Fayetteville Faces Stormy Financial Future

At its current pace, the city of Fayetteville will be broke in two years.

Fayetteville Mayor Dan Coody and some city council members have plucked numbers from the city’s finances to flaunt in front of their favorite media outlets, but city Budget Manager Steve Davis recently presented a cut-and-dried picture that paints a storm brewing right over city hall.

Davis had already warned the city council about the deficiency in May, but he felt inclined to push the point home again at the Nov. 6 meeting.

Fayetteville had $10.27 million in reserves in 2000, but it is projected to have only $5.58 million by the end of 2002. With the path of its current expenditures, Davis said the town would not be able to operate in the black by the end of 2003. And Arkansas doesn’t allow a city to operate with a negative balance, so multiple cuts must be made in the next year, providing the city doesn’t find the money from some other source.

The annual gap between expenditures and revenue is projected to grow from $3.6 million to $6.9 million from 2002- 2005, Davis noted in his briefing.

Coody isn’t to blame for mandatory pay raises and other projected revenue losses, but he is still the man who must face head-on the fast-approaching storm.

However, with cutbacks needed to put the city’s financials back into gear, Coody has made a curious move by adding a $40,000 salaried position for a trails coordinator. He points to a $750,000 grant the city received in 1994 for the purpose of building multi-use trails. The initial grant was for a master trail plan design. Coody said Fayetteville wouldn’t get any more grant money if it didn’t begin the project the previous administration had ignored.

Nevertheless, some of the departments facing possible cutbacks are police and fire. And seeing a trails coordinator hired at a $40,000 salary is hard for those departments to digest when a 20-year veteran of the police department with a corporal rank makes only $38,000. Even the new sustained environmental coordinator is making $36,000 annually.

“In my opinion, we cannot cut fire or police,” said Alderman Trent Trumbo, the most outspoken council member against Coody. “We can cut trolley service and some city services that can be done away with. We also need to cut these new, high-salaried positions from the city payroll that we simply can’t afford.

“We have a new, progressive administration with good ideas, but in a time of recession we can’t afford to implement these expensive ideas. The ideas are great in theory, but our payroll increase is up 6 percent, and that’s going to make for an additional $800,000 [in expenses] next year.”

Mayor Report Card

Coody received positive grades from business leaders and other city officials whom the Business Journal asked about his first 10 months in office, despite the public battles he’s fought with members of the business sector. Coody and developer Ben Israel waged a well-publicized war, but the two have since — at least publicly — buried their differences.

Then there was a quarrel with Burt Hanna, CEO of Hanna’s Candle Co. and son of former Fayetteville Mayor Fred Hanna. Coody proudly showed the Business Journal a “thank you” note Hanna had sent the mayor after a recent visit to the company to discuss their differences.

“To [Coody’s] credit, I think he’s bent over backwards to try to correct some things,” said Bill Ramsey, the new president of the Fayetteville Chamber of Commerce. “It took some gonads to go out and visit Burt Hanna. I give him a great deal of credit for that. I think the mayor is realizing he needs everybody if he’s going to stay in that position. He needs the support of the business and development community.”

Coody is quick to go on the defensive when his techniques are questioned. He often resorts to criticizing former Mayor Hanna’s tactics.

“One of the complaints I hear about the previous administration was that if a friend of the mayor came in for a [building] permit, he could just walk right on through,” Coody said. “I do not want that reputation, and if you do it one time then you’ve got it.”

Few question the fact that the Hanna Administration was lax in its development requirements, an issue that came to a boil in the tree-sitting protest during the spring of 2000 at CMN Business Park.

Coody and some council members, including Sierra Club organizer Randy Zurcher, fed off of that controversy. The local consensus is that Coody rode that wave all the way to city hall.

And while Zurcher has fought urban sprawl, Trumbo said he considers the Northwest Arkansas Mall and CMN area urban sprawl — but it makes up about 65 percent of Fayetteville’s sales tax revenues.

“We have slowed down,” Coody said. “And we’re not growing like we did in the ’90s, but not many places are. Rogers is, but I suspect Wal-Mart has something to do with that. To have a global company like Wal-Mart nearby helps. If General Motors moved to Fayetteville, I would expect we would have some growth from that, too.

“I hope whoever is complaining realizes that the whole U.S. is hurting this year. Hopefully, they don’t think that everything is rosy everywhere but Fayetteville.”

Coody points out that Fayetteville has a 72,000-seat football stadium, 19,000-seat basketball arena, new 233-bed hospital, new Town Center and senior citizen center.

He also argues that his office saved the planned Boys and Girls Club.

“That deal was about to blow up into a million pieces, but this administration held the deal together,” he said.

Coody pointed out that the same week the Springdale City Council denied the apartment/golf course complex planned by Jim Lindsey and Gary George, it was Fayetteville that approved 500 new apartment units.

Ramsey said the perception of Coody’s administration being antidevelopment is definitely out there, but he defends the mayor.

“I’ve been real pleased with the response I’ve had from him,” Ramsey said. “Both of us are a work in progress. I’ve been in politics a long time, and whether it’s the governor or mayor, you need to work with him. The economic news of our state is not good. We are just going to have to make some adjustments.”

Two of Fayetteville’s top bankers also gave Coody passing grades.

“Dan Coody is trying to lead Fayetteville in a little different direction,” said Bank of Fayetteville President John Lewis, a staunch supporter of the mayor. “He’s working long hours confronting the issues. He’s not done anything I’ve had any objection to at all. He’s listened to all sides of issues. Fayetteville is not an easy town to govern. I give him high marks. Part of his campaign was to bring various elements of Fayetteville together. It hasn’t happened yet, but he’s trying.”

Arvest McIlroy Bank President Gary Head has butted heads with Coody, but nonetheless expressed his support.

“I have been very pleased with the effort the mayor has made to work with businesses in our community,” Head said. “Considering he came into the job knowing very few business leaders in the area, he’s done a good job assisting the community needs in our area. He’s out hustling business for Fayetteville.”

Coody said he understands controversy comes with the territory.

“We are busting our butts to do the right thing every day,” he said. “When we get accused of something that’s wrong, it gets very frustrating, but it’s not going to slow us down.”