TBP May/June 2015

May/June 2015

The 2015 Legislative Session Review John Brummett Death Penalty Revisited Cong. French Hill Saving Community Banks Arkansas Travelers Baseball The History You Never Knew The Governor’s Cup Business Plan Competition

First Security’s Reynie Rutledge

Leading By Example

CENTERED IN TRUST AND LONG TERM RELATIONSHIPS. Standing from left: Dennis Hunt (Executive Vice President and Director of Public Finance), Chris Angulo, Michael McBryde, Mark McBryde, Bo Bittle, Jack Truemper and Kevin Faught Seated from left: Michele Casavechia, Lindsey Ollar and Jason Holsclaw

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Contents May/June 2015 5 Publisher’s Letter Commentary

7 State Bank Commissioner 9 66 67

Candace Franks Right-sizing Regulations The Honorable French Hill Saving Community Banks John Burris The Legislative Road Ahead Jessica DeLoach Sabin Starting a Conversation

80

Profiles

18 Attorney Robert Smith Offers

Perspective on Issues Facing Banks

24 The History of the

Arkansas Travelers

60

28 Aaron Gschwandegger Artisan/Entrepreneur

32 The Yellow Rocket Food Journey 36 2015 Governor’s Cup Competition

32

Industry

20 Banking

Examining Arkansas Bank Health

38 Trucking

A U-turn to Profitability

42 Construction

Tiny Houses Are a Big Business

46 Energy 74 76

Power Grid Operators Charging in Arkansas Health Care New Surgeon General Dr. Greg Bledsoe Business Wal-Mart’s Legal Fees Pile Up

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50 Hometown, Arkansas

Rogers Reinvesting in Downtown

67 70

Regional Northwest Arkansas The Compass Report Car Sharing in Fayetteville Northeast Arkansas

71 Delta Group Launches New Effort 72 72

in NEA ASU Courts Embassy Suites Frito-Lay Expands in Jonesboro Leadership

78 Sixth Sense: Executive Inspiration 80

Executive Q&A Jonathan Crossley Teacher of the Year

10 Cover Story: The Family Tree First Security Bank’s Reynie Rutledge and his three sons – John, Adam and Nathan – are driving the Searcy-based bank to new heights without losing its family feel.

Features

56 The Death Penalty John Brummett looks back at a major turning point in Arkansas executions with a behind-the-scenes briefing from former Attorney General Steve Clark.

60 Around the Dome in 82 Days Our review of the accomplishments – and damage done – in the recently completed 90th General Assembly’s regular session.

COVER PHOTO BY BOB OCKEN

www.talkbusiness.net

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

From the Publisher

The Task Force Session Talk Business & Politics is owned by River Rock Communications and is published six times a year. For additional copies, to be included in our mailing list, or for information about advertising, contact Katherine Daniels at katherine@talkbusiness.net.

May/June 2015 Publisher & Editor-in-Chief Roby Brock roby@talkbusiness.net Art Director Bryan Pistole DesignMatters LLC bryan@designmattersllc.com Editor Bill Paddack bill@talkbusiness.net Contributing Writers Larry Brannan Steve Brawner Jeanni Brosius Wesley Brown John Brummett Kerri Jackson Case Michael Cook Rex Nelson Casey Penn Kim Souza Michael Tilley Jason Tolbert Michael Wilkey Photographers Stephanie Dunn dunnmsteph09@yahoo.com Tim Rand pix@trand.com Bob Ocken bob@ockenphotography.com Kat Wilson katographic@gmail.com Vice President Operations Stephanie Baker stephanie@talkbusiness.net Vice President Sales & Marketing Katherine Daniels katherine@talkbusiness.net

Kudos to state legislators and Gov. Asa Hutchinson for completing the latest regular session of the General Assembly in roughly 82 days.

There will be a lot to reflect on in this session from the Rep. Justin Harris “rehoming” issue to tax cuts to workforce and prison reforms. The religious freedom and non-discrimination debates as well as the Dr. Martin Luther King and Robert E. Lee holidays also attracted significant national attention.

My vote for the dominant theme of the 90th General Assembly is the “task force” session.

There will be a yearlong working group focused on health care reform. Its mission is to wind down the private option and fold it into a larger, more comprehensive health care conversation. With a consulting group coming on board and a pending U.S. Supreme Court decision, health care will heat up as the year progresses. Depending on the outcome of that case, it’s not too far-fetched to see that a path to consensus can happen.

The Common Core task force that Gov. Hutchinson asked Lt. Gov. Tim Griffin to lead will have its hands full with public forums. The upside is that the many town halls and council meetings will allow for some passionate debate on a controversial issue – in essence, letting some of the air out of a tight balloon before it pops. The downside is that a solution that will satisfy all sides is unlikely. The issue is uber-divisive and opinions will doubtfully be persuaded off of hardened positions.

On prisons, the task force may not hit full stride until later this year. There will need to be some time for a few of the reliefs that the legislature passed to show results. As we’ve seen in the past, however, it only takes one high-profile event to throw the debate into a frenzy. Let’s hope for a calm, cool and collected summer.

And highways are also on the horizon. That working group’s biggest challenge will be to come up with solutions that haven’t already been presented as part of a blue-ribbon commission that did a lot of this heavy lifting a few years ago. Much of its work is still collecting dust on a bookshelf. With the magnitude of costs tied to highway construction, Arkansas may have to rely on a functional federal government to provide funding. We should all be concerned because highway construction has been fueling our jobs rebound in large part. Cutbacks and delays on projects will be devastating for the economic momentum we’ve been seeing.

Health care, education, prisons, and highways – these are big public policy issues that the state Legislature and the governor have yet to deal with in totality. It will be the focus of our daily coverage here at Talk Business & Politics, and I encourage you to follow our reports.

So upon reflection, the 82-day legislative session should have been one of the shorter ones in the modern era because much of the work remains undone.

Sincerely,

Printer Democrat Printing & Litho River Rock Communications 8308 Cantrell Road Little Rock, AR 72227 501.529.1737

Roby Brock Publisher & Editor-in-Chief www.talkbusiness.net

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Commentary

Right-Sizing Bank Regulation To Preserve Our Unique System

By Candace A. Franks Candace A. Franks is commissioner of the Arkansas State Bank Department and chairman of the Conference of State Bank Supervisors, the national professional association of state financial regulators.

T

he United States’ banking system is uniquely American. It is incredibly diverse, ranging from small community banks to global financial conglomerates. This diversity is not a mistake, but rather a product of our unique dual-banking system. I am concerned, however, that the current regulatory framework fails to supervise these banks differently based on their size, complexity, overall risk profile and risk to the financial system.

In my 35 years as a state regulator, it has become abundantly clear that community banks are essential to the U.S. financial system and economy.

Community banks excel at relationship lending, a business model that relies on the bank’s knowledge of its local market, citizens and economic conditions.

This makes them a vital source of credit for small businesses. In fact, community banks play an outsized role in small business lending, holding 46% of the banking industry’s small loans to farms and businesses, while only making up 14% of the industry’s assets.

The relationship-lending business model allows community bankers to offer personalized solutions designed to meet the specific financial needs of the borrower.

Regulatory right-sizing requires a process for determining how safety and soundness and consumer protection requirements can better reflect the community bank business model.

UNDUE BURDEN Community banks also operate around the nation, from the largest U.S. cities to the smallest rural markets. Did you know that one out of every five U.S. counties has no physical banking offices except those operated by community banks? Here in Arkansas there are 96 towns that have only one physical banking location. For these towns, the community banking system is the banking system.

Recent regulatory reform efforts by policymakers in Washington, D.C., have rightfully centered on addressing the problems posed by the largest, most systemically important banks. However, there is also widespread concern among regulators, policymakers and the banking industry that many of these new rules pose an undue burden for community banks.

Instead of a one-size-fits-all approach to bank supervision, we need a tailored, flexible approach that is appropriate for banks of all sizes.

Regulation must ensure safety and soundness and consumer protection, while still allowing banks to contribute to the economic stability of local communities, the state and the nation. This is what my fellow state regulators and I call “regulatory right-sizing.”

Regulatory right-sizing requires a process for determining how safety and soundness and consumer protection requirements can better reflect the community bank business model. To start this process, policymakers and regulators need to know which banks should be the focus of our right-sizing efforts. A consensus definition of community banking has proven difficult to come by, with policymakers ultimately relying upon simple asset thresholds to determine what is or is not a community bank.

OTHER FACTORS However, my fellow state bank regulators and I have found that community banks cannot be defined by simple line-drawing based solely on asset thresholds. While asset size is relevant, there are other factors.

Factors like market areas, funding sources and relationship lending are characteristics that must be considered.

Such an approach to defining community banks would provide the necessary foundation for a more appropriate regulatory framework for community banks. This definitional approach could be used as a basis for a broad range of regulatory right-sizing initiatives. With a new process in place to identify community banks, policymakers can move forward in a purposeful manner, designing statutes and regulations that are consistent with and foster a diverse economy and financial system.

My hope is such an approach will move us closer to a right-sized regulatory framework. There are significant operational and strategic differences among our nation’s banks. These differences reflect the admirable diversity of our financial system, and we must do our part to preserve our diverse and unique dual-banking system. www.talkbusiness.net

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Commentary

Congress Has Opportunity To Save Community Banks

By Congressman French Hill Congressman French Hill, R-Little Rock, represents Arkansas’ Second District. He is a member of the House Committee on Financial Services, the Subcommittee on Capital Markets and Government-Sponsored Enterprises and the Subcommittee on Oversight and Investigations.

Community banks and credit unions are vital to economic development, job creation and the overall financial stability of the communities they serve. Everyone agrees that our nation’s community banks and credit unions did not cause or contribute to the 2008 financial crisis. Yet, they are bearing much of the brunt of the regulatory fallout, largely as a result of the 2010 Dodd-Frank Act. The explosion of some 400 new regulations under Dodd-Frank, in addition to an extensive web of existing regulations, has greatly increased compliance costs and paperwork burdens and undermined the relationship banking model that gives our community institutions a competitive advantage.

While consolidation has been a trend in the industry, the overly burdensome regulatory regime post-DoddFrank has exacerbated it, and on average, one community institution closes each day.

According to the Federal Deposit Insurance Corporation (FDIC), there were over 4,000 fewer banks at the end of 2014 than in 2010. A recent study from Harvard University’s Kennedy School for Business and Government found that the market share of community banks is declining twice as fast after Dodd-Frank and attributes this decline, as well as the acceleration in bank consolidations, largely to regulatory burden. Despite what Sen. Elizabeth Warren, D-Mass., may say, community financial institutions are not “doing better than ever.”

According to industry experts, the cost of regulatory compliance as a percentage of operating costs is about two-and-one-half times greater for small banks.

EXCESSIVE REGULATORY COSTS Community banks have a long history of tailoring their products

and services to meet the needs of their customers, and they require the flexibility to be able to serve the unique needs of their communities. The Washington-knows-best, one-size-fits-all mentality is systematically ending the competitive advantage of our thousands of locally focused, relationship-driven community banks – creating a new class of “too small to succeed,” while legitimizing “too-big-to-fail.”

I have heard from community bankers across Arkansas struggling to deal with the cost, complexity, uncertainty and sheer volume that makes up this massive regulatory burden. As a former founder, chairman and CEO of an Arkansas community bank, I have experienced these negative impacts firsthand. Excessive regulatory costs and the pernicious effects of the Federal Reserve’s interest rate policies have reduced the growth and availability of capital, and healthy bank capital is what facilitates lending to American families and businesses. In other words, these regulations are not just affecting the bank’s bottom line – they are harming the customers these banks serve by removing choice and access to affordable credit and causing overall harm to the communities they serve.

Smaller institutions have a much harder time absorbing regulatory costs than larger institutions due to economies of scale, as larger institutions are able to spread costs over a greater asset base. According to industry experts, the cost of regulatory compliance as a percentage of operating costs is about two-and-one-half times greater for small banks.

As a result, many of these costs, or “regulatory taxes,” are passed along to the customer in the form of increased fees and more limited credit or product availability. Other regulations have caused consumers to lose access to services they previously enjoyed at their local banks, like free checking and overdraft protection.

LOAN APPROVAL RATES DROP New Qualified Mortgage (QM) rules from the Consumer Financial Protection Bureau (CFPB) have also made it more difficult for low- and middle-income borrowers to qualify for a mortgage. A 2013 Federal Reserve Board report found that one out of every five consumers who borrowed money to purchase a home in 2010 would not meet the continues on page 19 www.talkbusiness.net

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Cover Story

Generations In The

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Making

TALK BUSINESS & POLITICS | MAY/JUNE 2015

PHOTO BY BOB OCKEN

First Security’s Reynie Rutledge began the Searcy-based bank with help from his father. Now, his sons are carrying the torch.

By Roby Brock

T

The Rutledge family: (left to right) John, Adam, Reynie, and Nathan

here aren’t many parents capable or willing to co-sign a multi-million dollar loan with their 27-year old son to help buy a bank in a community where no one really had roots.

But Reynie Rutledge had parents who knew their son was a good investment.

Now, father to three sons who have all eventually found their way to Rutledge’s privately-held First Security Bank, the 65-year old bank chairman and CEO is watching the dividends of having his boys – John, Adam and Nathan – help build the family business into one of the largest financial institutions in the state.

“I didn’t know if any of them would join the bank,” Reynie Rutledge said in a recent interview. “But I kind of hoped that one of them would, in all honesty.”

BANKING BUCKAROO Rutledge grew up in the South Arkansas town of Smackover, a small community in Union County with a population that has hovered around the 2,000 mark since the 1920s when it was incorporated. The oil boom of that decade sparked www.talkbusiness.net

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Cover Story: Rutledge settlements that created the town about 20 miles north of El Dorado.

Smackover’s most famous residents include Arkansas football legend and NFL player Clyde Scott and a rockabilly musician named Sleepy LaBeef, whose name is befitting for the town with the mascot the Battlin’ Buckaroos.

Rutledge’s mother and father, Jeanne and NT Rutledge, found their way back to South Arkansas after meeting in Dallas. Jeanne’s father had a sawmill near Smackover and she met her future husband at church one Sunday while she was attending Southern Methodist University.

NT was the youngest of seven kids and was lucky to find himself in school at a local business college. He was a Highland Park volunteer firefighter, which afforded him free room and he worked as a dishwasher at a dormatory cafeteria, which paid for his food. He later transferred to SMU and obtained his engineering degree.

Reynie’s father was an encourager and couldn’t have been disappointed that his son

earned a degree in industrial engineering from the University of Arkansas. The younger Rutledge then stayed an extra year to land his MBA and protect his younger future wife, Ann, from potential suitors.

Reynie interviewed with companies like IBM and AT&T for engineer-related jobs, but he wasn’t sure he wanted to take that route.

His father suggested he talk to a local Smackover banker, whose advice was to give banking a try. “What you learn will make a difference and you’ll be dealing with bankers for the rest of your life,” was the advice Rutledge recalls.

So true.

SEARCY CALLING Rutledge found employment in the banking world in the early 1970s with Worthen Bank in Little Rock as a loan officer. It was a good place for a young banker to cut his teeth and the connection would later prove instrumental in Rutledge’s long-term plans.

After three years at Worthen, Rutledge

took a job in Springdale at First State Bank, but that only lasted nine months. An opportunity had presented itself.

E.D. Yancey was looking for a buyer for a small Searcy bank called First Security, which had been around since the early 1930s. Just 27 years old, Reynie Rutledge convinced his father and Worthen Bank to finance and help guarantee the loan, which was more money than Reynie ever imagined he could borrow.

“To say that my parents went a little overboard or perhaps stepped a little bit over the line than they should have by letting me do that is probably an understatement,” Rutledge says today.

Negotiations began on July 4, 1977, and the deal closed on October 1.

Rutledge has taken the bank from its meager assets of $46 million in 1977 and six acquisitions later – including the buyout of bond brokerage house Crews and Associates – First Security’s holding company, First Security Bancorp, boasts assets of more than $4.9 billion today.

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Cover Story: Rutledge With more than 1,000 employees and over 75 locations statewide – and growing – you could say NT and Jeanne Rutledge got a pretty good return on their investment.

THREE DIFFERENT PATHS Reynie and Ann Rutledge are blessed to have three sons, John, Adam and Nathan.

All three boys have taken circuitous routes to the First Security hallways.

John, the oldest at age 36, didn’t take an interest in the bank until close to the end of his college studies at the University of Arkansas.

“I was going to look at every other option to figure out and make sure this was the right option versus assuming this was the option,” the regional market president says with confidence.

As kids, all of the boys had jobs ranging from changing tires to a lawn service. They were told they couldn’t come to the bank for a job except under one condition.

“You can’t come to work at the bank

unless you want to learn,” John recalls his dad’s policy. As John took higher-level business courses at school and became more intrigued about the banking world, he finally attained “learner” status and began his banking career.

Adam, age 34, runs the Northwest Arkansas market for First Security. He thought about real estate for awhile, but by his junior year of college, he felt the calling to join the family’s banking business.

“At some point in time, you hit a maturity and realize the opportunity to stand on some shoulders,” he said. “You want to be a part of that.”

A shy youngster, Reynie taught Adam (and his brothers) how to look someone in the eye and shake their hand. Adam laughs now that it takes 20 minutes to get to their seats at Bud Walton Arena because his dad is working the customer circuit.

Nathan is the youngest brother, a 31-year old lawyer who was recently named senior managing director at Crews & Associates.

He’s held a variety of roles at the big bond house and will now oversee the firm’s public finance operations.

He didn’t lean toward banking until his senior year when he was sitting for the LSAT to get into law school. He says that he had an awareness that his family’s life had been blessed and that “we grew up having way more than we ever deserved.”

There is a desire to give back to the family business and state that has provided for them.

“I think all of us had a sense of wouldn’t it be fun to keep building on what they’ve done so well,” he said referring to his father and grandfather.

All three sons have absorbed the company culture: service to the communities they serve. It’s probably part of their DNA. In our boardroom conversation, Reynie talks about learning about each community the bank serves, not acting as if they know it all when they enter a market.

Adam explains that leadership among

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Cover Story: Rutledge employees takes place at all levels; all three sons have served in a variety of roles from bank teller to business development.

John describes the commitment to the customer whose needs are “first and foremost.”

“If you’ll do what’s right and do what’s needed, then you won’t have to worry about the bottom line. It’ll take care of itself,” he contends.

Nathan said all of these qualities are characteristics that anybody in business should follow. “Work hard. Do what’s right. Smile.

Have fun doing what you’re doing. Treat everybody in the room with respect,” he says, noting that he didn’t learn these traits in school. He learned them from his father.

“He didn’t tell us. We watched it,” he confides.

BANK CHANGES You can’t get into a room with four knowledgeable bankers and not shoot the breeze about the current banking climate.

The economy still lacks firm confidence.

Interest rates are still too low. Regulations are killing smaller banks.

Reynie Rutledge was chairman of the Arkansas Bankers Association when the Dodd-Frank legislation was passed in 2010.

“I lobbied very hard with our delegation and lost,” he says. He once thought that only banks with $500 million in assets could absorb the compliance overhead of the federal regulatory measure, but now he thinks that number might be closer to $1 billion in assets. If that estimate ultimately pans out, Arkansas would be reduced to only seven state-chartered banks in that category versus the 109 that exist today.

“I hope I’m wrong,” he confesses. “But it’s going to be difficult.”

Reynie Rutledge believes the Feds will eventually raise interest rates and when they do, he says it will be a good thing.

“I think it will be slow,” he says of the potential uptick, unlike the Greenspan years when each Fed Open Market Committee meeting resulted in interest rate moves. “I view it as being a positive move. Depositors

need an increase.”

Adam, who has witnessed the rebound of the red-hot Northwest Arkansas market, says he’d prefer a steadier pace in the region.

It’s more predictable and sustainable.

“We don’t need it to heat up much more than it is,” he warns, recalling the crash that ensued after the housing market bubble burst in the Great Recession.

John agrees that lower gas prices, decent housing statistics and improving unemployment numbers are a reason for cautious optimism, but he worries that it doesn’t “feel sustainable.” He brings the whole thought of banking and the economy back to the customer.

“Banking is a reflection of the economy in which it’s in,” he says. “So we’re only as good as our customer base and our customers are only as good as the economy they have to perform their business, to get jobs and have the opportunity for upward mobility to create wealth and income.”

Sounds like something his father – or his father’s father – would say.

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A NON-BANKER’S PERSPECTIVE Attorney Robert Smith is critical of the new regulatory environment that financial institutions face and is concerned about the dwindling number of small-town banks.

By Talk Business & Politics Staff Robert Smith is a partner in the Friday, Eldredge & Clark Law Firm’s Mergers & Acquisitions Practice Group. His corporate practice focuses on representing individuals, companies and financial institutions in general business, transactional, securities and regulatory matters.

He has handled transactions in a variety of industries, including the banking, broadcasting, retail, manufacturing, real estate, technology and health-care industries.

In the banking area, Smith advises clients on merger and acquisition transactions, branch purchases, lending, regulatory compliance and capital raising activities, including government investment programs.

We recently asked him his thoughts on the effects regulations are having on the banking community as well as what kind of future he sees for smaller banks in Arkansas.

TB&P: Arkansas bank profits have been consistently higher over the past several years, according to FDIC statistics, yet we continue to hear about regulatory burdens squeezing profits. How have you seen the bigger banks adapting versus the smaller banks to these regulatory burdens and is it as bad as we hear?

Smith: While bank profits have been higher, it is in spite of new regulations.

Banks had nowhere to go but up after the impact of 2008 and 2009. Although you could not convince Elizabeth Warren of this, it is ridiculous to say that the new regulatory environment does not disproportionately

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Attorney Robert T. Smith PHOTO BY DERO SANFORD

impact community banks as compared to their larger rivals. Over the past several years, the regulatory changes have slowed banks’ ability and willingness to make mortgage loans, in addition to the significant increase in compliance costs.

It is also short sighted to see the rebound in profits and declare that community banks have successfully withstood the regulatory avalanche. I recently read that the average community bank (defined as less than $1 billion in assets) has fewer than 40 total employees. That includes everybody, tellers, secretaries, loan officers, etc. The economies of scale simply do not exist to allow those smaller institutions to maintain profitability at a level that their shareholders and potential investors will accept. The time horizon to assess the impact of this new environment has to be longer than just a few years.

Your question asked how larger banks have adapted. I have observed that they are simply in a better position to address the compliance issues because they have the capacity to add personnel, training, etc. This then obviously puts enormous pressure on small banks, leading – in many cases – to the decision to sell. Arkansas is fortunate to have many well-run institutions. The larger institutions (several billion dollars plus) have looked around the Southeast region and taken advantage of acquisition opportunities. Small well-run banks have taken advantage of the opportunity to grow above the $500-million and $1-billion levels through mostly in-state acquisition.

TALK BUSINESS & POLITICS | MAY/JUNE 2015

TB&P: We’ve seen significant merger and acquisition activity in the market. What type of M&A activity do you sense we will see more of in the next year to three years?

Smith: I believe the pace will continue to slow when compared to the past four to five years of activity in Arkansas.

However, we will still see plenty of active interest in evaluating deals (and many behind the scenes as banks test the waters and search for acquisition partners). The Bank Director publication recently released an M&A survey indicating that around two-thirds of banks believe that the current environment for transactions is more favorable than last year. One of the factors cited was continued improvement in credit quality. While this makes the due diligence process less of a headache, many smaller institutions still have unrealistic visions of higher valuations relative to book value that will make a transaction less likely.

The Federal Reserve also recently revised its policy regarding small bank holding company acquisitions that will expand financing options to more institutions. The Fed’s Small Bank Holding Company Policy Statement, adopted in 1980, has applied to holding companies with consolidated assets of $500 million and less. Institutions of that size are allowed to incur higher levels of acquisition indebtedness than permitted for larger companies. Last month, the Fed increased the asset level to $1 billion, thereby allowing more bank holding companies to debt finance up to 75% of the

purchase price of a target bank.

TB&P: Do you have any prediction as to what may happen with some of the smaller banks in Arkansas – ones with aging boards, shrinking loan activity and/or deposit base, smaller communities losing population? Will someone buy these banks or do they shrink to the point of closure?

Smith: Having grown up in a small town in Southwest Arkansas, I share the concern of the dwindling number of small-town banks. These institutions serve an important role in the community by providing credit access to otherwise unserved borrowers and supporting local schools and community groups. We have a surprisingly high number of institutions in the state that serve only one or two small towns.

Your question identified a significant problem relating to aging boards. In this environment, any community banker can attest that it is far more difficult to recruit new board members that do not either own a significant stake in the bank or

have some other associated family history with the institution. Director liability concerns are more prevalent now than seemingly ever and for good reason.

Regulators too often apply 20/20 hindsight to a board’s actions.

Compounding the board issue is an increasing number of absentee owners. As family held shares pass to later generations, many of whom have moved out of the local community, there is simply less involvement and concern for the well-being of the bank and the local community. When considering a sale, in my experience these detached shareholders often have wildly unrealistic visions of the value of the bank’s franchise, which further exacerbates the problem in attempting to structure and complete a transaction.

A few positive trends may be at work in Arkansas, however. We are seeing a number of small bank clients working to grow to reach the $500-million or $1-billion level to achieve some economies of scale. There are also instances in which investor groups

desiring to enter the banking industry have located a well-run small bank looking to inject capital and build out the bank’s market by branching into other areas. Although the freeze on de novos has begun to thaw, the reality is that it is faster, simpler and more likely to obtain regulatory approval for investors to acquire an existing bank than start a new charter.

I hate to consider that we would see small banks simply wither out of existence. I believe this is unlikely given two factors that would ultimately impact valuations in those situations. First, at some point (in most cases), shareholders will see the handwriting on the wall and look to realize the best return available. While the multiple may not be as high as hoped for, even a limited return on investment would be better than the alternative. Secondly, the regulatory agencies are good at keeping tabs on institutions headed in the wrong direction.

For a truly troubled institution, they can exert a significant amount of influence when considering the bank’s options.

Commentary

Congress Has Opportunity To Save Community Banks

By Congressman French Hill underwriting requirements for a QM. Loan approval rates have significantly decreased due to these new, “check-the-box” underwriting standards, with one Arkansas bank noting a greater than 40% decrease in loan approvals. Mortgage documents that previously totaled 15 to 20 pages now exceed 250. It is not surprising that community banks are exiting residential lending altogether due to the complexity and uncertainty in the QM – now earning the nickname “Quitting Mortgages” – regulations.

Across the industry, community banks provide the majority of agricultural loans, over half of the small business loans and account for almost half of the commercial real estate lending. Regulations that reduce a bank’s ability to extend credit reduce opportunities for the creation of new businesses and jobs, and unfortunately, small business lending has decreased since Dodd-Frank. In addition, according to the FDIC, almost one out of every five U.S. counties has no physical banking

continued from page 9 offices other than those operated by community banks. Who will serve these markets when the local institution shutters its doors?

This Congress has a real opportunity to find common ground and provide relief to these institutions that are so valuable to small communities across Arkansas and America. I am proud to serve on the House Committee on Financial Services, and my priority is working toward a more commonsense, streamlined regulatory system that does not unduly burden community banks. Making the CFPB more transparent and accountable, requiring cost-benefit analyses of the impacts of regulations, focusing on business characteristics instead of arbitrary thresholds and redefining the rural banking market to reflect reality are just a few places to start.

I look forward to working with my colleagues on solutions to save our community banks, and thereby preserve consumer choice and competitive pricing. www.talkbusiness.net

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Industry PHOTO: SHUTTERSTOCK

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Turning a Nice Profit Income rises by 14% in 2014 for Arkansas’ larger banks.

By Kim Souza

COURTESY OF THE CITY WIRE

C

ommunity bankers across the Natural State enjoyed a profitable 2014 accruing net income of $810 million among the 109 institutions. Profits rose from $707 million a year ago, according to the Federal Deposit Insurance Corp.

The FDIC splits the banks into two categories – those with less than $100 million in assets and those above $100 million. There were 28 banks in the state in the small bank category and together their net income totaled $18 million as of Dec. 31, 2014, up from $15 million in the year-ago period.

Small banks saw their deposits shrink to $1.551 billion, down from $1.803 billion.

Assets also decreased 12% to $1.677 billion among the 28 small banks last year. Analysts have said the small banking segment is having the toughest time handing the increased costs associated with burdensome DoddFrank regulations.

Most of the smallest banks are the last of a dying breed, with family-owned and mostly rural banks having the toughest times covering regulatory costs, according to Gaines Dittrich, a banking analyst and founder of Joplin, Mo.-based Dittrich & Associates. He had said in 2014 that there would be more consolidations fueled by the higher compliance costs related to Dodd-Frank.

SMALL SURVIVORS Smaller banks in Northwest Arkansas appear to be carving out a niche market amid an onslaught of competition from larger banks and non-bank entities introducing financial products.

Just barely over the $100 million level, Today’s Bank is one of the more profitable institutions in the region and state. With $102.66 million in assets, the bank reported net income of $2.63 million last year, producing a return on asset ratio of 2.56%. The

bank’s performance improved from $1.109 million in profits in 2013 with a ROA of 1.15%. Today’s Bank President Larry Olson said 2014 was a strong year, but he doesn’t expect a repeat performance in 2015.

“While we expect to have a decent 2015, it probably will not be as strong as last year.

Reason being, we are expanding into the

“We are forecasting growth this year building gradually on the momentum that began a couple of years back.”

– Parkway Bank of Rogers President

Bob Taylor Springdale market this year, and will have additional fixed asset and staffing costs associated with that,” he said.

Based in rural Huntsville, Today’s Bank had its largest branch in Fayetteville but has broken ground on a new branch in Springdale that will be the fifth location for the bank that operates two branches in Huntsville and two in Fayetteville.

“The general business market continues to pick up speed. We are experiencing solid

deposit and loan growth opportunities. It seems small businesses are now more willing to expand and/or make capital expenditures, which create financing demand,” Olson said. “I believe the small businessmen/ women have been waiting on the sidelines for the last few years trying to get a sense of where the economy is going; but now feel better about the economy and think it is a safer time to make some strategic moves – notwithstanding the seemingly continued gridlock coming out of Washington.”

Parkway Bank of Rogers is happy with its profits. President Bob Taylor said profits are improving along with the overall economy.

The bank reported net income of $718,000 for 2014. In 2013, the bank showed net income of $1.476 million. Taylor said tax liabilities from previous years hurt the bottom line in 2014, but the good thing is that profits are already stronger year-over-year in the first two months of 2015.

Credit losses for the bank decreased to $61,000 last year, which was down from $465,000 in 2013. Non-performing loans were reduced to $578,000, down from $1.370 million in 2013. Taylor said loan demand is decent and deposits are up. The bank has grown its assets to $123.537 million, the largest it has been in five years.

“We are forecasting growth this year building gradually on the momentum that began a couple of years back,” Taylor said.

“The major reason profits are improving for the banking sector is that less money is being set aside for loan loss reserves. The lending climate is very competitive. We are a boutique bank offering four to five products and we don’t try and compete with the larger banks. We are finishing up on a couple of vendor-related projects in Bentonville and are finding the construction lending market pretty good right now.” www.talkbusiness.net

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Industry: Turning a Nice Profit Parkway Bank has one branch in Bentonville and two branches in southern Arkansas in Monticello and Portland. Taylor said deposit growth is strong in southern Arkansas and loan demand is better in Northwest Arkansas. About 70% of the bank’s deposits are in the southern branches and about 65% to 70% of the loans made by the bank are for projects in Northwest Arkansas, he added.

LARGER BANKS The majority of banks in Arkansas (81) have more than $100 million in assets. This group had net income of $792 million as of Dec. 31, 2014, rising 14.6% from the $691 million reported in the year-ago period.

“The banking industry continued to improve at the end of the year,” FDIC Chairman Martin Gruenberg said in a statement.

“Community banks across the country performed especially well during the fourth quarter. Their earnings were up 28% from the previous year, their net interest margin and rate of loan growth were appreciably higher than the industry, and they increased

their small loans to businesses.”

The largest bank based in Arkansas is Arvest, though the bank also does business in neighboring states. Arvest reported net income of $108.982 million for 2014.

Profits declined 14% from $126.873 million reported in 2013. The bank’s return on assets was 0.74% to end 2014, down from 0.92% in 2013. That said, credit losses were trimmed to $15.28 million, down from $28.22 million in the prior year. Non-performing loans were also reduced to $125.85 million, down from $214.215 million in 2013. Arvest had assets of $14.75 billion at the end of 2014, up from $13.8 billion to end 2013.

Mike Jacimore, sales manager for Arvest Bank’s Fort Smith and River Valley market that runs from Russellville to Sallisaw, Okla., said loan growth in that large region is up from a year ago.

“Mortgage loans and business loans are growing in this market as our deposits are also picking up thanks to a better economy,” he said.

He said margins have been compressed

for some time given the low-interest rate environment and he expects more of the same this year as long as rates stay down.

“Consumer savings are picking up some and at the same time we saw personal consumer loan demand higher in January and February to start this year compared to the prior year,” Jacimore said. “The lower fuel prices have been a positive for consumer attitudes so far this year.”

Fort Smith-based First National Bank Corp. operates in Fort Smith and Northwest Arkansas. This large bank grew its assets to $1.182 billion, up from $1.052 billion to end 2013. The bank reported net income of $15.665 million, down slightly from $16.786 million reported in 2013. Credit losses rose to $586,000 in 2014, which rose more than 100% from 2013.

The bank still commands a respectable return on assets of 1.32%, as 1% is the benchmark for banks in normal economic climates. First National Fort Smith President Sam Sicard said loan demand is improving, but he still believes the bank’s customers are somewhat cautious.

“It does appear that savings have improved due to the drop in gas prices. The latest national reports indicate the savings rate has improved over the last few months.

Total deposits at First National Bank of Fort Smith have also increased over the last few months,” Sicard said.

He said banks have become more profitable over the past couple of years thanks to a stronger economy and the reduction in loan loss provisions. However, margins remain tough to expand, and that will likely be the story in 2015.

“I believe margins will continue to be compressed in 2015 due to the large number of willing lenders and with borrowers being more cautious than they were before the Great Recession,” Sicard said.

IN THE MIDDLE Community banks with assets between roughly $300 million and $500 million fared well last year and those bankers in Northwest Arkansas are optimistic that 2015 will be better.

Signature Bank and Legacy Bank formed ahead of the Great Recession, with each

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

heavily investing in commercial real estate before the bust in 2008. Each bank has returned to profitability and shaken off enforcement actions from regulators. Signature Bank remains under a “memorandum of understanding” after having the stricter Consent Order removed by the FDIC in December.

Springdale-based Legacy National Bank reported net income of $2.087 million for 2014, up slightly from $2.028 million in 2013. The bank grew assets to $296 million, a gain of 11.3% from the prior year.

The bank reduced its credit losses by 81% year-over-year and its real estate owned amounted to $5.239 million at the end of 2014, down from $7.395 million at the end of 2013.

Legacy CEO Don Gibson said the bank budgeted higher profits for 2015 and they are off to a good start being slightly ahead of budget for January and February. He also mentioned tighter margins from low interest rates, something he expects will continue through most, if not all, of 2015. Gibson said the bank has seen its compliance costs more than double in the past year to comply with Dodd-Frank regulations.

“Increased capital requirements will be an issue if [Dodd-Frank is] not backed off which is a negative for the consumer because available monies for lending will be pulled back into capital,” Gibson said.

Fayetteville-based Signature reported $2.306 million in net profits for 2014, a 120% improvement over the $1.044 million reported in 2013. The bank showed assets of $488.9 million at the end of 2014, down slightly from the $490 million reported at the end of 2013. This bank continues to work through its troubled loan portfolio from a few years ago. Credit losses were $3.4 million, down slightly from the $3.7 million reported in 2013.

Signature still holds $17.927 million in real estate, a large amount for the bank, and it is an amount that is relatively flat with a year ago. Signature Bank President Gary Head said that an improving Northwest Arkansas will help reduce the real estate holdings. He said that since the December financial reports, the bank has moved more of that property off the books.

“We had several lots in West Fork on our books for five years with no offers, but now they are selling,” Head said.

He expects 2015 to be better than 2014 for Signature Bank as loan losses are reduced.

“Our 109-year-old bank in Brinkley had a tough time last year with farm losses. It was the worst year in some 45 years of farming according to one customer,” Head shared.

“We are standing by those farmers as they work to restore their profits in 2015.”

Across Arkansas.

Across America.

He likes the prospects in Northwest Arkansas and noted that the major employers are doing well. Head said the fierce banking competition in Northwest Arkansas is good for businesses and consumers alike.

“Homebuilding, single and multi-family still have some room to run in this market because there is hardly a house to rent and apartment occupancies remain low as the University of Arkansas continues to grow,” Head said.

Charles Nabholz Board Member CHI St. Vincent

Chairman Emeritus The Nabholz Group

CHI St. Vincent leads the way to better health.

Our founders envisioned better healthcare, a community where innovation, compassion and world-class outcomes would be the standard of care. Over 127 years later, CHI St. Vincent has realized the vision.

U.S. News & World Report ranks CHI St. Vincent Infirmary in Little Rock as the number one top-performing hospital in Arkansas, as well as a high-performing hospital in geriatrics, nephrology, neurology and neurosurgery, orthopaedics, and urology.

It’s also the first and only hospital in Arkansas to earn Magnet® Recognition for excellence in nursing leadership, clinical practice, innovations and positive outcomes.

With top rankings and top-rated physicians in the country, CHI St. Vincent is building a better future. Just imagine what we’ll do next.

www.talkbusiness.net

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Profiles Service PHOTOS COURTESY OF ARKANSAS PARKS & TOURISM & DICKEY-STEPHENS PARK/ARKANSAS TRAVELERS

A Rich History The distinctive Arkansas Travelers franchise, dating back to 1895, is at home in the terrific Dickey-Stephens Park.

By Rex Nelson

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

T

he tradition of professional baseball in Central Arkansas dates back 120 years.

But few of the fans who show up at Dickey-Stephens Park along the riverfront in North Little Rock this spring and summer will know that the Arkansas Travelers have played on only three fields in those 120 years and are one of the few teams in professional sports in which fans were able to buy ownership shares.

The Travelers were also the first professional team to be named after an entire state.

That occurred in 1957 when the team’s name was changed from the Little Rock Travelers to the Arkansas Travelers.

And the Travelers also are among only a handful of minor league baseball teams to have a museum. Of course, few minor league teams have the rich tradition of the Travelers.

It’s a franchise that’s unique in the annals of professional sports.

The Dickey-Stephens museum contains artifacts ranging from the team’s 1901 charter into the Southern Association to all team photos from its years as an affiliate of the St. Louis Cardinals (1966-2000) and the Los Angeles Angels (2001-present). Visitors to the museum can learn about team officials, players and fans – Ray Winder, Judge William Kavanaugh, Jim Elder, Ferguson Jenkins, Jim Bunning, Travis Jackson, O.C. Otey and even superfan Walter “Hookslide” Bradshaw.

There are baseballs, game equipment, uniforms and photos of Kavanaugh Field and Ray Winder Field. There are team photos from 1901, 1903, 1904 and 1905. Through the years, people have donated items ranging from Western Union telegrams to player contracts, baseball cards and game tickets.

Considering the instability that infects so many other professional sports teams, it’s amazing that for parts of three centuries this team has had just the one nickname and played on just three fields.

‘SQUAREST MAN IN BASEBALL’ The Travelers first played in the Southern League in 1895. Other league members were Atlanta, Chattanooga, Memphis, Nashville, Evansville, Montgomery and New Orleans.

The Travs posted a 25-47 record in their inaugural season. After the Southern League folded, professional baseball was absent

in Little Rock for five years. The Travelers returned in 1901 with the formation of the Southern Association and finished second, just one game behind Nashville. They were second again in 1902.

Enter William Marmaduke Kavanaugh, an Alabama native and the son of a minister.

Kavanaugh moved to Clarksville in Johnson County following his graduation in 1885 from the Kentucky Military Institute. He worked for a banker and merchant there before moving to Little Rock in 1886 to work for the Arkansas Gazette. He was the Gazette managing editor from 1890-96.

After leaving the newspaper business, he

“I knew what we wanted to call this park before there was any certainty we would be able to get it done.”

– Warren

Stephens was the Pulaski County sheriff for four years and the Pulaski County judge for another four years. In 1913, the Arkansas Legislature selected Kavanaugh to finish out the term of deceased U.S. Sen. Jeff Davis. He was even a member of the Little Rock School Board for a dozen years.

In 1902, Kavanaugh was asked to become the Southern Association president. Fellow board members of the National Association of Baseball Clubs often would refer to him as “the squarest man in baseball.” Poor attendance and financial difficulties caused the Travelers to drop out of the Southern Association as the 1910 season approached,

but Kavanaugh continued to work as league president. He never gave up hope that professional baseball would return to Arkansas’ capital city.

TRAVELERS COME BACK Kavanaugh announced the return of the Travelers on Feb. 20, 1915. He died the next day following what was described as an hour-long attack of acute indigestion. He was just 48. West End Park, the Travelers’ home, was renamed Kavanaugh Field. When the ballpark closed in 1931, the property was sold to Little Rock High School (now Little Rock Central). Quigley-Cox Stadium is now at that location. In 1936, Kavanaugh Boulevard in Little Rock was named in honor of the man some had called “Arkansas’ foremost citizen.”

Kavanaugh didn’t live to see the Travelers’ first championship, which came in 1920.

The team finished the season with an 88-59 record. In their final season at Kavanaugh Field in 1931, the Travelers attracted 113,758 fans, the second-highest attendance since that 1920 title. Land near the Arkansas State Hospital was given to the Travelers by the city in 1932, and Travelers Field became the team’s second home.

The stadium was renamed for Winder in 1966. Winder had worked as a ticket taker for the Travelers in 1915, eventually rising to the rank of general manager. During his more than five decades with the team, Winder had to use extreme tactics from time to time to keep professional baseball in Arkansas.

After attracting fewer than 68,000 fans during a 77-game home schedule in 1958, the Travelers moved to Shreveport for the 1959 season. Just as had been the case with Kavanaugh decades earlier, Winder never lost faith that baseball would return. The Little Rock team returned to the Southern Association in 1960 following the purchase of the New Orleans Pelicans.

Minor league baseball teams have become a hot commodity in recent years. It’s not the big leagues, but it is big business with teams regularly being sold for millions of dollars and often moving to other cities. Thanks to a decision Winder made 55 years ago, fans of the Travelers don’t have to worry about their club being sold and moved outside of Arkansas. www.talkbusiness.net

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Profile: Dickey-Stephens Park Winder formed the Arkansas Travelers Baseball Club, Inc., in 1960 and led a public stock drive to buy the New Orleans franchise. Each share of stock in the Travelers was worth $5. The price of that stock has never changed, and all dividends go back to the club. There are more than 2,000 stockholders, and the Travelers don’t accept public requests for stock ownership. In other words, it would be almost impossible for an outside entity to buy the team. In that sense, Winder knew exactly what he was doing.

The Southern Association was on its last legs, and Winder again had to scramble. The Travs were scheduled to play in the Class AAA American Association in 1963, but that league folded prior to the beginning of the season. The Travelers played instead in the Class AAA International League in 1963. In 1964-65, Arkansas was in the Class AAA Pacific Coast League as a Philadelphia Phillies affiliate, making trips to places such as Salt Lake City and Portland. The move to the Texas League in 1966 brought stability.

THE VALENTINE YEARS Little Rock native Bill Valentine, who had worked as an American League umpire from 1963-68, became the Travelers’ general manager in 1976. Valentine had grown up within walking distance of Travelers Field, where he would sort soft drink bottles before games, shag foul balls during games and retrieve seat cushions after games. In September 1968, Valentine was informed by Joe Cronin, the American League president, that he had been fired along with umpire Al Salerno. Valentine and Salerno had been trying to form a union of AL umpires.

Valentine returned to Little Rock, where he worked for the Arkansas Republican Party, did radio and television sportscasts and refereed college basketball games. In Valentine’s first year as general manager, attendance at Traveler games increased 34%.

Valentine gave away thousands of tickets to kids and held events such as midget wrestling to attract fans. He served as the team’s general manager until 2007 and remained as the club’s executive vice president for two more seasons before retiring in March 2009.

Valentine died on April 26 at age 82.

The Travelers hosted their first game at

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Dickey-Stephens Park on April 12, 2007.

Warren Stephens, the youngest son of the late financier Jack Stephens, donated the land along the Arkansas River for the stadium. North Little Rock voters then approved a temporary sales tax to fund the facility.

During a groundbreaking ceremony in late 2005, Warren Stephens announced the park’s name.

“My father and uncle loved the game of baseball and cherished their relationship with the Dickey family,” he said that day.

“There are four good men smiling about this project and being able to keep baseball alive and well in Central Arkansas. There was something pure about their love of the game and the relationship they shared. I knew what we wanted to call this park before there was any certainty we would be able to get it done.”

The Dickey brothers had worked for Witt and Jack Stephens at Stephens, Inc., after their baseball careers ended. Jack Stephens had far more sports involvement through the years than his older brother. Witt preferred talking politics. He also loved spending weekends on his family farm at Prattsville in Grant County. Jack, meanwhile, was inducted into the Arkansas Sports Hall of Fame in 2000. He became only the fourth chairman of the Augusta National Golf Club at Augusta, Ga., in 1991 and served in that role until 1998.

Jack Stephens had become a member at Augusta in 1962 and joined the executive committee in 1975. In November 1999, he made a $5 million gift to the First Tee, a national youth golf organization. He also gave $20.4 million to the University of Arkansas at Little Rock to build the Stephens Arena, the university’s on-campus basketball facility that is among the finest arenas of its size in the country.

MORE THAN JUST A CATCHER The Stephens brothers enjoyed the company of the Dickey brothers. With all due respect to former Baltimore Orioles’ great Brooks Robinson, Bill Dickey just might be the best baseball player to have come from Arkansas. He was a member of the inaugural class of the Arkansas Sports Hall of Fame in 1959.

TALK BUSINESS & POLITICS | MAY/JUNE 2015

The other members of that first class were Lonoke native and famed New York Giants football player and coach Jim Lee Howell, Hendrix College coaching legend Ivan Grove, women’s basketball star Hazel Walker and University of Arkansas football All-American Wear Schoonover. Some baseball historians consider Bill Dickey the best catcher in the game’s history. Sportswriter Dan Daniel once said, “Bill Dickey isn’t just a catcher. He’s a ballclub.”

Dickey wasn’t born in Arkansas, but he always considered himself an Arkansan. He was born near the Arkansas line in northern Louisiana at Bastrop. When he was 3 years old, his family moved to Kensett in White County, the community that produced another nationally famous Arkansan, Congressman Wilbur Mills, the longtime chairman of the powerful House Ways and Means Committee. The Dickey family moved to Little Rock when Bill was 15. He played for Little Rock College, a Catholic school, in 1915 and also played for a semipro team at Hot Springs. A scout for the St. Louis Cardinals was sent to Hot Springs to sign Dickey.

“The scout’s car had a flat tire,” Bob Razer writes for the Encyclopedia of Arkansas History & Culture. “The delay allowed Lena Blackburne, manager of the Little Rock Travelers, to sign Dickey before the scout arrived. This was an era when any team – not just major league teams – could sign players to contracts. Dickey split the 1926 season between the Class C Muskogee Athletics in the Western Association and the Class A Southern Association’s Little Rock Travelers.

In 1927, the Travelers lent the catcher to the Jackson Senators, a Mississippi team in the Class D Cotton States League.

“Because the Little Rock club had a working agreement with the White Sox, most major league teams assumed Dickey had signed a contract that gave the White Sox the option of buying it. Such an arrangement was common during much of baseball’s history. But Dickey had not signed such a deal, and Chicago failed to press any advantage it might have had with the Travelers. A New York Yankees scout was not so hesitant. After watching Dickey play, the scout urged his bosses to buy Dickey’s

contract, saying, ‘I will quit scouting if this boy does not make good.’’’

in 1949 as a coach under Casey Stengel and stayed with Stengel through the 1957 season. Bill Dickey was elected to the Baseball Hall of Fame in 1954.

His brother, “Skeeter” Dickey, played for the Boston Red Sox in 1935-36 as a backup catcher. He also was a backup catcher for the Chicago White Sox in 1941-42 and 1946-47.

His best season was 1947, when he appeared in 83 games while hitting .223 with one home run, six doubles and 27 RBI. He had a career average of .206 in six major league seasons.

ALL-STAR AND ALL THAT The scout needn’t have worried. Dickey was assigned by the Yankees to the Travelers for the 1928 season, but he was moved to New York later in the season. He became the Yankees’ regular catcher in 1929 and batted .324. His longevity from that point forward was amazing. Dickey played for the Yankees until 1946. He was an All-Star selection in 1933, ’34, ’36, ’37, ’38, ’40, ’41, ’42, ’43 and ’46.

Dickey hit more than 20 home runs with FAREWELL TO RAY WINDER FIELD more than 100 RBI in four consecutive sea Despite the promise of a new park for the sons from 1936-39. His 1936 batting average Travelers named after the Dickey brothers of .362 was the highest single-season average and the Stephens brothers, there were tears ever recorded by a catcher until Mike Piazza in a lot of eyes on Sunday afternoon, Sept. 3, of the Los Angeles Dodgers tied the record in 1997 and Joe Mauer of the Minnesota Twins broke it in 2009 by hitting .365. Dickey’s lifetime batting average was .313.

He struck out just 16 times in 1936.

“While Dickey excelled at two of the skills desired in a catcher – durability and hitting – he was equally known for his defense, throwing arm and the art of knowing how to pitch batters to get them out,” Razer writes. “In 1931, he became the first catcher in histoRay Winder Field, former home of the Travelers. ry to go an entire season with no passed balls. He was also one of the first catchers to adopt a one-handed catch2006. More than 8,000 people turned out ing technique, a technique more difficult in that day to say farewell to the place the team Dickey’s day due to the small, less flexible had called home since 1932. catcher’s mitts in use then.”

As one fan later wrote, “I really believe Dickey’s best friend on the Yankees was that a ballpark has a unique way of taking us Lou Gehrig. Dickey was the only Yankee back to the best times of our lives, strengthteammate to be invited to Gehrig’s wedening the connection between generations. ding and the first teammate Gehrig told of I know that I never go by the site of Ray the disease that would end his life. Dickey Winder Field without remembering the played himself in the movie about Gehrig, wonderful times there as a child with my “Pride of the Yankees,” which starred Gary dad, as well as my wife and children many Cooper. years later.”

Dickey served in the Navy during World Now, a new generation has the opportuWar II, missing the 1944-45 seasons. In nity to make memories on the other side 1946, he was named the Yankee managof the Arkansas River in North Little Rock. er after Joe McCarthy was fired. In 1947, At the end of the 2007 season, Joe Mock’s Dickey came home to Little Rock to manage BaseballParks.com named Dickey-Stephens the Travelers. He returned to the Yankees its Ballpark of the Year in an annual ranking

of new and remodeled facilities. Previous winners of the award had included PNC Park (home of the Pittsburgh Pirates) in 2001 and Petco Park (home of the San Diego Padres) in 2004.

“When they took the field on April 12, it had been three-quarters of a century since the Arkansas Travelers had been the home team in a brand new stadium,” the website noted. “That evening began a magical season for the Texas League’s Travs as they smashed attendance records and provided their loyal fans with the kinds of comforts and high-tech niceties previously found only in parks in other parts of the country. Indeed, Dickey-Stephens Park was a complete revelation to residents in Central Arkansas.

After all, for decades they’d been attending games at an antique of a park called Ray Winder Field. Charming and beloved, yes. Modern and comfortable, not at all.”

‘SIMPLY PERFECT’ Mock explained the selection by saying: “The land in North Little Rock that was donated by Warren Stephens is along the banks of the Arkansas River, making it simply perfect for a ballpark. That’s because spectators can gaze across the river at the beautiful skyline of downtown Little Rock as they munch on their hot dogs and watch the team play. Two of the best parks in the majors are PNC Park in Pittsburgh and the new Busch Stadium in St. Louis. What if you took some of the nicest elements of each of these two parks and incorporated them into a new minor league facility? Then you would have Dickey-Stephens Park.”

Mock said Dickey-Stephens “screams baseball, from its brick exterior to its gorgeous concourses, and from its outfield fences to its bullpens. At the foot of the Broadway Bridge in North Little Rock, you know you’re looking at a baseball park – and a very, very special one at that.”

It’s also a baseball park with a museum, befitting the long history of the Travelers, a franchise that plugs on after decades of ups and downs. www.talkbusiness.net

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Profiles Service PHOTOS COURTESY OF AARON GSCHWANDEGGER

Double-sided, framed, hanging photos are a popular item in Aaron Gschwandegger’s Fallen Pine line of products. He also sells matted prints, notecards, pillows and table runners, all of which feature his photography.

Picture This Artist Entrepreneur Chooses Arkansas as Home Base

By Casey L. Penn

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

A

rtist and photographer Aaron Gschwandegger spent much of his young life moving around the United States.

Born in Jonesboro, his mother is a Walnut Ridge native, and his father, now retired, is an Austrian immigrant whose career in railroad equipment carried the family to Virginia, Texas, Utah, Nebraska and even as far as Montreal at one point.

In the years following high school, Gschwandegger made a career in retail merchandising, display and retail buying while earning multiple degrees, including a B.A. in marketing from Bellevue University in Omaha, and an associate’s in merchandising and buying from New York’s prestigious Fashion Institute of Technology.

Gschwandegger learned outside the classroom, too, developing skills in nature photography and woodworking. After years of working elsewhere, the young professional focused his accrued energies on a new venture – in Melbourne.

“Rural Arkansas may seem an odd choice to some,” says Gschwandegger of his choice to found his photography and artistic design company Fallen Pine, LLC, near the nature-rich foothills of the Ozarks. “I couldn’t ask for a better ‘muse,’ than the beauty that I see daily: mountainous areas, open fields and some of the most beautiful sunrises and sunsets anywhere.”

Family was another factor. “I wanted to be near my family and my retired parents, and I wanted a fresh start as an entrepreneur,” Gschwandegger says. “A person can follow his dreams and make his life into something new if he is determined.”

Fallen Pine’s product base began with fine art photography sold in original handcrafted frames. Early shots included some captured

by Aaron’s father of 2009’s large ice storm and aftermath.

“All around, one could see fallen pine trees. A side effect of a devastating storm, they were also a sign of how nature renews itself,” Gschwandegger explained. “This sense of renewal was what the new company represented to me and why I named it Fallen Pine.”

AN ARTIST’S PACE Though founded (on paper) in 2009, Fallen Pine started in earnest in 2010. Even then, Gschwandegger took his time. “This

was not the traditional way to start, but it was necessary for me as an artist to learn and develop a product base,” he says of early months producing inventory, experimenting with new mediums and learning new skills.

Some products have proved profitable, while others he eventually put aside. Learning to tell the difference has been a process of trial, error and objective analysis.

Because of location, Gschwandegger has no choice but to follow the buyers. “Travel

“I couldn’t ask for a better ‘muse,’ than the beauty that I see daily: mountainous areas, open fields and some of the most beautiful sunrises and sunsets anywhere.”

– Aaron Gschwandegger is one of my larger expenses,” he conceded.

“However, having a website and participating in arts and crafts shows are great ways for me to get exposure. Shows equal marketing and a place to sell.”

It doesn’t hurt that he’s close to Mountain View, a crafter’s travel mecca and a great place for an artist to network with other artists and potential customers from all over the country.

“During the warmer months and into the fall, Mountain View draws many people from the larger cities,” says Gschwandegger,

who has been a member of the Mountain View-based Arkansas Craft Guild since 2011 and now serves on its board. Since 1962, the Guild has been devoted to promoting member artists from all over Arkansas and their quality art. The Guild operates a gallery and hosts an annual Christmas Showcase at the Statehouse Convention Center.

As much as Fallen Pine is an artistic expression, it is also a business. To make it work, Gschwandegger sticks to a business plan, albeit one that is ever evolving. “My survival depends on my ability to adapt to the market and find my fit within that market. I have to look objectively at what I’m doing and if it is going to support me.”

Initially, he says, his “plan” entailed nothing more than finding his direction as an artist and marketing himself through art shows. He recalls how that changed with experience.

“As anyone who has done an art show can tell you, it is a lot of work. In addition, there is a lot of expense involved. Travel expenses and show fees add up quickly. After doing many shows, it became obvious that I was better off not doing some shows. Sales were not justified by expenses,” he said.

In place of some less productive shows, Gschwandegger improved his company’s bottom line – and reduced his stress level – by working his products into several key outlets. In addition to Mountain View’s Arkansas Craft Guild Gallery and The Homespun Gift Shop at the Ozark Folk Center State Park, Fallen Pine products have found a worthwhile home in other Arkansas stores such as The Velvet Otter (Eureka Springs) and The Lodge at Mount Magazine State Park (Paris).

The company’s online presence serves as an additional point of connection between artist and customers, who often reach him through his website (fallenpine.com) after shows to ask questions or purchase a Fallen Pine Miniature Picture, a dual-sided, hanging picture (a patented, Fallen Pine exclusive) or related items.

BUSINESS LESSONS LEARNED There have been ups and downs. On the down side, Gschwandegger points to an entire year rather than one product or decision. “The year 2013 was a lesson learned,” he shares. “I became fixated on developing www.talkbusiness.net

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Profile: Gschwandegger new things to sell. While this can be fine, the new things were taking my time away from art I was already selling. Re-finishing and re-purposing old furniture is appealing, and it consumed my year. The majority of my time was spent filling one location that ended up closing and my biggest show was cancelled due to weather. I learned never to lose focus on what you do well and never rely on too few places to sell.”

That would be enough for many to call it quits, but this artist has a stubborn streak.

You need one, he says, in order to regroup and refocus after a fall. Gschwandegger was able to do that in 2014, a rebound year that allowed him to triple his sale of key products while investing in tools to move his business forward.

With those lessons behind him, Gschwan-

degger is working toward his current goal of expanding his company’s reach, sales and notoriety in the coming year and beyond.

To do that, he is focusing on placing and promoting his art and merchandise in those Arkansas State Parks that operate gift shops, including state parks stores at DeGray, Mount Nebo, Mississippi River, Petit Jean and Woolly Hollow.

“This year will be a very important year to the long-term success of Fallen Pine,” says Gschwandegger, who is working on goals in 2015 that include product development in stationery and textile lines, original artistic fabric designs from his photography (for table runners, pillows) and stationery notecards.

“In an era of high tech, I like the intimate simplicity of a notecard,” he says. “I’d

Aaron Gschwandegger returned to Arkansas to launch his photography and woodworking business.

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

like to expand these types of products that promote the simple joys of nature and its beauty during the coming year. I want to make Fallen Pine into a brand that everyone recognizes in Arkansas and beyond.”

THE SELF-EMPLOYED SCHEDULE Gschwandegger’s education and professional background helped prepare him to operate his own business. “Retail and merchandising gave me an advantage in presentation skills, while my background as a retail buyer gave me an understanding of how to track trends,” he says. “Real business deadlines helped prepare me for the constant ones that I now have as a business owner. My education helped in the sense of learning different types of marketing and product development. I create and sell art,

but also find ways to develop the art I have made into other things people would like to buy. A great example is taking my nature photography and creating things like notecards and pillows with these images.”

Meanwhile, no amount of experience could fully prepare him, he indicated. “Experiencing and living this is different from understanding it in the abstract. There are things that you take for granted when working for someone else – bills that need to be paid, inventory and expenses, deciding what to make and sell, etc. Nothing is pushing you to do those things but you.”

To stay motivated, Gschwandegger employs a daily regimen of sorts – plenty of sleep, time each morning to regroup and daily lists.

“It’s important for me to start my day before the sun comes up,” he says. “I plan what I am going to do on what day so that orders are completed. I schedule time for website, photography, phone calls, designing, restocking, etc. I sit down and think about all I’ve put into my business,” he says,

comparing his thought process to pushing a stone downhill. “Once it starts, it is easier to keep it going.”

Through it all, Gschwandegger tries hard to keep his focus on his art, which makes the busy work worthwhile. “Obviously, the sales support me, but there isn’t a better feeling than creating something that makes someone else happy when they see it. That is success.”

UPCOMING EVENTS Here are a couple of events where Gschwandegger plans to display his products. Check fallenpine.com for updated show listings.

Lit’l Bita Christmas Nov. 13-15 ASU Convocation Center, Jonesboro Arkansas Craft Guild’s Christmas Showcase Dec. 4-6 Statehouse Convention Center, Little Rock

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Profiles Service PHOTOS BY BOB OCKEN

The Heights Taco & Tamale Co. opened in April at the location in Little Rock that was formerly home to Browning’s Mexican Grill.

Countdown To Blastoff The leadership team at Yellow Rocket Concepts shares stories about the restaurant business and the new Heights Taco & Tamale Co.

By Kerri Jackson Case

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

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oughly 10 days before the soft opening for Heights Taco & Tamale Co., three of the four owners sat around a dining table cooking up dreams for the future of their venture. Around them waiters were in training on the menu particulars, bartenders were working out the finer points of their signature drinks (the frozen mojito is sure to be a summer favorite) and staff members were unpacking furniture. The final tile of the pattern designed specifically for this location would be installed the next day.

It’s almost possible to see the partners making mental To Do lists while they’re talking about their hopes for this space. So many details are left to complete. So little time is left before opening what they believe will be their signature eatery.

Construction delays have put pressure on their bottom line and pushed their opening date by several months, but they say they will not open until it’s exactly right. The reputation of the location and their company is too important to make sloppy mistakes.

“We want to take this iconic space and make it something Little Rock can enjoy for another 50 years or more,” said Scott McGehee, principal of Yellow Rocket Concepts, the umbrella group responsible for Heights Taco as well as other Central Arkansas restaurants Local Lime, ZaZa, Big Orange and Lost 40. “This will not be our most profitable restaurant. This is a labor of love.

It’s our investment into this community.”

The iconic space he mentioned is the former Heights location of Browning’s Mexican Grill, a Little Rock staple for more than 60 years. “We loved Browning’s,” said Ben Brainard, co-owner of Heights Taco.

“Several of us grew up coming here with our dads to drink that famous punch and eat cheese dip. This place was a legend.”

The gravity of their undertaking visibly weighs on them. It’s the burden of being the winning quarterback: emboldened by past successes, but keenly aware that one fumble can turn a fickle crowd against you quickly.

The popularity of previous ventures is the blessing and curse of the expectations of any new restaurant this group opens.

“We wake up every morning hungry and humble,” said Russ McDonough, co-owner.

“People have short memories. We have to be at our best every single day.”

ARK-MEX What they have planned is a new genre they have dubbed Ark-Mex. It will be their own version of Tex-Mex, incorporating flavors from the Delta to create a unique menu. “There’s a nod to South Arkansas and North Mississippi,” McGehee said. While it might not be obvious at first, he believes people will recognize the Browning’s influence, even in a completely different atmosphere and menu.

Every detail has been considered from how food will look on Instagram, where photos will be inevitably shared, to the

PHOTO BY KERRI JACKSON CASE

“This group

hasn’t been successful by accident.

They’re good operators.

They’re good food people.”

– Don Phelan precise blend of iced tea for the HT Tea, a cocktail blended specifically for this bar. “It all matters,” McDonough said. “The décor, food, attitude, location, everything. Every single thing matters when you’re opening a restaurant today.”

It’s a world away from when J.T. Browning, a former Kroger butcher decided to open a Mexican restaurant in Little Rock in 1946. Don Phelan, who came on as manager in 1968 and then bought the restaurant from the Browning family in 1980, says their food

“wouldn’t have stood up to the test of magazine plating and lighting. But it tasted good, and that’s all people cared about then.”

He understands the evolution of the business, “a young man’s game,” he calls it. That’s why he sold out in 2007. Subsequent owners weren’t successful in the space, and it eventually closed. He believes that while the style has changed, the substance of the food industry hasn’t and won’t. “Food and service … if you got that, you’re good,” Phelan said.

He believes the new tenants on Kavanaugh have those things, “This group hasn’t been successful by accident,” he said.

“They’re good operators. They’re good food people. That’s a lot of hard work, grit and determination. I think they’ll do themselves proud.”

Phelan measures the success of Browning’s, in part, by how many former employees have gone on to successful careers, particularly as their own restaurant owners.

This is also how Yellow Rocket wants to be judged: by the partnerships and collaborations in the food community the group is able to forge.

“Ben and John [Beachboard], who are partners in this venture, were sous chefs in a previous restaurant I owned,” McGehee said.

“Other creative young people have come through here, and some are now looking at going forward with some ideas of their own.

We want to invest in that emotionally and professionally, and eventually maybe financially. We want to cultivate a cooperative food community in Little Rock. We don’t want to take market share from other locally owned places. We want to take market share from McDonald’s and other chains.”

DESIRE FOR A BREAK Yellow Rocket has grown rapidly in the past few years, and the partners plan to catch their breath after Heights Taco opens.

They say they want to spend several months focused on operations for their seven locations and ensure quality before settling on a new idea.

But no sooner have they declared a desire for a break than they start rattling off 15 concepts in 10 potential locations for expansion. Maybe Jonesboro? Maybe Northwest Arkansas? Maybe using this location or that developer? The innovative piece of their brains doesn’t ever seem to turn off. www.talkbusiness.net

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Profile: Yellow Rocket Concepts “Will we do more? Sure,” McDonough said. “But not 10 more. The reality is we all have kids at home. We’re not thrilled to be out of state on a regular basis running restaurants right now. We have debt. We have 400 employees. We have to take some time before we make the next move.”

They’re in the enviable position that success brings of offers from developers and ideas from young talent. They will be able to be picky. But perhaps some of this isn’t entirely up to them. It might be a little up to fate.

“When I was in college, I brought my best friend home for the weekend,” Brainard said. “We came up to Browning’s to eat.

We had a saltillo plate, punch and cheese dip. My friend seemed to know then that I did not have the bright future in finance I thought I was going to. He looked around and said, ‘You’re going to own this place someday.’ I thought he was crazy. But here I am. I own this place. And it’s going to be a great place to bring my kids, like my dad brought me.”

Scott McGehee (left) and Ben Brainard see the new restaurant as a labor of love.

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Profiles Service PHOTO COURTESY OF ARKANSAS STATE UNIVERSITY

Agricultural Innovations team members (from left) Dirk Tanner, Justin Bagley, Joshua Baker, Kenneth Rains, and Frank Kelley.

Governor’s Cup Idea turns into winning business plan for ASU team in annual competition.

By Talk Business & Politics Staff

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missed dinner with family provided the inspiration for an Arkansas State University graduate student to create a potentially revolutionary product.

That product was the reason that several ASU business students won first place and $25,000 in a statewide business idea competition on April 22 at the Statehouse Convention Center in Little Rock.

The 2015 Donald W. Reynolds Governor’s Cup named its winners across multiple categories, with students at the undergraduate and graduate levels from universities across the state racking up more than $100,000 in prizes for their ideas.

The business plan competition, sponsored by the Arkansas Economic Acceleration Foundation, a subsidiary of the Arkansas Capital Corp., is in its 15th year and it has become a showcase for some of the best business ideas from the brightest college talent in the state.

This year, 47 teams submitted business plans from 12 colleges and universities from across Arkansas for a chance to win money tied to the prize pool.

“At the risk of sounding cliché, every year it gets stronger, every year it gets better,” Arkansas Capital Corp. President Sam Walls III said. “What was exciting about this, and exciting about the competition, is you’ll notice the diversity of the winners. In years past, there were a few institutions that kind of dominated at the event. Now, we have a broader range of people making it this far.”

More than 750 business leaders and college representatives were in attendance for the annual event.

AGRICULTURAL INNOVATIONS Besides its first-place finish in the graduate category, the ASU team, Agricultural Innovations, also received $5,000 for winning the Delta Plastics Innovation Award at the event and another $3,000 for finishing second in the Arkansas Farm Bureau Agriculture Awards. The team is comprised of Josh Baker, Justin Bagley, Frank Kelley, Dirk Tanner and Kenneth Rains.

The TIRE team from Harding University took first place in the undergraduate division and received $25,000. It also picked up $2,000 and the AT&T Elevator Pitch Award for that category.

First- and second-place business plan

winners in the undergraduate and graduate divisions will compete against the top two teams from Nevada and Oklahoma for the Donald W. Reynolds Tri-State Award in May, where they will be competing to win a share of the $118,000 prize pool.

Baker, who grew up in Hubbard, Ohio, said the idea for Agricultural Innovations started one Sunday after church. He said his father-in-law, a farmer, could not go to dinner with his family because he had to work on irrigation wells.

Thus, the idea sprouted.

“It is a solar-powered, sensor-driven automated irrigation system,” Baker said of

the idea is possible but that the group is focused on helping farmers. “Our relationship with farmers is key. It will be designed to help farmers when they need us the most,” Baker said.

The group started with a premise of whatto do, received the financial backing and is now working on field testing and software development, Baker added. He and his teammates were mentored by Dr. Erick Chang, an associate professor of management at ASU.

“It is a solar-powered, sensor-driven automated irrigation system.”

Undergraduate AT&T Elevator Pitch Award – $2,000 TIRE, Harding University

– Josh Baker the product called WellsVision. “It will allow you to do it from the comfort of your home or through wireless.”

Baker said an app was set up to allow the work to be done from a mobile device.

The product is geared toward farmers with at least 500 acres of land and who farm in multiple counties, he said, and it has gone through significant research and development.

Baker said he analyzed the market and has looked for ways to improve the product.

“It will give the farmer a total picture, both present and into the future,” he said of the information the product will glean.

The product is currently in a test phase, while a fully functioning prototype is expected to be in the field by the end of June. As for distribution rights, Baker said

GOVERNOR’S CUP WINNERS Here’s the complete list of 2015 Donald W. Reynolds Governor’s Cup winners.

Graduate AT&T Elevator Pitch Award – $2,000 Saf-Tech, Arkansas State University Undergraduate Delta Plastics Innovation Award – $5,000 Conner Innovation, University of Arkansas Graduate Delta Plastics Innovation Award – $5,000 Agricultural Innovations, Arkansas State University First Place Agriculture Award – $5,000 Baby Booster, University of Arkansas Second Place Agriculture Award – $3,000 Agricultural Innovations, Arkansas State University Undergraduate Business Plan Winners First Place – $25,000 TIRE, Harding University Second Place – $15,000 Charlie’s Choices, John Brown University Third Place – $10,000 Opt-In, John Brown University Graduate Business Plan Winners First Place – $25,000 Agricultural Innovations, Arkansas State University Second Place – $15,000 Kordate Solutions Inc., University of Arkansas Third Place – $10,000 Baby Booster, University of Arkansas www.talkbusiness.net

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Industry PHOTO: SHUTTERSTOCK

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Different Paths Deliver Better Days for Truckers Firms make adjustments unique to their operations to tap into improving economic trends.

By Michael Tilley COURTESY OF THE CITY WIRE

I

t’s tempting to simply credit an improved national economy for improved finances at the trucking operations of the four publicly held companies based in Arkansas.

But that temptation fails to account for labor contract changes, management shifts, auto sales, driver pay, driver shortages, federal regulations, bottlenecks at West Coast ports, energy markets and nasty winter weather.

And that’s the short list.

Further complicating the analysis is that Fort Smith-based ArcBest, Lowell-based J.B. Hunt Transport Services, Tontitownbased P.A.M. Transportation and Van Buren-based USA Truck are wholly dissimilar in structure and operations.

ArcBest, through its ABF Freight subsidiary, is in the less-than-truckload sector with an emerging global logistics operation. J.B. Hunt is no longer a trucking company. It’s a logistics/freight solutions company, with its trucking division generating around 6% of total revenue. Despite attempts to diversify its customer base, around 40% of business for P.A.M. Transportation is tied to the U.S. auto industry.

Of the four companies, USA Truck is the one that remains more of a common carrier trucking company, although its logistics business has grown in recent years.

Brad Delco, a trucking and transportation industry analyst with Little Rock-based Stephens, Inc., said an improving U.S. economy “certainly” helped the four companies, but each company had to make changes unique to their operations to tap into improving economic trends.

ARCBEST (NASDAQ: ARCB) Two big changes at ArcBest have been the

$180 million acquisition of Ohio-based Panther Expedited Services in June 2012 and a new labor contract approved in the summer of 2013 with the International Brotherhood of Teamsters. The deal with Panther helped vault ArcBest into the higher margin logistics sector, and the labor deal is estimated to save the company up to $65 million a year.

The company has posted two consecutive years in the black. Full-year net income in 2014 was $46.177 million, up 192% compared to the $15.811 million in 2013, and a wide swing from the $7.7 million loss in 2012. Total revenue during 2014 for the publicly held company was $2.612 billion, up 13.6% compared to 2013.

As to the company’s effort to generate more business from its non-trucking side, so far so good. In 2014, the company’s four non-trucking subsidiaries – Premium, FleetNet, ABF Logistics and ABF Moving – generated $25.776 million in operating income, or about 34% of the total. Delco said the company is likely to “remain focused” on growing the non-trucking businesses.

ArcBest CEO Judy McReynolds isn’t comfortable with the changes. She’s set a 2015 revenue goal of $3 billion. Acquisitions could be part of that growth. The company has little debt, and as of Dec. 31 was sitting on almost $205 million in cash or holdings easily converted to cash.

J.B. HUNT TRANSPORT (NASDAQ: JBHT) Trucking, the division that launched the company, began to struggle for several years after the Great Recession. In December 2013, the company decided to refocus on

the segment and made management changes toward that goal. Shelley Simpson, chief marketing officer and president of Integrated Capacity Solutions, was placed into a “strategic leadership role” with the trucking segment.

The company’s trucking segment posted fiscal 2014 revenue of $385.603 million, below the $391.086 million in 2013.

However, operating income for the segment was $24.223 million, a big jump over the $3.658 million in 2013. Company officials said rising rates and “rapidly declining fuel prices” helped boost income in the segment.

Overall, J.B. Hunt Transport Services boosted its 2014 revenue to $6.165 billion, a 10.4% increase over fiscal 2013. Net income for the year was $374.792 million, up 9.46% compared to the 2013 period.

In the first quarter of 2015, operating income for the trucking segment was $8.5 million, up 248% over the first quarter of 2014. Under Simpson’s tenure, and with the help of lower fuel prices, this once laggard segment has raised rates, increased rates per loaded mile, reduced maintenance costs, lowered insurance rates and reduced claims expenses.

P.A.M. TRANSPORTATION (NASDAQ: PTSI) Times are definitely better for P.A.M., which reported annual net income of $13.491 million for the 2014, a steady bump up from the $5.914 million reported a year ago. And with 2012 net income of $2.179 million, the company is on a three-year run of positive earnings.

But it’s been tough to recover from the national freight recession that began in late 2006. The company posted a 2011 loss of www.talkbusiness.net

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Industry: Trucking $2.857 million, a 2010 loss of $655,000, a 2009 loss of $10.847 million and a 2008 loss of $18.765 million.

P.A.M. CEO Daniel Cushman has moved to diversify the customer base, move more freight to and from Mexico and grow brokerage services. However, the company has between 35% and 40% of its business tied to the auto sector, and is the most likely among the four to be tied to national economic trends.

Auto sales have improved in recent years.

There were 16.53 million cars sold in the U.S. in 2014, much better than the recession low point of 10.43 million in 2009, and the first return above 16 million since the 16.154 million car sales in 2007.

USA TRUCK (NASDAQ: USAK) In late 2012 the USA Truck Board of Directors reached out to Harvard graduate Robert Peiser to chair the board and get the company back in the black. Peiser, known in corporate circles as someone able to rescue a company for future growth or acquisition, hired John Simone in early 2013. He had a reputation in the trucking and logistics sector for tidying up troubled operations.

Peiser and Simone began making wholesale changes to USA Truck’s corporate philosophy, management and strategy. Officials with the long-haul trucking and logistics company announced 2014 net income of $6.033 million, a more than $15 million swing from the $9.11 million loss in 2014, and a gain that ended five consecutive years of losses.

The company’s trucking segment is still struggling, however. The trucking division posted a $3.532 million operating income loss in 2014 – although it was a big improvement over the $17.66 million operating income loss in 2013.

Driving the gains are the non-asset side of USA Truck’s operation. The company’s Strategic Capacity Solutions (SCS) – logistics and freight brokerage – division posted operating income of $20.775 million, more than double the $9 million in 2013.

The company announced April 6 that Simone was on indefinite leave from the company to deal with a “serious medical condition.”

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PHOTO: SHUTTERSTOCK

It’s getting increasingly “more difficult to recruit honest, safe and reliable truck drivers.”

– John Larkin of Stifel Nicolaus

2015 FORECAST Delco is bullish on the sector for the remainder of 2015. Driving the sentiment is “meaningful supply constraints” within the transportation sector, with those constraints more a product of driver availability than access to equipment.

Delco also sees wage growth and lower fuel prices resulting in more consumer spending, which is always good news for the freight industry. Also, federal regulatory changes are likely to make it more challenging for the freight industry to respond to growing demand, which will in turn allow freight companies to charge and maintain higher rates.

TALK BUSINESS & POLITICS | MAY/JUNE 2015

John Larkin, transportation analyst with Stifel Nicolaus, has said driver shortages are the biggest concerns for trucking CEOs going into 2015. He projects the driver shortage to widen to 240,000 by 2020. He cites increased demand and retirements of veteran drivers along with declining interest from younger generations as the primary causes for the shortage.

Like Delco, Larkin said tighter federal regulations don’t help and it’s getting increasingly “more difficult to recruit honest, safe and reliable truck drivers.”

He said just 5% of applicants industry-wide meet all the requirements to be a commercial driver.

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Industry TOP PHOTOS COURTESY OF BLAKE LENSING, BOTTOM PHOTO COURTESY OF HGTV

Blake and Lauren Lensing’s 192-square-foot home offers them a simpler lifestyle.

The Ravenlore is a “painted lady” that was featured in one of the episodes on HGTV’s “House Hunters” spinoff named “Tiny House Hunters” in 2014.

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Tiny House Movement Smaller, simpler dwellings are creating a new niche in the construction industry.

By Jeanni Brosius

D

eep muddy channels, remnants from a recent heavy snowfall, didn’t stop the crew at the construction site at Slabtown Customs in Mountain View. Three custom tiny houses sat on trailers in various stages of completion.

Ever wonder why someone would deliberately sell most of their possessions and move into a home the size of an average bedroom?

There are a number of reasons, and it’s creating a movement and a new niche in the construction industry. Tiny houses are even the subject of two television shows.

It’s not uncommon to occasionally hear of someone living in a recreational vehicle or a small cottage, but today’s tiny houses are miniature homes on wheels totaling less than 200 square feet.

Scott Stewart, owner of Slabtown Customs, said he began building something similar to today’s tiny houses about 15 years ago. But in the past five years, he has devoted his construction business mostly to these small homes on wheels.

“Typically we build for people who use them as their primary residences,” Stewart said about the homes his company delivers all over the United States. “Some people choose this because of a financial crisis. But for others, it’s having only what they need and spending their money on enjoying life.”

collapse and no longer see it as a ‘castle,’ and they don’t believe Social Security will be around when they need it, and most are underemployed,” Beck said. “It’s another cycle in our society where we are meeting the need, and tiny houses are the solution to multiple issues in our society.”

Conway residents Blake and Lauren Lensing made the choice to live minimally in their 192-square-foot home in September 2013.

LIVING MINIMALLY Ross Beck, operating manager at Tumbleweed Tiny House Co. in Sonoma, Calif., said the average American home is 2,350 square feet, and young people who have never owned a home are looking at the housing market with a different perspective.

To many homebuyers, larger houses are no longer affordable.

“Most people under 30, who have gone to college, were around during the housing

“Most people have to spend their time at a job they don’t particularly like just to pay the mortgage, interest, insurance and property taxes on a house where they never get to be because they are always at work,” Blake Lensing said. “Every time Lauren and I talked about buying a house, it never seemed like the right move for us. It felt like it would be an anvil around our necks.”

Lensing said living in a tiny house forces the couple to examine what’s really

“Life can be as simple or as complicated as you make it. We prefer having an uncluttered life and mind.”

– Blake Lensing, tiny house owner

important. After downsizing from their 1,500-square-foot home, he said the biggest challenge is keeping their tiny space clean because there’s just nowhere to hide dirt and clutter. But the greatest reward is a simpler lifestyle.

“Material possessions require time and energy to obtain the means to buy them and then to store, maintain and protect them.

The cycle of consumption was not fulfilling to us. It never ends,” he said. “It really is like a drug to which you develop a tolerance.

When you live your life to consume, no matter how much you have, it’s never enough.”

By decreasing their possessions and financial obligation to a large mortgage payment, the Lensings have attached themselves to building relationships and experiences rather than focusing on their material possessions.

“Life can be as simple or as complicated as you make it,” he said. “We prefer having an uncluttered life and mind.”

ZONING REQUIREMENTS A few drawbacks to building a tiny house yourself or having one built by a contractor who is not certified to build RVs are getting a loan, getting insurance and finding a place to put it. One of the problems with living in a tiny home is it doesn’t meet the single-family zoning requirements of most cities. It may be difficult to get a permit to build such a small home on a permanent foundation. So the solution to that is to build the home on a trailer instead of a foundation. The disadvantage of building a home on a trailer is the size restriction.

Beck said that building codes and legislation are trying to catch up to this new product that doesn’t seem to fall into a standard category.

“My wife and I talked about living with www.talkbusiness.net

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Industry: Tiny Houses less and took steps to building a tiny home in downtown Little Rock,” said Michael Orndorff of Michael Orndorff Construction in Little Rock.

Not on wheels, but a foundation, his 269-square-foot, one-bedroom tiny house sits on its own lot just off South Main Street.

The Orndorffs don’t live in the house, but they rent it out as a bed and breakfast.

He had to jump through a few hoops with the current building codes, Orndorff said, but the city worked with him, even though there is no classification for a home as small as this one.

“The tiny house is symbolic of having what you can afford and what you can manage,” he said. “You can work your way up. … Tiny houses are good for the environment and, politically, they’re good for the economy.”

“America has its system set up where you can’t build anything different, and the zoning laws prohibit you from building tiny homes next to conventional homes,” said Samuel Pettit of Pettit Contracting in Cabot.

For 38 years, Pettit Contracting has been building homes in the Cabot area. Pettit said he’s been watching his parents construct 2,500-square-foot homes all of his life, but he sees the need to explore building tiny homes, too.

“I’m looking into building tiny homes, and it’s on the drawing board for this year,” Pettit said. “Tiny homes allow you to reduce what you use, reduce your bills and reduce the time normally spent with the upkeep of a conventional American home.”

“Tiny homes are humble little dwellings that are a lot easier on the earth, and it puts us back to humanity’s more nomadic roots.”

– Samuel Pettit of Pettit Contracting

AS SEEN ON TV As a contractor who plans to live in a tiny home himself, the question Pettit poses is,

“How can we downsize intelligently without compromising our quality of life? How do we give everyone this opportunity? Tiny homes deliver a really cool tiny space with zero waste … We are killing the planet, and construction materials are getting more expensive.”

Stewart and Pettit aren’t the only ones who see the Tiny House Movement as the way of the future. HGTV also realizes the popularity of tiny homes. The network is expanding its “House Hunters” franchise to include a second series, “Tiny House Hunters” that premiered in December, and one of the shows was filmed in Mountain View when a guest on the show was shopping for her tiny house.

“With ‘House Hunters Pop’d’ and ‘Tiny House Hunters’ we’re giving our most popular franchise a fun spin,” said Allison Page, general manager, HGTV and DIY Network. “No one knows better how to slice, dice and expand the ‘House Hunters’ concept than we do.”

The FYI network also filmed an episode of “Tiny House Nation” at Slabtown Customs for clients who wanted a tiny house.

“Tiny homes are humble little dwellings that are a lot easier on the earth, and it puts us back to humanity’s more nomadic roots,” Pettit said.

PHOTO BY JEANNI BROSIUS

A tiny home featured on HGTV. PHOTO COURTESY OF HGTV PHOTO BY JEANNI BROSIUS

PHOTO BY JEANNI BROSIUS

Scott Stewart of Slabtown Customs in Mountain View shows off two of the tiny homes that he builds for clients all over the United States. He was featured on “Tiny House Hunters” and FYI’s “Tiny House Nation.”

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Entergy Arkansas’ rates are lower than the state and national averages.

And here’s our plan to keep them low.

At Entergy Arkansas, we work not only to ensure reliable power, but also to make sure that power remains affordable.

That’s why Entergy Arkansas customers have rates below the average for Arkansas and the nation – and why we are committed to keeping costs down while creating value for customers now and for years to come.

1. Providing reliable power.

Our plan includes strengthening the electric grid from transmission lines to substations to transformers – to prevent storm outages by planning and maintaining a more robust network.

2. Lowering costs.

Keeping a balanced mix of energy resources is an important ingredient to providing customers with clean, reliable, and affordable electricity. Entergy Arkansas also joined the Midcontinent Independent System Operator (MISO) several months ago. And we’re already seeing monthly savings by having access to a large power market that allows us to further reduce costs.

3. Generating jobs.

Entergy Arkansas is reaching out to major companies around the world to put Arkansas on the top of their lists for new facilities. Then we work with them to make sure we have the infrastructure they need to power their business – adding more customers to share costs and putting more Arkansans to work.

4. Investing in sustainable communities.

The health of our local communities drives our quality of life as a state. Training, education and infrastructure are vital not only for economic development, but also for building a stable society for generations to come. We’re committed to helping our state grow, strengthening communities, supporting non-profits and improving education.

To learn more, visit EntergyArkansas.com.

A message from Entergy Arkansas, Inc. ©2014 Entergy Services, Inc. All Rights Reserved.

www.talkbusiness.net

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Industry PHOTOS COURTESY OF MIDCONTINENT INDEPENDENT SYSTEM OPERATOR AND SOUTHWEST POWER POOL

Midcontinent Independent System Operator Control Room, Todd Hillman (left) and John Bear (right)

Nick Brown in the Southwest Power Pool Ops Center

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Managing the Energy Grid Two organizations – Midcontinent Independent System Operator and Southwest Power Pool – put Arkansas at the center of the nation’s electricity transmission grid.

By Wesley Brown

W

hen regional transmission organization (RTO) Midcontinent Independent System Operator literally turns on the power switch to its state-of-the-art command center in West Little Rock on June 1, Arkansas will be at the epicenter of the nation’s ongoing and often raucous debate on the safety and reliability of the nation’s energy grid system.

Along with Southwest Power Pool’s $62 million relatively new campus with its own real-time data and operations center about 3.4 miles from the MISO headquarters, both nonprofit grid operators now staff a specially-trained group of engineers that oversee the smooth flow of nearly one-third of the nation’s power generation across all or parts of at least 23 states and Canada.

Once fully operational, MISO’s 50,000square-foot Little Rock campus will control the organization’s (RTO) South region, which includes 18,000 miles of transmission, 50,000 megawatts (MW) of general capacity, and 30,000 MW of load into the MISO southern footprint across parts of Arkansas, Louisiana, Mississippi, Texas and the city of New Orleans.

The company’s initial 42 employees are primarily experts in engineering and technology, adding to the growing number of science, technology, engineering and mathematics (STEM) jobs at high-tech companies throughout Arkansas.

“We hope to use our presence here not only as a resource to the greater Little Rock

community, but as a magnet for other energy-sector firms,” MISO President & CEO John Bear said at the grid operator’s grand opening on March 24.

As one of the largest RTOs overseeing power grid operations across North

“At MISO, we are able to run 9,000 contingencies every 90 seconds – it just blows your mind the amount of analysis.”

– Todd Hillman MISO’s vice president of South Region Operations

America, MISO manages a 15-state region stretching from the Gulf of Mexico to Manitoba, Canada. MISO’s $22 million Little Rock operations center will also work

in tandem with a similar facility in Carmel, Ind., MISO’s corporate headquarters outside of Indianapolis, and a third facility in Eagan, Minn., near Minneapolis. Employees at all three MISO locations work together in real-time operations, market operations, customer services, government and regulatory affairs, information technology and administrative support, officials said.

FORMIDABLE FACILITIES During a recent tour of MISO’s space-age looking command center, Todd Hillman, MISO’s vice president of South Region Operations, proudly chaperoned visitors through the grid operator’s facility located just off Kanis and Bowman Roads in West Little Rock. On this particular day, engineers were testing computers and other hardware connected to a giant “live map” covering one large wall, displaying every power plant and distribution line where MISO operates.

Notwithstanding the impressive engineering epicenter, the other facilities and operations at MISO’s Little Rock location are just as notable. They include a train-sized backup power generator, a solar-paneled outdoor car garage, open-space workstations with “Jetsons”-like computers and phone systems, National Security Agency-level security and sports-inspired meeting rooms named after the Arkansas Razorbacks and other SEC schools.

Among his many hats as ambassador www.talkbusiness.net

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Industry: Energy for MISO’s South Region, Hillman said his main job is consistent with the grid operator’s mission of providing safe low-cost and reliable energy to consumers across MISO’s massive geographical territory. And although there have been many questions about the reliability of the system in the news, Hillman said during the tour of the command center that utilities, regulators and grid operators are always working to improve the efficiency of the nation’s energy system, often through innovation, upgrades and “smart grid” technology developed after major events like Hurricane Sandy or Midwestern tornadoes that temporarily take thousands of electric consumers offline.

“The grid has always been reliable,” Hillman said quietly when questioned about Hurricane Sandy in 2012 and the Northeast blackout of 2011. He argues with ready available statistics that, although problems will occasionally occur in the nation’s grid that are caused by weather or human error, the U.S. still has the most expensive, sophisticated and reliable system in the world when compared to other countries.

PREDICTING CONGESTION In addition, Hillman said technology that now allows MISO and other grid operators to see the energy grid in real time also allows engineers to now immediately correct energy overload and congestions problems they see each day. The command center in Little Rock and other MISO locations also allow the grid operator to run scenarios to help predict and alleviate congestion and other issues that may cause future blackouts and power surges.

“The thing MISO brings to the table is tools that have far-reaching [capabilities],” he said. “We can see the over-arching picture from a reliability standpoint. At MISO, we are able to run 9,000 contingencies every 90 seconds – it just blows your mind the amount of analysis.”

He added: “There are actual facts that show that MISO being in the South in one year has made the [grid] system more reliable.”

Hillman, like other grid operators and industry watchers, describes grid operators as the “air-traffic controllers” of the nation’s

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complex and often-maligned energy grid, ensuring the delivery of reliable least-cost energy to wholesale energy customers.

In his office after a tour of the still-newsmelling MISO headquarters, Hillman talked passionately about the Little Rock center that was literally hewn out of the famous rock that gave the city its name. Outside his office window sits one of those impressive car-size boulders that Hillman said will help keep him grounded about the mission of grid operators in Arkansas and the other states he oversees.

‘FRIENDLY’ RIVALRY But MISO’s decision to move to Little Rock is largely related to its current rivalry with SPP that both grid operators call “friendly.” After first exiting its system agreement in 2005, Entergy Arkansas evaluated a number of alternatives before considering whether to continue its independent arrangement with SPP or deciding to join another RTO like MISO, which had no Southern roots at the time.

During that period, SPP made the argument before the Arkansas Public Service Commission (PSC) that it was in a better position to serve Entergy Arkansas and its Arkansas ratepayers.

“If Entergy joins SPP as a full member, two large adjacent power grids will be consolidated, Entergy will have a voice in SPP’s decision-making process, it will continue contributing to our regional energy reserves, and the APSC will have real and meaningful influence through SPP’s Regional State Committee,” SPP President and CEO Nick Brown said during that process.

Finally in November 2011, after months of often contentious public discussion, cost-analysis studies and regulatory hearings, Entergy Arkansas officially filed a “change of control” request to join MISO. “Our proposal for Entergy Arkansas to join MISO is monumental for our customers,” Hugh McDonald, president and CEO of Entergy Arkansas, said at the time. “It provides the answer to a commitment we made to customers in 2005 to terminate Entergy Arkansas’ participation in a contract that simply created too much uncertainty and litigation risk for our

TALK BUSINESS & POLITICS | MAY/JUNE 2015

customers and company.”

As part of the decision to allow Entergy Arkansas to join with the Midwest grid operator, the PSC issued a 112-page order that dictated specific steps Entergy Arkansas had to take before the deal was complete.

Those mandates included giving special recognition to other electric companies in Arkansas, such as SWEPCO and the Arkansas Electric Cooperatives Corp.

The PSC edict also required Entergy Arkansas to maintain operational independence from its parent company, Entergy Corp., and sister operating companies in Louisiana, Mississippi and Texas.

In late 2013, Entergy Corp. completed the integration of its transmission system into MISO following more than two years of planning and preparation with the New Orleans-based parent of Entergy Arkansas and numerous other stakeholders.

‘VERY GOOD TRANSITION’ Today, both Entergy Arkansas’ McDonald and MISO’s Bear say the integration process went smoothly, and the initial projections of more than $1 billion in savings to Entergy utility customers over the next decade is ahead of schedule.

“It has been a great decision,” McDonald said in a recent interview. “The estimates of customer savings that we had over the entire Entergy [system] was like $1.4 billion over the first 10 years, and our [Entergy Arkansas’] share of that was about $263 million for that same period. And after being with MISO for a year now – we are on track.”

In looking back on the entire process that took years to complete, McDonald termed the cooperative deal with MISO a rousing success. “We joined at 11 p.m., Dec. 18, 2013,” McDonald said. “Things went very smoothly without a hitch, and it’s been a very good transition. The MISO team has done a great job in helping us, and our customers are benefitting from that in the form of lower energy and fuel costs.”

MISO’s Indiana-based chief executive said much the same before the grand opening of the grid operator’s Little Rock operations.

“Everything went as well as it could have gone,” Bear said. “The best news for me is

that I have met with every [stakeholder] and every person has said they have met or exceeded the benefits that they projected.”

LOOKING TO THE FUTURE Despite the long and often contentious bid with MISO for the right to oversee Entergy’s vast energy portfolio, Southwest Power Pool has rebounded nicely from the disappointing news with the state’s largest utility that would have expanded the Arkansas grid operator’s Southern footprint substantially.

Still, the board of the Little Rock-based RTO approved more than $1.7 billion in new projects in early 2012 that will span over the period of 10 years. Part of the plan included about $251 million in new transmission projects over five years and another $1.5 billion in targeted transmission upgrades over 10 years.

SPP also successfully implemented its Integrated Marketplace process in March 2014, becoming the first RTO to design, build and deliver a FERC-mandated marketplace program that will improve grid reliability and improve the regional balancing of energy supply and demand.

“The Integrated Marketplace program is the latest and most complex incremental step in SPP’s evolutionary approach to improving our service to members and the region,” SPP President & CEO Nick Brown said a year ago.

Founded in 1941, SPP’s footprint includes 48,930 miles of transmission lines and 370,000 square miles of service territory. The Little Rock grid operator has 76 members in Arkansas, Kansas, Louisiana, Mississippi, Missouri, Nebraska, New Mexico, Oklahoma and Texas that serve more than 15 million energy customers.

That total will grow to 14 states this year with the Integrated System’s entities’ full membership in October.

And despite their obvious differences, including a FERC-refereed disagreement over how compensation and energy flow issues in areas where the two grid operators’ Southern boundaries cross, MISO and SPP representatives often run in the same local circles, appear at the same events and support the same causes.

In fact, both RTOs have recently released white paper and public reports saying that President Obama’s Clean Power Plan could cost its members billions of dollars to comply with the EPA’s proposed rules to shutter most of the nation’s coal-fired energy generation plants.

The two nonprofit grid operators also speak the same acronym-laced language that often leaves journalist and industry outsiders trying to interpret the meaning of commonly used alphabetic phrases like RTO, EPA, SPP, MISO, FERC, PSC and ADEQ. Likewise, both grid operators are leaders in bringing attention to the need for adding STEM-related jobs to the Arkansas economy, boasting annual salaries for their respective employees that are well above $80,000 a year.

“Little Rock can become a major center for science, engineering and technology jobs which will mean a bright future for the city and enhance Little Rock’s reputation as an energy capital,” MISO’s Bear said at the grid operator’s Little Rock grand opening.

And as the RTO with Arkansas roots going back more than 65 years, SPP’s 575-person workforce at its nearly new 200,000-square-foot headquarters in West Little Rock is already one of the most tech-savvy workplaces in Arkansas. There, at its four-story office headquarters with a 36,000-square-foot operations data center, the nonprofit RTO monitors the power grid for such utility giants and energy powerhouses as Conoco Phillips, Kansas City Power & Light and the Tennessee Valley Authority.

COMMUNITY RELATIONS Both grid operators are also strong corporate denizens, actively supporting their employees’ involvement in nonprofit and charitable activities in Central Arkansas. For example, when an F-4 tornado nearly destroyed the suburban communities of Mayflower and Vilonia in late April 2014 and left 16 people dead, SPP employees donated time and money to each other and their neighbors who were affected by the disaster, company spokesman Tom Kleckner said.

“Our staff volunteers with – or contributes to – more than 70 nonprofits and charities,” Kleckner said. “They participate in blood drives, charity runs, cook-offs, and as mentors to area students.”

The SPP spokesman noted that the grid operator also “once again” led the Little Rock area’s Summer Cereal Drive, contributing more than 28,000 boxes of cereal to the Arkansas Foodbank and accounting for 13% of the drive’s total. The Little Rock RTO’s charity golf tournament also raised $13,000 for CareLink, which reaches more than 18,000 people a year in Central Arkansas through Meals on Wheels, home care, senior fitness and wellness programs, and helping family caregivers, he said.

Although MISO is still not yet fully staffed, Hillman and Bear said during a tour of the facility that the grid operator began establishing community and charitable roots in Little Rock starting in 2013 when the decision was first made to establish a Southern presence in the city.

Hillman, an Indiana native, said the regional grid operator has already contributed to the community in ways beyond the operation of the electric grid and salaries to employees. For example, MISO’s employee base is already actively involved with the Make-A-Wish Mid-South Arkansas office, and Hillman currently serves on the board of directors of Make-A-Wish Mid-South, which serves Arkansas, West Tennessee and North Mississippi.

During the tour of the facility at the grand opening, company officials proudly showed artwork featured in the main entrance of the facility that was created by a local artist with the assistance of Make-A-Wish children.

In addition, Katherine Prewitt, MISO’s senior director of South Region Operations, serves on various boards like the Women’s Foundation of Arkansas, the Arkansas STEM Coalition and the Arkansas School for Mathematics, Sciences and the Arts.

Hillman said MISO is also developing relationships with the University of Arkansas engineering departments and other similar programs across the state to collaborate on future industry research projects and to potentially recruit new employees in the future. www.talkbusiness.net

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Hometown, Arkansas

Rogers Considering Its Options for Downtown Redevelopment 50

TALK BUSINESS & POLITICS | MAY/JUNE 2015

Dallas firm is coming up with an economic plan for the city.

By Rose Ann Pearce COURTESY OF THE CITY WIRE

R Gary and Jan Oftedahl’s photography studio (building at right) is a mainstay on Walnut Street in downtown Rogers.

OGERS – Gary and Jan Oftedahl have owned a photography studio in downtown Rogers for more than 30 years. A dozen years ago, they moved to an apartment above their business.

“We like it because we just have to walk downstairs to go to work,” Gary Oftedahl said. “Walking up the stairs is good exercise, but you give up a few things like a garage to park the car.”

PHOTOS BY KAT WILSON

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Hometown: Rogers There’s a buzz circulating through the city of more than 60,000 residents that a renewed interest in redevelopment of the downtown area is growing. The city is spending nearly $450,000 for an economic development plan for downtown. And it is spending $5 million on redevelopment and

“The buzz has started.”

– Rogers Mayor

Greg Hines expansion of green space at Lake Atalanta, on the eastern edge of downtown.

Downtown living is also catching on, including Mayor Greg Hines, who, at 39, wants his two daughters to experience what Rogers was like when he was growing up there. Hines is building a new home in the

area defined as downtown, running from the lake on the east to Eighth Street or 13th Street on the west and from Olrich or New Hope Roads on the south to Arkansas 102 on the north.

“It’s not really defined,” Hines said of the downtown boundaries. “The footprint can be as big or small, initially. You don’t want the scope to be so large that a monumental project looks small.”

Gateway Planning Group of Dallas is developing the downtown plan. The plan will probably be rolled out later this summer, Hines said. “What I wanted was a real economic development plan to show a potential developer what they can do for a return on their investment,” he said.

DEALS IN THE WORKS “The buzz has started,” Hines said, over coffee at Iron Horse Coffee Company, an early investor in downtown growth. “A number of real-estate transactions have occurred or are pending. There are at least four different transactions in the contracts

The Hunt Tower, under construction at the corner of Pinnacle Hills Parkway and J.B. Hunt Drive, will be a 10-story office building.

52

TALK BUSINESS & POLITICS | MAY/JUNE 2015

The fountain at Pinnacle Hills Promenade.

Heirloom Food & Wine on Second Street.

The Daisy Airgun Museum, located in downtown Rogers, is a showcase for vintage products and artifacts of the historic Daisy company.

The corner of Walnut and South streets in the historic district.

in the last two months. Developers are getting ahead of the curve and tied to a specific location in anticipation of what might happen,” he said.

Discussions about one particular building are ongoing. That is the city’s interest in the former Morning News building on West Second Street. Hines said the city’s interest stems from the need for expansion of the Rogers Historical Museum, directly across from the Morning News building. The building was constructed in 1947 as the home for the Newt Hailey Motor Co., a Ford

dealership.

The city has been in talks with representatives of Northwest Arkansas Media, which owns the building, but an agreement has not been reached. “It could be restored to look as it did as a car dealership and we would be repurposing a structure downtown,” Hines said.

Other projects are in various stages of discussion or planning but are not ready to be discussed. Later this year, a new Walmart Neighborhood Market will open on the southwest corner of Eighth and Walnut

THEY HELP US

streets.

Still there are plenty of amenities in the downtown area, said Jan Oftedahl.

“I recently counted a half dozen grocery stores within walking distance,” she said, not to mention bars and restaurants.

ZONING REVIEW The city also is conducting a zoning review of downtown residential areas to drive more downtown residential living.

Some are starting to look at the downtown area as a residential area, including Hines’

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Hometown: Rogers parents who recently moved from a home in Pinnacle to a downtown home one block south and one block west from Hines’ new home.

Hines said he wants to be able to walk or ride his bicycle to downtown events like the Rogers Farmers Market.

“It’s important to have friends of all ages and you’re not as likely to have that in a subdivision. Downtown, there are folks of all

age groups from the 70s to the millennials,” he said.

He expects a working draft of Gateway’s proposals in the next month or so, at which time the city council and others will hold work sessions with builders and others who have expressed interest, he said.

The idea of living downtown was appealing to the Oftedahls, who claim not to be too interested in yard work. Today,

Historical Frisco Park, which celebrates the colorful transportation history of Rogers from Butterfield Stage Coach Line through the Frisco Railroad, is popular with people of all ages, including these participants in the recent Glow Run.

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

they can’t imagine living anywhere else, Jan Oftedahl said. Their apartment boasts 2,500 square feet and 16 eight-foot tall windows.

She is not sure the couple could return to a neighborhood after living downtown all these years. Like others, she is excited to hear what the Gateway study and plans will reveal.

Another strong advocate for downtown growth and development is architect John

Mack. He has worked and lived within four to five blocks of his downtown office since establishing his practice in Rogers in 1972.

He too looks forward to the new plan, noting zoning issues will need to be addressed to attract more businesses and people to the area. Walkability will be an important issue as well as the connection between Lake Atalanta and downtown.

Another area Mack hopes will be addressed is the northern entryway into the downtown from U.S. 62 on the north side along Second Street.

“There are eclectic opportunities with contemporary elements with historical elements,” Mack said. “There are a lot of different opportunities. The diversity of what downtown can be is exciting to create a sense of place.”

Troy Walker is trying to tap into the eclectic opportunity. He is the operator of Trickdilly, a food truck he parks on Walnut in downtown Rogers just outside of Brick Street Brews. He hits the spot on Friday and Saturday evenings.

“Rogers has been really good to us. We do more business typically on Fridays as folks are getting off work than most Saturdays.

But being here in front of the tap tasting bar we stay pretty busy from their customers,” Walker said. “We park in downtown Bentonville for the lunch traffic each day, but there are far more trucks per capita. ...

The city of Rogers has been so easy to work with. They gave us a six-month permit and we are about the only truck parked here downtown in the evenings.”

Walker said having the local tap bars open in the evenings helps bring more nightlife to downtown Rogers, but he’s looking forward to the day when there are more residential options in the brick street area.

Brick Street Brews opened in April 2014 and features locally brewed craft beers and wines. Owners Rick and Naomi McLeod, Jim and Dana Mather, Lynn Atkins and Mike Rooney said they sought out a location in downtown Rogers for the brew tasting room and beer garden to give local residents the opportunity to enjoy many of the region’s craft beers without leaving home. They see Rogers as a progressive town that has never forsaken its roots.

An evening scene at Walnut and Second streets in Rogers.

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Feature

The Death 56

TALK BUSINESS & POLITICS | MAY/JUNE 2015

As the cycle of debate and delay continues, former Attorney General Steve Clark reflects on past executions in Arkansas.

Penalty

Former Attorney General Steve Clark

By John Brummett The author of this article is a regular columnist for the Arkansas Democrat-Gazette.

T

he re-emergence of the death penalty debate in Arkansas – not about whether, but how – provides an opportunity to revisit a couple of the many adventures of Steve Clark.

He has been up and he has been down and he has been back again. And often he has been in the thick of things. www.talkbusiness.net

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Feature: The Death Penalty He was the early-30s Democratic attorney general of the state when, in 1983, he pushed for the law to switch the state’s method of carrying out the death penalty from electrocution to lethal injection with a series of drug infusions.

There had been ghastly electric chair malfunctions around the country. Bodies had been disfigured. Eyeballs had popped out.

Several states had switched to the injection of a series of killing chemicals, and the ambitious young centrist Democrat serving as attorney general thought Arkansas should join them.

Clark’s uncle, the late Sen. John Bearden of Leachville, sponsored the bill. Clark remembers Uncle John telling him the requisite 18 votes were hard to come by in the Senate. “He said, ‘Those for the death penalty thought [lethal injection] wasn’t cruel enough and those opposed to the death penalty thought it was too cruel.’”

In time Bearden would pass the bill and send it to the House. It passed there after a debate in which a legislator memorably pleaded for compassionate support for the supposed more humane process of lethal injection. He asked his colleagues to “try to act more like human beings than legislators.”

Some would suggest that admonishment as a general rule, even a mantra, perhaps suitable for engraving on yet another state Capitol lawn monument.

SWINDLER AND SIMMONS Seven years later Clark was the veteran attorney general standing by on site when, after a nearly two-decade hiatus owing to a U.S. Supreme Court ruling, Arkansas again put someone to death.

First, in June 1990, came convicted murderer John Edward Swindler. His conviction had predated the 1983 change of method and he had choice of method. He picked the electric chair.

A week later, monstrous killer Ronald Simmons, murderer of 14 family members including a daughter who also was his granddaughter, waived all appeals from his 1989 conviction and was the first person to be put to death in the state by the lethal three-drug injection.

Clark, now heading the Fayetteville Cham-

58

ber of Commerce, was in an adjoining room when Swindler’s electrocution went quickly and without incident.

Wanting nothing to go wrong, the state had fine-tuned the chair’s electrical system.

It had polished the hardware. An extra strap had been attached owing to Swindler’s size. A natural sponge rather than synthetic one was used because it carried a greater charge and increased the likelihood of death occurring within a second without a gruesome mishap sure to make national headlines.

And all went ... actually, “well” may not be

“The silence was deafening.

So you’re just sitting there.

This is not a small-talk type of thing. You don’t turn to the guy beside you and bring up the weather.

You sit. You wait.”

– Former Arkansas Attorney General

Steve Clark

the most appropriate way to put it. It went quickly, certainly, and without incident other than a man’s efficient death at the hand of the state.

One week later Clark sat in the room looking through the witness’ window when Simmons’ lethal injection shook him ...

Clark, that is, not Simmons, whose thoughts were unknown.

As Clark describes, the curtain opened to this scene: Simmons was raised slightly on the gurney to face the audience. He had a long white beard and was draped in white.

TALK BUSINESS & POLITICS | MAY/JUNE 2015

His arms were spread for the IV insertions.

21 MINUTES Clark recalls instantly thinking of crucifixion “and all the symbolism of church and faith.”

“I hadn’t expected that,” he said.

Then three drugs were injected. Then Simmons went to sleep. Then 21 minutes passed before Simmons was pronounced dead by a doctor.

Clark and other officials had been told the three-drug cocktail would take Simmons’ life peacefully within three to five minutes.

Clark said he came during the course of those 21 minutes to think of himself as a gawker in a scene that might have been compassionate in a way for Simmons – an ironic way at best – but was hardly compassionate as a general exercise by the people through their government.

“Minutes turned to ... well, not hours, but it almost seemed like it,” Clark said. “The doctor checked three times, I think, and Simmons’ heart hadn’t stopped. It just wouldn’t stop. The silence was deafening. So you’re just sitting there. This is not a small-talk type of thing. You don’t turn to the guy beside you and bring up the weather. You sit. You wait.”

KNOWLEDGEABLE BACKGROUND Today Clark carries no evolved or evolving view of the death penalty itself as a matter of morality or policy, or at least none that he cares to relate. But what he does carry today is an informed context.

“I remember we’d sit in the AG’s office and complain that if only the 8th Circuit would get out of our way and quit delaying us we could have an execution,” he said. “But when you’ve been there, when you’ve seen it, when you’ve had 21 minutes to sit and wait for a man to die, you realize we don’t need any kind of rush to judgment.

“These people who say they want to watch the killer get his – that he deserves just what he gave his victim, and worse – that’s easy to say, and it’s understandable. But it’s not the kind of thinking that I had when it was right in front of me.

“And if anybody deserved it, Ronald Gene Simmons deserved it.”

Clark said these two examples – Swindler’s

and Simmons’ – make a counter-intuitive case that the electric chair is more humane than lethal injection.

“That’s not to say that’s the general case, or that we ought to bring back Old Sparky [the electric chair]. But it shouldn’t take a man 21 minutes to die, and certainly not while you sit there and watch.”

Two years after the Swindler and Simmons executions, then-Gov. Bill Clinton would return from the presidential election campaign trail to be in the state – as he saw his duty – on the night the state applied lethal injection to Rickey Ray Rector. He was a convicted cop-killer who subsequently had blown off part of his own brain in an apparent failed suicide attempt.

Rector saved the pecan pie from his last meal, telling prison officials he would eat it later.

Then it took the medical staff 50 minutes to find a suitable vein for the IV, apparently because of Rector’s obesity and the presence in his system of anti-psychotic medicine.

As officials labored to make the injection, the witness room curtain remained closed and witnesses reported hearing Rector moan several times.

Whether that’s compassionate – whether that’s better than electrocution – is a debate that probably hinges on how efficiently the electrocution goes.

Whether that word – “compassionate” – is even relevant or appropriate in this context is a worthy question.

UTAH AND THE FIRING SQUAD For now, the state Supreme Court has approved a new lethal injection system to replace a former process beset by legal challenge and the growing unavailability of the needed drugs.

In the recent session, legislators passed another law amending that method – giving pharmaceutical suppliers anonymity, supposedly, among other changes – and a suit was promptly filed on behalf of Death Row inmates challenging the new law on several grounds.

So the cycle of debate and delay continues.

Clark was asked about Utah’s reliance on a firing squad for executions. He replied by saying he’d been telling someone a few days

before that it might be that a firing squad was as good as anything else, even better than some methods.

In Utah, five rifles are extended through portals, aimed by specially chosen police officers (some of whom have asked for the assignment) at a target on the heart of the head-covered person to be executed. One of the guns holds blanks.

Then there are five booms and a man is

we

dead.

The American Civil Liberties Union says the firing squad method makes Utah look backward and gruesome.

But it’s not a 21-minute death punctuated by gawks from a witness room. It’s not 50 minutes of moaning in messy search of a vein.

And by whatever method, Rickey Ray Rector doesn’t get to eat his dessert.

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Feature

From the private option to re-homing and the Religious Freedom Restoration Act, Gov. Asa Hutchinson and the Arkansas Legislature dealt with a variety of new, old and odd issues.

By Steve Brawner ILLUSTRATION BY SHAFALI ANAND

www.talkbusiness.net

61

Feature: Legislative Review

D

o you remember, not so long ago, when the private option was supposed to be the legislative session’s most controversial issue? That was before anyone had heard of “re-homing” or thought much about what a state Religious Freedom Restoration Act would look like.

A lot can change in 82 days – a short session by recent historical standards. And a lot can change when legislators consider 2,200 bills, pass 1,288 of them into law, and vote to spend $5.18 billion for fiscal year 2016, an increase of $133 million over the year before.

When the session began, it was unclear what Gov. Asa Hutchinson would do with the private option – the program that uses federal Medicaid dollars through the Affordable Care Act to purchase private health insurance for lower-income Arkansans. The program had barely mustered enough votes to be created in 2013 and had barely survived the fiscal session in 2014, and it didn’t seem to have the votes this time. But it also brings in a billion federal dollars to the state’s economy, which Hutchinson needed if he hoped to pass the middle class tax cut he’d promised Arkansans during the 2014 campaign.

So he bought time. During a speech at UAMS on Jan. 27, Hutchinson asked the Legislature to fund the private option for two years while it studied the issue in the context of overall healthcare reform. The idea passed easily in both the House and Senate. Hutchinson’s nephew, state Sen. Jim Hendren, R-Sulphur Springs, a private option opponent whose stance has become more conciliatory, sponsored Act 46 creating the task force and is co-chair along with state Rep. Charlie Collins, R-Fayetteville.

make recommendations on how Arkansas should proceed with the education standards. The standards have become a lightning rod for some conservatives who believe they are an example of federal overreach.

Originally there were 24 states in the Partnership for Assessment of Readiness for College and Careers, a testing consortium meant to compare students across state lines. That number has dwindled to nine, and a bill was advanced by state Rep. Mark Lowery, R-Maumelle, to require Arkansas to exit the consortium as well. Instead, the bill was amended so that it limits Arkansas to maximum one-year contracts.

Hutchinson also promised to appoint a

this session. The first came about when the Arkansas Times broke the story about state Rep. Justin Harris, R-West Fork, informally transferring guardianship of his two young adopted daughters to a former employee of his day care who then sexually abused one of them. Harris continued receiving state payments as an adoptive parent, though he said he forwarded that money to the girls’ new family.

CALLS FOR RESIGNATION The practice of “re-homing” an adopted child was perfectly legal, but rare. Many called for Harris to resign, which he did not do. Instead, he leveled charges that the state Department of Human Services had failed to provide his family needed support and had threatened him with abandonment charges if he returned the children.

Though Harris did not resign, the Legislature quickly passed a law making re-homing without court approval a felony under Act 1092 by state Rep. David Meeks, R-Conway.

Harris voted for the bill. The law does not apply in certain circumstances, such as placing the child with a relative. The bill also clarified that “abandonment” does not apply when a child has disrupted the adoption and parents have exhausted their available resources. Act 1018 by state Rep. Greg Leding, D-Fayetteville, directs DHS to create rules for post-adoptive services.

Just as the furor over re-homing was dying down, one regarding the Religious Freedom Restoration Act exploded. House Bill 1228 by state Rep. Bob Ballinger, R-Hindsville, said state government could not substantially burden a person’s exercise of religion without a compelling state interest. Opponents saw it as granting licensure to discriminate against gays and lesbians.

“Democrats who opposed me, they not only said it, but they showed it in actions that it is important for Arkansas that the governor succeed.”

TASK FORCES Appointing task forces and study commissions became one of the most effective tools in Hutchinson’s toolbox. He diffused another controversial issue – the Common Core – by appointing a 16-member review panel chaired by Lt. Gov. Tim Griffin to

62

– Gov. Asa Hutchinson task force to study highway funding after a bill he didn’t support advanced out of the House Committee on Public Transportation that would have transferred some general revenues to highways. Under Hutchinson’s gentle persuasion, the sponsor, state Rep. Dan Douglas, R-Bentonville, agreed to kill the bill, but Hutchinson said he would appoint the task force and hinted that a special session on highway funding could be in the state’s future.

There was no way to buy time on the two issues that drew the most attention

TALK BUSINESS & POLITICS | MAY/JUNE 2015

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63

Feature: Legislative Review companies, publicly opposed the bill. The Human Rights Campaign bought a full-page ad in the San Jose Mercury News, which serves Silicon Valley, declaring Arkansas was “closed for business due to discrimination.” Activists shouted “shame on you” at Ballinger and other legislators as they left a House committee room March 30 and then lined the steps leading to the House chamber with signs as legislators prepared for the afternoon session.

With the bill sitting on his desk, Hutchinson, who earlier had supported it, called on legislators to recall it and send him a different one that mirrored the federal Religious Freedom Restoration Act signed

by President Bill Clinton in 1993. During a press conference April 1, Hutchinson said that his own son, Seth, was opposed to the legislation. Looking for a way out of the controversy, the Legislature quickly passed Act 975 by Hutchinson’s nephew, state Sen.

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Jeremy Hutchinson, R-Benton, which is similar to the federal bill. However, the debate over gay rights, discrimination, and religious freedom isn’t going away.

This was a historic session. For the first time since shortly after the Civil War, a Republican governor worked with a Legislature composed of Republican majorities – 64-36 in the House, 23-11 in the Senate, with one vacant.

Republicans were determined to demonstrate that they could govern, and as part of doing that, they followed the governor’s lead on issue after issue – the private option, Common Core, the highway funding bill, the Religious Freedom Restoration Act. Meanwhile, Hutchinson had no trouble passing his signature campaign proposals – a 1% income tax cut for Arkansans earning between $21,000 and $75,000, and a requirement that high schools teach computer science courses.

PROPOSED AMENDMENTS For a while, it appeared that legislators might not refer any proposed constitutional amendments to voters, until Hutchinson made it clear he supported one that would allow him to keep his powers when leaving the state, rather than them being transferred to the lieutenant governor, and another that would increase the fund that Arkansas uses to attract economic superprojects, such as auto plants.

Those proposals now will be on the ballot, along with a third that would increase county officials’ terms from two to four years.

Asked about his run of success this session, Hutchinson said April 9, “The strength of the governor is from the respect of the office and the recognition that we need to have a leader, and also the desire to have the governor succeed. And so that’s impressed me, and that’s not a Republican thing.

That’s a Republican and a Democrat thing.

Democrats who opposed me, they not only said it, but they showed it in actions that it is important for Arkansas that the governor succeed.”

This also was the first session where legislators operated under Amendment 94, the so-called “ethics amendment” passed by the voters in 2014, which among other provi-

sions was supposed to limit gifts by lobbyists to legislators. Instead, lobbyists took advantage of a provision in the amendment allowing them to provide legislators gifts such as meals as long as they were planned events serving official government bodies.

The amendment also extended term limits for legislators from three two-year terms in the House and two four-year terms in the Senate to 16 years overall – up to 18, in fact, for some. Speaker of the House Jeremy Gillam, R-Judsonia, who before the amendment would have been term-limited, recently announced he is running for re-election to that post. His fellow Beebe High School alum, Senate Majority Leader Jonathan Dismang, R-Searcy, has not yet announced if he also will seek re-election to his position.

The ethics amendment also led to a pay raise for legislators. The Independent Citizens Commission created by the amendment increased legislative salaries from $15,869 to $39,400 and also increased the salaries for all statewide elected officials except the lieutenant governor. The governor’s salary, for example, will increase from $87,759 to $141,000. Legislators did agree to do away with a $14,400 office expense account used by many as a supplemental salary. They still will receive daily per diem expenses as well as mileage reimbursements.

WORKFORCE LEGISLATION The Legislature also passed what Hutchinson described as “foundational” changes to the state’s workforce education efforts.

Among those was Act 892 by state Sen. Jane English, R-North Little Rock, who in 2014 switched her vote on the private option from a “no” to a “yes” in exchange for a promise from then-Gov. Mike Beebe to focus on the workforce issue.

English – along with others such as the Arkansas State Chamber of Commerce – argue that the state’s education system must better prepare students for jobs that exist in the workforce. Act 892 creates the Office of Skills Development within the Department of Career Education to award workforce training grants to public and private organizations.

It also establishes a Career Education and Workforce Development Board composed of representatives from various industrial sectors, along with nonvoting members from various state agencies. The board will create a comprehensive program for career education and workforce development and will supervise all vocational, technical and occupational education programs. It and the State Board of Education together will administer state and federal adult education funds.

Hutchinson also sought to make foundational changes to the state’s prison and parole system. With 2,500 state prisoners housed in county jails because

As always, social issues attracted a lot of attention this session. of prison overcrowding, the Legislature passed reforms that, among others, will transfer prisoners to a county facility in Texas, require eligible prisoners to enroll in Medicaid for drug and mental-health treatment, fund re-entry programs for prisoners leaving prisons, and create alternative courts for certain types of offenders.

Funding was increased to add parole and probation officers. Meanwhile, Act 1096 by state Rep. Douglas House, R-North Little Rock, sets lethal injection protocols that may pave the way for the state to execute inmates for the first time since 2005.

EDUCATION LEGISLATION Public education received a small funding increase, to $2.12 billion. The financially

troubled Arkansas Scholarship Lottery will now be administered by the Department of Finance and Administration rather than the Lottery Commission as a result of Act 218 by state Sen. Jimmy Hickey, R-Texarkana.

To save costs, Act 1105 by Hickey directs freshman lottery scholarship winners’ awards to be cut in half, to $1,000, while sophomore awards will be increased from $2,000 to $3,000.

Another noteworthy education law passed this session was Act 377 by state Rep. Bruce Cozart, R-Hot Springs, which lets the Department of Education grant waivers allowing schools that fall below the 350student minimum to avoid consolidation.

Also, Act 525 by Sen. Alan Clark, R-Lonsdale, removed the requirements for the state’s education commissioner to be a 10-year educator, paving the way for Hutchinson’s handpicked choice, former state Sen. Johnny Key, to occupy the post.

As always, social issues attracted a lot of attention this session. Act 1231 by state Sen. Jason Rapert, R-Conway, requires the state to use private funds to build a Ten Commandments monument on the Capitol grounds. Arkansas passed six laws restricting abortion, including Act 139 by state Sen. Missy Irvin, R-Mountain View, which prevents doctors from performing abortions via telemedicine. State Rep. Nate Bell, R-Mena, and state Rep. Fred Love, D-Little Rock, made several efforts to separate the state’s current same-day commemorations of Dr. Martin Luther King and Gen. Robert E. Lee. When the session began, Arkansas was one of three states that celebrate the civil rights leader and Confederate general on the same day.

It still is.

Finally, Act 137 by state Sen. Bart Hester, R-Cave Springs, and Ballinger prevents local governments from creating their own anti-discrimination laws protecting gays and others. It passed easily early in the session, though Hutchinson let the bill become law without his signature because he was concerned it usurped local control. At the time, few had heard of the Religious Freedom Restoration Act, but a lot changed during that 82-day session. www.talkbusiness.net

65

Commentary

Legislature Accomplishes a Lot, But Plenty Remains to Be Done

By John Burris John Burris regularly writes opinion columns that appear on talkbusiness.net. He can be reached by email at johnburris@capitoladvisorsgroup.com. Follow him on Twitter: @John_Burris

T

he 90th Generally Assembly has ended, at least the part of it that occurred in the regular session.

There’s probably not a more unique feeling in the world. It’s just fun to watch a big, bumpy ride come in for a landing. On the night the session was declared over, I coincidently crossed paths with our governor at Doe’s.

I joked that if his habits didn’t improve, he’d be looking like me before too long (I had also seen him there for lunch earlier the same day). He didn’t seem concerned. The session was over, after all. Plus, he plays basketball. I watch it.

Those feelings of relief will fade quickly. In the meantime, most everyone will begin offering opinions about everything that just happened. I will do the same.

In some ways, it’s hard to offer much of an opinion right now.

Unlike previous sessions where the clock starts and ends with complete clarity, our leaders this time slowly strolled down a path, and the destination is still not quite clear.

It might not even be halftime yet.

Now that the deck has been cleared of all of the other things, it’s time to work on the big things.

BIG ISSUES LINGER Things like health care, highways and other issues have yet to be resolved. Even on tax policy, we reduced some of the income tax rates inside the current structure, but still need a plan for overall reform. That should include a painful look into credits and exemptions that conservatives so often preach against.

If you think I’m being critical, you’re reading this with the wrong tone.

The strategy of doing whatever it took to get through the session – while still accomplishing your main goals – was probably the right one. It means the things that could be done quickly were done quickly. The things that needed more time weren’t rushed.

Now that the deck has been cleared of all of the other things, it’s time to work on the big things. So any accurate summation will have to wait for future resolution. It’s too early to say what will define this General Assembly, but it won’t be the just-completed session.

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Important things did happen, though, and it’s a mixed bag.

It usually is.

Many good bills failed to become law. They included a conservative run at tort reform, some basic limitations on when special elections can occur and the easing of barriers that prevent licensed faculty from carrying a weapon on campus.

Some other bills failed to get much attention, but could potentially have an outsized impact.

State Rep. Micah Neal, R-Springdale, gave the governor much enhanced power on board and commission appointments. It was needed, but never done because it seemed too difficult a hill to climb. I guess someone just needed to try.

State Rep. Reginald Murdock, D-Marianna, got a bill passed that gave public schools the ability to seek waivers from burdensome rules and regulations. Sound familiar? It essentially gives all public schools the same opportunity as charter schools.

It represents a massive shift in thinking. Usually when governments over-regulate, alternatives emerge and disrupt the market. The reaction of the government that caused the problem is to regulate even further, in an attempt to ensure the equal sharing of misery.

This time, a new precedent was set. Murdock basically said, “Hey, if charter schools get that, I want public schools to get it, too.” He leveled the playing field, but did it in the right way. We moved toward more flexibility, not away from it.

This happened in a few other instances as well. I think we’ll look back and appreciate that more over time.

MAIN ACHIEVEMENTS The Legislature cut the income tax, reformed our workforce development programs and incentivized the teaching of computer coding in schools. These are all major accomplishments, and likely don’t receive enough praise because of the non-dramatic way the process happened.

So I guess in a way that may be the defining aspect of the 90th General Assembly: they did a lot, and they did it smoothly, but partly by avoiding the things that guarantee the lack of smoothness.

Future task force meetings and a special session(s) are needed before outcomes are fully known and measured.

For now, legislators should celebrate what they were able to do and rest for the things ahead.

It won’t be getting easier.

Commentary

This Legislature Started New Conversations

By Jessica DeLoach Sabin Jessica DeLoach Sabin regularly writes opinion columns that appear on talkbusiness.net. She can be reached by email at jessicadeloachsabin@gmail.com. Follow her on Twitter: @jessicaxan

S

ometimes just starting a conversation should be considered a victory.

With Democrats serving in a new true minority role in the 90th General Assembly, their power was limited, leaving them with fewer tools than ever before to accomplish major policy goals.

But the Democrats were remarkably effective because even where they did not achieve legislative victories, they created enduring narratives that ultimately defined the regular session that just concluded. Most significantly, Democrats championed the interests of working families through their economic and education proposals while advocating for responsible and pragmatic budgeting and against radical and divisive social policies.

This provides them with a platform that, going forward, establishes their authority and credibility on key issues as the consequences of the session sink in and become better understood over the coming months.

Some time has now been bought to craft a better solution to address the challenges that come with educating our young people.

THE FUTURE OF EDUCATION There were several illustrations of this dynamic as it played out during the 82 days of intense activity at the state Capitol. For instance, when was the last time we had such a thorough and responsive exchange about the future of education in our state?

As efforts that would make our public school system more susceptible to state takeovers and legislative support for private charter programs grew, supporters and believers in our public school system rose up to stop the legislation before it reached the House floor. Some time has now been bought to craft a better solution to address the challenges that come with

educating our young people.

But what is key is how the dialogue created around the subject is now almost certain to bring more stakeholders to the negotiating table. This means more community input and the potential for a bipartisan solution that addresses the concerns of all interested parties.

We also got to see how rhetoric does not beget reality and how reality was so easily ignored in the name of partisanship through debates over economic interests.

NO TAX CUT FOR THE POOREST The GOP supported tax cuts for the middle class and the ultra-wealthy, but when it came to those who reside in our lowest income brackets, cuts never came. In fact, arguments were often made that these individuals already received benefits through other forms of government assistance, like health care. But such logic falls short when one acknowledges that low-income workers already pay a higher share of taxes than any other taxpayer through those like sales and fuel.

A cut that was tied to earned income was proposed, which would have been a fairer and more effective tax cut than any other kind of cut made during this session. Unfortunately, the bill, which would have provided an opportunity to move individuals off government assistance by creating an atmosphere where they would be able to contribute more to the economy, was voted down in committee. Shortly thereafter, the same committee that voted down this effort to extend relief to our most at-risk working families voted to restore the capital gains exemption to 50% instead.

Outcomes aside, these events started a dialogue about disparities in wealth and showed that Arkansas must find a way to speak to the ever-expanding gap between rich and poor sooner than later.

These are just a couple of the new conversations that are certain to dominate the Arkansas political scene for quite some time, and while there are many more issues that must be addressed by our legislature (such as how we’ll fund our highways and teacher insurance), only the robust competition of our two-party system will ensure that our policies reflect the best interests of all Arkansans.

www.talkbusiness.net

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Regional: Northwest Arkansas

Top State Metro Economies Finish 2014 on a Good Note

By Michael Tilley COURTESY OF THE CITY WIRE

Economic conditions in Arkansas’ three

Compass Report. He is also a former direc-

area posted a C+ grade for the fourth

largest metro areas were relatively healthy in

tor of the Center for Business and Economic

quarter, unchanged compared to the C+ in

the fourth quarter of 2014. Small improve-

Research at the University of Arkansas.

the third quarter of 2014 and unchanged

ments were seen in the Central Arkansas

“Output growth has been solid over

compared to the fourth quarter of 2013.

and Fort Smith areas, and overall solid

the last three quarters. This coupled with

Gains in building permit values, sales tax

numbers continued for the Northwest Ar-

relatively strong employment growth has

collections and continued improvements in

kansas economy, according to The Compass

reduced the economic concerns of U.S.

the region’s hospitality (tourism and travel)

Report.

households and businesses,” Collins noted in

sector resulted in the slightly better than

The quarterly Compass Report is man-

his analysis of fourth quarter 2014 economic

average grade. Decline in regional em-

aged by The City Wire. The report is the only independent analysis of economic conditions in Arkansas’ three largest metro areas.

Compared to the fourth quarter of 2013,

Arkansas Metro Grades Q4 2014

economic conditions were improved in Central Arkansas and the Fort Smith metro area, and down slightly in Northwest Arkansas.

However, Northwest Arkansas remains by far the state’s most vibrant metro economy.

To underscore the impact of the three largest metro areas, for December of this

(October-December)

Northwest Arkansas: B Central Arkansas: C+ Fort Smith Region: C+

year the unemployment rate for the rest of

ployment is the primary reason the region struggles to consistently trend toward the positive.

Non-farm employment in the metro area hit 116,700 in December, down from 117,300 in December 2013. The report also shows how many jobs have been lost since the Great Recession. In December the total number of employed in the MSA was an estimated 118,635. By contrast, total employment in December 2006, prior to the recession, was 130,702.

the state was 6.5%, down from 8.4% in De-

conditions. “Indeed, many economists ex-

Sales and use tax revenue reported by

cember 2013. The statewide unemployment

pect output to grow between 2.5% to 3% for

the Arkansas Department of Finance &

rate with the three largest metros added

the foreseeable future barring unexpected

Administration were up quarter-on-quarter

back in was 5.6% December-on-December.

shocks such as the extreme winter weather,

5.5% after adjusting for the increased rate in

Slow and steady improvements in the

which significantly reduced output in the

Crawford County. Collections were particu-

national economy should continue to

first quarter of the year.”

larly strong in October.

help Arkansas’ economy in 2015, said Jeff

Although regional economic conditions

Collins, the economist for The City Wire

FORT SMITH REGION

have stabilized, Collins said the trends show

who gathers the extensive data used in The

The Compass Report for the Fort Smith

that the overall labor market has “weak-

68

TALK BUSINESS & POLITICS | MAY/JUNE 2015

ened.” He said the data make it hard to

ter. In percentage terms, Bentonville expe-

helped boost the grade higher. Non-farm

predict future patterns.

rienced the strongest growth in collections

employment stood at 350,900 in December,

“Data for the Fort Smith regional econo-

(20.7%) while Fayetteville collected the most

better than the 345,900 in December 2013.

my had been mixed for some time,” Collins

tax dollars of any of the four major munici-

There were an estimated 18,700 jobs in the

wrote. “The most recent numbers do noth-

palities ($9.6 million in the fourth quarter).

region’s construction sector in December,

ing to shed light on the long-term prospects

Collins expects the Northwest Arkansas

well ahead of the 15,900 in September 2013.

for the region. Finally, the data for the Fort

economy to do well in early 2015. “There is

Smith area economy suggest the region has

no reason to predict that growth will slow

Collins said the area also benefitted from

not performed as well as other key metros

and will likely accelerate in the first half of

a 1.3% gain in retail activity in the region

but has performed similarly to the state as a

2015,” he noted in his analysis.

during the fourth quarter compared to the

whole.”

same period in 2013. “Most recent econom-

Rodney Shepard, president and CEO of

CENTRAL ARKANSAS

ic data for Central Arkansas is encouraging.

Arvest Bank in Fort Smith and the River

Economic conditions in Central Arkan-

The local economy had struggled to gain

Valley Region, said the Fort Smith regional

sas, the state’s largest metro area, received

momentum so the declining unemployment

economy was hit hard but has stabilized.

a grade of C+ in the fourth quarter, better

rate and growth in non-farm employment

“I still remain encouraged. … As a

than the C in the third quarter and better

are positive signs the region may be return-

community, yes, we would like to see better

than the C- in the fourth quarter of 2013.

ing to trend. Whether this is an anomaly or

numbers, but in this environment and in

Improvements in employment and

a harbinger of things to come remains to be

this economy, I see this as a positive,” Shep-

impressive gains in the construction sector

seen,” he said.

ard said.

NORTHWEST ARKANSAS Continued gains in employment, sales tax revenue and construction resulted in a solid grade of B for the Northwest Arkansas economy during the fourth quarter. However, the grade was down from a B+ in the third quarter and a B+ in the fourth quarter of 2013.

The Northwest Arkansas regional economy continues to grow but at a more

N I P U L L A E R ’ E W .

S S E N I S U B R U YO

moderate pace than in previous quarters.

For example, non-farm employment grew at the same rate as Central Arkansas where it had previously been adding employment at two to four times the rate of the state’s largest MSA. Employment growth may be slowing but sales and use tax collections in Northwest Arkansas have definitely not stopped growing. Tax collection numbers show that Bentonville, Fayetteville, Springdale and Rogers

or black-tie gala , ing a business event Whether you’re plann Center has ever ything you need . the Fayetteville Town ormation, contact For more inf ncenter.com enter.com or visit tw nc tw er@ nn ru cb at Collin Brunner

have experienced growth quarter-on-quarwww.talkbusiness.net

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Regional: Northwest Arkansas

Car Sharing Stressing sustainability, new company in Fayetteville gives drivers the option of using low-speed electric vehicles.

By Rose Ann Pearce

COURTESY OF THE CITY WIRE

A new form of city transportation, building on the notions of sustainability and car sharing, is coming to Fayetteville and owners are banking on local residents using low-speed electric vehicles for short trips around downtown or to the University of Arkansas.

Sustained Urban Mobility (SUMO), with its “Benign Disruption,” opens this month at the northeast corner of Lafayette and West streets, one block north of Dickson Street, co-owner Mikel Lolley said. A white brick building stands at the corner, once the site of a filling station. Lolley said he and his partner, Bob Monger, entered a land lease with the building’s owner, Eric Close. A 40foot shipping container under the awning will serve as the office.

Lolley said the two met about six years ago at a green building conference where the idea was originally hatched and since has grown into a full-scale business model.

The low-speed electric vehicles – described by Lolley as “souped up, street-legal golf carts” – are governed to move at a top speed of 25 miles per hour. The company has 14 of the low-speed electric vehicles, an electric Toyota and a four-door sedan. The vehicles are small and agile and “can turn on a dime,” he said. The vehicle averages about 40 miles per charge; the four-door sedan has a range of about 70 miles.

He said the initial investment has been about $250,000, mostly for equipment.

COST BASED ON MINUTES The concept is similar to the international Car2Go (www.car2go.com), which started in 2008 in Ulm, Germany, and is now in 29 European, Canadian and U.S. cities, such as Washington, D.C., Columbus, Denver, Miami and San Diego, to mention a few, with more than a million memberships worldwide.

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It’s a simple process: A user buys a costefficient membership and uses the membership card to access the vehicle, drive from point A to B, then park the car. The cost is based on the minutes the car is in motion.

No reservation is required and you don’t have to return the car where you picked it up. The preferred model of car is the Smart Car. Lolley said his business model is similar to that of Car2Go. “Car sharing has been around for 20 years. The difference is ours is a low-speed

“We’re not trying to replace the family car.”

– Mikel Lolley

electric car share for members only and offering free parking,” he said.

The company is negotiating with the UA and businesses around Fayetteville to establish parking pods for the vehicles that will allow the user to park for free. The pods will be striped with signage and charging stations. Lolley estimated a typical parking

TALK BUSINESS & POLITICS | MAY/JUNE 2015

space could accommodate three of the vehicles.

In Fayetteville, the plan has been in testing since last December. The partners conducted five focus groups, reaching about 50 participants. For their participation, they will be the first members and have earned credits to use the service. Driving record checks have been conducted on about 30 people.

PAYMENT THROUGH PAYPAL Each low-speed electric vehicle has been equipped with a GPS antenna to keep track of the vehicles. Payment for rental will be made through PayPal once the membership is set up. Lolley said charges will be based on the number of minutes a vehicle is in use, estimating the cost will be about $1.50 for a five-minute trip.

Lolley and Monger also are authorized dealers for The Star EV, a low-speed electric vehicle manufactured in China, and the Cushman EZ Go, a similar model. They range in price from $9,500 to $10,500. To special order either model takes six to eight weeks for delivery.

“We have seen a lot of interest elsewhere, such as in Colorado, Georgia and Hawaii,” Lolley said, noting he has owned a lowspeed electric vehicle for about a year.

He estimated he is saving about $3 or more in fuel costs every time he drives it instead of his pickup truck. He drives the vehicle from his home in downtown Fayetteville to the Fayetteville Athletic Club at Zion and Crossover roads – a 20-mile round trip – and has been doing so for nearly a year.

“Only one person has honked,” he said.

“We’re not trying to replace the family car. I have a passion for sustainability.

We see a future in this, particularly with millennials.”

Regional: Northeast Arkansas

New Research Consortium Targeting Delta’s Problems

By Michael Wilkey A plan to blend the work of university research and private-sector efforts to build a strong future for the Delta can pay big dividends, the federal co-chairman of the Delta Regional Authority says.

“This is really good stuff,” Chris Masingill said of the nearly 40 ideas that members of the Delta Research Consortium came up with in April during a leadership summit.

“If we do half of what is on that list, you can put a flag in the ground and declare victory.”

Officials from at least 35 universities and area businesses met at Arkansas State University to start searching ways to build entrepreneurship and growth in the eightstate region. ASU is one of the sponsors for the project.

Masingill said the idea of helping the Delta has been a tried-and-true mission for many years.

“There have been at least four major initiatives in the past 15 years. And all of them have failed miserably,” Masingill said, crediting turf and funding battles as some of the reasons for the failure. The mission this time is different, he said, citing the work of the educational institutions involved.

that the college and others in the region have worked on conservation issues involving the Mississippi River flyways. He cited as an example nearby Jackson State University working with the Jackson Zoo to help the tiger population.

Masingill said other opportunities for businesses, universities and groups working together on issues can leverage support on a variety of issues. But the goal is knowing what you have, especially when dealing with

WORK AHEAD Before Masingill spoke, a group of at least 40 people sat down in the eighth floor conference room at the Dean B. Ellis Library on the ASU campus in Jonesboro to discuss the issue.

The talk was one part bull session, one part brainstorming as the people discussed the ideas.

“What about money,” one person said.

“It is about building trust,” another said.

Reid Bishop, an official with Belhaven College in Jackson, Miss., told the group

– Chris Masingill

“We have job openings in all eight states [of the Delta Regional Authority] because of the skills gap.” the federal and state governments, Masingill said. “The more you can partner and collaborate [on issues], the better you can put yourself in a more competitive situation,” he said.

NEEDS AND ASSETS The new consortium will give people an opportunity to learn more about the region.

Right now, Masingill said it is sometimes

difficult to compile information on everything from education and health care to infrastructure needs and assets. He said most places that are successful have one thing in common – an institution of higher learning or access to one.

Masingill cited ASU as an example.

“ASU is an attractor for business and is a huge asset for Jonesboro, Craighead County and the entire region,” he said. “We also don’t need to forget our two-year schools as well.”

He said another need involves narrowing the so-called “skills gap” in the region.

“We have job openings in all eight states [of the Delta Regional Authority] because of the skills gap,” Masingill said. DRA has a footprint in Alabama, Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri and Tennessee.

Many companies have cited the need for welders and engineers in today’s world.

Masingill said he believes there should be support for the idea of “cradle to grave” education, with people constantly working to become educated in a complex world.

Earlier, Masingill called the leadership summit a first step in building a regional source for data that drives good decision-making.

“In order to craft effective policies and solutions to address the Delta region’s greatest challenges, we must collaborate across sectors to produce the research, data and resources to support economic and community growth,” he said. “This consortium will achieve this need by bringing academia, economic development practitioners, policymakers and local industry together to identify and fulfill the needs of our region’s economy and people.” www.talkbusiness.net

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Regional: Northeast Arkansas

ASU, O’Reilly Planning Campus Embassy Suites

By Michael Wilkey Arkansas State University is negotiating a deal with O’Reilly Hospitality Management LLC for a land-lease agreement that could eventually bring an Embassy Suites hotel, a conference center and Houlihan’s restaurant to the growing Northeast Arkansas campus, according to ASU Chancellor Tim Hudson.

The project, in which O’Reilly is expected to invest between $35 million and $45 million, is designed to bolster the Northeast Arkansas economy through increased tourism, serve ASU constituencies and generate auxiliary revenue for the university, Hudson said. The university would also receive revenue from the development. Construction is expected to start later this year.

EDUCATIONAL OPPORTUNITIES “We’re encouraged by the opportunities to enhance learning for our students, increase revenues for the university and serve our city and region,” said Hudson, noting the university would work with O’Reilly to incorporate joint educational opportunities and internships in areas such as hospitality management and marketing.

“The initial feasibility study feedback indicates market demand for these facilities.

We look forward to working with Jonesboro

Mayor Harold Perrin and other city leaders as we escalate Arkansas State’s position as a destination and a driver for tourism and hospitality-related economic growth,” he said.

As CEO of the Springfield, Mo.- based hotel group, Tim O’Reilly is a franchisee of Hilton Worldwide. The proposed facility would have nearly 200 full-service rooms, with plans for a 40,000- to 50,000-squarefoot conference center with a Houlihan’s franchise restaurant attached.

The university and O’Reilly are looking at a preferred location for the hotel and convention center on an 11-acre site between Red Wolf Blvd. (U.S. 49) and Olympic Drive, near the former ASU track and field complex. Currently, Centennial Bank Stadium, the Convocation Center, Fowler Center and Cooper Alumni Center surround the site.

O’Reilly was chosen through a procurement process for the project, officials said.

“We’re excited about partnering with Arkansas State and the city of Jonesboro to develop a modern, full-service hotel and meeting space in Northeast Arkansas,” O’Reilly said. “Ultimately, this development will have a substantial positive impact on

the region and make Jonesboro competitive to attract dozens of state and regional events.”

CONVENIENT FOR VISITORS Shawnie Carrier, the chancellor’s chief of staff and interim director of the Delta Center for Economic Development, said a feasibility study is being conducted by HVS Consulting and Valuation Services, a division of TS Worldwide LLC. Carrier, the project leader for ASU, said the results are expected soon.

“We all see long-term strength in the local hotel market and a location that will be convenient for overnight visitors attending events on campus,” Carrier said. “The conference center will drive business not only to our hotel and restaurant, but also to many other lodging and dining facilities.”

Perrin said he has advocated for a conference center and full-service hotel for seven years. “Increasing the number of conventions and visitors to the city will help retailers, restaurants and other hotels,” he said. “The impact on our city will be enormous, and we will do everything we can to support the efforts of Arkansas State and O’Reilly Hospitality.”

Chipping In: Frito-Lay Expanding

By Michael Wilkey A company laid its proverbial chips on the table in mid-April by announcing a nearly $50 million expansion at its location in Jonesboro.

Frito-Lay officials announced April 13 that they would expand an existing Jonesboro manufacturing facility with a $45.7 million addition. Company officials with Frito-Lay spoke to Craighead County

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justices about the major announcement.

Currently, Frito-Lay’s Jonesboro plant employs 453 workers. The factory makes Dorito’s, Lay’s, Ruffles and other brands of chips. The expansion will provide about 30 new jobs and expand the facility on Arkansas Highway 18 by nearly 80,000 square feet.

Cynthia Baker, spokesperson for

TALK BUSINESS & POLITICS | MAY/JUNE 2015

Frito-Lay North America, said the expansion will include investments in “high technology distribution equipment” and that it should be online by 2018.

“The facility has been operating for 17 years,” she said. “The new equipment increases the stability of the site and enhances the site’s operations with faster delivery of products to our customers.”

September/October 2014

A 16 year multi-media news organization reporting on business Blackwell developments and politics in Arkansas.

July/August 2014

Story Topic Story Topic Story Topic Story Topic Story Topic Story Topic

Marlon

ON ARCHITECTURE & LIFE

Gov. Mike Beebe Takes Flight Energy In-depth

The EPA Impacts Arkansas

Turning 10

The Fayetteville Shale

Gene’s BBQ Always Open

Hot Springs Re-imagined Motorcycle Tourism Get Your Motor Runnin’

Heavyweight Fight Sen. Mark Pryor vs.

Cong. Tom Cotton

TELEVISION

Host Roby Brock interviews influential business and political leaders at 9 a.m.

Sundays on KATV Channel 7. The show also features Channel 7 News Anchor Scott Inman and Lead Capitol Reporter Janelle Lilley.

RADIO

Monday nights at 6 on KUAR 89.1 FM in Central Arkansas; weekdays at noon on KUAF 91.3 FM in Northwest Arkansas; and Saturdays at noon on KASU 91.9 FM in Northeast Arkansas and ED-88 in Southwest Arkansas.

MAGAZINE

Talk Business & Politics is produced six times a year and features a mix of profiles, commentaries, in-depth coverage of statewide business and politics and top regional stories of interest. Of the 16,000 copies published, 15,000-plus are directly mailed to influential business and political decision-makers in Arkansas and the remaining copies are distributed in niche locations and at conferences across the state.

ONLINE

Talkbusiness.net offers statewide coverage of top business and political news with leading contributors with opinion columnists. Supplemental micro-sites covering key industries provide more in-depth reporting in fields of entrepreneurship, manufacturing, energy, finance, health care, education and more.

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Sign up on our website for our daily e-newsletter to be delivered to your email address 7 days a week.

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Sundays, watch or listen to our weekly TV program.

Tuesdays at 4 p.m., Roby Brock and Wes Brown “Talk Business” and provide interviews, analysis and deeper coverage of big stories in the business arena.

Available on talkbusiness.net, iTunes and Stitcher.

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SOCIAL MEDIA

EXPERIENCE

Led by Roby Brock , the Talk Business & Politics brand is a trusted resource for fair and balanced reporting on the news that’s driving politics and commerce across the state and is the most respected media in the industry. With the relationships that have been cultivated over the years, the TB&P staff, contributors and content partners represents the most knowledgeable and experienced in their fields. www.talkbusiness.net

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Industry PHOTO: DOLLARPHOTOCLUB

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Health Care by the Numbers Arkansas’ new surgeon general sees federal waiver 1332 as important to the work of the health-care task force.

By Roby Brock

A

rkansas’ new surgeon general, Dr. Greg Bledsoe, says the legislative health-care task force that in late April began its work in earnest will be looking at a much wider swath of reform than just the private option.

Appearing on a recent edition of Talk Business & Politics on KATV Channel 7, Bledsoe said Gov. Asa Hutchinson’s efforts and the legislation he got passed in this recent session will be all-encompassing.

“The private option is a good first step,” he said. “More importantly, we want to move it further from what we have right now. … These last few years we’ve been talking solely about the private option. What the task force is looking at is all of health-care reform.”

Hutchinson pushed state lawmakers to fund the private option through the end of 2016. The innovative and controversial program has led 230,000 enrollees into health-insurance coverage, according to the latest statistics.

Hutchinson also convinced legislators to form a task force to recommend changes by the end of this year for ending the private option program by next year and to design a new marketplace for health care and insurance by the start of 2017.

Bledsoe sits on the 16-member legislative task force that is charged with meeting that challenge. As a non-voting member, he’ll still be representing the governor’s interests to the panel.

“I think this is a once-in-a-generational opportunity to do this,” said Bledsoe, who added that a potential special session is “on the table” to ultimately address the task force’s recommendations.

WAIVER PROVIDES OPTIONS A key reform driver that will quickly

come up in discussion for the task force involves a federal waiver known as a 1332 waiver. It allows great flexibility within the Affordable Care Act, also known as Obamacare. In short, 1332 waivers allow states to: • modify or eliminate the individual mandate component of the ACA, • modify or eliminate the employer mandate component of the ACA, • modify benefits or subsidies, and • modify or eliminate marketplaces and health plans.

“I think the federal government is in a position where they’re willing to negotiate.”

– Dr. Greg Bledsoe “When you look at the opportunity to truly remake Medicaid and remake health care in the state through these 1332 waivers, we’ve got an incredible opportunity. There’s a lot of flexibility built into the Affordable Care Act through the 1332 waivers,” Bledsoe said.

When asked how eliminating individual

or employer mandates could impact health-insurance participation, Bledsoe said he did not have a crystal ball on if the task force would keep those mandates in a state plan or create different incentives for participation.

‘WILLING TO NEGOTIATE’ He said one of his first meetings as state surgeon general involved a face-to-face with Sylvia Burwell, secretary of the U.S. Department of Health and Human Services.

Bledsoe said he felt the feds would bend greatly in Arkansas’ efforts to reshape health care.

According to Bledsoe, Burwell said if the White House says no or the federal law forbids it, there is little she can do. “‘But everything else is on the table for discussion,’” Bledsoe says he was told. “I think the federal government is in a position where they’re willing to negotiate.”

Also, a U.S Supreme Court ruling, King vs. Burwell, could come down this summer.

The challenge to the federal health-care law is based on the constitutionality of exchange insurance subsidies created by the Affordable Care Act. A ruling against the subsidies could lead to the act’s demise. If upheld, it’s business as usual.

Bledsoe confesses that a ruling against the exchange insurance subsidies “could change the dynamic.”

“The governor and I and the rest of the staff have been looking at how we would respond in case they ruled against the government, against Burwell, and we have a plan in place to deal with that. But we’re not going to get out ahead of that and speculate until the Supreme Court actually makes its ruling,” he said, declining to offer more details when asked. www.talkbusiness.net

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Industry PHOTO COURTESY OF WALMART.COM

Trust-Mart Hypermarket, China

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Allegations of Corruption Prove Costly to Wal-Mart Legal fees, compliance restructuring costs add up to more than $612 million since 2013.

By Kim Souza

A

COURTESY OF THE CITY WIRE

lleged violations of the Foreign Corruption Practices Act by WalMart have cost the retailer more than $612 million in legal fees and compliance restructuring costs over the past three years.

The retail giant did not report the ongoing tally of FCPA expenses in any of its three reports issued on April 22. Wal-Mart does report the expenditures during its quarterly earnings releases, leaving the public to keep their own tally, until the international corruption probe is resolved.

Wal-Mart’s Global Compliance report, one of the three reports issued, came about last year by a mandate from the board’s audit committee in the wake of expanded allegations of bribery, permit mishandling and other corrupt practices in Mexico, India, Brazil and China.

In fiscal 2015, which ended Jan. 31, Wal-Mart said it spent $173 million on FCPA compliance-related costs. The majority of that – $121 million – was spent on legal costs associated with the investigation and additional inquiries. The remaining $52 million was spent on WalMart’s own internal compliance overhaul.

In the prior two years, FCPA costs totaled $439 million for Wal-Mart, with $282 million in 2014 and $157 million in 2013.

Wal-Mart said in the 2014 compliance report it expected to spend more than $100 million on compliance systems enhancements around the globe over the course of the next several years. In the 2015 report, Wal-Mart did not mention the FCPA investigations by name and it gave no financial update on costs thus far or an expected impact going forward.

MEETING OBJECTIVES Instead, the seven-page report attempted

to highlight some of the strides taken by Wal-Mart as directed by the board of directors in 2013. The board’s audit committee established a set of compliance objectives they wanted to see accomplished by Jan. 31, 2014. In an effort to demonstrate Wal-Mart’s commitment to compliance, a portion of executive compensation could be withheld should the executives fail to achieve their compliance objectives.

CEO Doug McMillon notes in the recent compliance report that senior management worked with the audit committee in fiscal year 2015 to accomplish 70 of the 72 compliance objectives outlined by the board the previous year. McMillon said some progress was made on the remaining two goals, which have been carried over into the current year resulting in no reduction of executive compensation for fiscal 2015.

These compliance objectives can be grouped into three areas: people, policies and processes, and systems. The goals were set in collaboration between the audit committee and its counsel and top management, the report notes. He said additional staff was hired in fiscal 2015 to round out the retailer’s global compliance team. The retailer employs more than 2,000 people in its formal compliance program. The company also said it continued to develop its own internal anti-corruption resources.

“For example, we supplemented our anti-corruption leadership team by recruiting anti-corruption directors in the eCommerce businesses at Walmart.com.br (Brazil) and Yihaodian.com (China).

Working with Walmart’s global anticorruption team, these new directors conduct due diligence, develop and provide anti-corruption training, and oversee the implementation of anti-corruption policies

and procedures,” the report stated.

IMPROVEMENT TEAMS McMillon said the company also built upon efforts began in fiscal 2014 for Wal-Mart’s appointments of compliance monitors in each of its international markets.

“These monitors [known as Continuous Improvement Teams] regularly visit the stores, assess the effectiveness of our compliance controls at store level, train managers on proper compliance procedures and assist the operators in correcting any issues identified,” the report noted.

During fiscal 2015, the teams completed more than 5,500 assessments at retail locations, identified any deviations from company policies and processes and collaborated with store operators to correct over 90% of those issues by year end, the report states. The retailer said it expanded the concept of compliance monitors to focus on anti-corruption policies and related financial controls. As a result of the findings last year a number of one-time externally handled functions have been transferred in-house.

Wal-Mart said it spent more $40 million in fiscal 2015 employing data and tracking analytics for its teams around the world, conducting due diligence on third-party actions on their behalf and centralizing the oversight of its license and permit applications and renewal.

In fiscal 2015 Wal-Mart said it extended a global license-management system into 11 of its international retail markets to simplify the process for applying for licenses and provide a single repository for documentation associated with its licensing obligations. www.talkbusiness.net

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Leadership

Sixth Sense:

Leadership Inspiration Today’s executives know they need to continually develop and hone their management skills, so we asked six business leaders to tell us about the single most impactful book, article or presentation that shaped their approach to leading people.

By Bill Paddack

Chuck Hyde

Rosalind M. Mouser

George Wheatley

A great book is “Multipliers” by Liz Wiseman. Pound for pound it has more practical insights for leaders than perhaps any resource I’ve seen.

Through her study, Wiseman identifies five behavior patterns where leaders can multiply the talent and contribution of those around him or her, or can diminish those same people. As I read through the patterns and supporting examples, I was able to quickly identify leaders from my career who were multipliers and those that were diminishers – to the point I started writing names down in the margins.

What became convicting to me was, for the people I lead, where would they write my name? When am I a multiplier and when am I a diminisher, even if accidentally?

This is one of the books I can and have gone back to read again and again as a reminder of the type of leader I want to be.

It’s the winter of 1968. A white police officer shoots and kills a young AfricanAmerican man in Pine Bluff. I’m 10, standing in a crowd with my mother at an event to address the race situation. Why am I here? The African-American community requested one white person to speak, and it’s my father. I cannot see him, but I hear him, loud and clear.

This is the earliest presentation I recall that changed my life. I do not remember the exact words my father spoke, but the next 35 years of his life demonstrated what he said. That night, I determined I wanted to be a leader like my father. Genuine. A leader that brings people together in the midst of tragedy, anger and sorrow. A leader that “walks her talk.” A leader that will show up and take a stand, even when unpopular. A leader that will seek truth and justice for all – one that works tirelessly to bring her best to the challenges of life. My father’s speech that night has been the greatest influence on my approach to leadership.

You may ask, “How do you feel this morning?” I say, “Terrific.” I say that no matter how I feel when I start out. Once I have said it two or three times, I do feel terrific.

The single most impactful book that helped shape me is “The Art of Winning”

by Dennis Conner. It is a rather old book – late 1980s. It is chock full of techniques for motivation, teamwork and success in life.

Whether you are attempting to win the America’s Cup (as Conner did) or trying to help our world to be more sustainable, these need to be in your formula for success – strategy, attitude, performance, teamwork, competition and goals.

Love what you do. Learn to appreciate everyone you work with – even your adversaries. Be your own goalkeeper.

Recognize outside insights and information, but set your own goals and your own pursuit timeline. Make a personal commitment to the commitment.

That’s a commitment you have to make for yourself.

CEO Soderquist Leadership Siloam Springs

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Partner Ramsay, Bridgforth, Robinson and Raley LLP Pine Bluff

TALK BUSINESS & POLITICS | MAY/JUNE 2015

Public Affairs Director Waste Management Fayetteville

State Rep. Monte Hodges Lucie Pathmann Vice President of Commercial Lending Southern Bancorp, Inc. Blytheville

Director of Brand Management & Communications Stone Ward Little Rock

Dominik Mjartan

My single most motivating proverb didn’t come from a textbook, magazine or lecture.

Neither did it come from any personal motivational material. But, my single most life-changing phrase came from one of the oldest, most relevant books in any society or culture: the Holy Bible.

In the book of Matthew, the 25th chapter, Jesus had to change the perception of what his disciples thought was leadership. They had true leadership misconstrued.

After reading this chapter, I was inspired go into public service. This book for me is always accurate, precise and to the point.

I’ve been put here to serve others.

Matthew 25:28 says explicitly that the Son of Man did not come to be served, but to serve.

From this perspective, I live in the fullness of who I am – “a servant leader.”

One of my favorite quotes on leadership is, “You manage things; you lead people.”

While I wear many hats within the agency, leading my team to reach their full potential is by far my main priority.

A few years ago, Stone Ward was introduced to the Process Communication Model, which identified individual personality traits for each staff member. The presentation on how those personality types act independently and interact with the other types completely changed the way I viewed leadership. The presentation gave examples on how to understand the traits of each personality type in order to motivate and communicate more effectively with those around you.

Based on what I learned that day, I now have the ability to focus on what drives each of my team members, what they need from me to succeed and the most effective way to interact with them. To me, knowing the best way to communicate to your employees is one of the most important assets in being a good leader and by doing this I’m able to live our agency’s philosophy of Building Good.

Most recently, I was influenced by the book “Traction” by Gino Wickman. It emphasizes the importance of aligning all aspects of an organization.

Under the leadership of our holding company CEO Darrin Williams, we’ve started aligning our organization as outlined in the book whereby each of our team members will have short- and long-term goals that align with our 10-year organizational goals. Each team member will have both long-term direction and short-term milestones.

For example, one of my 90-day goals is to deploy all of our excess loan capital while staying aligned with our 10-year goals of homeownership, entrepreneurship and savings.

Leadership development is a key component of the process as it engages employees, communicates the long-term strategy and challenges them to align their efforts with the long-term goals – all while underscoring the principles of accountability, respect, integrity and transparency.

CEO, Southern Bancorp Community Partners EVP, Southern Bancorp, Inc. Little Rock

www.talkbusiness.net

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Executive Q&A PHOTOS BY BOB OCKEN

Jonathan Crossley says students “respond to high expectations and transparency.”

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TALK BUSINESS & POLITICS | MAY/JUNE 2015

Jonathan Crossley

Adamant that ‘education equity should be at the forefront of the state and national conversation’ and that schools should teach students ‘how to think, not what to think,’ this school year away from the classroom has been a valuable, enriching time for Arkansas’ 2014 Teacher of the Year.

By Bill Paddack

J

onathan Crossley has been traveling Arkansas and seeing first-hand its challenges, problems and opportunities in education.

As the 2014 Arkansas Teacher of the Year, he’s spent the 2014-15 school year working with the state Department of Education. He’s been providing professional development and assisting school districts, educational organizations and affiliates through speaking engagements, policy discussions and research. In the process, he’s put about 35,000 miles on his car, a significant amount of that being workrelated.

Crossley, 26, a native of Gaffney, S.C., holds a B.A. in political science from the University of South Carolina and a M.Ed. in educational leadership from Arkansas Tech University.

Previously an 11th- and 12th-grade English and oral communications teacher at Palestine-Wheatley High School, he’s used to doing a little bit of everything and helping out in just about any way he can.

Check his resume or his LinkedIn page and you can see what undoubtedly impressed the Teacher of the Year judges.

For example: • His students grew from 36% proficiency to 92% proficiency on the Arkansas state literacy exam. He says this was the highest proficiency rate in school history and the highest in eastern Arkansas.

• Crossley’s students averaged 5.6 points growth on American College Test (ACT), and grew an average of 2.8 years in their reading levels.

While at Palestine-Wheatley for four

years, the former high school basketball star and college walk-on at South Carolina coached girls’ basketball and directed the first school play at the high school in 27 years. He also was the literacy coach for grades six through 12.

He was placed there as part of the Teach For America organization whose mission is to “eliminate educational inequity by enlisting high-achieving recent college graduates and professionals to teach” for at least two years in low-income communities throughout the U.S. In an interview, he comes across as friendly, articulate, eager to help make a difference and fervent in his belief in education and its power in bringing hope and improvement to impoverished areas like the Arkansas Delta. Despite his South Carolina roots, “I’ve made a home here in Arkansas,” Crossley said. “I think about myself here in Arkansas and how I can impact change.”

He enjoys movies and meeting new people and, oh yeah, still sports a basketball buzz cut. He’s in the middle of applying for more opportunities and optimistic about the future. His other honors include a Lowell Milken Award for Unsung Heroes and a Fishman Prize for Superlative Classroom Practice. He’s currently a regional finalist for a White House Fellowship. We caught up with him recently in the offices of the state Department of Education.

TB&P: What initially drew you to teaching?

Crossley: I was the first person in my family to go to college. Growing up, I wanted to be a lawyer to impact social change. Upon reflection, I discovered that

my true values most closely aligned with teaching in underserved communities.

When I look into my students’ eyes I see myself. I see my father. I see my mother.

The call is urgent. Teaching can significantly impact social change. The profession has changed my life for the better.

TB&P: What do you love about what you do?

Crossley: The mutual love and respect that can be built within a classroom drives me. Students respond to high expectations and transparency. In return, both my students and I grow in unexpected and profound ways.

TB&P: Since you were the drama director, we have to ask – favorite movie?

Crossley: “Forrest Gump.”

TB&P: What impact did your year as Teacher of the Year have on you and what were some of the highlights?

Crossley: This year has deeply enriched my self-efficacy and professional perspective. I cannot currently gauge the long-term impact of the TOY experience. As I grow as a practitioner and advocate, I will undoubtedly reflect on lessons learned from this year and harness strength.

Some highlights: watching my mother’s face as she brushed shoulders with the president of the United States, and speaking with countless Arkansas teachers across the state – listening to their concerns in an effort to better advocate for their needs.

TB&P: You’ve had a chance to attend – and often address – meetings of education www.talkbusiness.net

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Executive Q&A: Crossley

“The most effective way to prepare students relies on teaching them how to think, not what to think. “ – Jonathan Crossley

decision-makers. Do you feel like your voice was heard?

Crossley: Certainly. In my experience, Arkansas policymakers want to represent the will of the people. Republicans and Democrats alike have sought out my opinion on education topics ranging from teacher leadership to testing standards. I felt valued and heard in most every encounter.

TB&P: What are your thoughts about education in Arkansas and how it can be improved?

Crossley: Education equity should be at the forefront of the state and national conversation. Zip code should not determine school quality. In this vein, teacher retention – especially in underserved communities – is an issue of dire consequence. We need to keep the best and brightest in the field of education – committed to working in underperforming districts.

TB&P: What do we need to keep in mind

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in preparing young people for today’s job market, and how can we make sure students have the necessary skills to join the workforce upon completion of their schooling?

Crossley: Critical thinking and the ability to collaborate across ideological lines are vital for the 21st century. We cannot accurately predict the job market 10 years from now. The most effective way to prepare students relies on teaching them how to think, not what to think.

TB&P: If you could share just one thought with fellow teachers, what would it be?

Crossley: To evoke the words of Gandhi, “Be the change you wish to see in the world.”

At times the conversation concerning education can be polarizing; however, we must remain hopeful. Education is a noble and rewarding profession. We must bind together to reinforce a positive narrative about our profession. Teachers are leaders.

Schools across Arkansas are depending on teachers to spur the state forward. Most

TALK BUSINESS & POLITICS | MAY/JUNE 2015

centrally, we must never forget our reasoning for becoming teachers. Our personal narratives, rich in conviction and purpose, will enable us to work well beyond the proverbial bell to impact students’ lives.

TB&P: For new teachers coming into the profession, what advice would you offer them?

Crossley: One, be intentional about building a growth mindset. Do not be afraid of failure. Excellence in the classroom depends on continual improvement.

Perseverance coupled with ongoing personal reflection leads to a joyful and wise teacher.

Author your own professional development.

Two, remain hopeful. Students of all ages reflect the attitudes and dispositions of their teachers. Relationships not programs will lead to the most long-term improvements for students and schools.

TB&P: Finally, one word that best sums you up.

Crossley: Passionate.

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