Increases were posted for sales tax collections in Fort Smith and the city’s portion of the countywide sales tax, but the amounts collected year-to-date remain below budget estimates.

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.605 million in the October report, up 0.69% from the same period in 2012.

The collections in the October report were 2.36% below budget estimates. (Because the state of Arkansas has a two-month delay in reporting collections back to the cities, the city of Fort Smith — for budgeting purposes — has historically reflected the collections on a one-month delay. Which is to say, the tax collections remitted to cities in November are from taxes collected in September and transferred by merchants to the state in October.)

For the first 10 reporting months of 2013, each of the 1% sales taxes generated $16.363 million, down 1.02% compared to $16.532 million in the same period of 2012.

The year-to-date collections are also 3.92% below budget estimates.

Collections in 2012 of the two 1% taxes totaled $39.21 million, slightly ahead of the $38.683 million during 2011. The 2011 collections were 3.9% above 2010 collections.

Fort Smith’s share of the county 1% sales tax in the October report is $1.248 million, up 0.39% compared to October 2012. The collection was down 2.12% compared to the revenue estimate.

For the first 10 months of 2013, the countywide tax has generated $12.927 million for Fort Smith, up 0.34% compared to 2012 and down 2.12% compared to budget forecasts. The dip in collections compared to budget estimates has resulted in city officials seeking 4% budget cuts from all departments.

The countywide tax generated $15.279 million in 2012, just ahead of the $15.15 million in 2011, but lower than the peak collection of $16.61 million in 2008.

The countywide tax collection is critical because the revenue is a little more than 40% of the city’s general budget of roughly $42 million. A majority of the general fund budget general supports fire, police and other critical city functions.

AREA COLLECTIONS
Sales tax collections in Crawford County for the first nine months of 2013 total $4.718 million, slightly ahead of  the $4.695 million in the same period of 2012.

Collections in Van Buren for the first nine months of 2013 are $$5.372 million, well ahead of the $2.645 million in the same period of 2012. The city approved a 1% sales increase in 2012 for infrastructure improvements and emergency services upgrades.

Collections in the Sebastian County city of Greenwood totaled $1.494 million, better than the $1.468 million during the same period of 2012.

PREVIOUS ANNUAL COLLECTION INFO (Fort Smith)
2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2012: $39.210 million
2011: $38.683 million
2010: $37.229 million
2009: $37.554 million
2008: $41.226 million
2007: $37.858 million
2006: $36.840 million

Fort Smith portion of 1% countywide sales tax
2012: $15.279 million
2011: $15.15 million
2010: $14.89 million
2009: $15.04 million
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million

A vote taken Monday night (Nov. 25) by the Sebastian County Quorum Court could leave one justice of the peace in violation of Arkansas law.

Justice of the Peace Jim Medley voted for a budget line item during the Monday meeting that would grant more than $170,000 in funding to non-profit organizations, including $24,000 to the Area Agency on Aging of Western Arkansas, where Medley services as president and CEO.

The item was voted on twice Monday evening, first failing and later passing once the Quorum Court was given some clarity regarding what they were voting for.

During the first vote, Medley made no mention of his association with the agency, which he voted to approve funding for as part of the non-profit line item. Prior to Medley's second yes vote, Justice of the Peace Linda Murry asked whether Medley should recuse himself due to his associations with the Area Agency on Aging and the Quorum Court.

"Is it a conflict of interest for Mr. Medley to vote on (the appropriation)," she asked.

"Thank you, Linda, for noting that," Medley said. "I think that if I didn't vote it would be a no. I think the law simply requires me to make you all aware of the potential conflict. I've done that on all of my written forms."

Sebastian County Prosecuting Attorney Dan Shue, who serves as the court's attorney and parliamentarian, said Tuesday (Nov. 26) that while he would have preferred Medley have abstained from the vote, he did not think it ran afoul of the law.

"Just on Roberts Rules of Order (the parliamentary rulebook used by the county), you should abstain. But it's not an actionable, ethical violation."

Shue did note that an Arkansas Attorney General’s opinion is “pretty much on point” with what should have happened during the vote. According to Shue, the opinion reads: “It would be appropriate for the quorum court member to abstain from participating in such decisions.”

Shue’s opinion that Medley’s vote is not a violation of the law differs from that of attorney Matt Campbell of Pinnacle Law Firm in Little Rock, who told The City Wire that he thought Medley was breaking the law.

"I can't see how this would be acceptable. When it comes to the rules of conduct for county officers, Arkansas Code Annotated 14-14-1202(c)(1)(A)(i) is pretty explicit that no officer of county government shall: 'Be interested, either directly or indirectly, in any contract or transaction made, authorized, or entered into on behalf of the county or an entity created by the county, or accept or receive any property, money, or other valuable thing for his or her use or benefit on account of, connected with, or growing out of any contract or transaction of a county.'"

Campbell also said it was clear to him that Medley was "interested, either directly or indirectly," and added "that the appropriation violated that rule of conduct. And that's even more true if he refused to recuse and, instead, actively voted to send money to the Agency."

Violation of the law is punishable by a maximum fine of $1,000 and removal from office, he said, adding that either the county prosecutor or a citizen of Sebastian County could file a lawsuit against Medley in circuit court for violation of the rules of conduct according to that statute.

Reached for comment Tuesday at the Area Agency on Aging, Medley said he would consult with an attorney, though he felt that he had done nothing wrong.

"My response is that since you brought this to my attention, I'll be glad to consult with an attorney and get their opinion."

He again reiterated that he had already made the Quorum Court aware of his position.

Asked whether any of the funds from the county could be used to pay his salary at the Area Agency, Medley said no.

"I don't gain in any way. That money goes to services to people in south Sebastian County for things like wheelchair ramps and things of that (nature)."

A request made on Sept. 24 and signed by Medley to County Judge David Hudson and the Quorum Court detailed what Medley said the money would be used for, though no supporting documentation was provided with the request to prove that funds allocated in previous years were used in the same way.

"We will not use it for anyone that can have services paid for by the State or Federal funds," he wrote in the document requesting the funds. "The type of services we will provide are assistance with personal care, homemaking, minor home repair, dentures, eye glasses, medication assistance, wheel chair ramps, shower chairs, etc."

Medley refused to answer questions about his salary or funding for his salary, which the Area Agency reported to the IRS last year to be $324,496, other than to say that no portion of the $24,000 would be used to pay his salary or benefits.

"I'm saying it's inappropriate for you to ask about my salary much as it would be if you asked how much I paid for a car. I don't ask people their salary."

Medley said he believed Murry brought up his association due to his unsuccessful attempts to take away funding for health insurance for families of Quorum Court members.

"Linda Murry brought it up because she's upset about (proposing that) JPs not (receive) health insurance," he said. "I was the one who brought up the motion. When a person does their job diligently, obviously you'll pick up some political opposition."

Murry said Tuesday that she was not attempting to settle political scores, saying that "it just seemed odd and I expected him to abstain from voting on that."

"He shouldn't be taking it personally. Actually, the thing on the health care for the family doesn't affect me. I don't take family coverage. So what he did on health care didn't have an affect on me."

Should Medley's legal counsel advise him that he is in violation of the law, he said he would work to make it right.

The fight between Sebastian County Judge David Hudson and County Treasurer Judith Miller over financial software to be used in her office continues following a vote of the Quorum Court on Nov. 26 that would force Miller to allocate $115,000 to the county's information technology department to maintain software she said is not used by her office.

It is a disagreement first made public in April when Miller went to the Quorum Court with the dispute between her and Hudson.

At issue is more than $500,000 spent on a financial software system from a company known as New World, which was supposed to provide a single system between the judge's office, which also houses the comptroller's office, and the treasurer's office's financial systems.

After 16 months of meetings and consultation with the company, Miller said she has not received a working system and decided to pursue other options.

"Now 16 months later, I have nothing in the treasurer's office whatsoever," she said at the time. "And I decided that I'm done. To me they're in breach of contract."

She told the Quorum Court that Hudson would not sign a contract which would have entitled her to use with an Arkansas-based company known as Financial Intelligence, which would have cost the county only $700 per month. But after getting the go-ahead from the Court in April, FI pulled out of the project in June, citing "the unique circumstances facing Sebastian County. We viewed the way things showed today as simply too much risk at this time," wrote FI President Robert Baird.

At the time, Miller said the IT department's hostility to FI caused the company to abandon the project, though Hudson viewed the separation differently.

"I've spoke to the president of the company and I think there's been some misunderstandings, but I don't think that he was comfortable coming in when there was already a company here and it makes things more complex, so I don't think he was comfortable with that,” Hudson explained.

In a memo to the Court on Nov. 26, Hudson said the decision to use the same New World system was made in October 2011 and presented to the Court at that time, which is part of the reason he believed she should provide funding of $115,000 to the county's IT department.

"The key official to make this project financially feasible was the County Treasurer," he wrote. "This system was funded by the Quorum Court and contracts were signed and two new positions were hired in IT. Implementation began in 2012 and continues at this time for finance, law enforcement and courts. We anticipate completion of all three systems in 2014."

Hudson detailed services he said the IT department provides the county treasurer's office, including e-mail, hardware and network support, software known as iSeries and the new .Net System, though he said neither of the latter two systems is being actively utilized at the present time.

In an interview Monday (Dec. 2), Miller said the funding was taken from the Treasurer's Commission Fund and should not be used to prop up the county's IT department.

"For me, it's not paying for nothing. I'm not getting nothing from them. I don't want to pay for services I'm not receiving."

Miller has also discussed the issue with consultant Eddie Jones, a former Randolph County treasurer. He said in an e-mail to Miller that the only legal way to transfer treasurer's funds to the IT department "would be if the IT Department provided some level of service for the Treasurer's office," which Miller again said she has not received from the department.

As for what happens next, Miller is keeping quiet.

"I don't want this out there for David (Hudson) to know," she said. "I don't want him to know what I'm getting ready to do next. But I haven't given up."

Hudson said he hoped to find agreement with Miller and move forward.

"I'm certainly not in a dispute with the treasurer," he said. "I will continue to work as a partner in a cooperative fashion because I think that's what people that voted for us expected us to do."

Building permits in Fort Smith, Greenwood and Van Buren were a combined $5.944 million for the month of November, a drop of 64.82% from the same month last year when permits totaled $16.899 across the three cities.

The cities also showed a decrease in values of 59.32% from October to November, with October boasting permit values of $14.614 million.

Even though the value of permits was lower during the month of November, the three cities have continued an increase of building permit values for the year as a whole, posting a 40.12% increase in value from January through November 2013 ($195.226 million) compared to the same period last year ($139.329 million).

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

FORT SMITH
The city of Fort Smith posted 156 permits last month with a value of $5.398 million. Compared to October's values of $12.779 million, November's figures are down 57.76%.

Values are also down compared to the same month last year, when Fort Smith issued $15.412 million in permits, resulting in a decline in permit values of 64.98%.

Residential construction showed the most strength in November, with residential construction accounting for $4.222 million in permits.

Commercial construction, a sector that was boasting values in the millions of dollars during much of the year, showed only $818,003 in permits issued.

GREENWOOD
Permits were down in the city of Greenwood compared to November 2012, with only three permits being issued last month with a value of $177,990 compared to 11 permits the same month last year worth $392,500, a decline of 54.65%.

The largest permit issued in November was for a new home valued at $125,120. The other permits were issued for repairs and remodeling to one residential structure and one commercial structure.

VAN BUREN
Total valuations of building permits in Van Buren were down, as well, with the city only posting $367,600 in building permits last month compared to $1.096 million during the same month last year, a decline of 66.46%.

As with last year, much of the value of Van Buren's permits were related to residential construction which saw five permits issued at $264,000 compared to $1.025 million last year, a decline of 74.24% from November 2012.

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

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

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

From a weather perspective, it may soon get nasty in Northwest Arkansas and the Fort Smith area – with possible “utility interruptions” part of a National Weather Service warning.

AccuWeather.com on Monday (Dec. 2) reported that a large swath of ice and a wintry mix will hit later this week and will likely slow travel and cut power from parts of Texas to Pennsylvania.



“As dangerous cold sweeps southward and eastward over the Plains and Midwest in the wake of a North Central states snowstorm, it will set up a weather pattern favoring a narrow zone of freezing rain, sleet and some snow late this week,” noted the AccuWeather report. “The icy mix will spread from part of northern Texas Thursday to central Kentucky and southern Ohio Thursday night to central Pennsylvania Friday.

In addition to cities in Northwest Arkansas and the Fort Smith area, cities facing travel and power problem include Dallas; Oklahoma City; Little Rock, Louisville, Ky., and Cincinnati.

“There is the potential for ice and a wintry mix to last more than a few hours. In some cases, a buildup of ice may span two days, which could result in sporadic power outages,” according to AccuWeather.

The National Weather Service out of Tulsa on Monday also issued a weather warning.

“Very cold air will combine with north winds to produce wind chill values below zero in parts of northeastern Oklahoma and Northwestern Arkansas on Friday and Saturday,” noted the NWS alert. “Some utility interruptions are quite possible where the heavier freezing rain occurs.”

The NWS warning came with advice to get ready.

“While the potential for this wintry weather is still several days away, it would be a good idea to take advantage of the milder weather ... and make initial preparations for the turn in the weather.”

Fueling the possible snow and ice storm is a storm system producing flooding rains and heavy snow in the Pacific Northwest, according to AccuWeather. The story “will eject into the Plains early this week allowing arctic air to spill southward from Canada.”

Year-to-date tax collections in Arkansas continue to trend higher, but an unusual corporate income tax swing helped push collections in the November report below budget estimates.

Year-to-date gross revenue (July 2013-Nov. 2013) totaled $2.389 billion, 3.5% above the same period last year and above forecast by 1.1%, according to the report issued Tuesday (Dec. 3) by the Arkansas Department of Finance and Administration.

Individual income taxes for the fiscal year totaled $1.115 billion, up 2.5% from last year and 0.2% above the budget forecast. Year-to-date sales and use tax collections were $914.3 million, up 4.1% above last year and just 0.2% above forecast. Income taxes and the sales and use tax collections are the two primary sources of state revenue.

The corporate income tax collections for the first five reporting months of the fiscal year totaled $139.9 million, up 8.7% compared to last year and 7.1% above forecast.

NOVEMBER NUMBERS
November gross revenue was $430.2 million, up 0.6% above last year and 1.9% below forecast.

“Results in November were impacted by swings in Corporate Income tax, a volatile component of general revenue. Gross collections in Corporate Income tax were $4.2 million below forecast and -41.6 percent below year ago levels, while Corporate Refunds were $2.6 million above expectations and 36.6 percent above year ago levels. These monthly results differed dramatically from year-to-date results for the same categories,” John Shelnutt, head of the Department of Finance and Administration’s Economic (DFA) Analysis & Tax Research division, said in the report. “Timing effects in collections compared to year ago activity and the Thanksgiving holiday were anticipated as shown in Sales Tax growth compared to last year.”

Individual income tax collections during November totaled $197.7 million, up 2.7% compared to November 2012 and below forecast by 1.8%. Sales and use tax collections during the month totaled $175.2 million, up 1.2% from last year and 0.5% below the forecast.

A trend of relatively minor growth in sales and use tax collections is evident. The collections, considered a barometer of consumer confidence, ended fiscal year 2013 on a down note. Collections in the segment for the fiscal year totaled $2.124 billion, up just 1.1% compared to the 2012 period, and 1.4% below forecast.

The DFA reported Monday the projections for 2014 and 2015 fiscal year revenue.

Gross general revenues are estimated at $6.203 billion for the current fiscal year (July 1, 2013-June 30, 2014), down about 0.2% from fiscal 2013 collections, according to a report issued Monday (Dec. 2) by Richard Weiss, director of the Arkansas Department of Finance and Administration.

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

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2013 - Nov. 2013: $21.7 million
July 2012 - Nov. 2012: $20.7 million

Games of skill
July 2013 - Nov. 2013: $15.8 million
July 2012 - Nov. 2012: $13.5 million

Tobacco
July 2013 - Nov. 2013: $94.3 million
July 2012 - Nov. 2012: $97.2 million

Insurance
July 2013 - Nov. 2013: $43.5 million
July 2012 - Nov. 2012: $41.6 million

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

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

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

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

Serving on the Wal-Mart Stores Board of Directors pays a handsome amount, but it’s not without some hazards as the retail giant is regularly a target for protestors from various union-sponsored groups.

High profile exec Marissa Mayer, CEO of Yahoo, has been a board member for Wal-Mart Stores since 2012, and during that time she has been dogged by protestors at numerous events when she was scheduled to speak about Yahoo.

A noisy protest on Nov. 19 at the Moscone Center in San Francisco, was the most brazen interruption Mayer has faced during her board tenure at Wal-Mart. She was onstage speaking with Salesforce.com CEO Marc Benioff, when protestors inside the venue interrupted Mayer as she attempted to speak about her efforts to refocus Yahoo toward the mobile tech trend.

Mayer, the keynote speaker at the Salesforce.com annual trade show, was forced to stop and explain that she serves on Wal-Mart’s Board, but she wasn’t there to discuss Wal-mart’s business. Multiple media outlets reported that the protestors and labor activists were escorted from the center, where they remained outside.

Corporate governance expert Alan Ellstrand said board members have to realize there can be some collateral damage when the company they serve is targeted by protestors or other media controversy. Ellstrand is a professor at the University of Arkansas. He said firms that recruit board members likely brief board candidates on the potential they could face for targeted protests and there could be hazard pay associated.

“At some point if distractions become too much, board members might resign that post, especially since most are already running a company full-time, for which they are earning a much larger salary than a board stipend,” Ellstrand said.

THE SORENSON STORY
Earlier this year, Arne Sorenson, CEO of Marriott International, resigned his board seat at Wal-Mart Stores. Sorenson was a board member serving on Wal-Mart’s audit committee. He too faced protests inside at least two Marriott Hotels after the Foreign Corrupt Practices Act investigation into Wal-Mart’s international operations was made public in the April 2012.

In April 2012, protestors entered a Maryland Marriott chanting that Sorenson needed to resign in the wake of the FCPA bribery scandal. They also left a banner with the same message. Later that same month, AFL-CIO activists and Respect DC protestors entered the Pennsylvania Avenue Marriott in Washington D.C. and reportedly chanted “Hey Hey! Ho ho! Wal-Mart greed has got to go!”

Sorenson could not escape the Wal-Mart questions when he was interviewed on CNBC for a segment on the hotel and hospitality industry in the summer of 2012. Analysts were not surprised to see Sorenson step away from the controversial board seat. Sorenson said he would focus on running Marriott International and did not stand for board re-election in April 2013. He served on Wal-Mart’s board of directors for five years.

Wal-Mart Stores announced Nov. 22 that Pamela Craig, retired chief financial officer of Accenture, had joined the Board effective immediately. Craig became the 15th member of the board and will also serve as a member of the company’s Audit Committee.

MESSAGES AND MONEY
Ellstrand said board members can’t win if they answer questions from protestors or if they don’t.

“It’s likely that Wal-Mart or other firms would not want their board members to speak randomly about company business. After all, they may not have all the information given their limited meeting times throughout a year,” he said.

However, he said not answering questions can send the message that board members aren’t in-tune with what’s going on or they don’t care.

Wal-Mart reported that it paid members of it audit committee, like Sorenson, an additional $65,000 during fiscal 2013, in part because this committee met 15 times – nearly three times the number of other committee meetings and the full board.

Wal-Mart said because of the audit committee's extra work, it doubled the cash portion of the annual retainer for audit committee members, and doubled the chair fee for the chair of the audit committee.


Non-management board members for Wal-Mart Stores earned between $387,976 and $219,994, which included stock awards equaling $175,000.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Other Fort Smith-area Districts do not appear to be moving toward a major challenge, as no other seats except District 21 south and east of Fort Smith are represented by term-limited representatives or senators (House members are limited to three two-year terms while Senate members are limited to 10 years of elected Senate service):
HOUSE
• District 21: Rep. Terry Rice, R-Waldron (Term-limited)
• District 74: Rep. Jon S. Eubanks, R-Paris (2nd Term)
• District 75: Rep. Charlotte Douglas, R-Alma (1st Term)
• District 76: Rep. Denny Altes, R-Fort Smith (Term-limited)
• District 77: Rep. Stephanie Malone, R-Fort Smith (Term-limited)
• District 78: Rep. George McGill, D-Fort Smith (1st Term)
• District 79: Rep. Gary Deffenbaugh, R-Van Buren (2nd Term)
• District 81: Rep. Justin Harris, R-West Fork (2nd Term)
• District 82: Rep. Bill Gossage, R-Ozark (1st Term)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It’s hard to travel anywhere in Northwest Arkansas and not see evidence of many ongoing road construction projects—and officials say the orange barrel phenomenon is going to be a steady sight in the next few years.

“People will have to learn how to drive by barrels for the next several years,” said Patsy Christie, director of planning and community development for the city of Springdale.

Two highly visible, ongoing projects include the addition of the Don Tyson Parkway interchange under construction in Springdale and the Fayetteville Flyover under construction near the Northwest Arkansas Mall in north Fayetteville.

AHEAD OF SCHEDULE
Christie said work on the Don Tyson Parkway interchange is on schedule and may be ahead of schedule.

“It’s moving really well,” she said. “We would like to have some of the ramp paved by the end of the year. They’ve been doing a lot of night work to allow them to close 540 at 15 minute intervals at a time (and not interrupt daytime traffic as much).”

The interchange is a $23 million project that is a joint city and federally funded endeavor. The interchange is scheduled to open in August 2014 and will give drivers access to the Interstate without having to take the already congested Highway 412 through Springdale.

The $6.3 million Fayetteville Flyover is running ahead of schedule, reports Chris Brown city engineer.

“The main structure of the bridge is up and you can see the form of the bridge,” he said. “The contractor has been working on getting reinforcing steel in place in preparation of pouring the concrete deck (driving surface).”

Most of the road closures have been limited to the nighttime hours for this project as well. The contract calls for the project to open July 2014.

UPCOMING WORK
The last six months have been a flurry of planning and scheduling as the half-cent sales tax being collected and more planned highway projects were scheduled.

According to information from the Arkansas State Highway and Transportation Department, several projects besides the Don Tyson Interchange are underway. A major widening project near the Porter Road interchange started this summer and preparation work on Highway 2 for the Bella Vista Bypass is also underway.

Several projects are scheduled to be let in late 2013 including widening at Wagon Wheel Road and improvements to the interchanges at the Elm Springs Road exit ($4 million) and the Johnson Mill Boulevard exit ($2 million).

The year of 2014 will be a busy one with seven projects on the slab for being let during that year. Specific months were not indicated but the following projects are up next.
• Widening 540 at the New Home Road to Highway 102 interchanges
• Improvements to the Highway 62 interchange ($25 million)
• Improvements to the Highway 16/112 interchange ($19 million)
• Improvements to the Highway 264 interchange ($5 million)
• Major widening at 112 and 540 ($125 million)
• Improvements to Wagon Wheel Road interchange ($2 million)
Construction of the Bella Vista Bypass. ($30 million)

Link here for a PDF map detailing highway work in Benton and Washington counties.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

So she did.

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

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

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

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

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

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

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

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

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

Sales soared.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A move announced Wednesday (Dec. 4) by the Northwest Arkansas Council is geared to build upon the past several years of renewed interest in developing downtown areas in Northwest Arkansas.

The council has contracted with Daniel Hintz, who most recently worked as the executive director of Downtown Bentonville Inc., to provide consulting services and other resources to mayors and downtown leaders in Bentonville, Fayetteville, Rogers, Siloam Springs and Springdale.

Hintz’s work, according to the council, will include identifying downtown economic benchmarks, helping to create or update downtown master plans, strengthening or establishing downtown organizations, and helping secure the talent to foster ongoing development and growth in downtown areas.

The council said the effort is part of the Greater Northwest Arkansas Development Strategy – a five-year plan that outlines the council’s work. Part of that plan requires the council to “coordinate and elevate the work of downtown organizations.”

“Many people in Northwest Arkansas know about Daniel’s solid work in Bentonville and Fayetteville,” Mike Harvey, chief operating officer of the Northwest Arkansas Council, said in a statement. “He has a deep understanding of how exceptional and unique downtowns help competitively position individual cities and the Northwest Arkansas region as a whole.”

CROSSROADS
Harvey said active and vibrant downtown areas help Northwest Arkansas companies recruit talented employees. In the council statement, Hintz said downtowns are the “crossroads of culture, community and commerce.”

“I am excited that the Council recognizes vibrant downtowns as such a vital part of our regional success,” Hintz said. “This is both an honor and amazing opportunity to work with unique, dynamic communities in the region I call home.”

In addition to his work with Downtown Bentonville, Hintz was executive director of Fayetteville Downtown Partners for three years.

Hintz will have some momentum with which to work. Several downtown groups have been active in recent years.

SPRINGDALE, ROGERS
The Downtown Springdale Alliance is comprised of business, civic and community leaders and the mission is to “create excitement for a diverse community to gather, shop, play and live. The Historic Springdale District extends from Huntsville Avenue to the north, Maple Avenue to the south, Old Missouri Road to the east and Pleasant Street to the west.

In May 2013, the association approved a Springdale Downtown Revitalization Master Plan that contains four phases. This summer, the Springdale City Council approved the initial phase of that plan. Kent Hirsch, president of the association, said the $100,000 needed to complete the study came from the A&P Commission, Springdale Public Facilities Board and the City of Springdale.

The rest of the funds for the various phases are intended to come from almost entirely private resources, however. The initial cost estimates are about $20.6 million, not including paying for property acquisition, according to the master plan documents.

Main Street Rogers has been working for several years to keep its historic downtown area active. Kerry Jensen, who recently worked as director of Main Street Rogers, said the group’s goal was to make downtown more attractive and therefore to attract more businesses.

In 2010, 26 new businesses came to the region and that number has remained steady or grown each year. As of late October, 23 new businesses had come into downtown. This is a gross number and does not include businesses that have left.

“Downtown now has a soul,” he said. “It’s taken on a whole new life.”

BENTONVILLE, FAYETTEVILLE
Downtown Bentonville saw more than 600,000 visitors last year with a vibrant Farmer’s Market and First Friday events adding to the steady stream of patrons to Crystal Bridges Museum of American Art. That success is proof to many that long-term plans can come into fruition and can succeed.

Bentonville has also invested in a trail system around the city that connects to the downtown. Since 2006 the city has built more than 20 miles of trails at a cost of roughly $1 million per mile.

For Fayetteville, the revitalization the downtown area happened a decade ago and now the mission is expansion and promotion, said City of Fayetteville Chief of Staff Don Marr. 


“We’ve always been focused on downtown,” he said. “Our goal is to continue doing that. Downtown is the core of a community and that’s why we’ve been committed to it as long as we have.” 


Continued expansion requires the help of taxpayers and Fayetteville voters continue to support these efforts recently approving $10.9 million in bonds that will retire $1.5 million in remaining debt on the Town Center, $6.9 million to fund expansions at the Walton Arts Center and $3.5 million to help build a regional park.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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