the appropriate legal process, and with full participation of the parties and their legal representatives."

Noel claimed that Whirlpool disagrees "with any claims that property values have been adversely impacted based upon consultation with a national real estate firm." The claim comes after Sebastian County Assessor Becky Yandell's office re-assessed properties in the area affected by the plume, resulting in a cumulative property value decline of 41.2% in the area.

As part of the final remedy work plan, Whirlpool has also specified a "public involvement plan" that will have the company seek public comment on proposed corrective measures to be implemented. The plan consists of the following:
• Establishing a local repository for project documents;
• Compiling a copy of the Administrative Record for public access to the repository;
• Providing public notice of the availability of the record and a request for comments on the record and the proposed corrective measures within 30 days; and
• Conducting a public meeting for all residents and city leaders to review and comment on the final corrective measure.

The document also detailed plans to use chemical oxidation to remedy the problem, which The City Wire reported on in a July 2 report.

"The science is sound and the approach is a proven remedy. There are many sites in the U.S. and Canada that use focused / targeted chemical oxidation to enhance the overall performance of natural attenuation by reducing significant mass in target areas. We are confident this approach is the best solution given the existing understanding of the site and current land uses," said a letter from ENVIRON Corp., the consultants hired by Whirlpool.

"The amount of pressure used during injection will be determined during field activities, as too much pressure could result in short circuiting (daylighting) of the oxidant. However, the addition of pressure at multiple pressure variations / cycles should assist in moving the oxidant further out into the formation, which in turn should increase the effective radius of influence at each injection well. The specific pressures and duration of injections will be field determined based on measured observations."

Whirlpool's plan submitted on July 16 said the plan will be implemented in two different phases. The company will also rely on a process known as Monitored Natural Attenuation (MNA), which the company said includes "a variety of naturally occurring physical, chemical, and biological processes that, under favorable conditions, substantially reduce the mass, toxicity, mobility, volume or COC concentrations in soil and/or groundwater. natural attenuation can be very effective in reducing the mass of COCs including the off-site plume."

Soil vapor monitoring will also be included in the plan, in addition to the monitoring of groundwater.

A schedule included with the document says a public meeting on the plan should take place on Aug. 25.

Link here for a PDF of the Whirlpool's submitted final plan.

Greg Carman’s work to keep 45 trucks profitably engaged in a regional trucking company includes remaining positive, staying focused on priorities and not allowing technology to harm good personal relationships with employees and customers.

Carman’s parents, John and Diana, founded Fort Smith-based Carman Inc. in the early 1980s and grew a company that now employs about 65 people and operates with 45 trucks. Greg runs the sales side of the business, and his younger brother, Eric, manages the maintenance side of the business.

“When we were growing up, Eric was always the fixer. I was good on the sales side, and Eric was good on the maintenance side,” Greg explained, adding that he and Eric are proud to keep a business going that their parents worked hard to create. “We are really able to cover each other. He’s got my back and I’ve got his.”

But Greg admitted that in recent years it’s been tough to remain the “positive influence” a small business needs. Greg, who is active on the Board of Directors of the Arkansas Trucking Association, said the state and federal politics impacting trucking and the years of a tough freight environment caused him to have a cynical outlook. There was a point during which he noticed his negative aura was not good for the company.

“An organization can get bogged down, really bogged down with that (negativity). ... I had to step back and recognize that good things are happening and that you can’t lose sight of the positive things that are happening,” Greg said. “If the head of an organization carries that (negative attitude), then the danger is that it perpetuates.”

The other danger to a small company is when the boss is spread thin with non-business activities. In addition to the ATA Board, Greg is an active board member of Girls Inc. of Fort Smith, serves on the leadership team and Woodlands United Methodist Church, and is an active parent with his daughters who are part of a volleyball program that travels to tournaments in several states.

“I truly have to fight against being spread to thin. I truly have to keep tabs on the priorities. ... I consistently have to do that with myself, because I can get off track so easily,” Greg said.

One of those priorities, Greg said, is in monitoring employees and those important internal relationships within all small companies. Greg said part of that effort involves “hiring and keeping good people who know what they are doing” and let them do it.

“When you find those rare people who work hard and do the right thing, that’s a big help to any business. ... Yes, it allows me to concentrate on that (big picture) and what I need to be doing with that.”

Carman and Eric know the business from the office and the road. Prior to directly managing the business, the brothers worked as drivers. Greg drove for about 2.5 years.

“I thought I would just come in and get a desk and be an executive,” Greg said with a laugh. “But he (Dad) put me in a truck. At the time, I thought my dad was so horribly unfair.”

Greg said it didn’t take him long to realize the driving experience was the best thing his father did for him and his brother.

“We know what it’s like out there. ... We’ve seen just about every problem you can see,” Greg said.

Greg and Eric have worked to modernize operations, but are careful to use technology that allows them to “keep the values of the company” created by their parents. Greg said he’s seen many companies rush to adopt new technology, only to see it backfire when it diminished personal interaction between employees and customers.

“Our niche is with those personal relationships. Our customers know they can call me in the middle of the night. ... Try that with some large outfit,” Greg explained. “The large corporations don’t care about anything other than the price. Where true service is still a concern for them (customer), that’s the niche that I’ve carved out.”

That niche is working well, according to Greg, who said the first of the year began with “lackluster” business, but began to improve near the end of the first quarter.

“When we came out of February, all hell broke loose – in a good way,” Greg explained. “Right now, I’m out of trailers. I’m searching and begging to unload one of our trailers today so that I can load it.”

Another positive is that orders historically slowed in July as many Carman Inc. customers would scale back for plant maintenance or inventory shifts.

“That didn’t happen this year. It’s still going strong out there,” he said.

Online grocery sales continue to grab headline media attention in the U.S. but they remain a small part of the overall market, according to Fitch Ratings.

Fitch analysts don’t see the needle moving significantly in the foreseeable future, citing that online grocery sales account for roughly 1% of the $631 billion U.S. grocery market.

“It’s one of the lowest penetrated categories. Broadly assuming online grocery sales grow at 10% to 15% annually (which is faster than recent growth rates) compared with estimated 3% annual growth for the total market, online sales would grow to only 2% to 3% of the grocery market in the next decade,” noted Phillip Zahn, senior director at Fitch Ratings.

That said, Fitch expects there will be some players to gain share in this category. Existing online-only players like Fresh Direct and Peapod are expanding into new markets but do not offer services anywhere near Northwest Arkansas or 90% of rural America. Amazon is expanding its “fresh” food offerings and Wal-Mart is stretching the boundaries of grocery delivery in test markets this summer, which is likely to payoff in additional market share, according to Fitch.

Bill Simon, CEO of Walmart U.S., recently said the economics of online grocery delivery only work in densely populated areas. He said Wal-Mart is still testing it in a couple of markets, but will remain committed to its own “fresh” campaign and traditional grocery model for the time being. He said if someone else wants to spend their money testing this more broadly, that’s fine with Wal-Mart.

“We have the store count and logistics capabilities to roll it out quickly after the demand is proven,” Simon said.

ASDA, Wal-Mart’s brand in the United Kingdom, has had a successful online grocery business for several years. Simon said the U.S. market density is not there at this time.

Fitch notes several reasons why online grocery sales are not growing more rapidly across the U.S. Near the top of the list is a consumer resistance to delivery fees that can range $6 to $10 per order.

“Most consumers will conclude that the convenience of having their groceries delivered is not worth the added cost,” Zahn notes.

He said online grocers are also confronted by difficult economic factors such as hefty upfront investment costs, logistical challenges associated with delivering perishables, and the inherently low margins associated with the grocery business.

“These factors will limit the number of new market entrants as well as the pace at which existing players expand,” Zahn said.

In a June 20 conference call with analysts, Rodney McMullen, president and chief operating officer of Cincinnati-based Kroger, said Kroger continues to work on getting the scale and profitability needed to make e-commerce a viable service for the company. They have experimented in the Denver market for several years and report modest results. Kroger, a traditional grocer, is the No. 2 retailer in the U.S., according to Stores Magazine.

Wal-Mart, a big box general merchandiser, is heavily invested in grocery. Last year Walmart U.S. had total sales revenue of $274.5 billion, 55% or $150.98 billion of that was grocery.

Kantar Retail analysts said Wal-Mart has become a glorified grocery store and will continue leaning that direction as it expands its Neighborhood Market footprint over the next two years. And home delivery is just one aspect that all retailers will be facing in the future.

Amazon tested its grocery delivery service in Seattle for six years before recently expanding to a limited part of the Los Angeles market.

Fitch expects brick & mortar retailers like Wal-Mart and Kroger to take a more measured approach until the economics of home delivery have proven themselves.

Michael Tarvin was recently named director of chaplain services for Springdale-based Tyson Foods.

Tarvin will be responsible for leading more than 120 workplace chaplains employed by the multinational meat giant. He replaces Chaplain Rick McKinnie, who is retiring.

Tarvin is a U.S. Army veteran with more than 30 years of service, serving as a chaplain with the 82nd Airborne Division and the 25th Infantry Division.

He was a also senior chaplain of Multi-National Corps in Iraq, where he supervised more than 300 chaplains in combat operations.

In addition to multiple military certifications, Tarvin also holds graduate degrees from Boston University, Brite Divinity School and the U.S. Army War College.

Tarvin previously worked as chief of pastoral care at military hospitals at Fort Carson, Colo., and Fort Lewis, Wash.

Fresh meat sold at U.S. grocery stores will soon have a label detailing where an animal was born, raised and slaughtered, with the labels costing an estimated $192 million a year, according to meat industry groups.

The more detailed Country-Of-Origin-Labels also mean that livestock will have to be tracked and segregated within country, and no commingling of animals that commonly moved in and out of neighboring Mexico and Canada.

The expanded COOL rules have drawn a heated reaction from the meat industry, prompting them to sue the U.S. Department of Agriculture, who finalized the rules in May.

Last week, eight organizations representing the U.S. and Canadian meat and livestock industries filed suit in federal court attempting to block the implementation of the mandatory (COOL) rules. Plaintiffs include the American Association of Meat Processors, American Meat Institute, Canadian Cattlemen’s Association, Canadian Pork Council, National Cattlemen’s Beef Association, National Pork Producers Council, North American Meat Association and the Southwest Meat Association.

The complaint said the rules compel speech in the form of costly and detailed labels and the regulation exceeds the scope of the mandate offering little or no benefit to the industry or consumers.

Steve Kay, publisher of Cattle Buyers Weekly, said the rules essentially work to undue a concerted 20-year effort to build a cohesive North American meat industry. He said young livestock commonly move across the national borders and is fed out in the United States. Those animals cannot be commingled under the new rules, which means retailers will likely limit their purchases to U.S. born, raised and slaughtered.

A Consumer Reports survey completed this spring found 78% of respondents said they prefer to buy items manufactured in the United States, most cited retaining manufacturing jobs and keeping American manufacturing strong in the global economy their reasons for buying American.

The American Meat Institute and other plaintiffs note in the compliant that all livestock and meat processed at federally inspected establishments in the U.S. and sold in interstate commerce are subject to the same health and safety requirements prescribed by the federal inspection statutes.


“Those products are also graded for quality according to a system administered by AMS (Agricultural Marketing Service) without variation based on where an animal was born or raised. In short, beef is beef, whether the steer or heifer was born in Montana, Manitoba, or Mazatlán. The same goes for hogs, chickens and other livestock,” the complaint notes.

Mark Dopp, AMI senior vice president of regulatory affairs, said in a recent webcast, “Shoes, may say ‘Made in the USA.’ They do not say ‘Leather from cattle born in Canada, harvested in the USA, tanned in South Korea and processed in the USA’, yet that is the sort of labeling that we are now being forced to apply.”

Retail organizations said the cost of segregating, tracking and labeling meat according to these complex new rules will force them to reject meat sourced from Canada or Mexico and stock only meat with the designation “Born, Raised, and Slaughtered in the United States.”

The complaint notes new labels will need to be larger, and many grocers will have to acquire new weighing and labeling machines to handle the complex sorting of packages for each possible label.

“Segregating and tracking animals according to the countries where production steps occurred and detailing that information on a label may be a bureaucrat’s paperwork fantasy, but the labels that result will serve only to confuse consumers, raise the prices they pay and put some producers and meat and poultry companies out of business in the process. Everyone loses under this rule,” Dopp said.

Processed food such as bacon, or marinated chicken or pork loin are exempt from the COOL requirement, so not all of the meat in the grocer case will bear the larger label.

Dopp said the rule is egregious and will create winners and losers in the meat industry based on geographic location near national borders and those who have the ability to further process and bypass the rule. The plaintiffs have asked the court for an injunction that would repeal implementation, which was supposed to begin July 1.

Kay said retailers are technically out of compliance with the law but are likely hesitant to invest in new labeling equipment until after the court has ruled.

Retailers began their “back-to-school” push earlier this year, but the National Retail Federation expects consumers will shell out $54 less per family this year compared to 2012.


A survey conducted by Prosper Insights & Analytics indicates families with school-age children will spend an average $634.78 on apparel, shoes, supplies and electronics, down from $688.62 last year. 
Total spending on back-to-school is expected to reach $26.7 billion, that does not include back-to-college.


“The good news is that consumers are spending, but they are doing so with cost and practicality in mind. Having splurged on their growing children’s needs last year, parents will ask their kids to reuse what they can for the upcoming school season.” said NRF President and CEO Matthew Shay.


 “As they continue to grapple with the impact of increased payroll taxes, Americans will look to cut corners where they can, but will buy what their kids need. It’s important to note, however, that spending levels are still well above where they were a few years ago,” he said.


Apparel retailers will get the lion’s share of the budget, as 95% of consumers with school-age children will spend an average of $230 on fall clothes and denim.
 Another $114 will be spent on shoes and $90 toward school supplies. Roughly half of the families surveyed plan to purchase electronics, new tablets or smart phones, which are slightly cheaper than a year ago.


Shay said 80% of the respondents said they are scaling back because of economic conditions. One in three said they would turn to the internet to do comparative shopping in hopes of saving some money.


With much of the country returning to school in just four to six weeks, that is only two or three pay cycles for many families.


Roughly half of the respondents said they would shop within one month to three weeks ahead of the first day of school in their areas.


“We continue to see a shift in shopping patterns during big spending events, where consumers typically head out early to take advantage of fresh inventory options and initial markdowns, then see a lull only to rev back up again when final sales appear,” said Prosper Consumer Insights Director Pam Goodfellow.

“They are hoping to spread out their budgets but still reap the benefits of getting the products their children want at the best values.”

Hospitality tax collections in Fort Smith and Van Buren are down for the first five months of 2013, but employment in the regional tourism sector was up during May.

Collections in Van Buren during the first five months of 2013 total $174,969, a slight decline of 0.77% from the $176,327 in the first quarter of 2012.

May collections were $36,898, down 1.2% from the $37,344 in May 2012. The city collects a 1% tax on lodging and a 1% prepared food tax.

Maryl Koeth, executive director of the Van Buren Advertising & Promotion Commission, said mixed results from hotels and restaurants suggest a trend among travelers.

“Lodging receipts are up slightly from this time last year, however, restaurants are down about one percent. This confirms what I am hearing from other tourism areas. Despite a sluggish economy people are still taking vacations. They are compensating for less disposable income by taking shorter vacations, a little closer to home and spending less on shopping and dining out,” Koeth explained.

During 2012, Van Buren hospitality tax collections totaled $425,554, up 5.2% compared to the 2011 collections. Hospitality tax collections in Van Buren during 2011 totaled $429,561, up 2.34% compared to 2010. The 2011 collections ended a two-year skid in Van Buren.

FORT SMITH
Collections in Fort Smith for the first five months of 2013 totals $302,038, down 2.8% compared to the same period in 2012. The gap is improving, however. The first quarter collections were down more than 6% compared to the 2012 quarter.

May collections were $61,457, down 7.9% compared to May 2012. The city collects a 3% tax on lodging. Part of the decline is attributable to a hotel being late with remittance because of a franchise change, said Claude Legris, executive director of the Fort Smith Convention & Visitors Bureau.

Legris said May revenue at the Fort Smith Convention Center was up almost 20% compared to May 2012. However, hotel occupancy in Fort Smith was down 2.7%.

“Early indications for June show another decline in collections because some of the Christian Congregation of Jehovah Witnesses (CCJW) events occurred in June last year and some other convention business last year that did not reoccur in 2013,” Legris explained in an e-mail note. “However the month of July is looking solid since all of the CCJW events have taken place in July and the timing of the AR Sheriff's Association was very good (in between the two CCJW sessions) and the addition of a District AME Church event just after the second CCJW session.”

During 2012, Fort Smith hospitality tax collections totaled $746,182, up 5.37% compared to the 2011 period.

TOURISM EMPLOYMENT, ARKANSAS COLLECTIONS

Employment in the Fort Smith regional tourism industry was 9,300 during May, up from 9,100 in April and more than the 9,200 in May 2012. The sector reached an employment high of 9,800 in August 2008.

Average monthly employment in the Fort Smith metro tourism sector ended a two year decline in 2012. During 2007, 2008 and 2009, the average monthly employment was 9,300. That fell to 8,700 during 2010, 8,500 during 2011, but rose to 9,000 during 2012. The sector reached an employment high of 9,800 in November 2008.

Arkansas’ tourism sector (leisure & hospitality) employed 101,200 during May, down from the 102,300 during April and less than the 102,600 during May 2012. At a revised 103,700, January 2013 marked a new employment high in the sector.

Arkansas’ 2% tourism tax receipts totaled $3.716 million for the first four reporting months of 2013, up 1.4% compared to the $3.663 million during the same period of 2012.

Arkansas’ 2% tourism tax receipts totaled $12.405 million during 2012, up 3.16% compared to the $12.025 million during 2011. The gains marked the third consecutive year of improving tourism tax revenue.

A local farmers market expects new business and continued growth following action taken by the Van Buren City Council this week.

On Monday (July 15), the city council approved an ordinance that would allow vendors selling hand-crafted items to take part in the city's local farmers market. According to Barbara Little, a member of the Van Buren Growers Association, the change was requested in order to grow the farmer's market.

"We couldn't accept crafters and we wanted our market to grow and there was favorable feedback."

Market Master Mitch Carolan said crafts had made a big difference at other farmer's markets across the state, so it was something he and the vendors wanted to try.

"I think it will (help). We'll just have to take a wait and see attitude. All of your other farmers markets, you know what a difference the crafts make. (It doesn't just benefit the craft vendor), it also benefits me (as a grower). Even though I don't sell crafts, you may see some produce you want. Or vice versa."

He said growth at the Van Buren Farmers Market, which started six years ago in downtown Van Buren and now finds itself in the parking lot of the Van Buren Public Library on Wednesdays and Saturdays from 7 a.m. to 1 p.m., has been slowed in recent years due to competition from other markets in the area, such as the Fayetteville Farmer's Market and the much closer Fort Smith Farmer's Market, which allows for the sale of hand-crafted goods.

"We've lost a couple of vendors who have left and gone to Fort Smith because of the crafts. When produce is weak, (crafts) still draw people. It's a win-win situation. We're hoping it does the same for us."

Produce has been especially weak this year, Little said, as unusually cool weather and a first-ever May snow blasted much of Crawford County.

"Our growing season started slow and (crafts) were still not included at that point. The tomatoes and stuff were not as ripe as usual. And vendors were wanting to sell crafts and because it wasn't written in (the city ordinance), we started to lose vendors."

Carolan said some producers did not survive the cold blast, which included several late freezes.

"We had the (cold) front at the first of May. I know people that lost their entire gardens. Generally by the first of May, you're picking cucumbers and stuff, but this year it was so wet and so cool, you couldn't get it planted and coming up without the frost killing it."

Wednesday (July 17) was the first day crafts could be sold and Little said there was quite a variety of goods.

"Today we had hand-made bows and arrows, we had hair bows and jewelry, some art, different things. And braided rugs," she said. "It has to be in accordance with the Arkansas state rules that govern any agriculture products for sale in a farmers market, like people making james and all of that. There's specific guidelines."

Previous attempts to grow the market from only eight vendors to today's count of about 25 vendors have included the incorporation of not only produce, but other foods.

"We have buffalo meat, cattle that are strictly grass-fed beef with no antibiotics," Carolan said.

New types of produce are showing up, as well, from farmers and gardeners who were not adversely affected by this year's unusually cold Spring, according to Carolan.

"Were getting some new stuff. I'm seeing more heirloom vegetables at our market. You're seeing that more and more. They don't want the genetically modified stuff. Another practice I'm seeing is we have very few farmers who use pesticides. Most of our people don't use any pesticides at all."

The result, he said, is better-tasting produce that keeps local shoppers coming back time and time again.

"I buy very little from the store because I know someone at the farmers market will have it. These chain stores, they ship it in and a tomato doesn't taste like a tomato. If I bite into a tomato, I want it to bite me back. I want my green beans to have some flavor to it. We had blueberries a few weeks ago. It tastes nothing like what you get in the store," he said. "There's no comparing truly fresh produce to what you buy in the store. There's truly no comparison. It's like comparing a cactus to a rose. You can't compare the two."

Simmons First National Corp. posted second quarter 2013 net income of $6.58 million, a slight increase from the $6.54 million it reported one year ago.

The Pine Bluff-based financial institution pointed to several improvements in its metrics.

“Considering interest rates continue at historical lows, we were pleased with our 5.3% quarterly EPS increase. More so, we were pleased with the positive trends in our balance sheet, as reflected in our normalized organic loan growth of approximately 3%, which enabled us to produce a net interest margin of 3.96%. The organic loan growth, coupled with strong asset quality, bodes well for the balance of the year,” said George Makris, CEO-Elect.

Makris also noted that loan growth was improving, but he stopped short of declaring a full-blown rebound in lending activity.

“This was the third consecutive quarter of organic loan growth. While still not enough to call a trend, we believe it is very positive in that the growth is coming throughout our markets in Arkansas, Kansas and Missouri. Needless to say, the economy remains in a slow recovery, which makes this growth even more significant,” Makris said.

Key operational highlights from the quarter include:
• Total loans were $1.9 billion at June 30, 2013, an increase of $149.7 million, or 8.8%, compared to the same period in 2012.

• Loans acquired in FDIC-assisted acquisitions grew $113.0 million, net of discounts, and legacy loans (excluding acquired loans) grew $35.7 million.

• At June 30, 2013, total deposits were $2.8 billion, an increase of $183.8 million, or 7.0%, compared to the same period in 2012.

• Net interest income for the second quarter of 2013 was $29.6 million, an increase of $2.3 million, or 8.6%, from the same period of 2012.

• Non-interest income for the second quarter was $11.3 million, an increase of $180,000, or 1.6%, compared to the second quarter of 2012.

Simmons First (NASDAQ: SFNC) shares closed trading on Wednesday at $27.95. During the past year, the company’s stock has ranged between a low of $22.36 and a trading high of $28.00 per share.

HOMEBANCSHARES
Home BancShares, Inc., parent company of Centennial Bank, saw second quarter net income rise to $17.7 million, up from $15.5 million one year ago.

The Conway-based bank holding company recently acquired Jonesboro-based Liberty Bancshares for $280 million.

“The second quarter’s record net income is another exceptional achievement for Home BancShares,” said John Allison, Chairman. “We also continue to exhibit strong capital levels, which remain considerably above the regulators’ capital requirements. These strong reserves placed us in a position to participate in an opportunity like the recently announced Liberty Bank market acquisition. Merging these two similarly sized Arkansas-based companies with comparable cultures and history is a game-changer for Home BancShares. We are confidently optimistic of the company’s continued bright future when Liberty gets on board.”

Key operational highlights from the quarter include:
• Net interest income for the second quarter of 2013 increased 14.5% to $44.8 million from $39.2 million during the second quarter of 2012.

• Non-interest income fell to $9.8 million compared to $11.1 million for the second quarter of 2012.

• Total non-covered loans were $2.34 billion at June 30, 2013 compared to $2.33 billion at Dec. 31, 2012.

• Total covered loans were $329.8 million at June 30, 2013 compared to $384.9 million at Dec. 31, 2012.

• Total deposits were $3.33 billion at June 30, 2013 compared to $3.48 billion at Dec. 31, 2012.

• Total assets were $4.09 billion at June 30, 2013 compared to $4.24 billion at Dec. 31, 2012.

“For the ninth consecutive quarter in the company’s history, we have again reported the most profitable quarter, increasing net income by $111,000 or 0.6% from our previously reported record earnings,” said Randy Sims, Chief Executive Officer. “Not only did the company display an outstanding return on average assets of 1.71% for the second quarter of 2013, but we also improved our net interest margin by 53 basis points when comparing the second quarter of 2013 to the second quarter of 2012.”

Home Bancshares (NASDAQ: HOMB) closed trading on Wednesday at $27.23 per share. The company’s stock has traded between $14.75-$27.93 in the last 52 weeks.

The Alcohol Beverage Control of Arkansas approved 37 permits for new liquor stores in Benton County during the past three full days of hearings held in Little Rock.

All but three of the 55 cases were heard prior to the close of business today (July 18). This story will be updated with the final three cases at the start of business on Friday (July 19).

The first liquor stores in the county are slated to open by mid-August, as the ABC requires a 30-day waiting period.
 
Following is the tally of stores by city:
Rogers 15
Bentonville 11
Lowell 3
Gentry 3
Bella Vista 1
Pea Ridge 1
Siloam Springs 1
Centerton 1
Garfield 1

See the this map for the exact locations.


Rick Crisman, deputy director of education for the ABC, said during a previous townhall meeting in Bella Vista that it is perfectly plausible some cities would not get a store because of the random nature of the lottery process.

“Rogers might get 15 or 5, it’s just the luck of the draw,” he said.

There were a total of 72 applicants that returned the paperwork and paid the fees to get into June lottery for 55 permits, which is based on the county’s population. Those lottery winners faced the ABC board this week after their proposed locations across Benton County were checked out by the commission.

On Tuesday (July 16), the board approved eight permits and denied three. Wednesday’s round handed out 14 permits and denied seven, most were declined because six of the proposed sites were deemed too close to a church. State law requires liquor store locations be a minimum of 1,000 feet from a church, school or daycare facility.

During Thursday’s proceedings the ABC approved 15 permits, and most of those were in Rogers and Bentonville. Garfield, Bella Vista and Pea Ridge each had one site approved.

A study conducted by the University of Arkansas estimated that Benton County was missing out on $33 million annually because of its “dry” status.  The county was “dry” from 1944 until a major campaign garnered roughly 40,000 signatures to get on the general election ballot in November 2012.

The rest they say is history, and voters overwhelmingly supported the “wet” initiative and the county began selling beer and wine this past spring.  More than 300 applicants submitted applications for retail liquor stores, but less than one-third of those completed paperwork and submitted the $2,000 fee. Not everyone who wanted a permit and won a lottery spot got the go-ahead to move forward. There were a total of 15 applicants whose proposed sites were denied over the past three days.

Crisman recently said the major reasons applications are denied is because the locations are too close to schools, churches and daycare facilities or the applicant already owns an interest in another liquor state in the state.

Robert McCurry was denied because the commission said he owns stock in Gild Corporation, doing business as Macadoodles. State law prohibits anyone with a financial interest in a liquor store from getting a second permit.

Crisman said for example Wal-Mart has the one permit in Arkansas in its Fayetteville Sam’s Club and while they can get beer and wine sale permits in multiple stores, they are not able to obtain another liquor store permit.

A denial can be appealed in circuit court within 30 days, according to a ABC spokeswoman. If there is no successful appeal, the ABC will offer those permits to the applicants next in line.

Tim Harrell, who operates Mac’s Get & Go in Bella Vista, received a conditional permit on Thursday. Two other applicants hoping to put stores in the city were denied.

Natalie Hasenbeck, with Bella Vista Wine & Spirits at 8830 W. McNelly Road, was denied because there were two churches within 1,000 feet of the proposed site on McNelly Road. Jerry Brown did not appear for the hearing and his proposed site at 17333 U.S. 71 was also denied.

The city of Rogers lost out on six proposed sites, and Bentonville applicants had four declined. Siloam Springs and Bella Vista also had applications declined.

PERMIT APPLICATIONS DECLINED
Lidia Almaraz, Rogers Liquor, 1303 Walnut, Rogers

Stephen G. Baucom, Baucom’s Beverage, 2501 E. Central Ave., Bentonville

Jerry L. Brown, Bella Vista Liquor, 17333 Highway 71, Bella Vista

Joseph S. Capko, JJ’s Lakebound Liquor, 2403 No. 2nd Street, Rogers

Angela Cate, Squeaky’s Liquor, 206 S.W. 14th Street, Bentonville

Johnny L. Dillard, Veteran Spirits, 13977 Gentilly Road, Rogers

Eric C. George, High Spritis, 702 South Mt. Olive Street, Siloam Springs

Aimee R. Hasenbeck, Bentonville Wine & Spirits, 1720 So. Walton Blvd.,Bentonville

James R. Hasenbeck, Bob’s Liquor, 212 East Spruce, Rogers

Natalie S. Hasenbeck, Bella Vista Wine & Spirits, 8830 W. McNelly, Bentonville

Quintin W. Hilburn, Beaver Liquor, 1826 No. 2nd Street, Rogers

James C. Linstruth, Linstruth’s Wine and Liquors, 2501 North 4th St., Unit F, Rogers

Robert W. McCurry, Fine Wine & Spirits Store, 2503 SW “J” Street, Bentonville

Katherine K. Moore, Tipsy’s wine and Fine Spirits, 1705 So. 8th, Rogers

Patsy J. Simmons, Susie Q Liquor, 612 No. 2nd Street, Rogers

PERMITS APPROVED
Gary Eckel, Elkhorn Liquors, 16727 Highway 62, Garfield

Garland Hall, 1206 NW Walton Blvd. No. 4, Bentonville

Susan Hall, Jones Brother’s Beverage, 1206 NW Walton Blvd. No. 6, Bentonville

Sarah Gildenhaus, Guess Who, 3700 SE Rainbow Road, Bentonville

Jeffery Stokes, Stock Tank Liquor, 2270 Hwy. 412 E., Siloam Springs

Alayna K. Bennett, Mighty Nice Wine & Spirits, 3403 SE J Street, Bentonville

James T. WIllett, J & D Liquors, 14161 East Hwy. 12, Rogers

Heath Hasenbeck, Roger’s Wine & Sprits, 702 West Cypress Street, Rogers

Patrick Travis, Latte Da, 808 South 52nd St., Rogers

Sopheak Srunn, B J’s Liquor, 1902 S. 8th Street, Rogers

Judith Castor, The Liquor Steer, 215 W. New Hope Road, Rogers

Nicholas W. Southerland, Dr.’s Orders, 541 West Hudson Road, Rogers

John Lawrence, Junior’s Package Store, 2601 West Hudson Road, Rogers

Timothy Harrell, Mac’s Get & Go, 2822 Bella Vista Way, Bella Visa

Chad Smith, Chad’s Beverage Shop, 139 No. Curtis, Pea Ridge

Charles L. Jech, C & J Liquors, 129 Fowler, Suite A, Gentry

Brittany P. Wilks, B & G Liquor, 2100 W. Hudson, Ste. 4, Rogers

Sammy S. Leng, Kay’s Wine and Liquors, 2518 So. 18th, Rogers

Kyle D. Castor, II, Still at the Tracks, 401 W. New Hope, Rogers

Michael G. McGooden, McGoo’s, 2998 Hwy 412 East, Siloam Springs

Charles O. Reeves, Gentry Spirits, 129 Fowler Street, Suite D, Gentry

Erik P. Danielson, Walton Blvd. Wine and Spirits LLC, 406 Razorback Rd., Bentonville

Kerry D. Castor, City Sliquors, 1201 West Monroe, Lowell

Rita Bajwa, Beverage Mart Liquors, 7403 SW Regional Airport Blvd., Suite 2, Bentonville 

Michael F. McKenzie, Finnegan’s Wine and Spirits, 1301 No. Walton Blvd., Ste. 1, Bentonville

Matthew E. Giess, It’s All Good Liquor, 1717 West Walnut, Rogers

Joshua C. Kyles, Highway 12 Liquor, Corner of Hwy 12 & SW Bright Road, Bentonville

Lillian E. Fowler, Bridge Store Liquor, 15479 E. Highway 12, Rogers

Kym M. Reeves, 102 Liquors, 2501 No. 4th Street, Ste. A, Rogers

Jeremy D. Avance, Crossroads Liquor, 1401 So. Walton, #15, Bentonville

Nathan D. Strayhorn, Nathan’s, 1220 East Centerton Blvd., Centerton

Sheldon J. Nuhfer, Wine Basket, 207 East Monroe, Suite B, Lowell

Christopher E. Moore, Fosters Spirit Shop, 2090 W. Pleasant Grove Rd., Rogers

Sokunthea Sou, Tims Discount Liquor, 2328 So. 8th Street, Rogers

Parminder Singh, Liquor Haven, 1200 SE 14th, Suite 2, Bentonville

Vance M. Puttkammer, L. A. Liquors, 504 West Monroe, Lowell

Phillip E. Lee, South Walton Spirits, 1104 So. Walton Blvd., Bentonville
 

House flipping is up 256% in Arkansas, but those involved in buying and renovating a home for a profit say the process is tough and risky in smaller metro areas.

RealtyTrac reports 136,184 single family home flips in the U.S. during the first six month of 2013. A flip is where a home is purchased and subsequently sold again within six months. Nationwide home flips rose 19% in the first half of 2013, compared to a year ago, and they were up 74% from the first half of 2011.

Arkansas reported 923 flips this year, up 256% from a year ago.

The results in Arkansas counties did not gather that much steam, but Pulaski County did make the top 40 metro areas with 245 flips recorded in the first half of this year. Flip activity there rose 195% from the same period in 2012, according to RealtyTrac.

Benton County reported 109 home flips in the six-month period, up 8% from the same time in 2012. However, activity is down from 151 flips recorded in the same period of 2011. Washington County showed 7 flips this year, down from 11 reported a year ago and 38 recorded in the first half of 2011.

Sebastian County had 2 flips so far this year, falling from 5 in the same period of last year and 14 recorded in the first half of 2011. Crawford County also showed 2 flips, but that was an increase from zero recorded in the same period of 2012, according to RealtyTrac.

“While flipping continues to be profitable in most markets, particularly those where the home price recovery is still nascent and a recent rebound in foreclosure activity allows investors to find distressed inventory at a discount, home flipping is tapering off in markets where fewer of those distressed bargains are available,” said Daren Blomquist, vice president at RealtyTrac.

He said about a third of the 100 markets analyzed by RealtyTrac had declining flip numbers. Some of those include longtime perennial hot spots such as
Las Vegas, Phoenix, Southern California and Atlanta.

Blomquist said flipping remains on the rise in more than two-thirds of the markets, including New York, Washington, D.C., Chicago and several Florida metros.

PROFITS VARY
Mike Maxwell, an agent with Crye-Leike Real Estate in Bentonville, said he flips a couple of homes a year and there is no perfect formula for success.

The key to profitability often lies in the price paid, he said. Classic rookie mistakes by investors often include paying too much for the property and underestimating the cost of repairs and the timeline needed for a successful flip.

“In this market, investors need to allow six months to move the home, and that doesn’t necessarily include the renovation timeline,” Maxwell said.

He said a home bought at $100,000, in need of $20,000 in repairs, should bring a sales price of $155,000 to make money for the investor after marketing costs.

“Investors need to know most of the time their investment is tied up in the cost of repairs and carrying costs until that property is sold, or refinanced and kept as a rental. That can be several months,” he said.

Grant Morris of Fort Smith knows how long it can take to complete a house flip in smaller markets. In April 2010, Morris and his wife Lindsey purchased a home with a partner Kevin Childers. It took them 16 months to complete the extensive renovations, most of which they did themselves.

“We spent $20,000 in total renovations and put the home on the market in September of  2011 and it sold in May 2012. It was a two-year commitment for us,” Morris said.

He said given the time commitment of the project, he doesn’t think the partners were justly compensated based on the sales price.

“In my opinion the formula to flip homes the right way is: Buy low, hire the time-consuming work out (staying within budget), remodel as cheap and as fast as you can, remodel to the surrounding neighborhood (don't over do it) and get it back on the market for quick sale,” Morris said.

Nationwide, investors fared quite well with an average profit of $18,391, a 9% gross return over the purchase price.

Investors in Benton County got an 11% return over investment with a flipped price of $114,928, up $10,652 over the average purchase price in the first six months. In Crawford County, the average flip price was $6,645 lower than the purchase amount in the two flips recorded this year. The average purchase price in Sebastian County was $136,500 and the sales price was $121,000, an average net loss of 11%. In Washington County, home flippers lost an average of $7,614 per deal. The average purchase price was $112,614 and the flips averaged $105,000.

Blomquist said nationwide investors who flipped during the first half of the year benefited from buying homes a discount of 5% and then getting a 1% premium sales price over market value.

Maxwell said it’s hard to do in smaller markets like Northwest Arkansas or Fort Smith.

“When the foreclosures dried up in recent years its been very difficult to pull off. But now that bank-owned properties are starting to come back into the market there should be a few more deals available,” he added.

WORDS OF ADVICE
Morris and Maxwell said home inspections are a must and the $400 is small compared to thousands of dollars that could be spent from rot or termites.

“We had to completely gut the kitchen and bathrooms even taking out subfloors, which added to our timeline and costs,” Morris said.

Maxwell said most foreclosures are bought “as is” but a home inspection is still a good idea because the last thing a flipper needs is a costly surprise to derail his budget and his timeline. Maxwell has a contractor’s background so he does a lot of the work himself on the flips he completes.

Morris said looking back he would hire out as much as he could afford to do and still make a profit.

“We would have made about the same amount of money and been done approximately a year sooner if we would have hired the work out,” he said.

Maxwell and Morris said another classic mistake is to overdo the renovations.

“You have to remember that this is not your home, stick to neutral colors and keep the finishes within budget or you will see your profits slip away,” Maxwell said.

Morris urges prospective investors to keep the renovations within the scope of the rest of the neighborhood.

“We would like to flip again in the future, if the opportunity is right,” he said.

With a June jobless rate of 7.3%, Arkansas was one of six U.S. states to not see a jobless rate change compared to June 2012. Year-over-year jobless rate decreases were posted in 37 states.

Although the jobless rate remained the same compared to June 2012, the size of Arkansas’ labor force fell 1.67%, and the number of employed fell by an estimated 20,949, or down 1.66%.

The number of employed in Arkansas during June was 1.234 million, down compared to the 1.255 million in June 2012, according to a Friday (July 19) report from the U.S. Bureau of Labor Statistics.

The number of unemployed fell from 99,352 in June 2012 to an estimated 97,667 in June 2013. The number of unemployed increased by an estimated 628 between May and June.

The workforce size shrank from an estimated 1.354 million in June 2012 to 1.332 million in June.

Arkansas’ annual average jobless rate fell from 7.9% during 2011 to 7.3% during 2012.

ARKANSAS SECTOR NUMBERS
In the Trade, Transportation and Utilities sector — Arkansas’ largest job sector — employment during June was an estimated 251,500, down 1,400 from the May number and ahead of the 241,000 during June 2012.

Manufacturing jobs in Arkansas during June totaled 154,300, down from the 154,400 in May and below the 155,700 in June 2012. Employment in the manufacturing sector fell in 2012 to levels not seen since early 1968. Peak employment in the sector was 247,300 in February 1995.

Government job employment during June was 214,900, up from 214,700 in May and below the 216,000 during June 2012.

The state’s Education and Health Services sector during June had 174,400 jobs, down from the 174,900 during May and up from 170,700 during June 2012. Employment in the sector is up more than 20% compared to June 2003.

Arkansas’ tourism sector (leisure & hospitality) employed 102,500 during June, up from the 102,300 during May and slightly less than the 102,600 during June 2012. At a revised 103,700, January 2013 marked a new employment high in the sector.

NATIONAL DATA
The BLS report also noted that 37 states had unemployment rate decreases from a year earlier, seven states had increases, and six states had no change. The national jobless rate was unchanged from May at 7.6%, and was down from the 8.2% in June 2012.

Nevada had the highest unemployment rate among the states in June at 9.6%. The next highest rates were in Illinois and Mississippi, 9.2% and 9%, respectively. North Dakota again had the lowest jobless rate, 3.1%.

The June jobless rate in Oklahoma was 5.2%, up from 5.1% in May and unchanged compared to June 2012.

Missouri’s jobless rate during June was 6.9%, up from 6.8% in May but below the 7% in June 2012.

How large of a gap do Arkansas public schools have in broadband access? The gap in bandwidth may be as large as the gap in communication between state educators and Internet service providers, but both are likely to close quickly.

“I think there’s just this huge ravine of communication between the providers in our state and our school people and DIS [Department of Information Services] and us,” said Arkansas Education Commissioner Tom Kimbrell.

Last week, Gov. Mike Beebe (D) convened a group of leaders representing Internet service providers (ISPs), political and educational representatives, and members of the state’s business elite to discuss the subject. The outcome of the conclave was a business-focused group named FASTER (Fast Access for Students, Teachers and Economic Results) and an education-centered task force (the Quality Digital Learning Study committee) charged by the legislature to address the issue of Arkansas’ public school bandwidth shortcomings.

Education leaders are concerned that the state’s schools are woefully deficient in broadband access. According to DIS, only a handful of the state’s public schools may have a nationally recommended broadband capability of 100 Mbps per 1,000 students and staff. The average Arkansas school district with 1,800 students currently has 40 Mbps of bandwidth and needs at least 140 Mbps more, the department concluded.

Industry officials contend the DIS map does not represent the true condition of the state’s broadband capabilities.

The FASTER group has already met a second time and there is a sense among educators and providers that a solution may be fashioned in quick order. The first priority, however, is working with accurate data.

“I think the need for accurate, better data needs to be priority one with all of the task forces right now,” says Cox Communications director of government affairs Len Pitcock, who serves on the QDLS committee. “The data to a large degree that’s being used that indicates there are some problems is based on what the districts are operating on today, not what’s available to them.”

Pitcock is quick to point out that he’s complimentary of the latest efforts and is encouraged by his company and the industry’s goal of being part of the solution. So is AT&T’ Arkansas President Ed Drilling, who serves on the FASTER panel.

“I do think there is a little bit of a disconnect,” Drilling says. “There is a lot more fiber, a lot more bandwidth capability in the state.  It looks like there’s this deficit – and there is in terms of what’s being delivered to the schools – but I don’t think in all cases it’s a matter of lack of infrastructure. I think it’s just a matter of putting the components together and people making sure they let the providers know what speeds that they want and us getting together and communicating directly that this is available and doable.”

Pitcock and Drilling note that while some bandwidth activation will be simple to achieve because the infrastructure is already in place, there will be impediments in certain areas of the state.

Parts of Arkansas have limited broadband access due to low population, which makes it unfeasible for private industry to earn a return on its investment.  Subsidizing service in these areas is likely the only solution for funding bandwidth expansion.

Geography can be a challenge in other areas where mountainous terrain doesn’t allow for lower cost broadband deployment and it can be expensive to lay fiber in the ground.

Arcane restrictions on dedicated broadband funding sources also can limit the number of competitors in a region of the state or curtail the list of Internet providers capable of accessing monies.

“If you’re talking about taking last mile broadband to Snowball, Arkansas or to Deer, Arkansas, especially if you’re going to use government funds, it seems like there ought to be a competitive element to that as opposed to just defaulting to the incumbent phone company to have exclusive access to those monies,” Pitcock noted.

Drilling says that once a broadband map is updated to reflect Internet service providers’ capabilities – which he feels will be done rapidly – the debate will shift to how to get schools what they need and what the price tag might be from private industry, public schools and possibly the state.

“I think it’s a good opportunity for us to look at this from a comprehensive standpoint and coming up with something other than a piecemeal or band aid approach,” he said. “We can come up with some good long-term solutions – and mid-term and short-term solutions – to help the kids in this state.”

Pitcock agrees.

“One home, one school without access is one too many, but at the same time I think we also have to recognize that there have been billions of dollars invested – most of it private capital – to get it out to the overwhelming majority of Arkansans today.”

A federal government program known as E-rate 2.0 may offer a funding solution. The Federal Communications Commission program subsidizes school and library phone and Internet service by as much as 90% of costs.

THE DRIVER
Education Commissioner Kimbrell says that meeting testing requirements for new Common Core standards is part of what’s driving the bandwidth debate, but the problem extends far beyond this one element.

“It is true that’s what’s brought it to the forefront because we have some timelines, but what really has happened over the last four years, and before that, is a lot of conversations about how we use today’s technology – knowing that tomorrow’s technology will be upon us in no time – to use innovative tools of today with our students. How do we get those tools accessible to our teachers, so they can use them effectively to communicate with today’s learners?” Kimbrell said.

He is hoping for a private-public partnership that will provide 100% broadband coverage at the levels needed to the state’s school children. If the private sector can’t cover its costs in certain areas, Kimbrell says alternatives, such as tying on to higher education’s ARE-ON network, should be considered.

He understands that all of this effort may have a steep price tag. Some have lowballed the cost at $17 million, while others have estimated it as high as $765 million.

“Our first priority and our goal is to work out a private-public partnership in which we’re providing adequate bandwidth to every school, and private industry is not losing out because of it and our public schools and our students are not losing out because of pricing. We want to work out a situation that’s a win-win for everybody,” Kimbrell said.

He’s hoping that all of the working groups can complete their studies by December of this year in order to present the findings to the Governor and Arkansas General Assembly before next year’s legislative fiscal session.

Kimbrell also said that the investments he hopes to see in broadband could be transformative for the state’s education system. He doesn’t see the payoff from bandwidth expansion taking a generation to appear in better educated kids; he thinks the results will be immediate.

“I think in reality we could get there really, really quick,” he said.

One of the largest pharmacy chains in the country – CVS Corporation – recently met with city planning officials in Bella Vista about a proposed 13,225 square-foot store location along Highway 71, near Dartmoor Road.

Chris Suneson, city planning director, said earlier this month the commission approved a large-scale commercial development that would replace the two buildings now in use by Decker Eye Clinic and Mac’s Get & Go, a convenience store and gas station. He said the deal would mean Timothy Harrell and Mac's Investment Group who owns both properties will have to sell to CVS.

Suneson said CVS wants that location because of its proximity to the large new Mercy Clinic under construction around the corner. He said the proposed plan widens Dartmoor with a designated right turn lane into the CVS site which would occupy the entire corner with a retail store and 70 parking places.

CVS did not return four phone messages left over the past week, but the retailer has said publicly it will continue expanding its square footage by 3% this year. CVS opened 37 new retail drugstores and closed nine in the first quarter of this year. In addition, the company relocated 15 retail drugstores and had 7,531 locations in 45 states as of March 31.

Arkansas would be a new market for CVS, but the retailer is heavily invested in all of Arkansas’ border states. There is one CVS pharmacy in Texarkana, Ark., and Bella Vista would be the retailer’s second location in the Natural State.

On Monday (July 22) Fayetteville's planning commissioner approved plans for a CVS Pharmacy at  College Avenue and Township Street on the site of the Days Inn motel. LIke with the proposed site in Bella Vista, demolition will be necessary before CVS can build.

CVS has six months to obtain a building permit for the proposed development, according to Suneson. But first, the company will have to purchase the property from Harrell’s group.

Harrell opened Mac’s Get & Go two years ago and began selling beer and wine this spring after the country’s “wet” vote in last November’s general election. He received a liquor store permit last week by the Arkansas Alcoholic Beverage Control, and he told The City Wire on Monday (July 22) he was still weighing all of his options about where to put the new store.

Mac’s Get & Go also sells fuel, so Harrell can’t move the liquor store into that location because of the tanks out front. State law prohibits liquor stores from also selling fuel. He told the commission last week that he would either remove the pumps or build a separate facility. He hopes to be selling liquor within 90 days.

Harrell was the only liquor permit approved in the city of Bella Vista last week – a town of about 27,000, according to Census data.

Two other liquor permit applicants were declined because of their proximity to churches. Bella Vista has limited commercial space along U.S. 71, but there are a few other options for Harrell’s group if they do decide to sell out to CVS.

The site that Wal-Mart hoped to acquire for a Neighborhood Market, just two blocks to the north of Mac’s Get & Go, is still for sale. That property is owned by Betty Garcia and zoned for a small scale commercial development such as a liquor store.

Bella Vista Alderman Jerry Snow said the proposed CVS development timing is in sync with the Harrell obtaining a liquor permit and it will be interesting to see what his investment group decides to do – sell out and rebuild or stay put and renovate.

A growing number of regulations, a decreasing number of skilled workers and slow regional economic growth are just some of the issues challenging area homebuilders, according to Dave Hughes, executive director of the Greater Fort Smith Association of Home Builders.

That said, the association that was formed in 1955 has been a leading organization nationwide in the promotion of quality housing. The association is one of very few that still conducts two parade of homes events each year. Just a few years ago, the association was recognized nationally for 25 consecutive years of constructing and selling a showcase home.

“No other organization like ours, anywhere in the country, has done that for that long,” Hughes said.

The association today has 154 member companies who employ at least 8,500 people in the region, with most of those in Crawford and Sebastian counties.

According to Hughes, a majority of housing related businesses in the region have remained in business despite an almost 40% drop in home sales between 2006 through May 2013.

“The good news is, most builders and suppliers did not go out of business. ... It’s not been easy, but they’ve found ways to stay in business,” Hughes explained. “Most of our members are locally owned, and so they are invested in the community and they want to see it grow. ... At the end of the day, all a builder really has is his reputation, so they work hard to protect that.”

Hughes said the effort to stay in business becomes more difficult every year as the industry faces more federal and state rules. Most of the rules that Hughes says are “overreaching” deal with energy efficiency and building codes that go beyond “common sense.”

“To an extent and for public safety, you have to have good codes for safety standards and fire standards. But we’re approaching what I think is a tipping point with overreaching federal regs that are pushed down through state and local governments,” Hughes said.

With new energy efficiency rules mandating the types of windows, insulation, plumbing and other housing materials, the cost/benefit ratio soon gets out of whack, according to Hughes.

“The bottom line is that it will cost more to build a home ... and so you price families out of new homes and they stay in older homes or stay in apartments that” are much less energy efficient than homes built under older energy efficiency rules, Hughes said.

“So if your goal is to improve efficiency, but you price everyone out of the market, then what have you gained? Nothing,” Hughes said.

The local association is also working with the National Association of Home Builders to oppose efforts to reduce or eliminate the mortgage interest deduction.
www.nahb.org/

“They’ve (Congress) been trying to cut that for years, but it does help stimulate the market. I would think that, with the economy finally showing some life because of a better housing market, I would think they wouldn’t want to mess with that right now,” Hughes said.

Something else that would stimulate the industry would be a return of skilled trades training. Hughes said over the years there has been less instruction available for skills required by the housing industry because of the greater focus on college degrees. He argues with those who say a college degree is the best path to a good job.

“That’s not true. Call a psychiatrist the next time your toilet stops up. ... Look, we have a real dearth in incoming skilled trades people. It’s not just here in our area, it’s everywhere,” Hughes said.

He recently spoke to a group of high school students and encouraged them to consider the benefits of a skilled trade.

“I essentially told them, ‘Not all of you may finish college, but that doesn’t mean you won’t be successful,’” Hughes said of his remarks to the students.

In addition to a skilled workforce, Hughes said the Fort Smith regional housing market also needs more higher-paying jobs in the area. He realizes the manufacturing sector is not likely to return to its glory days, but an economy of service sector jobs is not good for the industry.

“Well, for starters, more jobs created than we’re losing,” Hughes said when asked what would provide more stability to the local housing sector. “Specifically, what we need are those $20-an-hour jobs that we had when manufacturing was so stable for so long.”

Retail is tough business even in the best of times, and for Max Ryan, who is closing his Springdale clothing store after 47 years, it’s a crossroads into retirement.


Ryan’s is one of just a few family-owned retailers in the region, and the store has been open more than four decades. The 65-year-old Ryan said he is closing doors as soon as the inventory is gone.


“It’s been a good run, but I am ready to retire and my children have great jobs of their own and are not interested in taking over the store,” Ryan said. 


He said the days are long and he puts in about 60 hours a week as the manager, buyer, merchandiser and bookkeeper. He has maintained a small staff of six full-time employees than have logged an average of 20 years at Ryan’s.
 Ryan said bidding the store good-bye is bittersweet but it’s time to move on.

It was a career that came naturally to Ryan, also a skilled musician, who worked as church organist part-time for more than 30 years.


RETAIL EVOLUTION

Ryan’s family clothing store in downtown Springdale dates back to 1966 when Max’s father, Troy Ryan, bought the business he had managed since 1941 under the name Rowland’s. Retail was a downtown enterprise back in the 1940s and 1950s long before shopping malls and urban sprawl. 


Records from the Shiloh Museum in Springdale indicates there were five clothing stores, 14 grocers, four drug stores and two hardware stores in downtown Springdale in the 1940s.


Ryan said he joined the family business in the early 1970s and there were nearly a dozen retail stores and restaurants in downtown Springdale at the time. The Northwest Arkansas Mall was just being built, Wal-Mart was in its infancy and the Internet – which made online retail possible – didn’t exist.


He credits the store’s longevity to the fact he has tried to keep up with the latest clothing trends from birth to burial, going to the Dallas and New York markets several times each year. Ryan said in later years the downtown location meant people had to plan a trip to the retail store, but his lower overhead costs also meant he could pass along better prices for the last fashions.

His 15,000 square-foot store building is for sale and Ryan said he’s getting out of the way for something that will hopefully be bigger and more exciting in downtown Springdale.


E-COMMERCE FUTURE

Two years ago, Ryan said he had no intention of selling clothing online, and he has not changed his mind even though he knows it’s a fast-growing business for many brick & mortar retailers.
 The store does not have a website, much less a Facebook page or mobile shopping application.


For Ryan, personal customer service means greeting his customers by name with a handshake and a smile. He said personal touch was part of the value he could provide along with good prices to a loyal customer base, and it worked well for the family store through the years.


Other retailers might say that embracing social media and technology is a good way to stay connected with their customers, to keep the conversation going even when they are not in the physical store.
 Kantar Retail analysts said technology is the great equalizer for small retailers and those who want to stay relevant in the next decade will need to embrace the digital age as online sales are becoming to big to ignore.


Forrester Research predicts online retail will reach $262 billion this year, up 13% from $231 billion in 2012, and representing 8% of the total retail market share.
 Forrester expects a compound annual growth rate of 9% aided by traditional stores’ investments in web processes to support a multichannel strategy.


Experts agree niche retailers can still flourish in a big box world, but augmenting their business with online offerings has never been more important than it is in today’s digitally connected world.
 Small, full-service brick and mortar retailers often don’t have the time amid long work weeks to kick-start an online retail venture, which is why they should outsource the work if possible, according to analysts.


Fayetteville-based Btiques works with small clothing retailers to help them promote limited quantity retail through a free mobile application that is shared through the retailer’s social media pages.

“We launched the mobile app three weeks ago and have signed up 15 small retail stores in Northwest Arkansas, Fort Smith and the Little Rock area. The feedback has been great and consumers like having a shop-mobile option,” said Will Carter, co-founder of Btiques.


He said consumers often buy fashion on impulse, they don’t know they want it until they see it. Btiques will promote the hottest fashion trends on social media for the retailer and then make the product accessible via the mobile application.
 The customer can purchase the product online and either have it delivered or pick it up at the store at a convenient time.


Carter said the mobile application is free and easy to use for the retailer and consumers. 


“We are paid a percentage of the sales generated from the application,” Carter said.

BancorpSouth, which has operations in the Fort Smith and Northwest Arkansas areas, reported second quarter net income of $20.75 million, slightly ahead of the $20.62 million for the same quarter of 2012.

For the first half of the year, the Tupelo, Miss.-based bank company posted income of $41.6 million, down from the $43.5 million in the first half of 2012.

"Much progress was made during the second quarter towards improving our cost structure and turning our attention toward growth," noted Dan Rollins, BancorpSouth CEO, in the earnings statement. “We are also pleased to report quarter-over-quarter loan growth for the first time in over three years. We've consistently communicated to our team the importance of growing our Company while improving operating efficiency."

Reducing the bank’s portfolio of problem loans is also helping the bank’s ledger. The second quarter report included only $3 million in a provision for credit losses, better than the $6 million in the second quarter of 2012. Non-performing loans held by the bank have declined from $266.9 million as of June 30, 2012, to $167.9 million as of June 30, 2013.

The bank also said a “Voluntary Early Retirement Program” cost the bank $10.9 million in the quarter, but is expected to result in pre-tax annual savings of $9 million.

Following are other key items in the earnings report.
• The bank generated net loan growth of $97.2 million, or 4.5% annualized.

• Mortgage production of $435 million and mortgage sales of $424.4 million, contributed to mortgage lending revenue of $17.9 million for the quarter.

• Insurance commission revenue was $25.9 million, which represents an increase of $2.9 million, or 12.6%, on a comparable-quarter basis.

• Net interest revenue was $98.2 million for the second quarter of 2013, a decrease of 6.2% from $104.7 million for the second quarter of 2012.

• Non-interest revenue was $76.1 million for the second quarter of 2013, compared with $66.5 million for the second quarter of 2012.

BancorpSouth is a financial holding company with $13.2 billion in assets. The company operates 292 commercial banking, mortgage, insurance, trust and broker/dealer locations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas, including an insurance location in Illinois.

BancorpSouth shares (NYSE: BXS) closed Monday at $19.07. During the past 52 weeks the share price has ranged from a $20.42 high to a $12.55 low.