Air travel is on the rebound in Northwest Arkansas and in the Fort Smith area, with both regional airports posting year-to-date gains above 6%. More passengers is not the case in Little Rock where year-to-date enplanements are down almost 7%.

The January-May gains at the Northwest Arkansas Regional Airport (XNA) and the Fort Smith Regional Airport include the period of severe winter weather that cancelled thousands of flights nationally.

Travelers flying out of XNA during May totaled 58,410, up 6.94% compared to the 54,620 during May 2013. For the first five months of 2014, enplanements at XNA total 243,939, up 6.85% compared to the same period in 2013. The early 2014 traffic is up 4.39% compared to the same period in 2007, the year that XNA reached record enplanements of 598,886.

For all of 2013, XNA enplanements totaled 579,679, up 2.58% compared to the same period in 2012. The enplanement growth remained stable through the year, with enplanements up 2.42% at the end of the first quarter of 2013.

Enplanements at XNA totaled 565,045 during 2012, up just 0.4% compared to 2011. Although slight, the gain prevented XNA from posting two-consecutive years of enplanement declines. XNA’s first full year of traffic was 1999, and the airport posted eight consecutive years of enplanement gains before seeing a decline in 2008.

FORT SMITH TRAFFIC
The Fort Smith Regional Airport, served by flights from Atlanta and Dallas-Fort Worth, posted May enplanements of 8,371, up 4.95% compared to May 2013.

Enplanements for the first five months of 2014 total 36,337, up 6.35% compared to the same period in 2013.

For all of 2013, enplanements at the airport totaled 84,520, down 2.46% compared to the same period in 2012. The decline ended three consecutive years of enplanement gains at the airport.

With 20,998 enplanements for the first five months of 2014, American Airlines accounts for 57.7% of commercial traffic out of Fort Smith. Delta Air Lines had the remaining market share for the first five months of 2014.

American enplanements out of Fort Smith are up 5.06% for the first five months of 2014 compared to the same period of 2013, and Delta enplanements are up 8.17%.

John Parker, executive director of the Fort Smith Regional Airport, said he does not get analysis on if passengers are flying for business or leisure, but said he believes business conditions are improving.

“We’ve had some positive business activity in the region lately,” Parker said, adding that consumer confidence is rising nationwide.

Indeed, The Conference Board reported Tuesday (June 24) that its index of consumer confidence reached a high not seen since January 2008.

“Expectations regarding the short-term outlook for the economy and jobs were moderately more favorable, while income expectations were a bit mixed. Still, the momentum going forward remains quite positive,” noted Lyn Franco, director of economic indicators for The Conference Board.

LITTLE ROCK NUMBERS
Enplanements at the Bill & Hillary Clinton Airport (Little Rock National Airport) were 99,982 in May, down 4.4% compared to May 2013. Enplanements for the first five months of 2014 were 415,892, down 6.75% compared to the same period of 2013.

Enplanements in 2013 totaled 1.085 million, down 5.45% compared to 2012. Enplanements in 2012 totaled 1.147 million, up 4.07% compared to 2011. The 2012 numbers ended five consecutive years of enplanement declines at Arkansas’ largest commercial field.

Among the top three carriers in Little Rock, only one has posted enplanement gains between January and May. Southwest, the largest carrier, has seen enplanements decline 17.84% in the first five months. Delta, the second largest, has posted at 1.5% decline in the period, while American Airlines has a 0.86% gain in enplanements during the first five months of 2014.

FUTURE TRAVEL PLANS
Gains at XNA and Fort Smith could continue if estimates by Airlines for America (formerly the Air Transport Association) prove true. The group predicts that summer 2014 air travel will hit a six-year high as 210 million passengers – 2.28 million a day – fly on U.S. carriers between June 1 and Aug. 31.

International travel is expected to reach an all-time high with published airline schedules showing Canada, Mexico, the United Kingdom, Germany and Japan, respectively, as the top five nonstop destinations from the United States.

“It’s a great time to fly, as air travel remains one of the best consumer bargains in America, given its superior speed and affordability,” John Heimlich, A4A vice president and chief economist, said in a statement. “U.S. airlines are well prepared to accommodate the increased travel demand in the summer months by adding seats and continuing to make customer-focused investments in their product.”

Fort Smith-based OK Foods has denied accusations leveled by the National Labor Relations Board that it interfered with a union vote at its Heavener, Okla., food processing plant.

The accusations from the NLRB came in a letter from the agency's Amy Novara, a field examiner, who detailed a list of nearly 20 different accusations against the company and individuals from on-site supervisors to CEO Trent Goins.

Novara said the company attempted to use financial incentives to influence the May 1 vote on whether or not employees should join the United Food and Commercial Workers Union Local 1000, a vote that ultimately failed. She also said after March 20, OK Foods denied wage increases and retroactive pay to employees that had engaged in union activities.

Novara's letter continued, alleging the company threatened employees if they voted in favor of unionizing with the United Food and Commercial Workers Union Local 1000 during the May 1 vote.

"In or about February 2014, the Employer, but Supervisor Sparks, informed employees that they could not address wage increases and retroactive pay because of the Union and threatened employees with loss of wages if employees selected the union as their collective bargaining representative, in violation of Section 8(a)(1) of the Act," she wrote.

Other similar allegations were made in her letter against OK Foods CEO Trent Goins, who she said "informed employees that wage increases and retroactive pay were being withheld because of union activity in violation of Section 8(a)(1) of the Act.” A settlement agreement attached to Novara’ letter "notifies employees or members that the Charged Party (OK Foods) will cease and desist from engaging in conduct proscribed by the Act," adding that the May 1 election would be thrown out and another election on unionization would be held.

According to a press release Tuesday (June 24), the company will not agree to any sort of settlement with the NLRB.

"OK Foods continues to deny any and all allegations and stands behind the May 1 vote," the release said.

The OK statement also claims that during the investigation, the NLRB "made no formal findings based on the union's allegations; conversely, it has dismissed some allegations and found that the union should present remaining allegations to an Administrative Law Judge.”

Goins also released a statement, saying that he was looking forward to challenging the allegations made by the UFCW.

"We look forward to presenting our case and refuting the union's remaining allegations," he said. "Our employees are important to OK Foods, and we will continue to stand behind them, determined to uphold their May 1st choice. As I stated in May, I continue looking forward to working with our employees to make OK Foods the best possible place; we are a team, and each member — and their voice — is valued and respected at OK Foods.”

UFCW's Anthony Elmo said the allegations detailed in Novara's letter were not union accusations, but were allegations directly from OK Foods workers.

"All of those are things that came from the employees themselves," he said. "Those workers brought those to the NLRB in sworn testimony. I think at the end of the day, for OK Foods to act like the union is making up the allegations is ridiculous. They came from employees and just put them in front of the (National Labor Relations) Board."

Consumers reined in spending across Northwest Arkansas in April which set sales tax revenue collections in the most recent report back 2.8% among the combined four largest cities in the region.

The individual city collection reports were mixed in June, which reflect sales tax collected in April creating a two-month lag in the reporting. Fayetteville, Springdale, Rogers and Bentonville cumulatively reported tax revenue of $4.325 million this month, down from $4.454 million in the year-ago period.

Each of the cities collect a 2% sales tax on good and services, 1% of that goes to repay debt and the other 1% flows into the city budgets for operating expenses. This report reflects the latter.

Sales Tax Revenue (June)
Bentonville: $714,355, down 26%
Fayetteville: $1,475,961, up 1.8%
Rogers: $1,184,283, up 0.2%
Springdale: $950,962, up 12%

Denise Land, finance director for Bentonville, said collections have been on a roller coaster for several years now. But the one important thing to remember is that year-to-date collections are better than what the city budgeted.

“We hope it continues,” Land said.

City officials, including Land, said there were some very strong months in early 2013, which are tough for comparison purposes, and the ups and downs month-to-month are not a surprise.

Springdale receipts captured the biggest bump upward in June, increasing more than $98,000 from the same month in 2013. It was the city’s highest revenue collection since prior to the 2008 recession.

Springdale Mayor Doug Sprouse said the increase was welcome and helped the city stay ahead of budget. He couldn’t attribute the gains to anything in particular except that maybe more residents were spending their money in the hometown.

“We believe the new Walmart Supercenter at Elms Springs road will help us retain sales tax dollars we may have been losing to other cities,” Sprouse said. “We are excited about other future developments in that area of the city and plan to reinforce some of the road infrastructure there in future months.”

Wal-Mart plans to open the new Springdale supercenter later this summer. It is one of 12 new building projects the retail giant has announced or finished this year in the two-county area.

The new Walmart AMP has Rogers city officials hopeful that sales tax revenue will continue to increase this summer along with the water park attraction which both make the city an entertainment destination.

Sales tax collections in Fayetteville grew by just $26,000 from a year ago, and city leaders said that does not begin to cover the economic losses sustained this winter as people were snowed in and businesses were closed.

City finance director Paul Becker said Fayetteville is still playing catch-up from weaker reports earlier this year. He expects the revenue swings to flatten out in the coming months.

Sales tax revenue has a strong correlation with consumer sentiment. U.S. consumer sentiment rose in April, according to the Michigan Sentiment Index. The final April reading on the overall index of consumer sentiment came in at 84.1, beating an expectation of 83.0. The number was the highest reading since July 2013.

"Perhaps the more important question is whether consumer confidence will show greater resistance to the backslides that have repeatedly occurred in the past few years," survey director Richard Curtin said in a statement. "Resilience is dependent on positive long term economic expectations. While near term expectations have improved substantially, longer term expectations for personal finances as well as the overall economy have not improved as much.”

Personal income fell 0.2% in the first quarter as earnings for Arkansas workers failed to keep pace with inflation and Arkansas farms lost more than $1 billion, according to estimates released Tuesday (June 24) by the U.S. Bureau of Economic Analysis (BEA).

“First-quarter farm earnings declined more than $1 billion in North Dakota, Minnesota, Iowa, Arkansas, and Nebraska,” the BEA report said. “The declines reflect falling crop prices.”

Travis Justice, chief economist for the Arkansas Farm Bureau, said he concurred with the BEA’s report, but cautioned that the Labor Department’s first quarter snapshot doesn’t capture parts of the state’s largest industrial sector that are on the upswing.

“Yes, we have seen some declines in the grain sector as crop prices have drifted lower, but on the animal side of the picture – we are seeing record prices for hog and cattle (futures),” Justice said.

According to the National Crop Insurance Services, Arkansas’ agriculture industry contributes more than $10 billion to the state’s economy. A 2012 census by the U.S. Department of Agriculture shows that Arkansas has more than 45,000 farms and 13.8 million acres of farmland.

Justice said the agriculture sector’s economic and revenue picture could turn positive quickly, especially from quarter to quarter.

“We could come up spades in just a few months,” he said.

Nationwide, the BEA report shows that state personal income rose slightly to 0.8% on average in the first quarter of 2014, an acceleration from the 0.5% growth in the fourth quarter of 2013. The fastest growth, 1.4%, was in Washington state, Vermont, and West Virginia. Personal income fell 2.9% in North Dakota, 0.3% in South Dakota, and 0.2% in Arkansas and Nebraska.

Inflation, as measured by the national price index for personal consumption expenditures, was 0.3% in the first quarter, the same as in the fourth quarter.

The personal income report stands in contrast to another economic bellwether from the BEA earlier this month showing the state’s gross domestic product (GDP) grew at 2.4% in 2013, ranking Arkansas 16th among the 50 states. Arkansas’ GDP growth was well ahead of the U.S. average in 2013, which slowed to 1.8% in 2013 after increasing 2.5% in 2012, according to the statistics from the U.S. Labor Department analysis arm.

Nationwide, real gross domestic product (GDP) increased in 49 states in 2013, but the surprise takeaway from the yearly report is that U.S. growth was widespread but lost momentum. Per capita real GDP ranged from a high of $70,113 in Alaska to a low of $32,421 in Mississippi. Per capita real GDP for the U.S. was $49,115.

SECTOR EARNINGS
Overall, personal income grew $79.5 billion in the first quarter of 2014, after increasing $75.1 billion in the fourth quarter of 2013. Earnings grew in 19 of the 24 industries for which BEA prepares quarterly estimates, with the largest increases in professional services ($22.1 billion), construction ($19.4 billion), and finance ($9.2 billion).

Mining earnings grew $8.6 billion in the first quarter, compared with a $2.5 billion increase in the fourth quarter. More than half of the mining earnings growth (which includes earnings in the oil and gas industry) was in Texas. The contribution of mining to earnings growth was larger than every other industry in eight states including Texas, North Dakota, and West Virginia.

Construction earnings grew $19.4 billion in the first quarter, more than double the $9.5 billion fourth-quarter increase. More than one-fourth of this growth was in Texas and California. Construction made a larger contribution to earnings growth than any other industry in 20 states including Nevada and Utah.

Earnings fell in five industries: farming ($16.4 billion), information ($9.2 billion), management of companies ($2.6 billion), durable goods manufacturing ($1.7 billion), and forestry ($0.1 billion).
Information earnings fell $9.2 billion in the first quarter after rising $14.3 billion in the fourth quarter. Earnings declined $11.1 billion in six states and grew $1.9 billion elsewhere. California’s $11.0 billion first-quarter decline followed a $15.5 billion fourth-quarter increase that included special lump-sum bonuses.

Durable goods manufacturing earnings fell $1.7 billion in the first quarter, following a $2.2 billion increase in the fourth quarter. Bonuses and other special pay contributed to a $1.4 billion first-quarter rise in Washington, the first increase in that state in a year.

The Fort Smith Airport Commission voted Tuesday (June 24) to follow the recommendation of airport staff and form its own fire department to serve the airport in the absence of the 188th Wing's firefighting mission, which will end October 1 now that the Air National Guard's remaining A-10s have left Fort Smith.

The Federal Aviation Administration requires airports to have varying levels of on-hand firefighting personnel and capabilities. According to Airport Executive Director John Parker, Fort Smith will meet FAA standards by employing four full-time employees with an estimated two additional part-time employees and possible on-call, as needed staff to cover shifts.

Individuals hired to work at the airport fire department will work 20 hour shifts, one day on and two days off, Parker told the commission.

While the requirements for firefighters to be certified to work in an airport fire department are more stringent than those required for typical municipal departments, Parker said he feels like the airport will be able to find more than enough qualified staff once it begins advertising for the open positions as soon as this week.

"We'll probably advertise statewide, so I think we'll get (a number of applicants), but that remains to be seen. If the commission approves this course of action, we will immediately start to advertise and begin accepting applications.”

For applicants interested in joining the new Fort Smith Regional Airport fire department, Parker said applications will need to be submitted by July 15 to be considered. The time, he said, allows the airport to not only conduct interviews, but also conduct vetting of applicants who will need background checks and security clearances. Once applicants are selected and offers are made, Parker said he would like to have firefighters on staff by August in order to ensure as much training time as possible for the new firefighters with the departing firefighters employed by the 188th.

The time is also necessary, he said, for the airport and its new firefighters to update the airport's new emergency plan, as well as updating mutual aid agreements with surrounding fire departments and first responders.

As for total cost, a memo to the commission placed the estimate for staffing the airport at between $250,000 and $300,000. The money, Parkers said, is not something the airport has without diving into deficit spending. The airport will have to dip into reserves to cover the expenses associated with manning the fire department, but he said the airport was in a financial position to do so.

The one saving grace from a budgetary standpoint, he said, was that the airport is working to finalize a contract with the Air National Guard Bureau to use equipment it has on site at the Fort Smith Air National Guard Base on airport grounds. Should the airport have had to purchase its own pumper trucks and cover other equipment costs, the total, Parker said, could have run as high as $850,000 per year.

But because of the arrangement with the Air National Guard, all the worst case scenarios are off the table and the airport is moving forward, he said.

"We certainly didn't ask to get into this job, but I believe this is the best way for us to proceed to do this required staffing.”

In other business, the commission also approved the appointment of Mac McGhee as the new airport commission chairman, Larry Schiffner as vice chairman and Dr. James Kelly as treasurer.

The commission also:
• Approved a contract with Chemtek Inc. in the amount of $46,933 for runway rubber removal and painting; and

• Approved an increase in T-Hangar rental rates. The rates will increase approximately 15%, to $250 per month, effective on new leases. Current leaseholders, Parker said, would remain at rates agreed to in already established contracts.

Talk Business & Politics has confirmed that Arkansas House members will meet in the historic Old State House during a special session, which Gov. Mike Beebe has officially called for Monday, June 30 at 4 p.m.

The current House chamber at the state capitol is undergoing a massive renovation and cannot be used for legislative business.

The Old State House in Little Rock was the state capitol before the current capitol location. It was also the iconic background on Election Night 1992 when Bill Clinton was first elected U.S. President. House leaders say they will live-stream their proceedings from the Old State House while in session.

Lawmakers will be called into session Monday afternoon for what is expected to be a short three-day session to deal with fixes to the public school employees insurance fund and freeing up potential prison money.

Gov. Mike Beebe spoke on the issue on this weekend’s Talk Business & Politics program.

Beebe’s special session call includes:
• Providing ongoing revenue to open about 600 additional beds in Department of Correction facilities and the Pulaski County Jail;

• Eliminating part-time employees from eligibility to participate in the Public School Employee Life and Health Insurance Program; and

• Adjusting the composition of the State and Public School Life and Health Insurance Board and its subcommittees, modifying the definition of and require verification of “dependents,” requiring that some participants establish health savings accounts, requiring the Board to identify FICA savings within districts for potential employee premium assistance, and limiting coverage for the treatment of morbid obesity and bariatric surgeries.

The prison funding is expected to free up $6.3 million to open up state prison beds that are underfunded. There is presently a backlog in county jails of state prisoners.

The public school employees insurance fund is looking at a $36 million funding shortfall.  Lawmakers contend that the changes outlined will lead to increases in premiums for bronze level insurance plans, restrict part-time insurance participation and spouses of public school workers who have other insurance options, eliminate certain non-mandatory surgeries, such as gastric bypasses.

Voters in Oklahoma went to the polls Tuesday (June 24) to decide nominees in a variety of statewide and local primary races. Perhaps the race receiving the most attention statewide and even nationally is the race to replace retiring U.S. Sen. Tom Coburn, R-Muskogee, who is leaving the Senate with two years left on his term.

Former Oklahoma Speaker of the House T.W. Shannon of Lawton faced off against U.S. Rep. James Lankford of Edmond in the Republican primary for Coburn's seat, as well as five other largely unknown candidates. Lankford won the election with a commanding 57.4% of the vote to Shannon's 34.4%, with 92.5% of the precincts reporting statewide.

It is a change of fortunes for Shannon, who was believed to be making up ground across the state, especially in urban Tulsa County, before a slate of negative ads drew Coburn into the race, speaking against negative ads and in favor of Lankford. Lankford did not waste anytime moving into general election mode, telling supports at a watch party in Oklahoma City that it is time to remove burdensome federal regulations negatively impacting Oklahoma citizens. He also took a jab at Obamacare, which is sure to be a narrative of his fall campaign.

"It's not enough for us to complain about this, it's not enough for us to make speeches about this. Americans aren't being heard by Mr. Obama. We have to make policy to protect Americans and the people of Oklahoma from the harmful affects of this law. We have to repeal this and we have to bring real conservative solutions to bear. The job is clear when we get to Obamacare.”

Three candidates are vying for the Democratic nomination, with State Sen. Connie Johnson of Oklahoma City leading with 43% of the vote to perennial candidate Jim Rogers' 36%. Patrick Michael Hates is currently polling at 21%, meaning Johnson and Rogers will face each other in a runoff set for Aug. 26.

Interestingly, Oklahoma has another U.S. Senate race on the ballot this year, as U.S. Sen. Jim Inhofe's term was up for re-election. The former Tulsa mayor, who himself started his Senate career finishing U.S. Sen. David Boren's unfinished term in 1994, faced four opponents in his bid for the nomination, but cruised to a win with 87.7% of the vote. His next closest opponent, Erick Paul Wyatt, brought in only 4.5%. Inhofe faces Democrat Matt Silverstein in the fall.

The race for State School Superintendent of Public Instruction drew a lot of attention during the primary, as incumbent Janet Barresi faced lagging poll numbers and a wave of unpopularity, which ultimately proved too much for her to secure the Republican nomination in her re-election fight. Barresi lost the nomination to Joy Hofmeister, who has been on the Oklahoma State Board of Education since January 2012.

Barresi had attempted education reforms while in office, but without much luck. While Barresi should have benefitted from the power of incumbency, her lagging poll numbers showed a candidate in trouble nearly two months out from the election. Hofmeister will face either Democrat John Cox or Freda Deskin in the fall election. Both will face each other in the August runoff after Cox received only 41.4% of the vote, while Deskin received 36.8%. Jack C. Herron Jr. trailing at 13.4% of the vote and Ivan Holmes came in with only 7.4%.

In the Republican race for Governor, incumbent Mary Fallin easily won her party's nomination with 75.5% of the vote against two challengers. In a statement, she thanked her supporters as she looks to the fall, where she will face Rep. Joe Dorman, D-Rush Springs.

“My thanks go out to all who participated in today’s Republican primary election, including the many volunteers who worked long hours on my campaign. I did not take this nomination for granted, and I am honored and humbled by the opportunity to once again be the GOP candidate for governor," she said. “Moving forward, my message to Oklahomans will be a simple one: in the last four years, we've worked successfully to create 80,000 new jobs; we've eliminated government waste and made our state agencies perform more efficiently; and we've stood up to President Obama and Washington politicians when they've tried to force bad policies on the people of Oklahoma.

ELECTION RESULTS (97% of precincts reporting)
U.S. SENATE UNEXPIRED TERM (DEMOCRAT)
• Sen. Connie Johnson - 43.6%
• Jim Rogers - 35.6%
• Patrick Michael Hayes - 20.9%

U.S. SENATE UNEXPIRED TERM (REPUBLICAN)
• U.S. Rep. James Lankford - 57.5%
• Former Speaker of the House T.W. Shannon - 34.3%
• Sen. Randy Brogdon - 4.7%
• Kevin Crow - 1.1%
• Andy Craig - 0.9%
• Eric C. McCray - 0.9%
• Jason Weger - 0.7%

U.S. SENATE REGULAR ELECTION (REPUBLICAN)
• U.S. Sen. Jim Inhofe - 87.7%
• Evelyn Rogers 4.5%
• Erick Paul Wyatt - 4.5%
• Rob Moye - 1.8%
• D. Jean McBride-Samuels - 1.5%

U.S. HOUSE OF REPRESENTATIVES DISTRICT 2 (DEMOCRAT)
• Earl E. Everett - 62.5%
• Joshua Harris-Till - 37.5%

U.S. HOUSE OF REPRESENTATIVES DISTRICT 2 (REPUBLICAN)
• U.S. Rep. Markwayne Mullin - 79.7%
• Darrel Robertson - 20.3%

GOVERNOR (REPUBLICAN)
• Gov. Mary Fallin - 75.5%
• Chad Moody - 15.4%
• Dax Ewbank - 9.1%

SUPERINTENDENT OF PUBLIC INSTRUCTION (DEMOCRAT)
• John Cox - 41.2%
• Freda Deskin - 38%
• Jack C. Herron Jr. - 13.3%
• Ivan Holmes 7.4%

SUPERINTENDENT OF PUBLIC INSTRUCTION (REPUBLICAN)
• Joy Hofmeister - 57.3%
• Brian S. Kelly - 21.6%
• Superintendent Janet Barresi - 21.1%

INSURANCE COMMISSIONER (REPUBLICAN)
• Commissioner John Doak - 77.4%
• Bill Viner - 22.6%

CORPORATION COMMISSIONER
• Todd Hiett - 52.1%
• Cliff Branan - 47.9%

STATE REPRESENTATIVE DISTRICT 17 (REPUBLICAN)
• Micah Thompson - 59.2%
• Paul Marean - 40.8%

DISTRICT ATTORNEY DISTRICT 27 (REPUBLICAN)
• Brian Keuster - 74.9%
• Anne Mize - 25.1%

Of home sales in Arkansas’ four largest metro markets, the Fort Smith region is the surprise leader with the best percentage growth for the first five months of the year. And although the Northwest Arkansas market is below the red hot pace of 2013, the four markets combined are up almost 4% against what was a robust market for home sales in 2013.

Home sales in Arkansas’ four largest metro areas during the first five months of 2014 totaled 8,148, up 3.97% compared to the same period in 2013, According to The City Wire’s Arkansas Home Sales Report. The average price per home sold in the four markets was $159,251, down 3.24% compared to the same period in 2013, and the total sales value of $1.297 billion in the four markets was up just 0.6%.

The City Wire’s Arkansas Home Sales Report captures home sales data in the state’s 14 most populated counties within the state’s four largest metro areas — Central Arkansas, the Fort Smith area, Jonesboro/Northeast Arkansas and Northwest Arkansas. The report, which records closed sales, accounts for between 70% and 75% of total Arkansas home sales. The report is sponsored by Fort Smith-based Weather Barr.

MAY NUMBERS
May home sales totaled 2,028, up 3.52% in the four markets compared to May 2013, and up 14.84% compared to May 2012. The average price per home in the four markets during May was $169,844, down 0.69% compared to May 2013, but up 4.79% compared to May 2012. The total value of homes sold in the four markets during May was $344.443 million, up 2.81% compared to May 2013 and up 20.33% compared to May 2012.

There were 968 homes sold in central Arkansas, up 8.76% compared to May 2013, and up 14.42% compared to May 2012. The value of the sales in May were up 5.21% compared to May 2013.

May home sales totaled 698 in Northwest Arkansas, down 8.99% compared to May 2013, and up 6.58% compared to May 2012. The value of the sales in May were down 3.51% compared to May 2013.

Jonesboro area home sales totaled 218, up 8.46% compared to May 2013 and up 31.33% compared to May 2012. The value of the sales in May were up 16.47% compared to May 2013.

In the Fort Smith area, home sales totaled 194, up 24.36% compared to May 2013, and up 32.88% compared to May 2012. The value of the sales in May were up 7.11% compared to May 2013.

Randy Miller, executive broker at J.E. Jones Real Estate in Van Buren, said he is not certain the large percentage gains in home sales in the Fort Smith area will continue through 2014.

"I don't think that you'll see a continued 10% (improvement in Sebastian County) each month. There's always a leveling we see in this market. We don't have big dips. It's always been gradual for us in this part of the country," Miller said. "I don't anticipate that it will be 10% for the next few months, but it would be exciting if that would happen."

THE REGIONAL PICTURE: January-May 2014
Central Arkansas — Home sales
Jan.-May 2014: 3,883
Jan.-May 2013: 3,662
Jan.-May 2012: 3,362

Fort Smith area — Home sales
Jan.-May 2014: 747
Jan.-May 2013: 635
Jan.-May 2012: 627

Jonesboro area — Home sales
Jan.-May 2014: 860
Jan.-May 2013: 756
Jan.-May 2012: 696

Northwest Arkansas — Home sales
Jan.-May 2014: 2,658
Jan.-May 2013: 2,784
Jan.-May 2012: 2,353

The top five counties in terms of Jan.-May 2014 home sales:
Pulaski — 1,817, up compared to 1,680 in 2013
Benton — 1,713, down compared to 1,736 in 2013
Washington — 935, down compared to 1,048 in 2013
Craighead — 688, up compared to 564 in 2013
Saline — 659, up compared to 606 in 2013

Link here for a PDF document of the May 2014 data.

HOUSING TRENDS
Through the first five months of 2014, a trend has developed in the four areas covered in The Arkansas Home Sales Report – units sold are up and average sales prices are down.

The City Wire Economist Jeff Collins said one thing still weighing on home prices is the unemployment rate – 6.4% in May in Arkansas which was an improvement of 1% over the same month last year but still higher than historical norms.

That high unemployment rate has led to at least one good thing for potential home buyers – the Federal Reserve is still interested in keeping interest rates low to encourage people to purchase homes. That policy probably won't change until the labor market improves, Collins said.

Still, the average interest rate on a 30-year, fixed mortgage on June 20 was 4.2%, an increase from 3.93% a year ago. Higher interest rates – or at least the perception of them – mean consumers are under the impression they will have to buy more modest homes due to higher monthly mortgage prices. That is one of the reasons average prices have declined.

Collins said people do need to keep in mind that mortgage rates are still hovering around historical lows.

“People have short memories,” he said. “They don't recall getting money at higher rates.”

WATCHING NORTHWEST ARKANSAS
Colllins said summer is traditionally the best time for Realtors so he'll keep a close eye on how sales go in the summer before predicting any trends developing for the remainder of 2014. He said one area of the state he will watch is Northwest Arkansas.

An “amazing” amount of building activity has taken place in northwest Arkansas and Collins said some people are concerned there could be too many new subdivisions. The concern, he said, is that real estate developers have been getting ahead of the unemployment picture and, if true, could mean that area of the state could be dealing with an excess of inventory and the lower sales prices that result.

MountData.com analyst Paul Bynum, who gathers real estate data for the Northwest Arkansas and Fort Smith area markets, said the May decline in Northwest Arkansas is the result of a tough comparison with May 2013. Bynum said last year was one of the best on record in Northwest Arkansas and anything remotely close to those levels is good.

ASSOCIATED COMMERCIAL GROWTH
In central Arkansas, Realtor Mike Cottingham with Baxley-Penfield-Moudy in Bryant said there is increased building activity in Saline County but most of it is commercial. The commercial construction is due to growth in the county.

“We don't have a lot of new (residential) construction going on and that's helping existing home sales,” he said. “Existing homes are moving well and more people are wanting to buy.”

He said more commercial development is on the way and that shows confidence in the residential growth of the area. Saline County is still in need of some more employers, but Cottingham said hopes are high that more jobs will come with increased commercial activity in the area.

In Jonesboro, Executive Broker Sherlyn Blackwell of Fred Dacus Associates said she has certainly noticed an improvement in sales this year.

“If a person isn't making money at real estate these days, they're not trying,” she said. “We're hopping here. I'm not getting home until late every night. … It's very good here.”

She said most development in her area is also commercial and the majority of homes sold are existing ones.

Bicycling helps keep him fit and trim, but on the June afternoon of the interview Rodney Shepard appeared tired, possibly a result of trying to meet directly with the hundreds of Arvest employees at 25 banking locations that stretch from Fort Smith to Russellville.

Shepard has returned to Fort Smith as Arvest’s regional CEO after more than three years of being the CEO for Arvest’s relatively new banking region in Springfield, Mo. He follows in Fort Smith Craig Rivaldo, who was named the CEO of Arvest-Benton County when the former CEO there was removed after allegations of fraud.

“For the most part, it’s been good,” Shepard said when asked about his first few weeks of getting reacquainted with the Fort Smith-River Valley market. “I’ve been trying to get out and meet the team.”

Chances are a majority of the “the team” know Shepard. And vice versa. He’s from the area, and was employed in the regional banking sector almost 18 years before the move to Springfield. In July 1993 he joined what was then Superior Federal Bank as one of a number of loan makers. He moved up the ranks, and when Superior was acquired by Arvest in 2003, he was one of the young leaders in a Fort Smith metro market in which Arvest was still the newcomer. His star rose, and when Arvest needed new leadership in Springfield, he was given his first chance as a regional CEO for the banking company owned by Jim Walton, son of Wal-Mart Stores co-founders Helen and Sam Walton.

LEADERSHIP CHANGES
Shepard, active with various organizations in the Fort Smith region before his Springfield move, sat silent for a few seconds when asked about what has changed in the Fort Smith area during his more than three years in another market.

“There has been a change of leadership in a few key places,” Shepard said, listing Sparks Health System, Mercy-Fort Smith, and Carl Albert Junior College among entities with turnover at the top spot.

“And then there is the whole mission change at the 188th,” Shepard added, referring to the 188th Fighter Wing based in Fort Smith losing its manned mission for a mission involving operations tied to remotely piloted aircraft.

Shepard also admitted to being surprised by something that had not happened.

“In the three and a half years, I would have thought they (U.S. Marshals Museum) might have had the groundbreaking,” Shepard said, adding that he realized the groundbreaking is set for September. “That’s not good or bad, I should say, but I just thought that would have happened by now.”

NO MORE WHIRLPOOL
Yet another change resulted in a brief moment of reflection on Shepard’s younger days.

“That closed while I was gone, but I guess they were closing it down before I left.”

“That” is Whirlpool’s refrigerator manufacturing plant in Fort Smith. Whirlpool Corp. closed the doors on the plant in June 2012. At the height of employment, the Whirlpool plant employed more than 4,600 in what were considered some of the best paying jobs in the region. One of those jobs was held for 38 years by Bobby Shepard, Rodney’s father.

“It supported our family,” Shepard said of his father’s job with Whirlpool.

And Rodney, like thousands of area youth, would work there during the summer months to make money to pay for college. Rodney Shepard spent three summers inside the Whirlpool plant doing a variety of jobs.

“You would meet some really good folks there; some great, hard-working people,” Shepard said, his voice trailing off as he stared beyond the interviewer and into the memory of that experience.

NEW JOB PRIORITIES
But good people are hard to find, and finding and retaining them are one of several key goals Shepard mentioned when asked about his Arvest priorities now that he has returned to Fort Smith. This role is one of the reasons Shepard has spent time traveling the region.

“On the front end, I want to find out what is going on. … What is working? What is not working as well?”

The process of finding and keeping good people is conjoined with the effort to deliver the type of community service Shepard says is necessary to grow market share in the region for which he is responsible. Market share growth is another of his priorities.

“It’s hard to find good people. So when you find a good person, you have to do whatever you can to keep them,” Shepard said. He added later in the interview: “The heart of our business may be in Fort Smith, but are we doing all we can in these other communities” to grow market share?

Arvest Bank grew its marketshare in the Fort Smith market by 1.26% or $50 million from June 2012 to June 2013 – the most recent data period available through the FDIC. Arvest ranks No. 2 behind First National Bank Fort Smith in that metro area with 14.56% of the market or $590 million. First National has 18.31% of deposit market share.

Priorities related to growing market share include reviewing facilities in the region “to make sure we are as convenient” for the customer as possible. Another aspect of growing the business is to focus on “being smart” about giving back to the communities in which Arvest operates.

“It’s not just about giving a check. It’s also about volunteer time. … The company really wants us to help these communities be better places to live,” Shepard explained.

REGULATION RESPONSE
Like most community bankers, Shepard is concerned federal regulations related to the implementation of the controversial Dodd-Frank bank bill will make it difficult for community banks to remain an viable player the socio-economic development in their areas.

Dodd-Frank was approved by Congress following the near financial sector collapse of 2008. Proponents of Dodd-Frank say the rules are necessary to prevent actions of a few large financial institutions from dragging down the entire economy. Others say regulation was needed, but that Dodd-Frank goes too far and is resulting in industry consolidation and other unintended consequences that may limit the access to capital in rural areas.

Shepard is not a fan of Dodd-Frank.

“While it may have been well-intended, the people they were trying to help will get hurt in the end,” Shepard said.

He said the rules coming from federal regulators are forcing banks to balance the costs of new regulations with providing customer service.

“I’m not optimistic. … I don’t think that (moderation of federal rules) will happen, and what we will see is these communities will get hurt by bank consolidations,” Shepard said.

A few days after the interview, Shepard was mowing the yard around his Springfield home and reflected on questions asked and answers given. He wanted to offer a few more thoughts, with one of them including what will be a tall order for himself and those around him.

“I want us to be great. Great is better than bigger and great will create all the other measureable attributes of being successful. Be it meeting customer needs or having efficient internal processes; we should and do continually look for improvements,” Shepard said in finishing his e-mail note.

Cable is not a utility bill but in the average household but about $120 is forked over each month for a plethora of channels that are getting watched less and less, according to Nielsen Ratings. The market firm also reports the average cable television household clicks on just 17 of the 189 channels it receives.

Analysts said it’s no surprise so few channels are watched because the bundling tactics used by cable providers force consumers to purchase channels they don’t want to get the ones they do.

PULLING THE PLUG
Some consumers who spoke with The City Wire have found the television programming costs have reached a tipping point in their households and they are finding other alternatives.

Julie Cox and husband Chris subscribe to the Dish Network, but they usually only watch the local channels, which is why they want to drop the Dish.

John Smith of Elkins opted to subscribe to NetFlix and forego the cable or dish options. Kurt Voigt of Fayetteville said his household is saving $100 per month since subscribing to NetFlix with an HD antenna.

Brandy Arena, a second year law school student, said she uses NetFlix and Hulu instead of cable, which is also good enough for Jason Smith and his Springdale household.

The average U.S. household spends between $120 and $148 per month for wireless cell service, according to Ars Technica. The combined cable and cell phone bills total about $5,000 per year amid stagnant wage growth and inflation in food and fuel.

These consumers agreed that pulling the cable programming plug made sense for them given they weren’t watching the majority of the channels and there are more efficient internet based options available.

CONSOLIDATION PLAYS
This migration to Internet-based programming is helping fuel consolidation in the cable programming universe and likely why AT&T is reinforcing its arsenal with the $48.5 billion offer to acquire DirecTV.

The $95-a-share merger will affect about 25 million combined subscribers to the companies’ services, closing in on one-quarter of the households in the U.S. This deal has yet to past the antitrust scrutiny. The U.S. Senate and House Judiciary Committees’ antitrust panels held  hearings Tuesday (June 24) to examine the proposed deal between  AT&T and DirecTV.

AT&T has said the plan to acquire DirecTV is part of its game plan to offer consumers access to video in variety of media and to grow scale more on par with larger cable competitors. Earlier this month AT&T released comments about the merger with DirecTV, saying the deal will allow competition in the cable market to flourish, taking aim at the Comcast and Time Warner Cable another $42 billion deal in the making.

COMPETITIVE SPACE
A recent report from Nielsen indicates that television homes and the potential audience in those households are growing at about 0.4% per year reaching 116.3 million in 2013. That smidgen of an increase is fueling hyper competition between cable programming providers like Cox Communications, AT&T, DirecTV and Dish.

One need not look any further than their mailbox to see cash back offers from each of these providers. AT&T routinely is offering $300 to $400 in a Visa rewards card for new Uverse, Internet and phone bundle. There are free upgrades and premium channels offered by Dish on a limited term basis, while Cox is offering a $200 prepaid Visa rewards card for new subscriptions on qualifying bundles.

Consumers say what they really want is a way to order the specific programming they want and pay accordingly on an “al a carte” type of system.

Kelly Zega, spokeswoman for Cox Communication, said the “a la carte” discussion is an active one in the industry, as “it comes with a complicated economic model and raises concern over stifling programming diversity.”

COX CONTOUR
She said Contour, a new service offered by Cox, is proving to be popular because it does offer a more personalized video experience that also provides for mobile access.

Zega explained that Contour provides recommendations for eight unique profiles and then tees up what customers already like and helps them discover more content that meets their personalized viewing habits with suggestions they might enjoy. She said each person in the household can have their own profile.

Though the Contour App interface users can view their personal programming choices which include access to more than 100 channels of live TV and 4,000 video on demand selections. This access is mobile helping to meet this growing consumer demand.

Lastly, Contour includes a DVR which can record six programs at once, storing up to 300 High Density shows.

“Customer response has been very positive and we’ve found strong engagement with both the recommendation engine on the primary screen as well as with the Contour app on the second screen,” Zega said.

She reports 99.5% of Contour customers are using the recommendations. Over half (56%) say it made them aware of content they hadn’t known about before.

“From May 2013 to May 2014, Contour customers went from average viewing of 22 channels per month to 29 channels per month,” Zega added.

Multi-state and local officials came together Wednesday (June 25) in a church parking lot in Alma not just to commemorate the designation of Interstate 49 behind them, but to start a campaign to build a stretch of Interstate from Fort Smith to Alma that they say would eventually give Fort Smith a non-stop interstate route to Canada.

Finishing that route could cost at least $3 billion just to finish the work through Arkansas, according to Arkansas highway officials.

Gard Wayt, executive director of the I-49 International Coalition, said the recent designation of I-49 from Alma to Bella Vista (previously known as I-540) as well as the designation of a stretch from just north of the Arkansas border to Kansas City in Missouri shows that "huge things" are happening.

"Those are huge events and it really generates some momentum. What you're doing here today is going to generate momentum and we want to keep that going," he said, also pointing to work taking place now on the Bella Vista Bypass in Benton County, which will eventually carry I-49 into Missouri.

Ivy Owen, executive director of the Fort Chaffee Redevelopment Authority, spoke of how the six mile, $95 million stretch of what will eventually be part of the interstate has transformed development of the former United States Army Base. He said without the interstate development taking place, large projects like the Arkansas College of Osteopathic Medicine and ArcBest were unlikely to have located out on the far eastern edge of Fort Smith.

And he said what will ultimately make what is now known as Chaffee Crossing and the Fort Smith area even more attractive for investors and developers is not only the I-49 designation unveiled in Alma on Wednesday, but also completing the stretch of interstate between Chaffee Crossing and Alma.

"When the veil comes off of this sign behind us and it says I-49, that will be a significant amount of I-49, new I-49, that's now open that gets it down all the way to the river. So what's left is what you see below you is build the bridge," said Owen.

And while there may be doubt as to whether or not the interstate will ever be built all the way down to Chaffee and eventually to Texarkana to the south, Owen said he has heard detractors cast doubt before and be proven wrong.

"Somebody asked me yesterday (if I was) excited about this. Oh boy, this is about the most exciting thing that's happened to me because when I walked in the door in 2007, someone told me this would never happen. (It would) never happen in my lifetime, never happen. And I got kind of depressed about that and I said, 'Well, I don't believe that. I just do not believe that.’"

Owen said much of the success in not only getting the I-49 designation from Alma to Bella Vista, but also the section of interstate built at Chaffee, was the work of Arkansas Highway Commissioner Dick Trammel, who Owen said promised to do all he could to get the interstate complete.

Trammel spoke Wednesday and told the crowd of leaders from Little Rock to Fort Smith that highways like I-49 were not political highways, and urged everyone to join hands to get the funding not only from Little Rock, but from Washington, D.C., to complete the interstate.

"You know, I'm going to quote a guy I knew a long time ago and I worked with (who said), 'You know, there ain't no Democratic and Republican highways. They're all the same color,'" he said. "And we all have to come together for better infrastructure and better highways. And that's what we did with Darby and Issue 1 and because of you, the people. Not me, not the governor, not the commission, but because of you, the people.”

He said while constructing the bridge and 13-mile stretch from Alma to Fort Smith and eventually building out the remaining interstate from Fort Smith to Texarkana may seem "unrealistic," it is possible if communities and leaders in government come together to find the resources necessary.

As for how the money will come, that is anybody's guess with Congress flatly denying almost all earmark requests and The Washington Post reporting that the Highway Trust Fund could go broke within months.

Trammel said while he can't promise anything, he is confident the designation of I-49 in Benton, Crawford and Washington Counties is just the beginning of what will eventually be an interstate that stretches through all of Arkansas and brings a non-stop flow of traffic from Canada to the ports in New Orleans.

Former Rep. Ed Thicksten of Alma said all of that starts with the bridge over the Arkansas River, and urged residents from across the region to visit Interstate49BuildtheRoad.org to sign a petition urging funding and construction of the bridge.

Previous estimates to build the I-49 connection from Alma, across the Arkansas River and connect to the I-49 route in Barling have been around $350 million. The City Wire has requested from the Arkansas Highway & Transportation Department an update on the estimate.

"The highway department has a job to do and they're willing to do it when they get some money and they're going to get some money when the federal government works. So, that's gonna' happen. … But if you don't start somewhere, you can't never finish it. We've got to show here in the River Valley and our friends in Northwest Arkansas how important that bridge is to us and I mean right now we've got to start.”

A representative of the state’s largest electric utility on Wednesday compared the Environmental Protection Agency’s new far-reaching guidelines to reduce carbon emissions in Arkansas to Dante’s journey through hell in the epic Divine Comedy poem.

“This (EPA) rule is another level of hell, and I am talking about just trying to understand it,” joked Chuck Barlow, vice president of environmental policy and strategy for New Orleans-based Entergy Corp.

Barlow made his humorous yet serious comments at the first meeting between nearly 20 stakeholder groups and state regulators from the Arkansas Department of Environmental Quality and the Arkansas Public Service Commission since the Obama Administration announced the proposed greenhouse gas guidelines on June 2.

President Obama’s proposal, called the Clean Power Plan, mandates a 30% reduction in carbon dioxide emissions from existing power plants by 2030 from 2005 levels, mainly targeting the nation’s fleet of more than 600 coal-fired plants that currently supplying the lion’s share of the nation’s electricity needs.

In Wednesday’s meeting, Barlow’s comments stood out during the three-hour roundtable at the ADEQ headquarters where stakeholders began to explore options for complying with the newly proposal EPA regulations. Not only did the Entergy executive cite the complexity of the 645-page proposal, but complained that the EPA has since added an additional 500 pages of regulations to the mandate since announcing it in early June.

Entergy still has a lot of questions about the new EPA rules, Barlow said, and reiterated the utility giant’s previous public statements that the new proposals should be “legally defensible.” He also said that the EPA gives some consideration to utilities that include “nuclear megawatts” in their energy mix.

“We have been saying the same thing since this process started,” Barlow said of Entergy Corp., the parent of Entergy Arkansas. “We are approaching the (EPA) rule with a lot of caution because we are still trying to figure it out.”

Barlow also broached a subject that many stakeholders have said will be the most difficult to resolve — the possible shutdown of several of Arkansas’ older coal-fired power plants. “Let’s not pretend, we are talking about shutting retiring coal plants,” he said.

Coal-fired plants still supply nearly 53% of Arkansas’ electricity demand. As of Feb. 14, Arkansas ranked 29th among the 50 states in the amount of total carbon dioxide or “dirty air” emissions with 67 million metric tons. By comparison, Texas is ranked first with 656 metric tons of carbon emissions, while Vermont and the District of Columbia have the lowest emissions at three and six million metric tons.

Overall, coal-fired power represents 44.5% of Arkansas’ annual net electric generation. Natural gas-fired generation is second at 23.2% and nuclear energy is next at 19.4%. Renewable energy generates about 6.4% of the state’s power needs, and hydroelectric fills the remaining 5.4% of the state’s electric capacity. Petroleum-fired fuel, once a staple for heating oil, now generates less than one percent of the state’s power.

Besides Barlow, other stakeholder representatives at the meeting took a more positive approach to the proposed EPA regulations. Walter Bryant, division vice president of regional operations for CenterPoint Energy Inc., said the Houston-based natural gas utility sees the new rules as a chance for Arkansas to improve and diversify its electric generation and distribution system.

“Going forward, it is really important that we have a good mix,” said Centerpoint’s top Arkansas executive. “I have never been one to put all our eggs in one basket. We have a lot of natural gas in Arkansas and we ought to use it.”

Colette Honorable, chairman of the Arkansas Public Service Commission, told the stakeholders attending the meeting that she looked forward to working through the process and coming up with a solution that will benefit all Arkansas ratepayers.

“We have some thoughts about what we would like to see going forward,” Honorable said. “But we are glad to hear from stakeholders and get your input.”

The PSC and ADEQ have been tasked by Gov. Mike Beebe to oversee the process of developing new rules to meet the EPA mandate in Arkansas. ADEQ is in the process of preparing the necessary paperwork to seek the assistance of a meeting facilitator for future stakeholder meetings.

Also, the public comment period on the EPA docket began June 18 and must be received by federal regulators on or before Oct. 16, 2014.

There was no shortage of new building projects taking shape in May among the region’s four largest cities. Bentonville, Rogers, Springdale and Fayetteville issues new construction — commercial and residential — permits valued at $90.895 million last month. The cumulative permit values rose more than 76% from the year-ago value of $51.637 million.

Nearly three quarter’s of the new projects breaking ground in May were located in Bentonville, thanks to $43.8 million multifamily expansion at Lindsey Management’s Linx at Rainbow Curve complex. Amazeum, the region’s first children’s discovery museum, also added $9.19 million to the Bentonville’s permit values last month.

Commercial projects, including multifamily among the four cities totaled $62.488 million last month. A year ago, the four cities issued a handful of new commercial permits in May with a value of $3.83 million. Med Express and Rogers Dental Clinic are under construction in Bentonville. Legacy National Bank’s new Rogers facility valued at $1.598 million also break ground last month.

In Springdale, Wal-Mart Stores got a permit ($117,690) for a fuel kiosk at the new supercenter at Elm Springs Road and I-49. The city also issue a permit to Memco and M&M Poultry for a new 60,000 square-foot warehouse and distribution center at 3001 E. Huntsville Ave. That project is valued in excess of $5 million. There were no new commercial or multifamily permits issued by the city of Fayetteville in May.

RESIDENTIAL SECTOR SLOWS
The residential building pace slowed again in May compared to the prior-year period as builders started half as many new homes. The four cities issued 104 permits for new single family dwellings valued at $28.397 million in May. This compared to 201 new home permits valued at $47.807 million a year ago.

New construction starts were off sharply in three of the four cites compared to May 2013. Bentonville issued 42 permits, less than half of the 79 new projects reported last year. This comes on the heels of a 58% decrease in April.

The same could be said for Fayetteville whose new permits (22) were valued at $6.446 million, down 41.7% from the same period in 2013. In the month prior, new construction in Fayetteville declined 81%.

Rogers issued just 19 permits last month for new homes. This was down from 49 new starts a year ago. Permit values also declined to $4.7 million, some 49% from the May 2013.
Springdale reported steady home construction with 21 new project permits valued at $6.55 million last month. This compares to 20 permits worth $5.92 million in the year-ago period.

STAYING BUSY
Despite fewer new starts, homebuilders report an active year with sales. Through the first five months of this year there have been 278 new homes sold in the two-county area, that compared to 267 in the same period of 2013, according to Paul Bynum, market analyst with MountData.com

Nicky Dou, a sales broker for three new subdivisions in Benton County, said the new home market is strong. Dou said in the first half of 2013 she had 66 closed sales totaling $18.6 million. In mid-June her sales pending and finalized totaled 69 with $19.5 million in production values.

"Out of my 73 sales so far 41 were new construction and 32 were resales,” Dou said on Wednesday (June 25). "The new homes in good locations are selling before they are even finished. In my experience – some of our subdivision like Hyde Park I can barely list them before they are is an offer. It is a great market for new construction homes and even resale homes if they are in a good location, priced properly and marketed well."

CONSTRUCTION ACTIVITY
Brent Hanby, co-owner of Encore Flooring & Building Products in Springdale, recently told The City Wire his own business is bustling thanks to builders and remodelers. He said every contractor he has spoken to is busy with work throughout the summer.

Builders say there lost some days throughout the long winter and rainy spring, which has had them playing catch-up. They report a tight labor pool for skilled trade because of the active commercial building and infrastructure work underway in the region.

“With demand for construction growing in most states, many firms are slowly rebuilding their depleted payrolls,” said Stephen E. Sandherr, CEO of the Associated General Contractors Association.

Sandherr warned that if the overall economic growth slowed, construction employment could backslide in many states. In Arkansas, the group reports 400 fewer construction jobs in May from the prior month. Year-over-year the state’s construction sector has added 1,500 jobs, a 3.3% gain.

NEW PERMIT VALUES (MAY)
Bentonville $65.988 million, up from $23.521 million
Fayetteville $6.446 million, down $11.184 million
Rogers $6.749 million, down from $9.3 million
Springdale $11.702 million, up from $6.19 million

(Permits include new commercial and residential projects and exclude remodels and alterations and additions.)

It happened again.

Fort Smith City Director Philip Merry's attempt to get an up or down vote on whether the city should hire an auditor to look into legal billings and also whether to establish a committee to review whether the city should continue a contracted service agreement with the Daily and Woods Law Firm or hire inside counsel on the city staff was removed from the July 1 meeting agenda.

The move is allowable under Fort Smith's city code, which requires four city directors to request the removal of the item.

City Director Mike Lorenz, who led the effort to remove the same items from an earlier meeting agenda in June, also led Thursday's (June 26) effort. He was joined by City Directors George Catsavis, Keith Lau and Vice Mayor Kevin Settle. City Director Andre Good had not responded to attempts for contact from Gard by the time she notified the Board and the media of the removal of the items.

The only two directors to indicate to Gard that they would like to have the items remain on the July 1 meeting agenda were Merry and Pam Weber, who have been outspoken in their calls for some sort of independent review of legal billings since attorney Matt Campbell, who runs the Blue Hog Report blog and is representing a group of city employees in a whistleblower case against the city, made the accusations in posts on his site earlier this summer.

While the Daily and Woods Law Firm said it looked into Campbell's claims of billing for services never rendered, it said no wrongdoing took place. But Merry has said that while he does not have reason to believe that Daily and Woods improperly billed the city, the firm's review of its own billing practices could not be objective.

Merry told The City Wire that he had heard from numerous residents and business leaders who have asked for a review like the one he has requested now at least three different times during public meetings of the Fort Smith Board of Directors. One business leader Merry and the rest of the Board has heard from is Richard Griffin, chairman of the Central Business Improvement District and the head of Griffin Properties.

In an e-mail to the Board dated June 2, Griffin said the Board needed to hire the outside auditing firm.

"The people that I talk to in this community, with good cause, are paying attention," he wrote. "Campbell has some valid points. What are you thoughts on the proper procedure to look into this matter? (City Administrator) Ray (Gosack) may not have it right in allowing the firm members, in the City's behalf, reviewing their own billing procedure. That is not quite arms-length.”

On the other side of the issue, all Board members received an e-mail from Baldor's Executive Vice President of Rick Management and Compliance George Moschner, who said the set up with Daily and Woods is saving the city money and said the audit would hurt taxpayers.

"I am so glad to read that both the leal bill audit and in house legal study resolutions were overridden," he wrote on June 12. "The audit would have been a waste of taxpayers' money. … From what little I have seen of the City's legal expense, I believe the City is receiving a great value and controlling costs by using the current system. This matter was analyzed (in 1999-2000) and the results were as I already expected. The City administration is on top of this matter.”

Moschner also said Merry's push for an audit and a review committee was an “overreaction."

"I agree that the Directors should not overreact to something someone else writes. All of you should have immediately had that thought run through your mind. When relevant facts are not available, attorneys often try to gain an advantage by obfuscating matters.”

In response, Merry said Wednesday (June 25) before his items were removed from next week's agenda that he understands the different views on the issue.

"Two distinct, great people. That's the spice of life in America, right? I happen to, in that particular thought process, align clearly with Mr. Griffin and I'm trying to carry that kind of sentiment when I'm asked by people like you.”

Merry said the range of opinions and views he is hearing go from the top to the bottom in terms of power and socioeconomic status and said the majority of people he is hearing from want this review.

"All walks of life. Clearly, a cross section where it was very clear to me. … I think the choosing to allow to have an agenda item and then a day later choosing, 'You know, on second thought, we don't want to have an agenda item,' by way of phone voting, you know concerns people. That's created I think another issue separate in and of itself. Why didn't we want to vote in front of the people?”

Lau, also speaking Wednesday before the items were removed, said he respects the opinion of Moschner and Griffin, but said there was a big difference between the opinions expressed by the men.

"I think George Moschner understands the big picture a lot better in terms of how legal services charge companies and how much they charge in the private sector. I rely heavily on that.”

Lau also repeated his view that Campbell is using the question of legal billings to muddy the water with regards to his legal cases against the city and said he was not going to allow the Little Rock attorney to "wag my tail.”

"I really do want to have transparency, don't get me wrong. But on the other hand, I was elected to lead and I was elected because my constituents felt I was able to make good decisions. I took the information I've been given and given weight to what I've been given and said this is not a big enough deal now to allow this attorney that's suing us to divide and conquer us or go after the law firm that's defending us," he said. "If we want to look at a strategic plan down the road, that's merited and we should do it if that's what the Board wants to do. … But it's not the time to do it and that's why I'm making that my decision and I think that's where I'm taking a leadership role as a director. And I know that's going to make the transparency guys angry."

E-MAILED STATEMENT FROM CITY DIRECTOR MIKE LORENZ:
Regarding an audit of legal billings to the city:
"Let me be very clear in my opinion of this matter.  I am not in favor of moving forward with the proposed audit at this time.  It makes no sense that every occasion that Director Merry has presented this idea he is very adamant that he in no way feels that any wrongdoing has occurred and has re-iterated this multiple times, as has Director Webber with her support/second of the motions.  Why request an audit of a vendor/contractor's billing when there is no concern of wrongdoing by the person(s) requesting the audit.  I continue to maintain that this action would set a terrible precedent where anyone with an allegation can engage the board in an expensive forensic audit of a vendors billing records.

"I also disagree in the contention that this audit is about transparency.  It is the responsibility of this board to show leadership and make informed decisions for the citizens that have elected us while assuring that we are respectful and responsible with the taxpayer's money we are entrusted to oversee.  Engaging in an expensive audit to simply "prove there isn't an issue" is a misguided suggestion.  The records in question as well as the responses to the accusations and proof therein have been presented to the media, though maybe a release of simpler and more detailed information report about this subject along with the findings of a billing FOIA request from Mr. Campbell on June 6 which showed Daily & Woods had under billed for services between January 13 and June 6, 2014 to satisfy this question.

"Again, I contend that  it is important we remember these allegations were made by legal counsel for the plaintiffs in multiple lawsuits AGAINST the city of Fort Smith and understand that Mr. Campbell is NOT an unbiased third party and has everything to gain by providing distractions and potential conflicts between administration, the board, and the legal counsel for the city.  These lawsuits are not about billing of phone calls by Daily & Woods or about whether we use a contract attorney or have an in-house legal team, these lawsuits are about personnel issues within the FSPD only. The FOIA request that administration received on June 23 from Mr. Campbell's office confirms my impression that he is trying to create distractions and division.  The lawsuits have serious accusations and potential serious consequences for the city of Fort Smith and if we as a board participate in any distraction that could weaken the case puts a large amount of taxpayer funds at risk and I will not accept or be a part of that.
 
"We need to spend our time working to make Fort Smith better and end this issue now."

Regarding establishment of a commission to review whether the city should hire outside council or staff attorneys:
"While this idea has merit at first glance and I am supportive of researching this issue to assure we are using the most cost-efficient method, there is much information that would need to be gathered in order for any committee to make a recommendation to the board.  I have serious doubts that hiring an in-house legal team is a more cost-effective option as it would take more than a single attorney as we would most likely need to staff for 1 attorney, 1 paralegal and a receptionist or legal assistant.  However, for us to undertake this at the current time as a reaction to the comments/allegations presented by Mr. Campbell sends the wrong message.  What we need to do is stand behind our current legal counsel while they are defending the city and taxpayers money from potentially costly lawsuits."

E-MAILED STATEMENT FROM CITY DIRECTOR ANDRE GOOD:
​"My apologies, but my work schedule and work load at FedEx has increased and is gotten very demanding, thus the reason I was late to the last board meeting, late to the last parks meeting, missed the last A&P meeting and missing today's TAC meeting.

"Be that as it may, I feel I need to make time to express myself on this matter.

"I am supportive of having the City attorneys billing records being audited, but not for some $30k give or take.

"I am supportive of creating a commission to review how the city does out legal services.

"Not discussing the accusations from Matthew Campbell shows a lack of concern to me personally. So if I feel that way, I know citizens feel that way as well. 
* Another perception issue - Are we doing the right thing by either using tax payer money at our discretion for such in the tune of $30K give or take or by not publically discussing the issues that surround why we are ever here?

"City Auditor - This audit could be completed by our internal auditor I would imagine. I just recently found out that we did not have an Internal Auditor in place. We do have a the position listed on the City's website. The IA works for the board but with administration and should be independent. In this case, since non of us are placing fault on our city attorneys, we still need to be looking at doing things better.

"Trust - Of course we should trust the people we fire, same as citizens want to trust us and we, as a board want to have that same trust in administration. Regardless, someone has to be watchful. Checks and balances. Accountability.

"This is why I believe we should move forward with appointing a commission to review how we do our legal services. The Internal Auditor, when hired, could audit the billing. Even at that cost savings, the city will still be billed by our attorneys to gather and submit the requested documentation needed.

"There is just so much to this, and I personally don't think allowing someone being questioned to answer accusations and say our hands are clean is openly and honestly doing due diligence. Peace of mind as a board member effects how I move forward on other issues and how the public perceives its public trust of our public service.

"Forgive the errors, at work at my desk at FedEx in a hurry. Sorry for the length also, but these are issues that trouble me and not certain if such would be best discussed in a board setting or not."

Wal-Mart and many other retailers are wrestling with inventory levels growing faster than sales. In April, Wal-Mart acknowledged during its Year Beginning Meetings that the retailer lost about $3 billion in sales last year because some products were out of stock, while at the same time its overall merchandise inventory grew a faster clip than its sales.

Inventory has been rising for the past three years at Wal-Mart, but execs with the retailer say the retailer’s overall inventory levels are in good shape. However, analysts such as David Strasser at Janney Capital Markets have said the prolonged uptick in inventory is “likely getting marked down substantially, driving sales at lower margins.”

Strasser said weaker than expected holiday sales across the retail spectrum, were further pinched by a long, harsh winter that greatly condensed the prime selling window  the spring seasonal items.

Analysts believe the uptick in Wal-Mart’s inventory levels — up 5.5% between June 2012 and 2013 – continues to have a negative impact on margins and bottom line profits.

"There can be several reasons for high inventory levels such as slow sales due to product/store selection, seasonality issues, changes in consumer demand, and/or replenishment issues," said Jami Dennis, co-owner of Rapid Training Solutions. "It isn’t just a negative impact on suppliers, but also Walmart and the consumer. It clogs up the system and slows down the flow of new product scheduled to go into the store for the next season.”

Dennis said it's simple math.

"You cannot add, unless you subtract, therefore, they must price adjust to move through the goods to free up shelf space. Suppliers often help fund price adjustments to move through the inventory. Unfortunately, many suppliers are not proactively managing their store level inventories and watching order levels to ensure that their ship-to-sales ratios are appropriate to drive sales and profitability, without overstocking stores," Dennis explained.

She said Wal-Mart gives each supplier a handy tool in Retail Link access to help monitor the business and partner in the decisions to minimize the losses. The more collaborative the relationship, the less frequency of these issues.

PROMOTIONAL PRICING
Promotional pricing has become all too common, around the mall and off-mall areas, according to Ken Perkins, president of Retail Metrics.

Retailers from Wal-Mart to Old Navy are blasting customers with e-mail blasts featuring hourly sales for special items — in-store and online. Analysts say this promotional pricing with savings up to 30% or more is dangerous, because consumers quickly begin to expect it and will balk if the promotional discounts are taken away.

Wal-Mart began last fall to aggressively cut inventory in certain categories including health and wellness and home. The retailer had to take big markdowns late last summer to move through excess women’s apparel, and they were also left with an overhang of school supplies heading into the holiday season.

INSIDE THE BACK ROOM
A veteran Walmart employee who manages the back room of a Walmart Supercenter told the City Wire recently during Wal-Mart shareholder week that consumables rarely stack up, but apparel, home and seasonal merchandise are often carried over from year to year.

“My store is sitting on three years of school supplies. We donate some, but we will still have supplies in the back room this year when the new shipment arrives later this summer,” the employee said.

This inventory overhang creates a challenging climate for the retailer and its suppliers. The store employee said it is disconcerting to see a new shipment come in of something already setting in back room.

“I know that is going to affect my bonus,” the employee said, referring to the annual bonus pay that is tied directly to that facility’s operational performance and profitability.

REPLENISHMENT TRANSITION
There is some hope that Wal-Mart’s new Global Replenishment System (GRS), in use now by a few large suppliers will help with more accurate demand forecasting and in reducing empty shelf issues and curtain excess inventory stacking up.

GRS will eventually replace a system known as Inforem, which was created by IBM and last updated in 2007. Inforem uses an upward forecast modeling system, the complete opposite from the downward forecasting model used in GRS.

Duncan Mac Naughton, head of merchandising for Walmart U.S., told investors in April 2012 that the retailer was working on the GRS which is believed to be a better forecasting engine. He said minimizing inventory at the store level, improving out-of-stocks with better forecasting is an end-to-end commitment using technology to drive better performance in the store.

“It will allow us to be more real-time with our supplier on what our expectations and our needs are and we will deliver better real-time inventory to our stores,” Mac Naughton said at the investor conference.

Wal-Mart continues to slowly phase in the new GRS system and convert more departments and suppliers from the old Inforem system. The retailer is, according to sources, proceeding cautiously to work out any kinks in the system.

CONVERSION INSIGHT
Insiders said the early conversions have been frightful for some suppliers with lost shipments leading to high out-of-stocks at the distribution center and store. There are very few experts on GRS subject matter as the system still at this stage and Wal-Mart’s replenishment managers are also still learning the system.

Dennis said working through this transition with the replenishment manager and making sure all the different cut-over steps are uploaded and established correctly on the front end will be the deciding factor of a supplier’s transition success.

When a supplier is given little notice of the transition, Dennis said the best thing a supplier can do is review their “Item/DC” and “Item/Store” – items at the distribution center and items in the stores – forecast variances and offer their recommendation for a new forecast for each variance. She also recommends that suppliers complete a lead time audit, and make sure an accurate order increment and minimum order quantity is in place for each “Item/DC” combo, if the supplier stores product at the distribution center. The lead time audit is a validation of processing and transit time from supplier ship point to each Wal-Mart distribution center.

Dennis said suppliers who want to make an easy transition to GRS should make sure they have an open line of communication with their replenishment manager and a firm grasp of the new tighter forecast variance.

With the primaries over for state and county offices, focus in Arkansas is shifting to the general election this fall. But locals are likely to start seeing action in municipal races, as well, since announcements are starting to trickle in on several city council races across Northwest Arkansas.

Even if residents do not hear the announcements from various candidates, they very well may run into candidates in neighborhoods, markets and other meeting areas soliciting signatures in order to see their name on the ballots Nov. 4.

All candidates seeking to run for municipal office in Bentonville, Fayetteville, Springdale and Rogers must obtain 30 signatures from registered voters residing in their respective wards if running for city council, or citywide if seeking an at-large position in municipal government, representatives from each city told The City Wire.

The signatures should be submitted beginning July 25 to the Washington County Clerk's office for Fayetteville and Springdale candidates, while Bentonville and Rogers candidates should submit their signatures to the Benton County Clerk's office. The filing period for municipal offices will end Aug. 15 at noon at each county clerk office.

BENTONVILLE
The heart of business in Northwest Arkansas is undergoing a period of change, as two new city alderman have been appointed to replace two others who have resigned from the council.

According to Kerilea Maggee, an assistant in the mayor's office, the two openings came about as a result of Chris Sooters' resignation of his Ward 1 Position 2 seat and Leah Williams' resignation of her Ward 3 Position 1 opening. Williams is seeking election to the Arkansas House of Representatives as a Democrat, challenging first-term Rep. Jim Dotson, R-Bentonville.

Appointed to replace Sooters Tuesday night (June 24) was former District Judge John Skaggs, while former Alderman James Smith was appointed to replace Williams.

Administrative Secretary Jan Hopkins, who also works in the mayor's office, said all eight positions on the Bentonville City Council are up for re-election this year, meaning Skaggs and Smith could possibly seek full terms to the council. But Magee said so far, none of the city councilors have announced their intent to run for re-election to the position that pays an annual salary of $8,713.

Also up for re-election this year is Mayor Bob McCaslin, who Magee confirmed was seeking re-election to his $125,008 per year salary position.

City Clerk Linda Spence, as well as City Attorney George Spence, are also up for re-election this year, though neither has indicated what their intents regarding re-election to their positions, which pay $12,000 and $18,572 per year respectively.

FAYETTEVILLE
Even though they cannot yet file, candidates in Fayetteville are quickly announcing their intents.

So far, Ward 1 City Councilor Adella Gray has announced for re-election, where she will face Sonia Davis Gutierrez in the non-partisan election. Also having announced for re-election is Vice Mayor and Ward 2 Councilor Mark Kinion, who is seeking a third term on the council.

"We have a unique heritage in Fayetteville that is irreplaceable and must be protected," he said, adding that the council must look forward to more economic growth opportunities in every sector including business, industry, medical, technology and creative economy.”

Ward 3 Councilor Justin Tennant has also announced that he will seek re-election.

Leaving the council at the end of her term is Ward 4 Councilor Rhonda Adams, who Fayetteville Deputy City Clerk Lisa Branson said was leaving the council to join her husband, who has accepted a job out of state. Announcing his intent to replace her is Mike Emery. No other candidates have announced for the Ward 4 position.

Other candidates up for re-election in the college town include the city attorney and the district judge. City Attorney Kit Williams has indicated he will run for re-election, while District Judge David Stewart has made no such declaration as of yet.

City councilors earn an annual salary of $12,504, while the city attorney earns $112,507 and the district judge's salary is $123,988.

ROGERS
The city of Rogers finds itself in a peculiar situation this year, according to Rogers City Clerk Peggy David.

David and Rogers Mayor Greg Hines are getting an extra two years in office instead of having to run for re-election this year as a direct result of the growth the city has experienced in recent years.

"His term would normally have been up, but because of the 2010 census where the population of rogers hit the 50,000 mark and above, his term was extended by two years, which is allowed by state law," she said. "His term and my term were extended to 2016 and from the on, our terms will run with presidential elections and so on.”

She admits that the circumstances are unusual, but said it is not the first time an event like this has occurred in Arkansas.

"This is one of those weird things that happens every so often," she said. "We hit that 50,000 population mark and we got two years.”

With David and Hines not up for re-election this year, the only positions up for re-election are the Position 1 posts in each ward. But while other cities have seen action when it comes to the city council, Rogers so far has remained quiet, according to David.

"I have not hear of anyone who has announced for re-election or even for filing. I think it was the intent of (Ward 1 Position 1 Councilor) Buddy Wright for sure that he was going to run, but I don't think he's made a statement yet.”

David said the unusual circumstances of her and the mayor's terms are not the only changes to occur on the council this year.

"This is the first time that only half of the council has been up for re-election. They were affected, as well. Previously, all eight ran every two years. But the census changed the council positions and so on. So only four are running this time and four will run in 2016.”

The salaries for Rogers city councilors is $9,096 per year, while the city clerk earns $66,605 annually and the mayor earns $124,557 annually.

SPRINGDALE
Action is already starting to take place in Washington County's second-most populous city. City Clerk/Treasurer Denise Pearace said all Position 1 posts in the city's four wards are up for re-election, as is the city attorney.

Springdale City Councilor Jim Reed confirmed that he will seek re-election to his Ward 1 Position 1 post. Reed said he is seeking re-election and had Tuesday signed the petition for City Attorney Earnest Cate's re-election effort.

While some races for statewide or General Assembly positions may get extremely heated, Reed said he expects a somewhat tame campaign, at least when it comes to his seat.

"This is my 8th year. My first race against Bill Eaden, I won 55% to 45%," he said. "My last race, I can't even remember my opponent's name, but I won by 71%. So that wasn't really a challenge.”

That said, Reed said he and fellow councilors should not take re-election for granted.

"Any race can be a challenge and anyone can be beat," he said.

While all the councilors up for re-election have picked up petition packets, the only other candidate besides Reed to confirm a re-election bid is Ward 3 Position 1 Councilor Brad Bruns. Bruns is seeking a second term to the council.

"Serving the citizens of Springdale on the City Council is a way for me to be a team player, work hard and give back to the city I love,” Bruns said in a statement. "I will continue to look for opportunities to make Springdale even more business friendly and improve the quality of life for our residents.”

Pearace confirmed salaries for city councilors are $10,200 per year, while the city attorney earns $101,898 per year.

Business leaders calling for the state’s public schools to connect to a university-based high-speed network hope to have cost estimates by mid-July and would like Gov. Mike Beebe to call a special session by the end of the year.

FASTERArkansas was formed last year by Beebe after education policymakers realized that most Arkansas schools did not have adequate broadband capabilities to participate in online Common Core testing or to take advantage of the internet for instructional purposes.

In a conference call Thursday, FASTERArkansas chair Jerry Jones of Acxiom, Kathy Smith of Walton Enterprises, Kendall Gibbons of Arvest, and Dumas Public Schools Superintendent David Rainey argued that schools should have the option of connecting to ARE-ON, the Arkansas Research Education Optical Network. They stressed that it should only be an option.

ARE-ON is a high-speed fiber optics network connecting the state’s public colleges and universities, health care providers and others. Public schools are not allowed to connect under Act 1050 of 2011, which was passed thanks to the efforts to the telecommunications industry. In May, a companion group, the Quality Digital Learning Study Committee, released a report calling for ARE-ON to be extended to schools.

According to Gibbons, Act 1050 has made it difficult to determine exact costs of the system because it prevents the state from bidding out the contracts. However, the group will make some “very high-quality assumptions” and provide a cost estimate by “mid-July, perhaps.”

Jones said “there were discussions about” placing the issue in next week’s special session dealing with school and state employee health insurance. However, as Beebe has said, the issue isn’t “ripe” yet.

“We would hope as we move forward through the year that we are able to build up overwhelming support for this initiative, and we (are) hopeful that the governor would call a special session later on during the year to address this needed change in the law,” Jones said.

ARE-ON is mostly composed of lines built by private telecommunications providers that are then leased to the network.

However, Jordan Johnson, spokesman for Arkansas Broadband Coalition for Kids, which represents the telecommunications industry, said there is no need to extend that network because the industry has already laid lines that would serve most schools. He said the data on which ARE-ON advocates are basing their assertions is flawed and that not enough of the industry’s questions have been answered.

“You have an existing system. Why would you want to reinvent the wheel?” he said.

It is a story of recovery and growth at Riverbend Industries in Fort Smith, according to CEO Ron Embree.

It was just last year that Embree said the company had its worst year. The factory was reeling from the closure of Whirlpool the year before. With the company responsible for sometimes more than 90% of its business having closed its local Fort Smith operations, the company had to reposition itself.

During this time, Embree said he was able to invest in a company out of Northwest Arkansas called Kosmo Koolers, which had designed a one-of-its-kind three-legged liquid cooler. While terms of the deal were not disclosed, Embree did say he spent about $500,000 retrofitting equipment at Riverbend to manufacture the coolers.

The company had initial success with the product, getting it into Sam's Club stores across the nation and bringing its employee count from a low of 63 people in 2013 up to its current level of 150, including temporary employees.

And while Sam's Club had decided to "go in a different direction" and no longer carries the item, Embree said things are still looking up for what are now his two companies under one roof — Riverbend Industries and Kosmo Koolers.

During a showing of the company's three spicket cooler at the National Hardware Show in Las Vegas the week of May 5, the cooler won one of the show's top awards, he said.

"We were won innovative product of the year and this cooler will be coming out in their July magazine — National Hardware Retailers Magazine. Out of over 6,000 products, one of the top 20 or 30 products at the show and there's some big, big names there. So we were pretty pleased with it.”

The award, he said, is not solely based on cool new concepts. Instead, he said various business factors come into the decision making process with regard to the award.

"It's supposed to be based on sellability and what they think the market will like to buy.”

While Sam's Club is no longer carrying the cooler, the world can still get their hands on the product and another innovative product designed and manufactured by Kosmo Koolers — the freestanding Kosmo cooler.

Even though the designation from the National Hardware Show takes into account market factors and and an item's sellability, Embree said he does not expect to compete with the big dogs in the industry anytime soon.

According to figures cited by the Outdoor Recreation Association, more than $646 billion was is spent annually in the United States on outdoor recreation, resulting in 6.1 million direct jobs. The same organization said in Arkansas, more than $10 billion in consumer spending is associated with outdoor recreation accounting for $2.9 billion in wages and salaries spread among 125,000 direct Arkansas jobs. The consumer spending results in more than $696 million in state and local sales tax revenues, the ORA said.

While no specific figures were found for the cooler industry, a 2012 Houston Chronicle report about the expansion of Igloo's Houston-area manufacturing facility said the company held 45% of the cooler marketshare, up from 38.1% in 2010.

Embree said he does not expect to compete for marketshare against the big dogs like Igloo or Coleman. Instead, he said Kosmo Koolers will focus on online sales through retailers like Amazon.com and getting their products in local stores. The company's products are for sale at retailers like CV's and Marvin's IGA in the Fort Smith and Northwest Arkansas areas at retail prices ranging from $40 to $59.97.

"We're not going to have hardly any marketshare. I mean, compared to Igloo, Coleman, Rubbermaid and them, we'll have small marketshare. I don't know exactly the market, but you know if I was selling $1 million to $3 million worth of product, I would be pretty pleased. And that's a drop in the bucket for the total marketshare.”

The goal, he said, was to increase sales to 35,000 units in 2015. Even at that pace of sales, he said it will still take a while to get the company's staffing levels back to the peak of 300 employees in 2007.

"I think it will take at least three years unless something happens that I'm not aware of right now.”

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.

Sondra LaMar, long-time public relations director at the University of Arkansas at Fort Smith, is leaving UAFS at the end of June, marking almost 42 years working in higher education.

LaMar was hired by the University in 1972 when it was a two-year community college after approaching the president at that time, Dr. Shelby Breedlove. The two created her position, one which other institutions emulated over the years.

LaMar has received 44 national, district, state, and local awards for writing, editing, design, complete promotional campaigns, and television and radio commercials.

The awards are from CASE (Council for Advancement and Support of Education) Recognition Awards, national competition for two- and four-year educational institutions; CASE District IV Awards; NCMPR (National Council for Marketing and Public Relations) Paragon Awards, national competition for two-year educational institutions; NCMPR District IV Awards; UCDA (University and College Designers Association) Awards; Admissions Marketing Report national competition for two- and four-year educational institutions; Fort Smith/Van Buren Advertising Federation ADDY Awards; Arkansas Advertising Federation ADDY Awards; International Reading Association competition; and the Arkansas Education Association competition.
 
LaMar has also hosted and judged in national competitions and has been a presenter at conferences. She is also a recipient of a Silver Medal Award given in recognition of outstanding contributions to advertising and furthering the industry’s standards, creative excellence, and responsibility in areas of social concern.
 
LaMar took a photo of Boreham Library which was published last August on the cover of a national library publication, and UAFS has frequent mentions in the online publication of the American Association of State Colleges and Universities. She also took a photo of Bill Clinton when he was governor of Arkansas that was published on the front page of a national community college newspaper.

Several years ago she published a workbook for children, “Think in These Things,” and has had articles printed in a magazine published by the Baptist Sunday School Board.

In her role at Westark and UAFS, she developed the college’s public information, news bureau, media liaison, advertising, publications and promotional programs and supervised all phases of the operation until the department was divided in 1991. At that time she opted to stay with the news side and continue what she began in 1972.

Prior to coming to Westark, LaMar was a reporter, traffic and news director, and an education writer for various news media entities, including the Times Record, KFAY and KKEG Radio in Fayetteville, Pine Bluff News, Lawton Constitution, and the Arkansas Democrat.

LaMar, who also oversees the technical crew and runs sound at Haven Heights Baptist Church, is proofing a manuscript for an author and expects to remain professionally active even though she has no immediate plans for retirement other than spending time with her family.

She and husband Charles live in Fort Smith. Daughter Kristin Jones lives with her family in Tahlequah, Okla., where husband Jacob is pastor at Southside Baptist Church. Son Shane Waldrop and his family live in Poteau, Okla., where he is pastor of Fuel Church.