The Pinnacle Country Club home of former Arvest Bank president Dennis Smiley will soon go on the auction block, with mortgage lenders First Security Bank and Arvest claiming rights to the property now in foreclosure.

First Security Bank recently filed foreclosure documents with the Benton County Circuit Court for real property located at 56 Champions Boulevard in Rogers. The 2,967 square-foot home was built in 1992 and has been on the market for 130 days listed at $568,500. There is a pending sale offer on the home for an unknown amount, according to Gary Leis, with Appraisers of NWA. Leis said the home, though it was built in 1992 has had contemporary updates including marble and Brazilian wood floors throughout.

First Security notes that it financed the mortgage for H. Dennis Smiley and wife Cynthia with a $200,000 note recorded May 16, 2012. County records indicate that Smiley purchased the home in April 2012 for $385,000 and Arvest Bank also recorded a mortgage that same month.

First Security said in the complaint that Smiley was in default of the $200,000 mortgage, owing $191,143 as of June 26, with an additional $3,800 owed in late fees and past due interest. Smiley is also in default of a second loan of $40,150 made by First Security in June 2013, using the home as collateral.

Arvest holds a $200,000 mortgage against the property and the assigned interest from Fort Smith-based Benefit Bank who also loaned $40,000 on the real property as the result of a mortgage filed on Dec. 28, 2012.

Counsel for Smiley filed an answer with the court that indicated the family is no longer residing in the home, but they do have some belongings there. The Smileys told the court they have not abandoned the home and are paying the utility bills and other bills related to yard and house maintenance.

Arvest responded to the court filing that it does hold a first lien on the property and has the responsibility for collecting another $40,000 which it was assigned by Benefit Bank’s interest as part of a settlement agreement. Arvest asked the court to dismiss First Security’s claim against the bank.

Smiley’s father, Henry D. Smiley Sr., also responded to the court as he was named as one of the guarantors in the second loan ($41,150) made to HDS Holdings in February 2013.

First Security said the loan to HDS was backed by the home as collateral. As of June 26, Smiley was in default for $37,240 with $1,150 in past due interest and late fees.
The bank asked for judgment against Dennis and Henry Smiley for $37,240. 

The answer of Henry Smiley filed with the court July 30, indicates that he never signed the documents which were presented between his son and First Security Bank. He affirms defenses of fraud against him and asked the court to dismiss the claim.

Fort Smith area business leaders, politicians and other local stakeholders got a first hand glimpse of the United States' largest diesel tugboat as the U.S. Army Corps of Engineers brought together the diverse group of nearly 100 individuals for a nearly three hour tour along the Arkansas River.

The river cruise on the Motor Vessel Mississippi started at Lock and Dam 13 in Barling and made its way along the river boundary between Fort Smith and Van Buren to discuss the future of the Arkansas River and its impact on the regional economy.

Col. Courtney Paul, Little Rock District Engineer with the Corps, said the MV Mississippi — a Memphis-based tugboat that spends the vast majority of its time engaged in construction work along the Mississippi River — brought the communities along the Arkansas River a rare occasion.

"This is a unique opportunity for us. It's the second time ever that the Motor Vessel Mississippi has come up the McClellan-Kerr Arkansas River Navigation System," he said, adding that the Mississippi River Commission would hold public hearings next week on the vessel as it travels from Catoosa, Okla., and works its way back down the Arkansas River.

Public hearings will focus on navigation, the environment and the relationships between recreation and industry along the busy waterway. Paul said among the individuals scheduled on the manifest Monday as the towboat makes its way back through Fort Smith is Gov. Mary Fallin, R-Okla.

He said before the meetings begin, each of the commanders from different regions along the river — such his office in Little Rock and the Tulsa office that manages the river from the Oklahoma border at Fort Smith to Catoosa — are inviting the public to participate and engage with the Corps so the topics of importance to communities all along the river can be made known to the commission.

"We can kind of educate or explain what's going on (along) the river to folks," he added.

According to Paul, policy will be front and center during the meetings with the commission, with testimony during the meetings placed in the Congressional record. And while communities including Fort Smith may push for policies such as the 12 foot channel or a new harbor, he said part of the trip along the river is about an educational experience for the public and local leaders in business and government to understand the Corps' priorities in order to keep industry flowing through river towns like Fort Smith and Van Buren.

He said while local priorities like the 12-foot channel are important, the public needs to understand the threats to the system and how it could impact not only river commerce, but train and truck transport at ports all along the river and how one threat could derail plans like the 12 foot channel. Arkansas business groups are advocating for the river channel to be dredged and maintained to a 12-foot channel along the Arkansas River, deeper than the 9-foot standard in place.

"One of the greatest threats is the situation at the mouth of the system, which is what you call the three rivers area which is the confluence of the Mississippi, the White and the Arkansas Rivers. Why it's a threat to the reliability is that right now, the way it's set up you flow into the McClellan-Kerr Arkansas River Navigation System into the White River, you're in the first pool. You go into the Arkansas post canal, you're in the second pool. And then you follow the Arkansas River up to here and then on to Catoosa. The White River wants to do what … rivers want to do, and that is to meander and join up with the Arkansas. It's done that in the past, we've kind of patched that with a soil-cement levy, but every year we run the risk of a breach of the soil-cement levy."

If a breach occurs, he said it could shut down the river for as many as three or four months, cost local economies in the short term and possibly costing ports, towns and companies along the navigation system in the long term if companies find other ways to transport goods by bypassing the Arkansas River.

He said the risk of a breach means the Corps will make funding a permanent fix a priority with the hope for other projects down the road.

The tour comes just less than two weeks before U.S. Sens. John Boozman, R-Ark., and Jim Inhofe, R-Okla., are scheduled to be in Fort Smith to discuss transportation issues in a question and answer session to take place with the area's Regional Intermodal Transportation Authority (RITA).

The meeting with Boozman and Inhofe on Aug. 19 was organized by consultant Matt Sagely, who RITA has hired to organize meetings between the agency and influential members of Congress focusing on infrastructure issues of importance to the Fort Smith region, including a proposed inland harbor.

The MV Mississippi is scheduled to travel Catoosa before eventually looping back toward Fort Smith Monday evening, where Fallin is scheduled to be in attendance at the Mississippi River Commission meeting on the vessel.

The two leading Arkansas candidates in the U.S. Senate race were in Fort Smith on Friday (Aug. 8) with one talking about a jobs plan and the other pledging to help cattle farmers fend off federal rules that “interfere” with farm operations. The two candidates also expressed concern about President Barack Obama’s decision to attack ISIS forces in Iraq.

Obama said the airstrikes were needed to protect American diplomats and civilians and more than 15,000 non-Muslim Iraqis under siege without food and water by the hardline ISIS militants.

In an interview after his remarks to the 55th Annual convention of the Arkansas Cattlemen’s Association in Fort Smith, U.S. Rep. Tom Cotton, R-Dardanelle, said he understands that American citizens require protection, but said the action represents a larger problem.

“We have to protect our American diplomats and other personnel there, and anytime we can aid tens of thousands of religious minorities who are being persecuted by Al Qaeda with food and water, we should. But overall it just shows the lack of a strategy the President has had in Iraq for the last three years, and really, since he became President, and the lack of an overall Middle East strategy that’s designed to protect America’s interests and defend our allies,” said Cotton, who by several polls holds a narrow lead over incumbent U.S. Sen. Mark Pryor, D-Ark.

Pryor, who spoke Friday afternoon at Gerber’s baby food production plant in Fort Smith, told reporters that he worries about the action leading to more military involvement in Iraq.

"I really commend all of our men and women in uniform who are trying to deliver the humanitarian aid to the religious minority who are under siege right now. But I must say I share the concerns I think many Arkansans have about this becoming a deeper military commitment. So I know this is by nature, right now, humanitarian. And again, I think that is justified. And I think most people will support that because it is limited. So like the rest of us, I'm watching to see how this develops,” Pryor said.

IMMIGRATION DEBATE
Both candidates also addressed the contentious immigration issue and the ongoing crisis along the U.S. border with Mexico. Pryor pointed fingers at the U.S. House for the crisis.

"The Senate passed an immigration bill a year and a half ago, or a year ago I guess. I think perhaps had we had the House pass the immigration bills, perhaps we wouldn't be having the same trouble we're having on the border right now. Because there's so much in that legislation on border security. It was really about securing the borders first and then working on the rest of it secondly,” Pryor explained.

However, Pryor said he does not support unilateral action by President Obama to influence immigration policies through the use of executive orders.

"I do not agree with the President when he says he's going to start doing a lot of things in the immigration world by executive order. I don't think that's the way to go. I think Congress should be involved in the solution here. If we do immigration reform, hopefully the House will pickup the bill that we passed last year. I'm not saying they should pass it verbatim. Let the process work, they'll amend it, make their changes whatever and we'll get together and try to work it out."

Cotton said the U.S. House pushed legislation that would have fixed the problem, but the Senate failed to act. Cotton said he “played an instrumental role in toughening that (a recent House bill) up” to provide border security, ensure that the U.S. “expedite the return of illegal immigrants to their home country and not the settlement of them in our country,” and support border governors who have to call up the National Guard. Cotton also said the House bill would prevent Obama from “issuing future executive amnesties.”

“Mark Pryor voted for the President’s amnesty and then skipped town (Washington D.C.) for five weeks while we still have a crisis,” Cotton said.

PRYOR JOBS PLAN
Pryor’s visit to the Gerber plant – owned by Switzerland-based Nestlé – was to tout his jobs bill he said would promote onshoring manufacturing jobs in the United States and eliminate tax loopholes for employers who take jobs out of country. The plan would also extending tax credits through increased expensing and bonus depreciation.

Pryor said his proposed legislation could result in up to 10 separate bills he hopes to co-sponsor with multiple Republican and Democratic colleagues in the Senate.

Pryor wants to get the legislation passed this year, though as a "realist" he admitted that with only about three weeks of legislative work remaining before the November general election and only five or so weeks before the start of the new Congress in January, it would be a tall order to get multiple bills through the House and Senate.

"And we have a lot of catching up to do in that lame duck (session). So I'm going to do as much as I can to do the best I can and try to make it as bipartisan as we can. I think we'll get a ton of bipartisan support on it, but I can't… I would say probably most of this would happen next year realistically."

Even if the legislation does not make it to a vote, Pryor said he would make the legislation focusing on job creation a central theme in his tight campaign with Cotton as Pryor attempts to win a third term.

"I would like jobs and the economy to be the centerpiece of my campaign. Absolutely. I think I have a good record there. I think that the business community understands that I work with them all over the state of Arkansas to help create jobs here and I just know how important the economy is. So I guess short answer…yes."

COTTON’S FARM SUPPORT
Cotton, who has drawn criticism from farm interests in Arkansas for his vote against the federal farm bill, received a friendly introduction during the Arkansas Cattlemen’s Association luncheon.

Cotton, whose family owns a cattle farm in Yell County, was the only member of Arkansas’ U.S. House delegation to post a ‘No’ vote in January when the farm bill was approved. The politically powerful Arkansas Farm Bureau had urged all members of the delegation to vote for the bill.

Mark Graves, a farmer from Howard County who introduced Cotton, said he was proud of Cotton’s vote against “the unfarm bill” that was more about bureaucracy and benefits than farming.

In his brief comments to the almost 200 gathered at the association luncheon, Cotton said he could continue to speak up for Arkansas farmers in a Washington D.C. environment that knows little about farming.

“They (legislators and regulators) think that food comes from a grocery store,” Cotton said.

His primary objective as a Congressman and if elected to the U.S. Senate, is to push back against “extreme” environmental regulations and certain aspects of the federal Clean Water Act that “interfere” with farm operations.

Graves told The City Wire that he believed “a greater percentage” of cattle farmers support Cotton than Pryor. Graves acknowledged that Cotton’s vote upset some on the farm community, but said those not happy were primarily row crop farmers “that get the big federal subsidies.”

Wal-Mart took part during the past week in a three-day U.S.-African Business Forum in Washington, D.C. where business and government leaders discussed investment and economic opportunities.

Wal-Mart CEO Doug McMillon helped open the forum on a panel moderated by President Bill Clinton on Tuesday (Aug. 5). McMillon along with the CEOs of 
Dangote Group, General Electric, The Dow Chemical Company and Shanduka Group. Each identified ways to strengthen their business ties and generate economic growth with African connections.

Over the past decade, six of the 10 fastest growing economies are in Africa, which has already prompted some of country’s largest firms like Wal-Mart, Procter & Gamble and General Electric to invest in sub-Saharan regions. Africa’s GDP is expected to rise 6% annually over the next decade and real income has increased more than 30% over the last 10 years, according to economists.

The conference was expected to spur investments from U.S. companies to the tune of $14 billion in deals that would benefit Africa but also enhance U.S. profits of the giving companies.

"I want Africans buying more American products. I want Americans buying more African products," said President Barack Obama, who addressed the forum on Thursday (Aug. 7).

MCMILLON NOTES
Wal-Mart owns a majority stake in Massmart, a large retailer based in South Africa it purchased for $2.4 billion in 2011 and the retailer continues to invest in Sub-Saharan Africa.

“We’re investing for the long term, empowering African producers through hands-on training and using our global supply chain to connect them with our businesses around the world,” McMillon said. “Everywhere we operate we see that our customers have so much in common. Our customers in Africa want to spend less on everyday needs so they can provide more for their families.”

He also referenced the success of Seven Sisters Wines, a South African wine producer that supplies a range of wines to 500 U.S. stores. Seven Sisters CEO Vivian Kleynhans took part in Massmart's Developing Wine Brands Program, which helps local suppliers grow their business in South Africa and beyond.

WALMART INVESTMENT
On Thursday (Aug. 7) Wal-Mart and its foundation announced a $3 million investment in three farmer training programs in Rwanda, Zambia and Kenya.

As part of Wal-Mart's commitment to train one million small farmers in emerging economies, the Walmart Foundation is working in partnership with the U.S. Agency for International Development (USAID) to fund training in agricultural best practices for 135,000 farmers, including more than 80,000 women, according to Maggie Sans, vice president of international corporate affairs at Wal-Mart.
 
Walmart Foundation funding in Rwanda is supporting expansion and providing training to 50,000 farmers on agricultural techniques, emphasizing the production of corn, beans and dairy farming.  

Sans said an additional 45,000 farmers will be trained in business skills and leadership in agriculture in Zambi  as part of Agribusiness Systems International’s Women's Improved Marketing and Asset Control (WIMAC) project.
 
In Kenya, Walmart Foundation funding will support the expansion of the One Acre Fund program to improve agricultural practices and market access for 40,000 farmers, which will see them receive high-quality inputs such as seed and fertilizer, as well as post-harvest support. This process is expected to result in a higher crop yield that could double incomes in one planting season, she said.
 
Sans said women in emerging markets typically invest more than 90% of their income back into their families and communities. She ended by reiterating that Walmart is committed to empowering supply chains in Africa, particularly women farmers.

U.S. PLAN 
President Obama outlined a series of steps the U.S. is taking to boost economic ties with Africa.

• As part of the "Doing Business in Africa" campaign, the President announced an additional $7 billion in new financing to promote American exports in Africa.

• U.S. will continue to partner with Africa to build the necessary infrastructure for a flourishing economy. Aiming to bring electricity to more than 60 million homes and business, with a total commitment of more than $26 billion to Power Africa.

• The President called on Congress to renew and enhance the African Growth and Opportunity Act (AGOA). 

• The United States is going to continue to help more Africans trade with each other — because, as the President noted, "the markets with the greatest potential are often the countries right next door."

Arvest had plenty of reasons to settle claims with 18 of 20 banks who were owed money by former Arvest group president Dennis Smiley. The Fayetteville-based Arvest Bank reached private settlements with all but two of the banks staking claim to Smiley’s retirement funds.

Banking consultant Phillip Knight said it was “wise for Arvest to settle and to stop the long, arduous legal battle that had begun between many banks across the state.” He said from a publications relations standpoint, a sealed settlement that allowed Arvest to contain the publicity and offer the banks even pennies on the dollar makes more sense than letting each of the individual claims languish in the court system with legal meters running.

Arvest chose not to comment on the settlement or any of the conversations that led to that action or the pending cases to be heard on Sept. 18 in Benton County Circuit Court by Judge John Scott.

Tim Tarvin, banking expert with University of Arkansas Law School, said Arvest’s decision to settle makes sense on a number of levels.

“Arvest’s decision to button up the matter with a settlement made sense given the high profile nature of the employee involved. This is positive for rebuilding public image and could help to restore relationships with sister banks,” Tarvin said.

BANK CLAIMS
It will likely never be known what the 18 settling banks got in the deal, or if Arvest paid more than the $551,764 from Smiley’s retirement account. Banking insiders agree the total outstanding debts were relatively small for an institution as large as Arvest.

The claims filed with Benton County Court totaled more than $2.2 million:
Delta Trust Bank $245,100 
First Bank Hampton $179,000
First Federal Bank $70,000
Bank of Fayetteville $520,800
First Western Bank $210,900
First Bank Lonoke, $159,000
Integrity Bank Mountain Home $160,900
Simmons First National $85,000
First National Bank Russellville, $145,900
First National Bank Fort Smith, $393,380
Summit Bank, undisclosed amount 
Legacy National Bank, undisclosed amount
Chambers Bank, undisclosed amount
First Security Bank, undisclosed amount.
Benefit Bank, undisclosed amount
Bank of the Ozarks, undisclosed amount
Bank of Oklahoma, undisclosed amount
Centennial Bank, undisclosed amount

Gary Head, President of Signature Bank, told The City Wire he was not approached for settlement by Arvest. Though Signature Bank was listed among those with claims to Smiley’s retirement account, Head said the bank did not file a claim with Benton County Court for payment.

“Our lawyers have been working directly with Dennis and his counsel. We prefer not to kick a man when he’s down, but we will continue to pursue payment for the money we are owed and will have counsel at the hearing next month,” Head said.

First State Bank of DeQueen was the other institution not settling with Arvest. Bank officials reportedly said they too were not approached.

LIABILITY AGAINST FRAUD
Bank officers such as Smiley typically are required to carry professional liability coverage that protects them and their employer against financial loss. 

Garland Binns, attorney with Dover Dixon & Horne in Little Rock, said banks typically have blanket liability coverage on their officers and employees in fiduciary positions. He said the policy can provide against financial loss in the case of fraud. It is not known if Arvest had blanket liability coverage on Smiley, or if the bank has filed any claims with liability carriers regarding the fraud alleged by Smiley.

Smiley allegedly signed other bank officer names on official Arvest documents that allowed him to borrow money from 20 banks using his bank retirement account as collateral. The retirement account had a value of roughly $500,000, but Smiley pledged that same collateral several times without the knowledge of Arvest or the lending banks.

Arvest told The City Wire that none of the officers whose names were signed in connection with pledging Smiley’s retirement account had knowledge of the loan and did not sign the papers. 

“No other Arvest employees have been implicated in this matter,” said Jason Kincy, spokesman for Arvest Bank.

Smiley’s father, Henry Smiley Sr., also told the court that his signature was forged on loan documents to which he had no knowledge. Smiley Sr. claimed that he too, had been a victim of fraud in this matter.

The Federal Bureau of Investigation continues to probe the fraud allegations but no criminal charges have been filed. The statue of limitations on white collar fraud is seven years. 

Tarvin said any criminal charges must come from the federal prosecuting attorney. He said the prosecution generally takes its time to fully investigate each case so that no stone is left unturned before a plea is entered.

Head said several years ago, he had a bank employee that committed a crime and it took three years before she had her day in federal court.

The latest survey of more than 150 Arkansas company leaders indicates an improved outlook for the rest of 2014 on the sales and hiring front, as well as expectations that economic conditions will improve in the last half of the year.

Talk Business & Politics — in conjunction with the Arkansas State Chamber of Commerce and consulting group CEG Partners – released its second “Business Leaders Confidence Survey,” which captures opinions on the future direction of Arkansas economic conditions. The Greater Little Rock Chamber of Commerce also aided in this latest survey.

“There is a lot of good news from this survey and nationally, but it’s kind of like pedaling a bike in the Ozarks. As soon as you make it over one hill, there seems to be another one in front of you,” said Mike Stafford, managing partner with Little Rock-based CEG Partners, which conducted and analyzed the mid-year report.

CEG Partners received results from 154 state business leaders representing top executives in all major industry categories, such as manufacturing, health care, finance, energy, construction and utilities.

Some key takeaways:
• 69% of respondents expect sales and revenues to increase slightly or significantly during the next 6 months – an 8% improvement from January 2014.

• 49% expect hiring to increase slightly or significantly – a 23% improvement from the number we saw in our last survey 6 months ago.

• 47% said economic conditions are better today than 6 months ago – an 88% improvement from our last survey.

• 51% said they expect conditions to improve in the next 6 months – a 46% improvement from six months ago.

“There’s no question that the economy, at long last, in this now five-year old recovery seems to be getting some legs, so this is good news,” said Randy Zook, CEO of the Arkansas State Chamber of Commerce and Associated Industries of Arkansas.

There was one negative highlight in the report related to capital spending. Despite the optimism for employment, revenue increases and the overall economy, business leaders are still cautious regarding capital expenditures. About 51% of business leaders surveyed expect capital spending to increase in the second half of 2014, a 2% decline from 6 months ago.

Stafford said capital expenditures remain a long-term investment, and presently, there is still lingering uncertainty for the long-run even though short-term conditions look positive.

Zook added there is still a lot of “slack capacity” in industry statewide and nationally, which could explain the hesitation in this category.

The results of the Business Leaders Confidence Survey are a contrast to Arkansas consumer opinion on business conditions. The recently released Arvest Consumer Sentiment Survey found only 22% of Arkansas consumers expect business conditions to be more favorable one year from now, mainly because of concerns regarding unemployment.

A $4.9 million grant from the Federal Aviation Administration to the Fort Smith Regional Airport is the largest single grant received by the airport and will pay for completion of a major taxiway realignment by the fall of 2015.

The grant was announced Monday (Aug. 11) by the offices of U.S. Sens. Mark Pryor, D-Ark., and John Boozman, R-Ark., and U.S. Rep. Steve Womack, R-Rogers. 

On May 27 the Fort Smith Regional Airport Commission approved awarding a construction bid to Forsgren for construction of phase three of the Taxiway A West project. The approval was for a contract of $4.636 million with a deductive alternate of $3.741 million.

With the $4.9 million grant, the full design for the taxiway work will move ahead, Parker said. Because of higher labor costs, materials cost and other inflation factors, original estimates set in 2010 were below the real costs in 2014. However, Parker said the FAA agreed to provide more than the original estimate, thus negating the lower alternate bid.

“This is really a big deal for Fort Smith. In fact, this is the largest single grant that the airport has received. ... We’ve had larger projects, but in terms of the amount of money, this is the largest single FAA grant,” Parker explained.

He estimated that work on the third and final phase of the taxiway realignment should be completed by the fall of 2015.

"These funds will allow Fort Smith to make smart, essential improvements to its airport," Womack said in a statement. "Developing our transportation infrastructure is key to the continued growth of the city's and our state's economies."

Commercial traffic at the regional field is on a positive track after posting a decline in 2013. The airport, served by flights from Atlanta and Dallas-Fort Worth, posted June enplanements of 8,393, up 6.56% compared to June 2013. Enplanements for the first six months of 2014 total 44,730, up 6.39% 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.

FIRE SERVICE
Parker also said airport staff may recommend contracting with Green Bay, Wisc.-based Pro-Tec Fire Services to provide rescue and fire-fighting services at the airport.

On its website, Pro-Tec says it “pioneered the contract Aircraft Rescue Fire Fighting services market in the United States in 1975.” Its service map shows 16 airports where it provides some level of rescue and fire support.

Such support was previously provided by the 188th Fighter Wing. The National Guard unit recently transitioned from a manned flying mission to an unmanned flying mission, eliminating the necessity of its own fire protection.

Parker has previously estimated that providing the fire service could cost the airport $750,000, which would be one-third of the airport’s revenue.

The effort to secure fire services has been hampered by the lack of timely response from National Guard Bureau officials on whether the airport can use the equipment and vehicles previously used by the 188th.

Arkansas should be able to connect all of its schools to high-speed fiber optics broadband networks within a few years using $15 million it already spends annually on outdated copper networks along with federal funds, Gov. Mike Beebe and a group that works to connect schools announced Monday.

EducationSuperHighway, a national nonprofit that works to expand internet access in schools, has been partnering with the Department of Education to study the issue and will work with Arkansas to expand access as part of a pilot project that also includes Virginia.

CEO Evan Marwell said the state can become the first to meet the national ConnectED goal, announced by President Obama last summer, of connecting 99% of American students to at least 100 megabits per second with a target of one gigabit per second within five years. Just by reallocating its resources, Arkansas could be the first in the nation to meet the ConnectED goals because of its current financial commitment – “a commitment that is not replicated very often around this country,” Marwell said – along with the investment private providers have already made.

“There’s no reason that by 2018, Arkansas shouldn’t be able to have every public school with the broadband that they need,” Marwell said in an interview after the press conference.

Schools connect to the internet using the state’s Arkansas Public Schools Computer Network (APSCN) along with private providers that they hire. Marwell said the APSCN contract represents more than 50% of the state’s collective investment in connectivity but is delivering only 5% of the broadband that connects schools today.

Because it relies on copper networks, it pays nearly $300 per megabit per month. The state pays more than 22 times more per megabit than the $13 per megabit that school districts who buy their broadband directly pay. If a typical residential cable modem bill cost that much, a family would be paying $3,000 to $6,000 per month.

“So because of this cost inefficiency, if Arkansas schools had to rely only on the connectivity provided by the state network, 60% of them would have less internet access than each of you have in your home,” Marwell said.

Asked why no one before now had revealed how much the state was spending on copper wire, Beebe said, “That’s a really good question. I wish I was technologically smart enough to (have) told you six years ago or eight years ago I had that figured out. And presumably we’ve got technological people around here that could have raised that question, but for whatever reason, it wasn’t raised. The fact that it wasn’t raised five years ago or six years ago, however, doesn’t mean it doesn’t need to be raised today.”

Given the changes occurring in broadband access, Beebe has ordered an in-depth audit of the Department of Information Services, which helps provide the technical expertise in managing APSCN. Beebe said the DIS model, which involves raising its own revenues, may need to be changed or streamlined.

Arkansas is doing better than the national average in terms of connectivity, but almost half of school districts do not have connectivity required for 21st century learning, Marwell said.

Joe Freddoso, who managed the broadband backbone in North Carolina before joining EducationSuperHighway, said Arkansas can move ahead of other states because it already has made the political decisions to spend the money.

“You are investing enough money today in K-12 connectivity to reach your goal, to have high-bandwidth, high-value connectivity to every school,” he said. “You’re spending a portion of the money you spend today inefficiently.”

Freddoso said North Carolina faced a similar situation before it began its initiative. Today, 98% of its schools are fed by fiber optics lines.

The issue of broadband connectivity has become an important one in Arkansas after it came to light that many schools did not have enough broadband connectivity to take advantage of digital learning opportunities or to conduct online tests as part of the Common Core State Standards.

Beebe and the state’s private broadband providers have been at odds over whether to connect schools using private networks or the state’s ARE-ON network that connects universities, medical providers and others. Beebe appointed a group of business leaders known as FASTERArkansas that has been pushing for the state to expand the ARE-ON network to public schools. Private providers do not want to compete with a government-managed broadband entity. They say they have already laid the foundation for a high-speed network, but schools have not connected to it.

Beebe said today he still wants schools to have the option of connecting to ARE-ON. Freddoso said he has met with private broadband providers who seemed open to working with the state on expanding broadband.

“The ones that I met with last week pledged that they would be on board if the business model worked, and I think that’s the process that we’re in now,” Freddoso said.

It’s not enough that Northwest Arkansas be considered a bedrock of retail expertise, some say it now must become a technology hub in its own right as retail and every industry sectors move in sync with digital demand.

“The fly wheel is rolling here and we can become a major technology hub. ... We are not going to become Silicon Valley or Austin, Texas, but we do have some unfair competitive advantages in Northwest Arkansas,” said Jeff Amerine, director of Arkansas Technology Ventures.

Amerine was the morning keynote speaker at the NWA Technology Summit on Monday (Aug. 11) held at John Q. Hammons Convention Center in Rogers. The Bentonville-Bella Vista Chamber of Commerce event packed in 400 tech professionals for a half-day of conversation and collaboration about growing the regional tech sector

MORE THAN JUST REDNECKS
“I wouldn’t normally think of Arkansas as a tech haven but we’re in the midst of creating a Northwest Arkansas venture ecosystem with some amazing things happening in the tech and startup scene,” Amerine said.

He admits that to much of the outside world sees Arkansas and Northwest Arkansas as a place where “gap-toothed, gun-toting rednecks drive huge pickup trucks.” He adds that Sam Walton and J.B. Hunt faced similar perceptions about the region when they sowed their entrepreneurial seeds years ago. 

“That perception is a constant we have to overcome and show the world what we have to offer,” Amerine said. “Growing this tech sector with a supportive venture ecosystem matter because that’s where future economic growth will come from.”

He said the Kauffman Foundation, a think tank for entrepreneurial interests, indicates that 85% of all net new job growth comes from startup businesses.

“If you look at the areas that have this bubbling activity, this churn of disruptive activity, we see talent migrating to areas where there is good quality of life and where innovation occurs. That feeling of innovation and the support that comes from a local ecosystem is very, very important,” Amerine said.

He explained that the formula is not magical, it begins with STEM education – focusing on science, technologies, engineering and math. 

“The creatives and technologists have to be nurtured, it has to start early on. That’s the call to action,” Amerine said. “Tech talent is crucial to keeping the movement going and that’s one of the key problems we face. But that’s not unique to us. That’s every flyover state in the country as talent tends to concentrate on the coasts. We have got to grow our own.”

He added that entrepreneurial outreach and networking opportunities are also key as are more angel investors networks that can provide needed capital at all stages for local startups.

“We need a large scale locally based venture fund that is focused on tech,” Amerine said. “We’re making progress, but there is more work to do.

RETAIL-TECH CONNECTIONS
Angelo Welihindha, head of mass market retail sales at Google, said during Monday’s panel discussion that retail is not just retail anymore because technology is a natural follow-up given the collision between physical and digital commerce.

He said Northwest Arkansas can be an important tech center because of the retail expertise centered here. Welhindha spent more than two years with Nestle after graduating from the University of Arkansas. He worked six years at Wal-Mart before moving to Google earlier this year. 

Stan Zylowski, president of Movista, said Northwest Arkansas is a logical place for tech energy given that there are so many Fortune 500 and Fortune 1000 companies with top retail professionals based here. He said as retailers and suppliers move toward seamless digital and physical interaction they all require top technology talent.

Carol Spieckerman, CEO of NewMarketBuilders said, the lines are blurring like never before between suppliers and retailers who are finding ways to share content. She said technology is the link that will allow seamless transitions between physical and digital shopping and customer experiences. Spieckerman said Wal-Mart has been a leader in the retail space integrating technology and thinking more like a start-up. 

“Macy’s is playing a quick game of catch-up and Target is woefully behind, but perhaps that will change under the new leadership of Brian Cornell and some other outside tech hires,” she added.

STARTUP MINDSET
As a new guy at Google, Welihindha said he sees firsthand how important it is for large companies to think like startups and to foster a climate of networking among its staff, which is something Google does every day.

Welihindha said corporate giants need to foster and support the creative disruptions from technology talent knowing there will be some failures along the way. When Welhindla was a University of Arkansas student in 2004, his entrepreneurial team developed a concept for e-receipts. They were able to pitch the concept to Wal-Mart.

“They told us that e-wallet was the answer and they dismissed our idea. They shooed us out the door pretty quickly and we never heard from them again. We were so disappointed and we thought that if the world’s largest retailer didn’t see the value, we should give up. We had been in revenue sharing talks with IBM but we gave that up and took corporate jobs,” Welihindha said. “Last year when Neil Ashe, CEO of Walmart e-commerce, stood up and said Wal-Mart would be offering e-receipts, I was so angry but at that point I was already headed to California (Google). Keep your minds open and you will understand how emerging technologies can make your company better.” 

Michael Stich, chief innovation officer at Rockfish Interactive, said since 2006 the company has grown to more than 250 people across 10 locations and trying to keep that startup mentality and agility has been a challenge. He said one of the core missions at Rockfish is to foster an environment that welcomes entrepreneurs to try new ventures, with the support of Rockfish. He said the company demands a lot from its people, but also supports their dreams for entrepreneurial ventures.

WAL-MART TECH
Karenann Terrell, chief information officer for Wal-Mart Stores, said she was proud to be an engineer in a family of teachers, but her parents never really understand what her job is. Terrell said Wal-Mart is a retailer and that will never change, but it’s also tech invested and that’s the future for giving customers what they demand.

She said Northwest Arkansas has got to do a better job fostering STEM education.

“We have the opportunity here to make the University of Arkansas great. Wal-Mart and other companies have to be able to co-exist with entrepreneurial ventures and companies have to elevate the role of technology within their corporations investing in talent,” Terrell said.

She said the UA, like many colleges, must put more emphasis on computer science graduates. Just one in 17 technologists nationwide graduated with a degree in computer science. In a room of roughly 400 technology professionals there were less than five computer science graduates from the UA. There were 50 or so who claimed to be graduates of the UA business school. 

“As we see the business school’s entrepreneurial program feed the talent pool, there is much more to be done in computer science education,” Terrell said. “If we don’t, we will miss an opportunity.”

Capital is the essential grease that keeps the entrepreneurial wheels turning and despite lots of cash on the table, area startups say investments are more difficult to secure than they once thought.

“I feel like the teenage guy waiting to kiss a girl, I know it will happen but the waiting is so hard to deal with in the meantime,” said Mark Brandon, serial entrepreneur and founder of Qbox Inc.

Brandon said his Fayetteville-based tech firm is still trying to raise $1.5 million to fund its next phase of growth. 

“We have a growing client base and are bringing in tens of thousands in monthly revenue but we have tapped out about every Arkansas capital source and I have spent a lot time on the coasts trying to draw financial support. I am hearing from investment groups that have requests from 4,000 ventures and they are going to fund 12. Mostly likely that will be those located near them, not miles away in Arkansas,” Brandon said.

Michael Paladino, one of the founders of Overwatch, said his venture is also beating the pavement for investment capital and it’s proved harder than they once believed.

Jeff Amerine, a keynote speaker at the NWA Technology Summit, said Northwest Arkansas is in dire need of its own venture fund that focuses on technology startups. He said there has been a lot work in establishing the local angel investment group that now has 300 members. This group looks at five deals each month, but that is not nearly enough for the deal flow created in this region alone.

Amerine said there is a need for all stages of capital to support ongoing technology ventures. He said the region and state has made major steps in the right direction over the last five years when there was just one angel fund in the entire state. He said accelerator programs like the ARK Challenge, provide some teams some seed money to start but when they need more money to ramp up it can be difficult. Brandon and Paladino, who were each ARK Challenge winners, agreed with Amerine’s assessment.

Abigail Kiefer, founder of Red Clay, moved to Bentonville to start her business a few years ago. In 2012 Red Clay raised $170,000 through local angel investors. Since then they have raised $1 million successfully using crowd sourcing.

“Over three years we have been able raise $1.5 million and it’s never easy. The best capital for a startup is revenue. Area companies who reach out and do business with local startups are the best,” Kiefer said.

Amerine said there have been a few success stories in the past five years that keep the hope alive for other startups, something that is essential for creating a technology hub in this region. There are 10 new angel investor funds in the state, when five years ago there was just one.

Acumen Brands closed the largest deal in the state with an $83 million investment from a capital venture fund that could have gone anywhere and invested in any company, Amerine said.

He said last year, Updata’s $10.5 million purchase of Collective Bias was a huge score.

Ryan Frazier and his team at DataRank got into the Y Combinator in Silicon Valley with a top 5 finish, according to Amerine. Within 24 hours DataRank raised $1.4 million in capital, enough to buy them a few more years and expanded growth opportunities.

Four members of the Fort Smith Board of Directors would not comment on the 2 mil increase for the Fort Smith Public Library, with two directors planning to vote for the increase and one against.

A proposed millage increase to be voted on Tuesday (Aug. 12) would net the Fort Smith Public Library an additional $2.8 million in revenue, allowing the library to expand offerings and upgrade technologies to meet customer expectations, according to library officials.

Library Executive Director Jennifer Goodson has said the current one-mill of property taxes accounts of about $1.4 million of the library's annual operating budget. Additional funding comes from the countywide sales tax, of which the library receives 6% of the city's share of revenue. The amount totaled $921,239 in 2013 and was budgeted at $925,572 this year.

Another revenue source for the library includes $100,000 in fines and fees collections. The library also receives some state funding and grants. The library's 2014 budget was set at $2.7 million.

Should voters approve the two-mill hike on Aug. 12, Goodson said the additional $2.8 million would slightly double the library's budget and allow the largest library system in Sebastian County to expand its offerings.

The City Wire recently asked the seven members of the Fort Smith Board of Directors and Mayor Sandy Sanders if they were for or against the millage increase. There was no response or a response of no comment from Directors André Good, Keith Lau, Mike Lorenz and Kevin Settle, and Mayor Sanders. Sanders’ wife has appeared in advertisements supporting the millage increase.

Director George Catsavis said now “is not the time for this millage increase.”

“First I want to say that I have always supported the library and will continue to do so but I can not support this millage increase,” adding that he believes the library is “very solvent.”

“Also our senior citizens that have their property taxes frozen will not be protected with this millage increase. (T)hey will pay more and the ones on a fixed income will be hurt the most and I know the middle income people of Fort Smith are still having a tough time,” Catsavis wrote in an e-mail note to The City Wire.

City Directors Philip Merry Jr. and Pam Weber are for the increase. Their full statements are below.

City Director Merry: “I am FOR the library millage increase.

“I believe that a library is at the very core of the culture of a city.  I am hopeful of an absolute state of the art library facility that is not just up to speed but on the cutting edge of options for its “cardholders”.  Libraries serve its citizens of all ages and the fruits to be had are there for the asking. Note that all of the services are for free when one signs up for a Free Library Card…now and after the vote upcoming….

“I am proud to support the Library millage increase because I believe it to be an INVESTMENT rather than an expense that will return well on investment for the decades to come.”

City Director Weber: "I will be voting for the library mileage increase. The Fort Smith Library provides extensive services for all citizens. I have used the library for over fifty years and am constantly amazed at the quality of service provided and the range of those services. We live in a changing world and our citizens need the resources to compete - children and adults will be provided services with new technology.

“Businesses and nonprofits will be afforded the opportunity to do extensive research that is currently not available. Most of all, libraries have allowed citizens the opportunity to dream and learn - many of us have studied history and traveled the world and broadened our horizons through the library. I want my granddaughter to have those experiences and more.

“The City of Fort smith has done numerous citizen surveys - the library alway ranks at the top with citizen satisfaction.”

Municipal candidate filings drew to a close at noon Friday (Aug. 15) and a large number of candidates have filed to run for positions ranging from city clerk to mayor to city council in cities across Benton and Washington Counties.

Municipal elections across the two counties will take place on the same day as the general election, Nov. 4.

Candidates who filed were required to turn in signatures of 30 registered voters in their respective wards or cities, depending on the office which they were seeking.

Filing for offices began July 25 and were open for three weeks.

BENTONVILLE
In the race for mayor, incumbent Bob McCaslin was the only candidate to seek another four year term. The same was true of City Clerk Linda Spence, who will be re-elected without opposition to another four years. Also running unopposed for re-election is City Attorney George Spence.

Ward 1, Position 1 saw Stephanie Orman, Jon Cavness and Michael Williams file for the position, while Ward 1, Position 2 saw John Skaggs and Chad Yoes file for the office.

In Ward 2, Tim Robinson is challenging incumbent Alderman Roger Thomas for Position 1 while Shane Miller has filed to challenge Alderman Chris Sooter for Position 2.

Ward 3, Position 1 is a matchup between Alderman James Smith and Craig Soos. For Ward 3, Position 2, Alderman Bill Burckart is facing a three way race following Kristy Reed and Bryan Bennett's decision to run for the office.

Octavio Sanchez and Burton Head are vying for Ward 4, Position 1 while Alderman Jim Grider is facing a three way race for Ward 4, Position 2 against Jim Webb and Anthony Giabattari. All city council terms are two year terms.

FAYETTEVILLE
City Attorney Kit Williams is running unopposed for another term as Fayetteville's top attorney.

On the city council, all Position 1 posts are up for re-election this year.

In Ward 1, Alderman Adella Gray is facing a race against Sonia David Gutierrez and Paul Phaneuf while in Ward 2, another three way race has pitted Vice Mayor/Alderman Mark Kinion against Joshua Crawford and Robert Patton.

Ward 3 Alderman Justin Tennant is running unopposed for another term on the council.

Ward 4 is the most crowded of any position on the ballot in Northwest Arkansas in November with seven candidates battling for the position which could result in a runoff election after Nov. 4 should no candidate receive more than 50% of the vote. Alderman Rhonda Adams declined to run for re-election this year.

Running for the Ward 4 position are Phillip McKight, Ray Boudreaux, Craig Honchell, D'Andre Jones, John LaTour, Michael Collins and Robert Williams.

ROGERS
The Position 1 city council seats are up for re-election in Rogers and Aldermen Buddy Wright and Gary Townzen will win re-election unopposed in Ward 1 and Ward 2, respectively.

In Ward 3, Aldermann W. Clay Kendall will face Keith Jackson while in Ward 4, the seat is open and facing a four-way race between Antonio Christopher Covington, Carlos Chicas, Carrie Perrien Smith and Sam Jeffery.

No one filed for the position of city treasurer. As a result, the Rogers City Council will be required by state law to declare a vacancy in the position on Jan. 1, 2015, and must appoint an individual to fill the position.

SPRINGDALE
In the city of Springdale, only two of the city's five positions up for re-election this year have challengers.

The positions are Ward 1, Position 1 on the city council, where Jim Reed and Bob Caudle are challenging each other for the open position.

Ward 3, Position 1 will see Councilman Bradley Bruns and Rick Culver battle for a four year term, as well.

Mike Overton and Mike Lawson, who hold the Position 1 seats in Wards 2 and 4 did not face opponents in their bids for the council. The same is true of Ernest Cate, who will be elected city attorney unopposed on Nov. 4.

Other cities and positions of note in Benton and Washington Counties include:
BELLA VISTA
Mayor - James "Jim" Wozniak, Peter Christie, Linda Lloyd, and Jim Parsons;
City Clerk - Wayne Jertson;
Alderman Ward 1, Position 2 - Tom Candela, John Flynn, Ashley Linden, Dane Zimmerman, and Jason Frederick;
Alderman Ward 2, Position 2 - Frank Anderson and Rick Neal;
Alderman Ward 3, Position 2 - Rory Crivello, Alderman Larry Wilson, and Philip Bardasian;

JOHNSON
Mayor - Chris Kenney and Mayor Buddy Curry;
Alderman Ward 1, Position 1 - Bill Burnett;
Alderman Ward 1, Position 2 - Daniel Cross;
Alderman Ward 2, Position 1 - Bob Fant;
Alderman Ward 2, Position 2 - Melissa Posinski;
Alderman Ward 3, Position 1 - Richard McMullen;
Alderman Ward 3, Position 2 - Hunter Haynes and Henry Layes;

LOWELL
Mayor - Eldon Long, Phil Biggers, Eric Schein;
City Clerk - Liz Estes;
Alderman Ward 1, Position 2 - Lonnie Jones, Janette Lasater, and Alan Harris;
Alderman Ward 2, Position 2 - Peter Daniels and Connor Jones;
Alderman Ward 3, Position 2 - Alderman Kendell Stucki;
Alderman Ward 4, Position 2 - Alderman Ronnie Breland and David Adams; and
City Attorney - No filed candidates.

Municipal candidate filings drew to a close at noon Friday (Aug. 15) and a large number of candidates have filed to run for positions ranging from city council to mayor in cities across Crawford and Sebastian Counties.

Municipal elections across the two counties will take place on the same day as the general election, Nov. 4.

Candidates who filed were required to turn in signatures of 30 registered voters in their respective wards or cities, depending on the office which they were seeking.

Filing for offices began July 25 and were open for three weeks.

ALMA
In the race for Alma mayor, former State Rep. Ed Thicksten and Keith Greene announced their candidacies within the last two weeks. A third individual to show up on the ballot was Gary Perry.

All other positions up for re-election in Alma have no opposition. These include city clerk, where Crissy Inge will take office in Janurary; Ward 1, Position 1 Alderman John Tribulak; Ward 1, Position 2 Alderman Maria Washburn; Ward 2, Position 2 Alderman Edward L. Wakefield; Ward 3, Position 1 where John Ware will become alderman and Ward 3, Position 2 where Rinda Baker will also take office as an alderman in January.

Ward 2, Position 1 had no candidates file for the position and will be declared vacant and be appointed by the city council in January.

GREENWOOD
In the race for mayor, incumbent Doug Kinslow — who was elected mayor in a special election May 20 — is fighting to keep his new office against a challenge from Garry Campbell.

Kinslow's special election win on May 20 came after the city of nearly 10,000 suffered the resignation of Mayor Del Gabbard in January, followed by the incapacitation of Acting Mayor Jim Gossett in March due to an automobile accident, placing City Clerk and Treasurer Sharla Derry in charge of running the city on a day to day basis until Kinslow's election.
www.thecitywire.com/node/32761

Should Campbell pull out a victory, he would be the fifth mayor of Greenwood in a year.

As for Derry, she said in April she had no desire to seek the mayor's office and held true to her word, instead running for re-election to her position unopposed.

Other races of interest in Greenwood include the Ward 2, Position 1 alderman race, where incumbent Richard "Lance" Terry is being challenged by Charles wayne Lowe and Ward 3, Position 1 where Jim Newcomb and A.C. Brown Jr. are vying for the open seat.

Ward 1, Position 1 was open and James Burges III will win the seat unopposed in November. City Attorney Michael Hamby will also win re-election to his position after no opponents challenged him.

MANSFIELD
The race for Mansfield mayor is open with four candidates vying for the city's top spot.

The candidates for mayor of the small Sebastian County city include Larry Austin, Keith Dedmon, Daniel Mayor and Ricky Gene Newman.

Races for city council are also seeing multiple candidates, which could result in a runoff in Ward 2, where three individuals are fighting for the Position 1 seat. They include incumbent Christi Salmeron, Tyna Martin and Nathan Sterling.

In Ward 1, Position 1, Alderman Geroganna Mabry faces Sandi Bertaux in the Nov. 4 general election.

Ward 3, Position 1 Alderman Rick McDaniel faces no opposition to his re-election.

VAN BUREN
Van Buren will only have two men vying for the top spot at city hall, with Mayor Bob Freeman facing a challenge from Alderman Max Blake.

City Attorney Candice Settle, City Clerk Barbie Curtis; Ward 1, Position 1 Alderman Mary Ann Dodd; Ward 1, Position 2 candidate James C. "Jim" Petty; Ward 2, Position 1 Alderman David Moore; and Ward 3, Position 1 Alderman Donna Parker are all running unopposed.

The only two opposed seats are Ward 2, Position 2 with Scott Curtis and Darrol Sparkman challenging each other for Blake's open seat and Ward 3, Position 2 where Alderman Johnny W. Ragsdale is facing a challenge from Alan Swaim.

Other cities and positions of note in Crawford and Sebastian Counties include:
BONANZA
Mayor - Ronald Norris, John Orick, Tony Strickland Sr., Mayor David Conley, and Elmer Nelson;
Ward 1, Position 1 Alderman - Patricia Norris and Bill Joe Collins;
Ward 1, Position 2 Alderman - Walter Slavens, Alderman Karen Littlejohn-Flores, and Paul Wise;
Ward 2, Position 1 Alderman - Johnny Wilson;
Ward 2, Position 2 Alderman - Lorie Grady;
Ward 3, Position 1 Alderman - Daniel Lunsford;

CEDARVILLE
Mayor - Wayne Bentley, Darren Langley Jr., and Mayor Glenanna O'Mara;
Ward 1, Position 1 Alderman - Timothy Breshears;
Ward 1, Position 2 Alderman - Jonathan Odom;
Ward 2, Position 1 Alderman - Alderman David Clark Coombes, Kenneth (KC) McClendon, and William Brown;
Ward 2, Position 2 Alderman - Alderman Wendell Moore, Rogers Johnson, and Brenda Burner;

MOUNTAINBURG
Mayor - Mayor Ralph Bryant, Douglas Coleman, Robert Dean III, Scott Dyer, Michael L. Harrison, and Neal Moon;
Ward 1, Position 1 Alderman - Open Seat;
Ward 1, Position 2 Alderman - Alderman Angela Rupp;
Ward 2, Position 1 Alderman - Michelle L. Henson;
Ward 2, Position 2 Alderman - Open Seat;
Ward 3, Position 1 Alderman - Open Seat;
Ward 3, Position 2 Alderman - Open Seat;

MULBERRY
Mayor - Mayor Gary baxter and Herman E. Luper;
Ward 1, Position 1 Alderman - Sheila Chastain;
Ward 1, Position 2 Alderman - Stacy Muntz;
Ward 2, Position 1 Alderman - Elizabeth Jordan, Terry Lewis and Alderman Bobby Tweedy;
Ward 2, Position 2 Alderman - Alderman Johnny Ray Kimes, Robert Reeves, Daimien Rice;
Ward 3, Position 1 Alderman - Alderman Dottie Goodnoh; and
Ward 3, Position 2 Alderman - Alderman Jimmy Moore.

An area Wal-Mart is most hammered on by media and unions is the reduction in employees per store – especially when the retailer’s customer ratings are mixed and sales are sluggish.

Wal-Mart appears to have taken steps to add employees to stores in the recent quarter to the tune of $200 million in added wages and salaries from the year-ago period.

“During the quarter, we allocated additional associate hours to specific areas of the store, such as front end, deli, bakery, and overnight stocking to improve overall customer service. We also sustained incremental labor expenses related to major department re-lays in entertainment and sporting goods. In total, salaries and wages were up more than $200 million compared to last year,” according to Randy Hargrove, Walmart spokesman.

Hargrove said Wal-Mart will continue to invest in wages for the rest of this year, mostly adding hours to existing workers schedules.

In March, Bill Simon, then CEO of Walmart U.S., acknowledged the retailer was losing $3 billion annually from lost sales because shelves were not always being replenished in a timely manner. Wal-Mart said then it would adjust store labor levels and give employees opportunities to work more hours.

In June, Cleveland Research noted that “labor investments had been very selective to almost non-existent,” adding that was the ”biggest problem by far” with respect to the retailer’s continued on-shelf availability shortfalls.

John Marshall, senior capital market analyst for the United Food and Commercial Workers Union, said his group welcomes the announcement that more labor will be put back into stores.

“I want to be clear we are hopeful that the new CEO Greg Foran will work to help this continue, because we haven’t really seen it yet,” Marshall told The City Wire.

Wal-Mart confirmed that store managers have the most say as to how many workers it employs. But Marshall said after many discussions with store managers he was told a computer model predicts the number of workers needed and that often is more than a store budget can handle.

Sherry Curtis-Swenson, a store manager of the new supercenter in Springdale, recently said the new store employed a few more than 300, and skewed heavier than normal for managers, which she said was important for effective operations given it was a new store with more new hires than transfers.

Marshall said Arkansas is one state where store employee counts have remained higher than most states. He said Wal-Mart workers are optimistic in Foran’s leadership given his vast experience in operations. 

“We take him at his word that he is serious about making sure stores are in-stock, clean and running efficiently,” Marshall said.

Foran noted in the pre-recorded earnings call that he will be in stores hearing directly from customers and associates and tracking performance. He said during the retailer’s manufacturing summit in Denver on Aug.14 that Wal-Mart must perform better because consumers today have a long list of shopping options.

He said a consumer decision is based on many factors, including distance to the store, how clean it was during the last visit, lines at the cash register, adequately stock shelves and price. Foran said they quickly review those factors and that’s what dictates where they will shop. Foran said it is he and his army of 1.1 million workers to make sure the choice is Wal-Mart.

Houston-based Kinder Morgan’s $70 billion tax-friendly deal to bring all of its energy assets under one corporate umbrella and stock symbol will not have an impact on the pipeline giant’s Arkansas operations, company officials said.

Kinder Morgan spokeswoman Melissa Ruiz said the company’s blockbuster announcement earlier last week to acquire all of the outstanding stock of its former master limited partnerships — Kinder Morgan Energy Partners, L.P. (KMP), Kinder Morgan Management, LLC (KMR) and El Paso Pipeline Partners, L.P. (EPB) — will not impact the company’s day-to-day operations “at all.”

“It is still business as usual,” Ruiz told Talk Business and Politics.

Once the deal is completed, Kinder Morgan-owned subsidiaries will have a stake in or operate nearly 80,000 miles of pipelines and 180 terminals across the U.S. Kinder Morgan’s pipelines transport natural gas, gasoline, crude oil and other products. Its terminals store petroleum products and chemicals, including ethanol, coal, petroleum coke and steel.

Kinder Morgan now owns or has an interest in two major natural gas pipelines that originate or transport product through Arkansas. Ruiz said the company also operates two product terminal facilities in Pine Bluff and Blytheville that employ 327 active local workers.

The Fayetteville Express Pipeline (FEP) is a 185-mile natural gas pipeline system that originates in Conway County, continues eastward through White County and terminates at the Trunkline Gas Co. in Panola County, Miss. The pipeline has a capacity of nearly 2 billion cubic feet per day and brings natural gas from the Fayetteville Shale to other pipelines serving Midwest and Northeast markets. (Link here for a Kinder Morgan asset map.)

Kinder Morgan’s Natural Gas Pipeline Co. of America (NGPL) is the largest transporter of natural gas into the high-demand Chicago market, and one of largest interstate pipeline systems in the U.S. The 9,200-mile pipeline enters Arkansas from Northwest Texas and crosses the state into Southeast Missouri transporting natural gas into the nation’s third largest metropolitan area. Kinder Morgan operates NGPL and owns a 20% interest in the pipeline company. Myria Holdings Inc. owns the remaining 80% stake.

Besides the massive breadth and size of the combined company, the deal will also bring huge benefits to Kinder Morgan shareholders when the Houston-based pipeline giant begins trading as a single, publicly-traded stock, under the symbol “KMI.”

“This transaction dramatically simplifies the Kinder Morgan story, by transitioning from four separately traded equity securities today to one security going forward, and by eliminating the incentive distribution rights and structural subordination of debt,” said Richard Kinder, company president and CEO.

Shares in the new Kinder Morgan will have a projected dividend of $2 in 2015, a 16% premium over the anticipated 2014 dividend of $1.72. Kinder said the company expects to grow the dividend by nearly 10% each year from 2015 through 2020, with excess coverage anticipated to be greater than $2 billion over that same period.

Additionally, the combined company will be the largest energy infrastructure company in North America and the third largest energy company overall with an estimated enterprise value of approximately $140 billion, behind only ExxonMobil and Chevron. Analysts also estimate the deal will generate about $20 billion in income-tax savings for the Houston pipeline giant over the next 14 years.

And although Ruiz said the company’s operations will not be impacted immediately, Kinder told Wall Street analysts during a conference call that by lowering the cost of equity and debt capital – the deal would open the door for “growth and acquisition opportunities” in the midstream energy market.

“We believe that KMI will be a valuable acquisition currency and have a significantly lower hurdle for accretive investments in new energy infrastructure,” Kinder said. “In the opportunity-rich environment of today’s energy infrastructure sector, we believe this transaction gives us the ability to grow KMI for years to come.”

Kinder Morgan said the deal is expected to close by the end of the year.

Dollar General CEO Rick Dreiling and Board of Directors have entered a bidding war for rival Family Dollar with a $9.7 billion offer announced Monday (Aug. 18.). The bid to pay $78.50 per share for Family Dollar comes on the heels of Dollar Tree’s $8.5 billion, or $74.50 per share deal.

Dreiling said during the company’s conference call on Monday that several offers were made privately over the last year long before the Dollar Tree was announced. The letter sent to Family Dollar Directors spell out a compelling opportunity to own the dollar store channel creating nearly 20,000 stores in 46 states with combined sales exceeding $28 billion.

Wall Street analysts said the Dollar General deal makes more sense given the two stores are much more alike that their competitor Dollar Tree. A Dollar General/Family Dollar merger would create more competitive pressures for big box giants like Wal-Mart Stores Inc., which s just now expanding into smaller formats to try and win more convenience shopping dollars. 

Carol Spieckerman, president of Bentonville-based newmarketbuilders, said Family Dollar offers advantages to Dollar General and Dollar Tree.

“On the surface, Dollar General’s business model would seem to be more compatible with Family Dollar yet that presents challenges as well. Hundreds if not thousands of locations may be found to be duplicative given that both retailers pursue similar demographic profiles,” Spieckerman explained. “On the other hand, since Dollar Tree is a multi-format retailer, buying Family Dollar would be equivalent to it adding a new format to its portfolio. That could make a Dollar Tree purchase easier in the end, particularly in terms of mitigating antitrust concerns.”

Dreiling said the strategic benefits of a Dollar Store/Family Dollar deal include operational synergies of $550 million to $600 million on an annual run-rate three years post-closing. 

“For Family Dollar shareholders, our proposal is financially superior to the current transaction agreement with Dollar Tree and would provide Family Dollar shareholders with a substantial premium and immediate liquidity for their shares,” Dreiling said in a statement.

Dreiling, who was set to retire in 2015, said he would stay on as CEO and chairman until May 2016 if Family Dollar approves their offer. During the call, Dreiling said no one was more surprised to hear about the Dollar Tree deal than he was, given that Dollar General had approached Family Dollar multiple times over the past year about a merger. The lack of interest is one reason Dreiling opted to retire next year.

“We have the utmost respect for Family Dollar, its leadership and its employees. We look forward to expeditiously entering into constructive discussions with Family Dollar in order to sign a definitive merger agreement that provides enhanced value to Family Dollar shareholders and enables Dollar General to realize the benefits of this combination,” Dreiling said.

Dollar General has lined up the financing with Goldman Sachs which includes estimated fees and expenses and the $305 million termination fee payable to Dollar Tree in the event Family Dollar terminates the existing merger agreement and takes the Dollar General deal.

Dreiling said Dollar General has conducted economic and antitrust analysis with respect to the transaction and is confident it can address any potential antitrust issues. Dollar General is prepared to sell up 700 retail stores to achieve the regulatory approvals, which is approximately the same percentage of the total combined stores represented by the 500 U.S. store divestiture commitment in the Dollar Tree merger agreement.

Family Dollar and Dollar Tree has yet to respond to the Dollar General offer and there is also the opportunity Dollar Tree will raise the stakes which is pushing Family Dollar shares higher. Family Dollar shares jumped nearly 5% to $79.64 on Monday with the Dollar Store bid. 

Dollar General shares rallied 10.35% on Monday’s announcement trading at $63.37, up $5.91 on heavy volume. Dollar Tree shares dipped 2% to $54.47 on the news.

Arkansas’ July jobless rate of 6.2% is well below the 7.7% of July 2013, but the decline of more than 26,000 in the state’s labor force and an employment decline of almost 6,000 in the year-over-year period indicates a struggling economy.

The July rate of 6.2% was below the June rate of 6.3% and below the July 2013 rate of 7.7%, according to the report issued Monday (Aug. 18) by the U.S. Bureau of Labor Statistics. The July figures are subject to revision. The June rate was revised from 6.2% up to 6.3%.

Arkansas’ labor force was an estimated 1.298 million in July, below the 1.306 million in June, and down 2.01% compared to 1.324 million in July 2013. The year-over-year comparison shows an estimated 26,682 fewer Arkansans in the labor force. There are 69,228 fewer Arkansans in the labor force compared to the peak (1.367 million) in May 2008, a decline of almost 5.06%.

The number of employed in Arkansas during July was 1.217 million, below June employment of 1.224 million, and down an estimated 5,938 jobs compared to July 2013. The number of unemployed was an estimated 81,031 during July, down from the 81,857 in June, and well below the 101,775 in July 2013.

Arkansas’ annual average jobless rate fell from 7.9% during 2011 to a revised 7.5% during 2012. The initial annual average jobless rate for Arkansas during 2013 is 7.5%.

'LEAVE THE STATE'
Jeff Collins, an economist with The City Wire, said the July jobs report “certainly says something about the job opportunities in the state.” He said the decline in the workforce doesn’t mean that more than 26,000 are out of jobs, but “what you likely have are people who leave the state and go to another state to seek employment.”

Collins also said Arkansas’ economy has not transitioned to new economic realities at the same speed as other states.

“The workforce in the state of Arkansas, and this is a very generalized comment, does not compete well for certain types of employment. Unfortunately, the type of jobs we do compete for are dwindling and highly mobile. So if you look at what sectors have been growing in Arkansas, you have a lot of growth in the service sector, ... and you see that manufacturing has just been bleeding over several decades,” Collins said.

He said the growth in service sector jobs typically results in lower paying jobs than the jobs lost in the past decade. Solutions to improve Arkansas’ job numbers, according to Collins, includes “giving Arkansans more tools to grow their own businesses” and to “radically transform” the state’s workforce training programs.

Kathy Deck, director for the University of Arkansas’ Walton College Center for Business and Economic Research, said that while the falling unemployment rate will garner headlines, the declining labor force should be of top concern.

“What’s more is that that Arkansas labor force has been shrinking, while the U.S. labor force has been growing slightly,” Deck added. “And, finally, an interesting component is that the labor force is shrinking in every single metro area of the state, not just the rural areas.”

ARKANSAS SECTOR NUMBERS
In the Trade, Transportation and Utilities sector — Arkansas’ largest job sector — employment during July was an estimated 242,300, up from 242,200 in June and ahead of the 241,100 during July 2013. Employment in the sector hit a high of 251,800 in March 2007.

Manufacturing jobs in Arkansas during July totaled 154,400, down compared to 154,800 in June and above the 151,900 in July 2013. Employment in the manufacturing sector fell in 2013 to levels not seen since early 1968. Peak employment in the sector was 247,300 in February 1995.

Government job employment during July was 215,900, up from 214,600 in June and above the 215,600 during July 2013.

The state’s Education and Health Services sector during July had 174,300 jobs, down from the revised 174,400 during June and up from 171,800 during July 2013. Employment in the sector is up 22.3% compared to July 2004.

Arkansas’ tourism sector (leisure & hospitality) employed 108,500 during July, up from 108,200 during June, and above the 105,400 during July 2013. Employment in this sector reached a high of 109,100 in March.

The construction sector employed an estimated 47,400 in July, up from 47,100 in June and above the 44,700 in July 2013. The sector is off the employment high of 57,600 reached in March 2007.

NATIONAL, REGIONAL DATA
The BLS report also noted that 49 states had unemployment rate decreases from a year earlier, and one state (Alabama, 7% in July compared to 6.5% in July 2013) had and increase. The national jobless rate during July was 6.2%, and was down from the 7.3% in July 2013.

Mississippi had the highest unemployment rate among the states in July at 8%. North Dakota again had the lowest jobless rate at 2.8%.

The July jobless rate in Oklahoma was 4.6%, up from 4.5% in June and down from 5.6% in July 2013.

Missouri’s jobless rate during July was 6.5%, unchanged compared to June and down from 6.8% in July 2013.

An unseasonably pleasant summer in Northwest Arkansas, expanding job base and growing population have helped keep home sales stable against last year’s stellar results.

Agents sold 722 homes in July across Benton and Washington counties, which was five less sales than a year ago. Total sales volume in the region topped $141 million in July, up from $140.5 million in the year ago period, according to Paul Bynum of MountData.com.

Supply and demand in the local market reached an equilibrium in 2013 with rising property values and fewer foreclosures.

“This summer has been flat. It really has not been extraordinary in terms of new home and existing home sales. But, this pace appears to be sustainable and that’s not bad given the record year in 2013,” said Phillip Taldo, broker with Weichert Realtors, the Griffin Company in Northwest Arkansas.

Taldo is also a new home builder who said that sales market slowed in the summer, but starts have been steady. Aside from a healthy relocation business, Taldo said the uptick in home prices and the low interest rates are giving more people an opportunity to sell their home and move up.

FORECLOSURES, INVENTORY SHIFTS
“The number of foreclosures continue to thin out creating more pricing power for homeowners. We are seeing prices rise at a pretty nice clip. My estimate is 5% or so for this year as a whole,” Taldo said.

Irvine, Calif.,-based RealtyTrac.com recently reported 35 new foreclosure filings in July for properties in Benton County, down 74% from the year-ago period. In Washington County there were 16 new foreclosure filings in July, down 71% from a year ago.

The local region is trending with the nation as July marked the 46th consecutive moth where foreclosure activity is down on a year-over-year basis, according to Daren Blomquist, vice president at RealtyTrac.

There were 3,672 homes listed for sale in the two-county region in July, 65 less than the prior month and flat with the year-ago, according to MountData.com. 

New homes accounted for 462 of the property listings, or about 14% of the total inventory. The new home inventory levels are up over the past year by 35% as more builders have become active in the market. A year ago, new home listings totaled 341, or about 10% of the total market.

YEAR-TO-DATE
Agents sold 4,476 homes in the first seven months of this year. Those sales totaled $837.82 million, according to MountData.com. Unit sales are up 6.4% and total volume rose 9.3% over the same period in 2013.

The gains are related to higher prices across the region and continued growth in Benton County. Benton County agents have sold 2,967 homes this year, with the combined sales value hitting $564.068 million, a median sales price of $151,823, and an average price of $190,114.

Taldo said Benton County is about twice the size of Washington County and that’s been part of an ongoing trend for several years given the larger population.

Nicky Dou, a broker with Keller William in Bentonville, said she’s having a great year despite two slow weeks to start August.

“I got four offers over the weekend. It was slow for about two weeks in August and is already picking back up,” Dou added. “I honestly don’t know if this is just how things are going for me or all agents, but I am very happy with the market this year leading into the fall and winter months.”

Dou said two homes she listed in the past week were previously listed with another agent for the previous six months.

“Both of them went under contract within the first week at the same asking price. The buyers are out there and I really believe it is all about how you get those listings out to those buyers. In my case that’s through strong Internet marketing,” Dou said.

Bynum reports it took an average of 53 days for buyers to go under contract and the sales-to-list price ratio is 97.9%, which is a sign prices are trending higher.

Agents in Washington County have sold 1,509 homes this year, compared to 1,572 in the year-ago period. Total sales volume dipped 0.5% to $273.744 million, from $275.180 million a year ago, according to MountData.com.

RISING PRICES
Bynum said in the combined the two counties the median price per square foot this year is $86, up from $82 a year ago. The median sales price of $152,000 is consistent with a year ago, with average prices skewing higher at $188,000.

Taldo expects home prices to increase in the coming months led by higher new home prices that will happen sometime in the next two years as builders are forced to develop more lots amid already very slim supplies.

“Lot prices at $40,000 won’t be the case in new developments. I can see $10,000 to $15,000 more added on the land costs of new homes, which is going to raise the price per square foot by some $10. It is going to happen, it’s just a matter of when,” Taldo said.

Home sales in the Fort Smith area continue to show growth year to date, with Crawford County's sales volume up 40.25% and Sebastian County sales volume up 7.29%.

For the first seven months of 2014, Crawford County has posted $40.314 million in sales versus $28.745 million during the same period in 2013. Sebastian County saw sales of $103.748 million so far this year versus $96.702 this time last year.

July, the most recent month sales figures were available, showed a 13.62% increase in sales for Crawford County to $6.25 million, while Sebastian County's total was down by 1.02% to $18.616 million.

Mont Sagely, the principal broker and owner of Sagely & Edwards Realtors in Fort Smith, said the sales figures for the year are a welcome change.

"That pleases me that Crawford County has started to come back because Greenwood, Alma, and Van Buren (have) been sluggish for the longest time," he said.

The rise in home values, Sagely said, also show that the economy locally is starting to pick up pace with the rest of the nation in terms of jobs and economic development.

"In the River Valley area, it's always been a lagger in keeping pace with the (national) economy," he said. "So I think what we're seeing is finally what the rest of the nation has been seeing. Like when we saw the downfall, we didn't see it as fast as the rest of the nation did. But we're finally reaping the benefits of the strong sales across the country. I think that is probably the reason why, because these two counties have always been slow to respond to the national economic trends."

Even with the improvements, he said it is still a buyers market as evidenced by median sales prices.

In Crawford County, the median sale price for a home this year is $105,000, which only represents a $1,000 increase from the same period last year. In Sebastian County, the figure has held at $115,000 since this time last year.

"There are some signs that the market is catching in certain price ranges, but overall it hasn't turned over to a seller's market by any means," he said.

What could eventually start to impact the local market is the loss of Van Buren's Rural Development Loan eligibility starting Sept. 30. Sagely said he does not necessarily think the loss is going to produce dramatic shifts in sales volume, but it would be felt in Van Buren.

Steve Echols, a mortgage lender with Benefit Bank in Fort Smith, said buyers seeking to stay in Van Buren will just need to work harder to get into a home and look at other loan options. He said the most likely alternative to the Rural Development loan would be an FHA loan.

"Probably the next friendliest is the FHA loan, which is 3.5% down versus the zero down the RD offers," he said. "Then there are also 3% down conventional loans. The main difference is the credit qualifying (for a conventional loan) is a little more restrictive."

He said cost-wise, there was not much difference in the two when factoring the lower interest on FHA coupled with its higher mortgage insurance costs relative to a conventional loan with 3% down. But for buyers in Van Buren still looking to lock in the Rural Development loan with zero down, he said there is a limited amount of time.

"The way we understand it, the submission to the Rural Development office should be made by September 30. So that would be a complete application package to Rural Development which would include an appraisal. Those take 10 days to two weeks (to complete). So I would say as September comes and as you get closer tot he 10th of the month or so, that's when you're going to have a difficult time getting the appraisal back to get it all in order for the submission. But as long as the submission is made by Sept. 30, then you are potentially in advance of the cutoff."

As for whether the loss of the Rural Development loan would hurt Van Buren and Crawford County sales, Echols said it likely would not make a huge difference.

"I think ultimately the people that need and desire an RD loan, they'll go find it. If that means going to Alma or Cedarville, they'll do that. But those that want to be in Van Buren or like communities, then they'll use an alternate loan program. I'm sure it may impact the numbers some, but ultimately where there is a will, there is a way and people will conform."

Home Sales Data (January - July)
• Crawford County
Unit Sales
2014: 352
2013: 268

Total Sales Volume
2014: $40.314 million
2013: $28.745 million

Median Sales Price
2014: $105,000
2013: $104,000

• Sebastian County
Unit Sales
2014: 781
2013: 696

Total Sales Volume
2014: $103.748 million
2013: $96.702 million

Median Sales Price
2014: $115,000
2013: $115,000

It was just four years ago that Trane laid off more than 200 at its Fort Smith facility, but production has returned and with it, so have many of the jobs lost in 2010.

According to plant manager Chris Farnsworth, the Fort Smith air conditioning factory secured a new labor contract in March of 2013 and with it, restored many of the positions lost in 2010, which at the time broke down to 197 hourly production workers and 15 salaried positions.

Trane previously employed as many as 500 as of late 2009.

"Things have really started rolling," he said. "Leading up to 2013, production was increasing. But with the new labor contract, that allowed us to bring a new line from Trenton, New Jersey, and increase the size of the labor line."

Farnsworth said Trane has also invested more than $800,000 in the Fort Smith facility while rearranging the facility to improve productivity.

"A portion of the big rearrangement efforts that we've been doing the last six or nine months has been actively clearing floor space. Right now with one clear exception, we have 65,000 square feet of clear space that was once full. That wasn't due to outsourcing (of production), that was due to taking the areas that were consuming space and using lean tools, compressing those areas, rearranging them, getting rid of waste and relocating them to other areas of the plant ..."

The open space will allow Fort Smith to possibly receive additional production lines, he said.

Regardless of whether Trane locates another production line to Fort Smith, Farnsworth said the company was looking to do additional hiring beyond the recalled employees who have returned to work.

"So currently, we've recalled everybody off the recall list. All the people we've laid off, we've attempted to return to work. Quite a few have accepted. Quite a few declined and have moved on to other jobs. But we're in a position where we're bringing on brand new hires," he said, adding that the company has brought on 29 new hires in the last month.

"Since March 2013, we've returned 100 people to work — either layoffs or new hires," Farnsworth added.

And even more positions are available for hire at Trane's Fort Smith manufacturing facility.

"We're actively looking for skilled trade people, maintenance and electricians. One is due to retirement, but a couple more are due to the new growth we've seen," he said. "We need more trade skills to keep up with the higher production volume."

The new labor contracts are structured to provide raises for individuals hired at the facility, Farnsworth said, with the senior-level employees who survived the layoffs making $18.90 per hour, while those recalled are starting somewhere between $12 and $13.80.

"The brand new hires start around $11.50 on a three year progression up to the mid-$13s. But with general wage increases along the way, they should be somewhere north of that. That would get them to $13.50 over three years and then be eligible for annual general wage increases, as negotiated (in the labor contract)."

Within the next couple of weeks following the latest round of hiring, Farnsworth said the facility should employ 230 hourly workers and 30 salaried, for a total of 260. The figure is just more than half the 2009 level of employment.

Asked to look at the future and how many more hourly workers Trane could add, Farnsworth said it was too difficult to pinpoint.

"I won't take a stab at a number, but I do believe with the productivity this facility has generate and the positive financial impact of the business, we'll continue to grow and be a presence in Fort Smith," he said, adding that any time a manufacturer is adding jobs it is a positive sign for future growth.

"This is great news for us and great news for the community."

The Fort Smith area manufacturing sector employed an estimated 18,400 in June, up from 18,200 in May, and unchanged compared to June 2013. The July metro numbers are scheduled to publish on Aug. 27.

Manufacturing employment is down almost 36% from a decade ago when June 2004 manufacturing employment in the metro area stood at 28,500. Also, the annual average monthly employment in manufacturing has fallen from 28,900 in 2005, 19,200 in 2012, and to 18,300 in 2013.