Health care changes in the U.S. are dramatically impacting businesses and communities as more consumers gain access to care. This dynamic is a constant challenge for providers like Mercy Health, but one the non-profit is attempting to meet as it continues to invest in technology, clinics and other services in demand.

Over the past three years Mercy Health has invested $90 million in Northwest Arkansas, aided by several philanthropic donors within the local community to fund new clinics in Bella Vista, Centerton and downtown Rogers, and ongoing additions of services within the flagship hospital in Rogers.

Mercy executives hosted a community roundtable dinner in Rogers on Thursday (June 26) to discuss the challenges and opportunities they see in today’s changing environment. Eric Pianalto, CEO of Mercy NWA, said 41 new doctors have joined Mercy NWA and the number of nurse practitioners used in primary care clinics has risen to 42 from just 16 two years ago. Visits to the Mercy system in Northwest Arkansas have risen from 355,000 a year to 401,000 in the most recent year.

Pianalto said Mercy NWA still has plenty of work to do despite the regulatory and other difficulties faced by the entire industry.

SHRINKING REVENUE
Mike McCurry, chief operating officer of Mercy Health, said the margins have become razor thin for the entire industry and the needs have never been greater as the number of Medicaid patients have grown and the full-pay insured pool continues to shrink.

Under the new federal health care law, medicare payments are shrinking 2% annually, making these patients unprofitable customers for carriers like Mercy. McCurry said more large employers such FedEx Corp., Home Depot and Walgreens as are making radical changes to their plans, eliminating health care options for retirees and non-spouses and raising the minimum deductibles to keep costs down.

“The biggest growth area impacting Mercy’s charity care fund are insured people who can’t afford the deductible. We are seeing $5,000 deductibles and higher among people who need to have a procedure but are not able to cover that on the front-end. Mercy has had to help patients set up payment plans to payout the deductible after the procedure has been performed,” McCurry said.

The other dynamic at play is that insured individuals are being advised to have tests and procedures but do not have them because they can’t meet the deductible.

“This of great concern, because it will likely come back to haunt everyone,” McCurry said. “Patients are also shopping services like never before, looking for lower cost alternatives. As Mercy moves more of the diagnostic testing and procedures out to its primary care clinics the cost for customers will go down.”

He estimates that will sting Mercy’s annual budget by $30 million a year. McCurry said Mercy’s systemwide budget is operating on $120 million less revenue coming into this year as a result of the Affordable Care Act and the reduced payments.

The cost of treating the uninsured is expected to be $17 million this year for Mercy Health. Another $40 million in Medicaid payment remains in jeopardy and McCurry estimates federal sequestration costs will run up to $33 million.

RESOURCEFUL PLANNING
McCurry said Mercy won’t sit idle because it must find ways to improve access and quality of care while lowering the cost and it must do so without going broke. He outlined several new sources of revenue potential, the largest between $400 million and $600 million linked to virtual care, telemedicine and care management services.

Mercy NWA is already in the virtual care business, having all of its medical records kept electronically. McCurry said the use of virtual care can provide high quality services at lower costs.

Lynn Britton, CEO of St. Louis-based Mercy Health System, said there 3.2 million patients in Mercy’s record system with more than 9 million electronic records on file.

He said doctors are using this as a diagnostic tool, to help study and predict certain health patterns. One study group helped to reduce the provider’s mortality rate from Sepis by 50% buy coming up with an early warning detection system based on learnings gleaned from studying patient records.

Britton said Mercy is becoming a leader in virtual care usage. He said a local resident diagnosed with a heart condition that required a specialized procedure in St. Louis was then able to get his follow up care locally via virtual care. He said pediatric psych care is being delivered by a local doctor to patients in Joplin.

Not only is Mercy using virtual care within its own network to provide more access with lower costs, but McCurry said the provider is also able to outsource those services to areas and communities that lack certain specializations. Selling those virtual services is another way Mercy plans to recoup revenue lost in other areas.

COMMUNITY INPUT
Areas of concern raised by local residents who took part in the discussions include some study and focus on mental health issues and well as working to reduce the high rates of child abuse and child hunger in the prosperous Northwest Arkansas region.

Boomer aged residents said they chose their health care provider based on trust and they like knowing their doctor. Younger residents said they need convenient and affordable models that fit better with their busy lifestyles.

Other residents challenged Mercy to think about ways to leverage social technology platforms to reach out to patients for ongoing dialogue.

Dollar General announced Friday (June 27)  that its chairman and chief executive officer, Rick Dreiling, 60, recently informed the board of directors of his intent to retire as CEO effective May 30 of next year, or upon the appointment of a successor.

Dreiling has agreed to serve, at the discretion of the board, as chairman during a transition period following the appointment of a new CEO. He has served as CEO since January 2008 and was named chairman of the board in December 2008. Under his leadership, the company's annual sales have increased more than 80% to $17.5 billion in 2013 and store count has increased by 38% to more than 11,000 stores in 40 states.

"Dollar General is a great company because of our people and our mission of serving others. I am extremely proud of Dollar General's track record of success over the past six years, and I am honored to have had the opportunity to lead such an experienced and talented team. Dollar General is in a strong position today, and i'm confident it has excellent prospects for the future. After considerable reflection, I am at a point where it is appropriate to begin to plan for my retirement,” Dreiling said in the release.

The board of directors is conducting an internal and external search for a CEO

Wal-Mart Stores has permanently reduced the cost of iPhone 5C and iPhone 5S effective today (June 27). This move comes in anticipation of an imminent launch of the iPhone 6 expected early this fall.

Wal-Mart told the media that the iPhone 5C 16GB will cost $29, down from $49, and the iPhone 5S 16GB will cost $99, down from $149. The new prices are available with a two-year contract on AT&T, Verizon, or Sprint. The updated prices are for in-store purchases only.

Other retailers such as Best Buy launched a trade in program in May for iPhone 5C and 5S that let users trade in old versions of their iPhones. The iPhone 5S went on sale for $100 and the 5C for $50.

Suppliers for Wal-Mart Stores were notified Friday (June 27) that the retailer is making two major changes – including raising the automatic deduction from a supplier’s account to $100,000 – to its post-payment audit process effective July 15.

Notice came in the form an of e-mail at 4:22 p.m. Friday. The retailer said it is streamlining its post audit claims process hoping to reduce the number of claims posted and provide suppliers with a more timely resolution of outstanding payment issues directly with Wal-Mart’s own audit department.

Post-payment audit deductions can occur when the retailer discovers a pricing discrepancy on a particular item that deviates from the contract made between the buyer and supplier. Claims can also arise from shipping errors, partial orders, labeling mistakes and product substitutions.

The new protocol allows Wal-Mart to automatically deduct claims of $100,000 or less from the supplier’s account by explaining the withdrawal with supporting documentation. Previously, automatic deductions for audit claims were limited to $25,000 or less.

Randy Hargrove, corporate spokesman for Wal-Mart, said the reason for raising the deduction threshold is an effort to reduce the number of claims and streamline the process. He adds that the $100,000 threshold is more inline with growth in sales Wal-Mart has achieved in recent years.

The other major change is that buyers (a Wal-Mart employee) will have less involvement in the resolution of working claims under $100,000. This move, according to Wal-Mart, gives buyers more time to devote to their core responsibilities. Hargrove said buyers will still be involved if the claim is greater than $100,000 and initially denied by a vendor or an auto deducted claim is disputed and the buyer’s assistance is needed to validate any additional details provided by the supplier.

"We’ll still be allowing our buyers to maintain their focus on their business unit, and we believe this will result in a more timely resolution," Hargrove said. “We are providing suppliers with a key contact name and phone number to one of Wal-Mart’s own auditors who will work with the suppliers toward a resolution. If a deduction is made and a question is raised, Walmart’s auditor will work through the dispute with the supplier and refund the deduction if warranted.” 

He once Wal-Mart validates and finds there has been a deduction error, payback is no less than 24 hours. Insiders estimate the timeframe to resolve an issue can range between six and nine months following the deduction.

Hargrove said the July 15 effective date on higher automatic deductions applies to new claims and does not include claims already pending.

Analysts and auditors who work with suppliers to defend retailer claims said the change could be burdensome for smaller to medium size suppliers who might not have the cash flow to sustain $100,000 hits to their budget.

“This new policy highlights the need for suppliers to ensure all proposals and agreements are clearly worded. We recommend that suppliers conduct their own internal audit to review their agreements for accuracy, clarity and proper execution. Rejected offers, including coops, should also be reviewed and documented to reduce audit exposure. Since the buyer will have no discernable role in claims $100k and under, suppliers will need to be proactive in order to prevent invalid claims from being deducted,” said Peter Smith, spokesman for Harvest Revenue, a Bentonville-based company that represents suppliers in the post-audit process.

Smaller suppliers, some 2-and 3-person shops could have the most to lose with this new larger deduction policy, but Hargrove said at anytime a supplier can declare a hardship case and receive special consideration. He said the retailer aims to fully research the discrepancy before any action is taken. 

“Last year the number of claims and their dollar values were reduced,” Hargrove said. “We work with all of our merchants and suppliers to ensure that our billing is correct.”

There are billions at stake in the post-payment audit business with some estimates of 0.1% leakage – disputed payment, reimbursements, etc. – for every $1 billion in transactions between a retailer and its supplier community. Just for Wal-Mart alone the leakage could total as much as $500 million in claims.

Dan McKay, CEO of Northwest Health System, is leaving his post of five years to take over as the new CEO of Sparks Health System in Fort Smith.

“It is bittersweet to leave Northwest Health System after how much has been accomplished together with our physicians and employees,” McKay said. “This role has been one of the most rewarding experiences of my career and I am confident that the momentum created over the past five years will continue and even grow.”
 
McKay joined Northwest in 2010 and immediately began work to develop collaborative relationships with physicians on the medical staff. He worked to help recruit 100 doctors to the system’s medical staff and oversaw the opening of 20 new clinics. The system also expanded and opened several new services, including a stroke program with University of Arkansas for Medical Sciences, a hospitalist program, telemedicine at Bentonville and Springdale, and a new emergency department in Springdale. Springdale was also the first hospital in Northwest Arkansas to receive chest pain accreditation, which was soon followed by Bentonville.
 
“Of all the ways Dan made Northwest a better place, the most important were the stability he brought and the foundation he has laid for future success,” said Linda Maeinschein, Chairman, Northwest Health System Board of Trustees. “The achievements we’ve made during his tenure have positioned us for a successful future and we are grateful for the position we are in because of his leadership.”
 
The search for a new CEO will begin immediately to identify the right candidate to lead Northwest Health System and serve this community.
 
 

Dan McKay, who has worked for five years as the CEO of Northwest Health System, has been named CEO of Sparks Health System in Fort Smith. McKay is the fourth named CEO of Sparks since January 2013.

McKay will also be responsible for operations at Summit Medical Center in Van Buren.

McKay joined Northwest in 2010 and immediately began work to develop collaborative relationships with physicians on the medical staff, according to a statement from Northwest. Sparks and Northwest are both owned by Franklin, Tenn.-based Community Health Systems.

“It is bittersweet to leave Northwest Health System after how much has been accomplished together with our physicians and employees,” McKay said. “This role has been one of the most rewarding experiences of my career and I am confident that the momentum created over the past five years will continue and even grow.”

He worked to help recruit 100 doctors to the system’s medical staff and oversaw the opening of 20 new clinics. The system also expanded and opened several new services, including a stroke program with University of Arkansas for Medical Sciences, a hospitalist program, telemedicine at Bentonville and Springdale, and a new emergency department in Springdale. Springdale was also the first hospital in Northwest Arkansas to receive chest pain accreditation, which was soon followed by Bentonville.

“Of all the ways Dan made Northwest a better place, the most important were the stability he brought and the foundation he has laid for future success,” Linda Maeinschein, chair of the Northwest Health System Board of Trustees, said in a statement. “The achievements we’ve made during his tenure have positioned us for a successful future and we are grateful for the position we are in because of his leadership.”

McKay said in a statement that he is eager to be part of the history of Sparks Health System.

“I am excited to support the physicians, employees and volunteers in their work to provide high quality healthcare to the patients who trust their care to Sparks Health System,” McKay said. “It’s an honor to join a system with a long history of being a leader in providing high quality healthcare to the Fort Smith area.”

Prior to serving as CEO at Northwest, McKay was a Vice President at Community Health Systems Professional Services Corporation, where he supported the management of operations at hospitals across the U.S. He previously served in leadership positions at hospitals in South Carolina, Missouri, Texas and Alabama. He holds a master’s degree in Healthcare Administration from Xavier University and a bachelor’s degree in Business Administration from the University of Kentucky.

“Dan has a track record of proven success and stability at Northwest,” said Hugh Maurras, Chairman of Sparks Health System’s Board of Trustees. “He brings proven leadership skills and a familiarity with our region to the role of CEO. On behalf of the board, I look forward to working with him to continue our work to enhance the care we provide our communities.”

McKay arrives in Fort Smith just weeks after the previous Sparks CEO, Tim Schmidt, was dismissed following a racially insensitive remark he made during an employee meeting. Schmidt, who has more than 20 years experience in hospital administration and previously served as CEO at hospitals in Illinois, New Mexico and Texas, was in March named the interim Sparks CEO.

Sparks has had a tough time finding a CEO. Schmidt was the third interim or named CEO to resign or be dismissed since the January 2013 departure of CEO Melody Trimble.

Gary Blan was picked to succeed Trimble when she was promoted to president of Naples, Fla.-based Health Management Associates' Southern and Western Group. Trimble’s promotion was effective Jan. 1, 2013. HMA was then the parent company of Sparks. Blan resigned in May 2013, less than three months after being hired.

Charles Stewart was then named CEO in September 2013, but his resignation would come less than six months later.

Sparks and Summit were part of the early 2014 sale of HMA to Community Health Systems, a company whose portfolio of hospitals was nearly double the size of HMA's portfolio. Locally, CHS owns four Northwest Arkansas facilities — Northwest Medical Center-Bentonville, Northwest Medical Center-Springdale, Siloam Springs Regional Hospital and Willow Creek Women's Hospital in Johnson.

After a rough start to 2014, all but six of the 17 publicly held companies in Arkansas posted higher stock prices through the second quarter ending June 30.

The biggest gainers in the first half of this year were transportation stocks. Van Buren-based USA Truck (NASDAQ: USAK) led the pack as its shares rose 47.66% through the first six months of this year. USA Truck shares closed Monday at $18.59, gaining $6 so far this year. (See box at end of story for list of stocks and their price changes.)

Tontitown-based P.A.M Transportation (NASDAQ: PTSI) also turned things around with a 34.75% increase in its stock price since the start of 2014.  P.A.M shares closed Monday, June 30 at $27.96, picking up more than 7% a share since the year began.

The largest drop came from Little Rock-based Acxiom which saw its share price plummet nearly 41% in the first half of 2014.

The equity markets have tread lightly in 2014, with the Dow Jones Industrial Average (DJIA) beginning the year at 16,441.35, and finishing the first half (June 30) at 16,826.50, up just 2.34%. All but 0.1% of that gain came in the second quarter. The broader S&P 500 began 2014 at 1,831.98 and ended the second quarter at 1,960.23, a 21.39% gain, and its sixth consecutive quarter for growth.

Analysts cite several reasons why U.S. stocks had a bullish second quarter. Short-term interest rates remained near zero and there is continued pressure on longer-term bonds. Reports of global inflation moderating at low levels and stable earnings despite a slower than-expected first quarter growth have kept investors in the game.

Wells Fargo economists believe the economic growth needs to pick up the pace to 3% or so to keep the equity markets moving upward.

THE UPS
Fort Smith-based ArcBest Corp. (NASDAQ: ARCB), the parent company of less-than-truckload carrier ABF Freight System, closed the second quarter at $43.51, up 28.65%  compared to the Jan. 2 closing price of $33.82. ArcBest officials have said growth in the non-asset businesses are necessary to diversify the company’s revenue stream and to help reach a goal of $3 billion in revenue in 2014.

LIttle Rock-based Dillard’s (NYSE: DDS) posted a strong first half of 2014, while other retailers have struggled. Shares of Dillard’s closed the second quarter at $116.61, up nearly 21% so far this year.

Springdale-based Tyson Foods (NYSE: TSN) closed the second trading quarter at $37.54, up 13%. The meat giant recently sacrificed share price gains with the announcement to buy Hillshire Brands for $8.55 billion, the largest deal in history for the meat industry. Tyson shares traded as high as $44 per share in early June, ahead of the proposed Hillshire deal.

Little Rock-based Bank of the Ozarks (NASDAQ: OZRK) ended the quarter at $33.45, a healthy 18.79% gain this year. Bank of the Ozark shares recently split two for one on June 23. In the second quarter Bank of the Ozarks closed a deal with Summit Bank.

Pine Bluff-based Simmons First (NASDAQ: SFNC), which also is expanding through acquisition, ended the first half of 2014 at at $39.39, up 8.4% over the Jan. 2 closing price of $36.37. In the second quarter the bank announced the purchase of two banks, one based in Tennessee and one in Missouri. 

Eldorado-based Murphy Oil and Murphy USA were up 4.36% and 16.65%, respectively through the first half of 2014. Little Rock-based Windstream also produced double-digit gains this year on improving revenue.The share price closed Monday at $9.96, up 24.34% from the $8.01 closing price on Jan. 2.

THE DOWNS
Seeing share price declines were Little Rock-based Acxiom (down 40.7%); Bentonville-based America’s Car-Mart (down 5.74%); El Dorado-based Deltic Timber (down 9.43%); Conway-based Home Bancshares (down 9.74%); Lowell-based J.B. Hunt Transport Services (down 3.68%); and Bentonville-based Wal-Mart Stores Inc. (down 4.87%).

J.B. Hunt Transport (NASDAQ: JBHT), the largest, most diversified logistics company in this report, saw its shares close the second quarter of 2014 at $73.76, Shares are down 3.68% so far this year, following expectations of  lackluster intermodal volumes related to lingering winter stores around Chicago, a major hub for Burlington Northern Santa Fe. Hunt reports its second quarter earnings on July 15.

Car-Mart recently posted lighter than expected earnings to end its fiscal year 2014, citing more repossessions, fewer sales and heightened competition in the subprime auto lending sector. The buy here, pay here used car dealer said it was slowing its new store openings to 8 this year as it works to combat the onslaught on competition. 

Home Bancshares of Conway, also ended the first half of this year on a down note. The bank’s shares (NASDAQ: HOMB) closed Monday at $32.82, down 9.74%. In the recent quarter Home Bancshares purchased Traditions Bank of Florida. Following this deal announced April 28, the combined company had $7.1 billion in total assets, $5.6 billion in deposits, $4.6 billion in loans and 156 branches across Arkansas, Florida and South Alabama.

Wal-Mart Stores (NYSE: WMT) struggled with tepid U.S. sales in the first quarter and weather-related charges that lowered profits compared to street expectations. The retail giant expects a stronger second half of the year. Wal-Mart shares dipped 4.87% in the first half of this year to close Monday at $75.97. The retailer remains committed to expanding its small store growth, keeping prices low and expanding its services platform.

Pinnacle Foods announced Monday (June 30) it has exercised its right to terminate the merger agreement with Hillshire Brands, originally announced in May. That move now clears the way for the $8.55 billion acquisition of Hillshire by Tyson Foods.

Under the terms of the merger agreement, Pinnacle is entitled to receive a cash payment from Hillshire Brands of $163 million as a result of this termination. Pinnacle indicated that one-time fees and expenses associated with the merger agreement, including external advisors and employee incentives, are expected to total approximately $25 million.

Tyson Foods has said it is prepared to cover the costs of the termination fees associated with the Pinnacle deal.

Pinnacle noted in a release that it expects to pay minimal cash taxes on the payment from Hillshire. The company plans to use the net cash proceeds to reduce debt and, as a result, expects net interest expense for the year to fall slightly below the $100 million previously disclosed.  The interest savings are expected to be reinvested in the business in 2014. 

On a pro forma adjusted basis, which excludes the merger-related payment, fees and expenses and other items affecting comparability, Pinnacle reaffirmed its guidance for diluted earnings per share for 2014 in the range of $1.70 to $1.75. 

"We're excited to continue delivering long-term value for our shareholders through our strategy of Reinvigorating Iconic Brands. We continue to manage well through the difficult industry and category environment that we have discussed previously,” said, Pinnacle Foods CEO Bob Gamgort.

Tyson’s blockbuster $8.55 billion bid for Hillshire Brands stipulated that the hot dog and sausage maker must first abandon its plans to buy Pinnacle for $4.23 billon. Tyson’s offer of $63 a share to Hillshire investors was met with mixed sentiment on Wall Street. 

Several analysts say Tyson overbid at $63 per share for Hillshire Brands at the expense of existing Tyson investors, and that the 70% per-share premium could take years for Tyson to recover.

Tyson shares closed Monday at $37.54, up 10 cents on the news. Shares were trading in the mid 40s in early June, just ahead of the announcement to buy Hillshire Brands. Shares of Hillshire Brand closed Monday  at $62.30, up 30 cents.

Independence Day vacationers looking to hit the crowded highways during the long Fourth of July weekend will have to shell out a little more of their hard-earned dollars for fuel in Arkansas and the rest of the U.S., industry analyst say.

U.S. drivers will pay the most expensive July 4th gas prices since 2008, primarily because Iraqi violence has increased global petroleum costs, the AAA said in its monthly gasoline report released on Monday.

“Most drivers are paying about 15-20 cents more per gallon than expected heading into the busy Independence Day weekend due to market fear about Iraq,” said Avery Ash, AAA spokesman. “It is frustrating that events overseas will make it more expensive to celebrate Fourth of July here at home.”

In Arkansas, Fourth of July motorists will pay about $3.48 for a gallon of regular unleaded up 17 cents from year ago pump prices of $3.30 per gallon and 19 cents higher than the Memorial Day weekend in late May, the traditional start of the summer vacation season. This year, the Independence Day holiday travel period is defined as Wednesday, July 2 to Sunday, July 6.

ARKANSAS METRO PRICES
As of today, the national average price of gas is $3.70 per gallon, up 21 cents from a year ago, according to the U.S. Energy Information Administration. The national average on July 4 in previous years was: $3.48 (2013); $3.34 (2012); $3.57 (2011); $2.74 (2010); $2.62 (2009); and $4.10 (2008).

Pump prices in Arkansas’ metropolitan areas range from a low of $3.42 per gallon in the Fayetteville-Springdale-Rogers and Fort Smith area to a high of more than $3.50 per gallon in the Texarkana area, according to AAA’s daily fuel gauge. Motorists in the Little Rock-North Little Rock area and Pine Bluff will pay an average of $3.46 and $3.47 and a gallon to fill up their tanks, respectively.

Drivers choosing to fill up the tanks with a higher-grade of gasoline should expect to pay an average premium of $3.77 a gallon across the state. Big rig drivers and other diesel fuel users will see pump prices at about $3.67 a gallon, up six cents from a year ago.

As those record numbers of families take to the road for some rest and relaxation, the state Highway and Transportation Department warns Arkansas drivers and motorist traveling through the Natural State they will likely face work zones and possible delays due to increased traffic volume during the long holiday weekend. There are extensive ongoing highway improvements across the state and “with those improvements come work zones,” the department said in a news release on Monday. To aid holiday travel, the state Highway Department said it has worked to open as many lanes as possible.

Still, drivers are urged to plan ahead by visiting IDriveArkansas.com for the latest travel information. The website includes live traffic flow, weather information, and details on construction zones. Travelers can also follow the department on Twitter @AHTD.

NATIONAL TRAVEL ESTIMATES
AAA Travel projects 41 million Americans will journey 50 miles or more from home during the Independence Day holiday weekend, a 1.9% increase from the 40.3 million people who traveled last year and a nearly 14% increase compared to the Memorial Day holiday weekend. The majority of travelers, more than eight in 10 (34.8 million), will travel by automobile, the highest level since 2007.

AAA Chief Operating Office Marshall Doney said notwithstanding high pump prices and crowded highways, those factors will not have a significant impact on the number of people traveling. However, it could result in some consumers cutting back on dining, shopping or other trip activities.

Doney said the recent spike in consumer spending is primarily due to increasing credit, rather than rising incomes. Consumers have been hesitant to add to their credit card balances the past several years, but continued improvements in the employment picture and rising home values means they are starting to feel more comfortable taking on debt, he said.

In addition to consumer spending, a boost in consumer confidence and the employment outlook are driving more Americans to take a road trip.

“Steady improvement in the economy has spurred increased consumer confidence and spending,” Doney said. “Optimistic Americans are more willing to take on debt this year, dusting off their credit cards to pay for a much-needed Independence Day getaway.”

The Fort Smith metro jobless rate for May rose back above 6%, with the regional workforce declining 3.51% and the number of employed down 1.97% compared to May 2013.

May’s jobless rate in the metro area was 6.3%, above the 5.9% in April and well below the 7.8% in May 2013. May’s data is subject to revision in future reports from the U.S. Bureau of Labor Statistics.

The size of the Fort Smith regional workforce during May was 127,054, up from 126,506 during April, and well below the 131,677 during May 2013. The labor force reached a revised high of 140,253 in June 2007, meaning the May workforce size is down 9.4% from the peak number.

The number of employed in the Fort Smith region totaled 119,003 in May, up from 118,984 compared to April but an estimated 2,398 jobs below the 121,401 employed in May 2013.

All eight metro areas in or connected to Arkansas had jobless rate increases in May compared to April, but had jobless rate declines compared to May 2013. During May, the lowest metro jobless rate in the state was 4.9% in Northwest Arkansas and the highest rate was 8.4% in the Pine Bluff area.

FORT SMITH METRO NUMBERS
Unemployed persons in the region totaled an estimated 8,051 during May, up from the 7,522 during April, but well below the 10,726 during May 2013.

The Fort Smith area manufacturing sector employed an estimated 18,200 in May, unchanged compared to April, and below the 18,400 in May 2013. Sector employment is down almost 36% from a decade ago when May 2004 manufacturing employment in the metro area stood at 28,400. Also, the annual average monthly employment in manufacturing has fallen from 28,900 in 2005, 19,200 in 2012, and to 18,300 in 2013.

Jobs in the Trade, Transportation and Utilities sector — the region’s largest job sector —  totaled 24,300 in May, unchanged compared to April, and above the 23,700 during May 2013. Employment in the sector reached a high of 25,700 in December 2007.

Employment in the region’s tourism industry was 9,700 during May, up from 9,400 in April and above the 9,500 in May 2013. The sector reached an employment high of 9,800 in August 2008.

In Education & Health Services, employment was 16,500 during May, unchanged from April and below the 17,100 during May 2013. Annual average monthly employment in the sector has steadily grown since 2005 when it reached 14,000. In 2012 the average was 17,000, but fell slightly to 16,800 in 2013. Employment in the sector reached a record 17,300 in October 2012.

In the Government sector, employment was 19,700 during May, up compared to 19,600 in April and above the 19,600 in May 2013.

NATIONAL NUMBERS
Unemployment rates were lower in May than a year earlier in 357 of the 372 metropolitan areas, higher in 11 areas, and unchanged in four areas, noted the broad BLS report.

The U.S. unemployment rate in May was 6.3%, down from 7.5% from a year earlier. Arkansas’ jobless rate was 6.4% in May, down from 6.6% in April and down from 7.5% in May 2013.

Oklahoma’s jobless rate during May was 4.6%, unchanged compared to April, and down compared to 5.4% in May 2013. The Missouri jobless rate during May was 6.6%, unchanged compared to April and below the 6.7% in May 2013.

ARKANSAS METRO AREAS
Fayetteville-Springdale-Rogers
May 2014: 4.9%
April 2014: 4.5%
May 2013: 5.8%

Fort Smith
May 2014: 6.3%
April 2014: 5.9%
May 2013: 7.8%

Hot Springs
May 2014: 6.4%
April 2014: 6.1%
May 2013: 7.6%

Jonesboro
May 2014: 5.8%
April 2014: 5.6%
May 2013: 7.1%

Little Rock-North Little Rock-Conway
May 2014: 5.8%
April 2014: 5.5%
May 2013: 6.7%

Memphis-West Memphis
May 2014: 7.5%
April 2014: 7%
May 2013: 9.2%

Pine Bluff
May 2014: 8.4%
April 2014: 8.3%
May 2013: 9.5%

Texarkana
May 2014: 6%
April 2014: 5.8%
May 2013: 7%

FORT SMITH METRO AREA HISTORY
Past annual average unemployment rates
2013: 8%
2012: 7.7%
2011: 8.3%
2010: 8.2%
2009: 7.9%
2008: 4.8%
2007: 5.3%
2006: 4.9%
2005: 4.5%
2004: 5.2%
2003: 5.5%
2002: 5%
2001: 4.2%
2000: 3.7%

The Northwest Arkansas jobless rate continued in May to be the lowest in Arkansas, but the regional labor force and the number of employed shrank compared to May 2013.

The May rate of 4.9% was higher the 4.5% in April but below the 5.8% in May 2013. Metro employment of 222,723 was up slightly from the 222,241 in April, but slightly below the 223,140 in May 2013, according to figures released by the U.S. Bureau of Labor Statistics. The May numbers are subject to revision.

May marked the 11th consecutive month that the NWA metro jobless rate has been below 6%, and the second consecutive month below 5%. The metro area is the only one in Arkansas to post a rate below 5%.

The size of the Northwest Arkansas regional workforce during May was estimated at 234,188, up from the 232,809 during April, but 1.08% below the 236,763 during May 2013. The average annual monthly labor size was 234,412 in 2013, 232,208 during 2012, 228,918 during 2011 and 225,974 during 2010.

All eight metro areas in or connected to Arkansas had jobless rate increases in May compared to April, but had jobless rate declines compared to May 2013. During May, the lowest metro jobless rate in the state was 4.9% in Northwest Arkansas and the highest rate was 8.4% in the Pine Bluff area.

NWAMETRO NUMBERS
Following are other key figures from the BLS metro report.
Unemployed persons in the region totaled 11,465 during May, up from the 10,568 during April and below the 13,623 during May 2013.

The Northwest Arkansas manufacturing sector employed an estimated 26,200 in May, unchanged compared to April, and down from the 26,500 during May 2013. Sector employment is down more than 21% from more than a decade ago when May 2004 manufacturing employment in the metro area stood at 33,400.

Jobs in the Trade, Transportation and Utilities sector — the region’s largest job sector —  totaled 47,700 in May, below the 48,200 during April, and unchanged compared to May 2013. The sector reached record employment of 50,500 in December 2006.

Employment in the region’s tourism industry was 22,400 during May, which set a new record for the sector. The May data is subject to revision. The level was up from 22,200 in April and up from 21,700 during May 2013.

In Education & Health Services, employment was 24,900 during May, up from 24,800 in April and up from 24,200 during May 2013. The May employment, if it stands, sets a new record for the sector.

In the Government sector, employment was 32,700 during May, up from 32,600 in April and up compared to 32,000 during May 2013.

NATIONAL NUMBERS
Unemployment rates were lower in May than a year earlier in 357 of the 372 metropolitan areas, higher in 11 areas, and unchanged in four areas, noted the broad BLS report.

The U.S. unemployment rate in May was 6.3%, down from 7.5% from a year earlier. Arkansas’ jobless rate was 6.4% in May, down from 6.6% in April and down from 7.5% in May 2013.

Oklahoma’s jobless rate during May was 4.6%, unchanged compared to April, and down compared to 5.4% in May 2013. The Missouri jobless rate during May was 6.6%, unchanged compared to April and below the 6.7% in May 2013.

ARKANSAS METRO AREAS
Fayetteville-Springdale-Rogers
May 2014: 4.9%
April 2014: 4.5%
May 2013: 5.8%

Fort Smith
May 2014: 6.3%
April 2014: 5.9%
May 2013: 7.8%

Hot Springs
May 2014: 6.4%
April 2014: 6.1%
May 2013: 7.6%

Jonesboro
May 2014: 5.8%
April 2014: 5.6%
May 2013: 7.1%

Little Rock-North Little Rock-Conway
May 2014: 5.8%
April 2014: 5.5%
May 2013: 6.7%

Memphis-West Memphis
May 2014: 7.5%
April 2014: 7%
May 2013: 9.2%

Pine Bluff
May 2014: 8.4%
April 2014: 8.3%
May 2013: 9.5%

Texarkana
May 2014: 6%
April 2014: 5.8%
May 2013: 7%

NORTHWEST ARKANSAS METRO AREA HISTORY
Past annual average unemployment rates
2013: 5.7%
2012: 5.6%
2011: 6.2%
2010: 6.4%
2009: 6.2%
2008: 4.1%
2007: 3.8%
2006: 3.6%
2005: 3.3%
2004: 3.8%
2003: 3.7%
2002: 3.3%
2001: 3%
2000: 2.9%

Arkansas’ $1.3 billion steel mill superproject in northeast Arkansas has closed on its private equity financing. Next up, construction and maybe another superproject.

State officials and Big River Steel CEO John Correnti said the financing portion of the deal — which closed yesterday – was a whirlwind event with all of the moving pieces of the project coming together in less than 48 hours.

“It was a lawyerfest,” Correnti said. “It’s a lot of work by a lot of people.”

Private equity investors are fronting $1.25 billion of the $1.3 billion superproject. Those investors have to spend $250 million before any portion of the state’s $125 million can be tapped. The city of Osceola and Mississippi County are also fronting a combined $16.5 million in financing.

State economic officials and public investors, led by the Arkansas Economic Development Commission, the Arkansas Development Finance Authority, and the Arkansas Teachers Retirement System, joined Correntti for an interview with Talk Business & Politics on Tuesday afternoon.

“We’ve jumped the largest hurdle by closing the financing. Meaning the equity partners put their $300 million in, we sold the bonds yesterday,” said AEDC director Grant Tennille. “Where we go from here, at the earliest possible date, construction will begin.”

Correnti said that should be in July, although heat, wet weather, mosquitoes and travel logistics may push a formal ceremony back to September for a “cornerstone” announcement. He said there is still engineering work to be completed and construction contracts to finalize.

Correnti, Tennille and others said the Big River Steel Mill superproject was unique in that a start-up company, not an existing one, was the first to utilize Arkansas’ Amendment 82 mechanics. That amendment, approved by voters, gives the state legislature authority to issue bonds for mega-projects that will create more than 500 jobs and make major infrastructure investments in state.

Tennille said that the complexity of the Big River experience now proves that Arkansas can handle other big deals and it has put the state on the map for other superprojects.
“We think we’ve got the assets now that make us an automatic first look,” he said.

When asked if there were any other superprojects on the immediate horizon, Tennille added, “You can deduce that. I would say that now that we’ve shown how we can do it, we’ve had some other people express some interest.”

July 4 is one of the most widely observed American holidays, with 153 million consumers expected to celebrate with food this year for an estimated $6.2 billion spend, according to the National Retail Federation and Prosper Insights & Analytics.

This year’s survey indicates the average household will dole out $68.16 on burgers, snacks and other food for the occasion. This is the first year the survey tracked food spending.

Meat prices continue to rise to record levels as shrinking cow and hog herds have packers paying more for slaughter livestock and passing those costs to the consumer. The U.S. Department of Agriculture reports the all fresh beef retail price hit $5.45 cents a pound in May, up 10.5% from a year ago. Beef prices have risen consistently over the past three years and are expected to jump 6.5% for all of 2014, compared with gains of up to 3% for pork and chicken.

The July 4 holiday is typically the busiest season for beef sales, but consumers are backing off red meat purchases at the higher prices. In the first four months of this year, U.S. beef sales volume fell 0.6% from a year earlier after rising in the last two quarters of 2013 at 18,000 grocery stores, supermarkets and other retail outlets tracked by Nielsen Co. In contrast, sales volumes for chicken rose 1.9%.

Grocers from Kroger to Wal-Mart Stores have added smaller packages of beef and more lower-priced cuts to their meat cases for consumers watching their grocery budgets. Analyst Steve Kay, with Cattle Buyers Weekly, said grocers are not featuring beef, nearly as often as they have in past summers, partly because supplies are down and costs are way up.

Restaurants are also beginning to respond to the pinch of rising beef prices. Hardees began scaling back the size of its burgers last year and launched a new chicken sandwich alternative in May.

Texas Roadhouse operates around 420 restaurants said it raised its prices 1.5% in December, while Chipotle Mexican Grill raised prices for beef-based entrees by 8% in May. Chicken entrees went up 4% and pork-based items rose 6% as the burrito chain cited rising protein prices. It is Chipotle’s first price hike in three years.

Meat packers like Springdale-based Tyson Foods have moved to shorter term contracts with food service customers in order to pass along higher wholesale prices quicker.

JULY 4 TRAVEL, FIREWORKS
While two out of three consumers will celebrate Independence Day with food, less than half will partake in fireworks and parade celebrations, according to the Prosper survey.

Roughly 105 million survey respondents said they will attend a fireworks show this year and 29 million plan to attend a holiday parade. Prosper notes that participation in these two activities are down slightly from a year ago.

The friday holiday makes for a three-day weekend which has more consumers planning travel vacations this year. Prosper said 32 million consumers will take a vacation during holiday period, the highest level in the survey’s history. About 20% of Millennials surveyed said they plan to vacation during the holiday. Consumers overwhelming (70%) said the price of gasoline will not impact their July 4 holiday spending.

Gas prices have recently spiked higher making this July 4 holiday the most expensive for drivers since 2008. AAA reports the average gas price in the U.S. is around $3.58 per gallon, up 17 cents from last year. The recent uptick in price is linked to political unrest in Iraq, which has sent crude oil prices higher.

According to GasBuddy.com, regular gasoline prices are averaging $3.45 in Arkansas, up 8 cents in the last month and 5% higher than a year ago. 

GasBuddy.com expects U.S. gas prices will top out this year at $3.75. 

Demand this summer is brisk, but it won’t likely match last year’s consumption rate. Year-to-date, U.S. motor fuel demand has averaged about 365 million gallons per day, up about 1.7% from the same period in 2013, according to GasBuddy.com. The lower demand is attributed to less driving by Millennials and more fuel-efficient cars and trucks on the road.

Tyson Foods and Hillshire Brands on Wednesday (July 2) confirmed they have entered into a definitive agreement under which Tyson will acquire all outstanding shares of Hillshire for $63 per share. The all-cash transaction is valued at approximately $8.55 billion, including Hillshire Brands' outstanding net debt. The deal is expected to be completed by Sept. 27.

Hillshire investors will received a tender offer within the next 10 days

As The City Wire has previously reported, Tyson Foods will make on behalf of Hillshire Brands a payment of the $163 million termination fee associated with the termination of Hillshire Brands' planned merger with Pinnacle Foods. The board of directors of Hillshire Brands has accepted the notice of termination received from Pinnacle Foods and the previously announced transaction has been terminated.

"By investing in Hillshire Brands and its collection of leading brands, we have a unique opportunity to transform an important segment of our business, and position Tyson Foods to meet American consumers' growing demand for protein at breakfast and throughout the day,” said Donnie Smith, president and CEO of Tyson Foods. “We operate in a competitive and complex marketplace that demands bold steps to remain an industry leader. I am confident that together Tyson Foods and Hillshire Brands have the right products and the right people to create years of enhanced shareholder value and ensure more choices for our customers and consumers.”

The pro forma company will allow Tyson Foods to add such names as Jimmy Dean, Ball Park, State Fair and Hillshire Farms to Tyson’s blended mix of name and private label brands.

Smith had previously noted that Tyson was attracted to Hillshire in part because of the strength the merger would bring in the growing breakfast category, where the Springdale meat giant has been trying to capture market share with its own DayStarts products.

The combined companies will leap over ConAgra and take the No. 2 market share ($3.3 billion) in the frozen value-added category, according to the meat companies. Tyson now has the No. 3 spot with $2.4 billion, and Hillshire ranks eighth at $1.3 billion.

The prepared foods segment is now 9% of Tyson Foods’ $35.4 billion in annual sales. If the deal happens, the combined companies would post annual revenue of around $39.4 billion, with 18% of that coming from prepared food sales.

Sean Connolly, president and CEO of Hillshire Brands, said, “After thoughtful consideration, our board of directors concluded that a combination with Tyson Foods represents a unique opportunity to provide shareholders with significant and immediate value while also positioning our business for continued success ... I am confident that we have found an excellent partner in Tyson. We firmly believe that our combined global platform will be extremely well positioned to capitalize on the substantial growth opportunities in this market in the years ahead.”

Smith has said the two cultures are a great fit and Stephens Inc. analyst Farha Aslam agrees. She said growth among U.S. food companies is hard to achieve because Americans are spending about all they are able on food. She said the food industry is seeing several consolidations because interest rates are low and food companies generate lots of cash.

“Hillshire is a strategic fit for Tyson Foods, the largest acquisition in Tyson’s history and it will take some time for them to digest it all.” Aslam said.

Other analysts believe Tyson overpaid for Hillshire given the final $63 bid came at about a 70% premium to Hillshire’s trading value prior to interest from outside suitors Tyson Foods and Pilgrim’s Pride.

“We believe Tyson stock will be dead money at best for the next 12 months as it copes with the hangover of paying such a big price including an issuance perhaps of $1.6 billion of equity,” noted Robert Moskow, an analyst with Credit Suisse.

Moskow was one of two Wall Street analysts to downgrade Tyson Foods as a result of the deal.

“At the price of $63 per share, we believe Tyson destroyed $2 billion in value. We believe fair value for Hillshire was $47 per share including the $1.3 billion value of synergies,” Moskow said.

Tyson shares reacted favorably with today's announcement closing at $38.96, up $1.09. Tyson shares are down from $44.24 prior to the pursuit of Hillshire Brands.

Arkansas ends its 2013-2014 fiscal year with a surplus of $78.7 million on total tax collections of $6.242 billion. The surplus was well below the $299.5 million surplus in the previous fiscal year.

The fiscal year total revenue was 0.5% above the previous year and was 0.2% above forecast. The gain marks four consecutive years of gains in gross tax collections.

“The fiscal year ended above forecast and above the budgeted amount as a result of stable collections in gross revenue and lower-than-expected payouts from gross general revenue in Individual Income tax refunds and other deductions,” John Shelnutt, head of the Department of Finance and Administration’s Economic (DFA) Analysis & Tax Research division, said in his report released Wednesday (july 2). “Weak absolute growth in year ago growth measures was attributable to adverse comparison to the income shifting into tax year 2012 liability that benefited fiscal year 2013 collections. Aside from special factors, the economic-related Withholding Income tax payments grew 2.0 percent in Fiscal year 2014, largely in line with employment, personal income, and inflation indicators over the same period.”

Collections have declined relative to how the fiscal year began. The gross collections were up 3.4% after the first six months of the fiscal year, and 0.9% above forecast. After the first four months of the fiscal year, the gross revenue was up 4.1%.

Individual income tax collections for the fiscal year totaled $3.111 billion, down 1.1% from last year and just 0.3% above the budget forecast.

Fiscal year sales and use tax collections were $2.173 billion, up 2.3% above last year but 1.6% below the budget forecast. Sales and use tax collections, considered a barometer of consumer confidence, also ended fiscal year 2013 on a down note. Collections in the segment for the fiscal year totaled $2.124 billion, up just 1.1% compared to the 2012 period, and 1.4% below forecast.

Income taxes and the sales and use tax collections are the two primary sources of state revenue.

Corporate income tax collections in the fiscal year totaled $440.2 million, up 2.1% compared to last year and 2.6% below forecast.

JUNE NUMBERS
June gross revenue was $616.4 million, down 0.8% from last year and 0.3% below forecast.

Individual income tax collections during June totaled $286.8 million, up 0.5% compared to June 2013 and matched the monthly forecast.

Sales and use tax collections during the month totaled $180.2 million, down 2% from last year and 5.5% below the forecast.

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2013 - June 2014: $53.2 million
July 2012 - June 2013: $52.6 million

Games of skill
July 2013 - June 2014: $39.5 million
July 2012 - June 2013: $35.9 million

Tobacco
July 2013 - June 2014: $219.2 million
July 2012 - June 2013: $230.3 million

Insurance
July 2013 - June 2014: $118.4 million
July 2012 - June 2013: $109.9 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 May 2010-May 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.

R.H. Ghan Commercial Properties of Fort Smith has changed its name to R.H. Ghan & Cooper Commercial Properties.

Rodney Ghan formed R.H. Ghan Commercial Properties in 1999 and has been in the real estate industry since 1982. Bob Cooper Jr. began working with Rodney Ghan in 2007 and earned full partnership by 2013.

R.H. Ghan & Cooper Commercial Properties is a commercial real estate company focusing on sales, leasing and development of industrial, commercial and multi-family properties. We broker, develop and manage properties in Arkansas, Oklahoma, Kansas, Missouri and Canada.

The company has more than 50 years combined experience in the commercial real estate industry, and has many local, regional, national and international clients and contacts.

Havenwood announced Cindy Acree as its new executive director. A Bentonville native, Acree brings more than two decades of business, nonprofit, and organizational development experience to Havenwood. 

She most recently served as a Colorado State Representative as well as president of Cindy Acree Enterprises, a consulting firm devoted to leadership and management effectiveness particularly in the nonprofit sector. Acree began her new role at  Havenwood on June 30.
 
“Cindy will bring leadership and innovation to Havenwood and to its programming designed to revitalize the lives our single parent families in need. Her proven experience in business and nonprofit management, in addition to her expertise in community and government affairs, will prove invaluable to Havenwood’s continued success. We feel very fortunate that Cindy has returned to her hometown of Bentonville so as to serve those in need in Northwest Arkansas,” said board chairman Paul Wood of Samsung. 
 
Acree’s professional background includes experience in strategic planning, nonprofit management, development, community outreach, and volunteer coordination.  A published author and public speaker, Acree is a seasoned community leader with degrees from Southern Methodist University and the University of Denver College of Law. 
 
“I am honored to join the Havenwood family,” Acree said. “Over the course of my life and career, I have been devoted to helping empower those in need, especially women.  I’m eager to begin assisting our Havenwood single parent families in understanding the basic tenants of success so that they can reach their goals in their lives. Inspiring mothers to higher endeavor, helping them live a hopeful life and rise above their challenges, can make their families stronger and keep their dreams alive.”

Rising home prices, lower unemployment rates and growing renter population in Benton County makes the area one of the top 16 markets for real estate investment over the past year, according to new report from Irvine, Calif.,-based RealtyTrac.

RealtyTrac analyzed median sales prices for residential property and average fair market rents for three bedroom properties in 370 U.S. counties with a combined population of 186 million people — 60% of the total U.S. population. Rental returns were calculated using annual gross rental yields: the average fair market rent of three-bedroom homes in the county, annualized, and divided by the median sales price of residential properties in the county.
 
The 370-county analysis found that investors buying U.S. residential rental property in the second quarter of 2014 are getting an average annual return of 9.97%, down from an average annual return of 10.60% a year ago. Benton County investors had an average gross rental yield of 9.69% over the past year. This calculation was based on average median home price of $125,000, up nearly 1% year-over-year and average rents of $1,009 for a three bedroom home.

GENERATIONAL SHIFT
Daren Blomquist, vice president at RealtyTrac, said the low median price, relative to average rent and steady renter demand is the reason Benton County made the top 25 list for returns. He told The City Wire in a phone interview that Millennials and Baby Boomers were the major catalysts in the robust renter demand. 

“We know home ownership numbers are declining but the number of home sales are increasing. This tells us that more new household formation units are choosing to rent. We see a strong rental market for the next five years to 10 years as Millennials are delaying their home purchases and more Baby Boomers downsize to rentals, capitalizing on rising home values,” Blomquist said.

He estimates that Millennials and Baby Boomers together total some 147 million consumers, more than 60% of the U.S. adult population.

Blomquist said much of the housing recovery has been attributed to active investors. Roughly 33% of sales in the U.S. this year have been to investors. He said institutional investors and hedge funds came into the market in mid 2012 gobbling up single family homes by the thousands, which they are now renting.

KNOW YOUR MARKET
Mike Maxwell, an agent and broker with Crye-Leike Real Estate, is helping individual investors that are based in California sell their properties in Northwest Arkansas. Most of them are a taking a loss.

“I have sold seven properties this year for clients in California that purchased at the market high in 2005. One just went under contract for $175,000 and the investor paid $220,000 nearly seven years ago. They are taking a loss, but it’s time for them to sell because of the 7-year interest-only loans they financed the deal with in 2005,” Maxwell said.

He said it’s crucial that individual investors know the market before they strike a deal. 

“These California investors based their deals on how their own markets work, steep price increases nearly every year. That’s not the case here, not since 2005 anyway,” Maxwell said.

As a contractor, Maxwell dabbles in local real estate flips and said single family rental homes in the Bentonville school district are in big demand. He said now that prices are starting to rise again, the time is much better for investment than it was in 2005.

“There are several local folks that I am working with who want to jump in the investment market now. Single family homes will rent within 10 days of listing, if they are well maintained and in the Bentonville school district. I am seeing rents as high as $1,400 and $1,500 per month for three bedrooms in stable neighborhoods,” Maxwell said.

He said there is more risk and more reward potential with multifamily units such as duplexes and quadplexes. Duplexes and other multifamily units are tougher to move when the investor wants to sell, although they do provide more cash flow if rented.

He said a $189,000 duplex in Bentonville rents at $800 for each side, which is a little under the 1% rule of thumb used when calculating return on investment. For better cash flow, he said the more units the better. He cited an older quadplex in Rogers that recently sold for $328,000, the positive cash flow is $500 per month.

Multifamily renters tend to turn over each year, so there is more churn which can impact cash flow. Unlike a single family home, if one side of the duplex is empty there is still the other unit making the payment. If the single family unit is vacant, Maxwell said there is no cushion for the investor.

Convenience, coupons and better cuisine top the list of what shoppers said they are looking for from their local grocers, noted a recent report from PricewaterhouseCoopers.

“Shoppers told us they like traditional grocery stores, 83% of respondents said they preferred them. While they are not completely sold on online grocery shopping, many want to digitally engage with stores even after they have left,” according to PwC report.

The survey of 1,000 shoppers indicated that coupons are valued by consumers who also like loyalty programs that they would like to see tweaked with more flexibility and tangible benefits.

"Grocers can no longer rely on providing a one-size-fits-all customer experience. The next wave of millennial consumers is likely to demand individualized attention and a shopping experience that meets their specific wants and needs," said Steven Barr, PwC's U.S. retail, consumer practice leader. "We're helping our clients look closely at their target customer segments on a micro level to effectively tailor the path to purchase for each shopper when they are in and out of the store. Grocers that truly get to know their customers on a store-by-store basis can find success in the future."

More than half of the shoppers surveyed complained of long lines and crowded stores. Grocers providing a smoother in-store experience by taming congestion are likely to earn repeated shopper visits. Shoppers will increasingly look to store employees as shopping advisors, whether for additional product information, new recipe tips or purchase recommendations, as they will want increased service and assistance with decision making.

While online shopping is growing exponentially in the broader retail sector, the grocery segment is slower to make changes despite retailers from Amazon to Wal-Mart ramping up efforts to win the online grocery battle. Only 1% of survey respondents consider online shopping their primary way of getting groceries, though 92% reported having the online option available to them.

"While online channels may not become a common way to buy groceries in the near future, technology will still play a major role in the evolving grocery experience," said Sabina Saksena, managing director in PwC's U.S. consumer division.

She said shoppers expect information at their fingertips and, according to the survey, more than half of respondents want to integrate their mobile devices into their future grocery experience.

“Grocers that innovate and build on their digital channels to meet this demand will be most successful,” Saksena added.

The four main components shoppers said brings them back to the store include:
• In-store experience - 52%
• Farmer’s market fresh produce - 47%
• Deli’s and salad bars - 42%
• Convenience options like express checkout, curbside pickup - 26%.

The survey found four distinctly different shoppers, each who have varied expectations from their grocers. PwC said grocers need to be aware of these differences if they are going to stay relevant through the demographic shift.

GOURMET GORDON
Gourmet Gordon is keenly focused on food. This is generally Gen X or Baby Boomers who live in urban cities. Some 80% of them do not have children at home and they are shopping for themselves and a spouse. About one-third of the survey respondents fit the Gourmet Gordon group.

The Gourmet Gordons spent an average of $70 per grocery visit. They are looking for products that are locally sourced, non-GMO and organic and they favor freshness. They care about where and how products are sourced. They shop with a conscience and have average household income between $75,000 and$200,000.

CONVENIENCE MATTERS
Some 26% aligned with “Metropolitan Marsha,” who craves convenience. This group mostly lives in large, walkable cities like New York or San Francisco. They shop often for their entire family. They also share their shopping stories with friends and family.

This group embraces technology in their shopping habits and are four times more likely to use a smartphone to research products, recipes, create grocery lists, order delivery and provide store feedback. They don’t like standing in line and are often frustrated by parking issues. The family spends an average of $50 per trip and annual income ranges between $75,000 and $300,000.

TRADITIONAL ROUTINE
Another 25% of the respondents identified with “Traditional Tim,” a Baby Boomer living in the suburbs, mid-size cities or small towns. This shopper is likely retired and shopping for himself or a spouse.

This group spends the least on groceries per month at about $400. Price matters to them. They like smaller formats, less crowded venues and are reluctant to change. They still clip coupons and rely on newspaper circulars when preparing their shopping lists.

TOMORROW’S SHOPPER
“Millennial Mel” was identified as tomorrow’s shopper. About 17% of the respondents fit this category as Millennials living in suburbs or smaller towns, often with a roommate or parents. They don’t do much grocery shopping for now, but when they do, it’s usually for themselves, even through they rely on parents to pay for it.

The group is comprised of digital natives already craving 3D maps of stores as a top tech feature they want. They are loyal and want bonus loyalty points for sharing their thoughts and opinions with friends via social platforms. They shop nearby and like to make one stop for grocery and non-grocery items. They were the only group that cited convenience stores and pharmacies among their top three places for grabbing groceries.

Whirlpool announced Thursday (July 3) a settlement with south Fort Smith property owners in a class action lawsuit the owners filed after the company had disclosed that potentially cancer-causing trichloroethylene (TCE) had leaked into the groundwater and spread to the affected properties. TCE was used as part of a degreasing agent at the former Whirlpool facility until the 1980s, when its use was discontinued by the company.

A series of lawsuits were filed against the company in May 2013, with attorney Ross Noland of Little Rock-based McMath Woods Law Firm saying the suits were primarily focused on property damages, not health-related claims.

"There are some other elements of damage, but the primary is property damage and the reduction of value in the property," he said at the time.

Sebastian County Assessor Becky Yandell was responsible for dropping property values by an average of 41.2% in the area. She said her office had researched other TCE spills and the impact the spills have had on property values to come up with their total reductions in value.

A total of 55 land parcels, including 49 residences and three commercial buildings, had their values reduced in the plume area while properties on what Yandell called the "fringe" were also reduced, though by smaller amounts. In all, 26 parcels were impacted by the change in property values in the "fringe" area.

In an email announcing the settlement with property owners, Whirlpool Senior Manager of Global Public Relations Kristine Vernier said the resolution of what eventually became a class action lawsuit by property owners in the affected areas against the company was part of the company's ongoing commitment to the residents of Fort Smith.

"Whirlpool is pleased to have reached a resolution with property owners in a class action lawsuit related to contaminated groundwater near the former Whirlpool manufacturing facility in Fort Smith, Arkansas," she said. "As part of Whirlpool’s ongoing commitment to the residents of Fort Smith, this agreement will fairly compensate property owners, and enable both the residents and the company to focus on meeting the goals of the current remediation effort."

Following are details of the resolution, quoting from Vernier's email.
• The agreement covers current owners of property devalued in 2013 by the County Tax Assessor for tax assessment purposes as a result of groundwater contamination from trichloroethylene (TCE) released at the former Whirlpool manufacturing facility in Fort Smith, as well as some properties near the facility whose tax value assessment did not change;
• Property owners inside the area bounded by Ingersoll Ave, Brazil Ave., Jenny Lind Rd., and Ferguson St. will receive either an amount equal to the devaluation estimated by the County assessor or the devaluation as determined by an independent property appraiser;
• Class members outside this area will receive $5,000, and possibly more in the future, if TCE is detected above threshold levels in groundwater beneath their property;
• Property owners agree to allow access to their property for testing and remediation activities, record a deed restriction prohibiting new wells on their property, and release Whirlpool from property damage claims. 
• Each class member will receive formal notice of the resolution, as well as an opportunity to opt out of the agreement;
• A federal Court will be required to approve the agreement; and
• Whirlpool has agreed to pay court approved fees and costs incurred by the class members.

It is unclear how many residents in the affected plume area or in the "fringe" areas will accept the settlement offer from the company. Resident Debbie Keith, who has been organizing efforts against Whirlpool in the neighborhood north of the former facility, confirmed she would not participate in the settlement offered by the company, but declined further comment.

Fort Smith City Administrator Ray Gosack called the settlement a "positive development."

“We’ve been made aware of the announced settlement between Whirlpool and many of our citizens in the vicinity of the company’s former facility. This is a positive development that helps property owners move forward,” Gosack said in a statement.

The statement from the city also noted that Mayor Sandy Sanders and the Board of Directors “have worked diligently on keeping the public engaged in this issue. In Whirlpool’s announcement, the company acknowledges the board’s work in addressing remediation and development activities.”

The settlement comes a week after the company was granted a 30-day extension by the Arkansas Department of Environmental Quality to install vapor monitors in structures within the plume area after the company said no area residents had agreed to grant Whirlpool entry for testing purposes. The settlement, as detailed above, would give the company property access rights should the property owner agree to the settlement.

Remediation efforts do continue, though it was revealed in May that contamination caused by TCE in and around the Whirlpool facility itself may, in fact, be worse than previously indicated.

A memo from the ADEQ said it appeared as though Whirlpool knew the extent of the contamination even while working with the agency on a remediation plan.

"Although Whirlpool collected this MIP data 4-5 months ago, no discussion of the results or ramifications of this data was supplied to ADEQ," the memo continued. "MIP data is presented in real time. Whirlpool certainly knew that this area was impacted prior to submitting the final Remedial Plan at the end of February."

Vernier said the settlement announced Thursday was "another significant step forward in Whirlpool’s ongoing work with Fort Smith residents and Arkansas state regulators to fairly and effectively address this issue.

"With the engagement and support of the Fort Smith City Directors and the oversight of the Arkansas Department of Environmental Quality, we continue to push ahead with the remediation activities and redevelopment of the Whirlpool property.

Whirlpool officials are scheduled to be in Fort Smith Tuesday (July 8) to provide an update on remediation efforts to the Fort Smith Board of Directors. ADEQ Public Outreach and Assistance Division Chief Katherine Benenati confirmed Thursday that the agency would be in attendance, as well. The meeting is scheduled to take place at 6 p.m. at the Fort Smith Senior Activity Center, 2700 Cavanaugh Road.