Economic stability. Now what?

by Michael Tilley ( 5 views 

The corpus of the Fort Smith regional economy is not a fully recovered patient but we should pause to take note of recent positive developments. The developments may offer even the most cynical in the region accommodation of a sliver of hope in better days.

Let’s start with the most recent big news. Fort Smith-based ArcBest is embarking on a $30 million plan to expand its corporate presence in the city. The plan will see the construction of a new office building and data center at Chaffee Crossing and the addition of an estimated 975 corporate jobs by 2021. Sure, the transportation holding company may not create those jobs in the seven-year period. Or it may create more.

Just down the road from this new corporate structure is more great news for Fort Smith. A fully operational osteopathic college – Arkansas Colleges of Health Education – is expected to serve about 600 students, and employ around 65 (full-time equivalent jobs) with an average salary of $103,000. That impact does not include adjunct professors who will be needed for the school. Building the campus is estimated to cost $58 million.

The school, to be located on Chaffee Crossing land (200 acres) donated by the Fort Chaffee Redevelopment Authority, may open in the fall of 2016.

Just two announcements and we’re up to almost $90 million in planned investment and more than 1,000 new jobs. So far, so good.

And downtown Fort Smith – which could use a significantly more professional focus by the city in terms of visioning and leadership – is showing signs of life.

The former Town Club building in downtown Fort Smith has been acquired by Smith Auto Group for the purposes of locating corporate operations with up to 20 employees in the building that has been without a permanent occupant since the club folded in January 2010. John Smith Jr., grandson of the automotive group founder and now the head of Smith Auto Group, has also in the past three years presided over more than $15 million in new investments in the company’s Fort Smith dealership operations.

Smith’s Town Club renovation is just one of several downtown renovations announced in the past 18 months.

Steve Clark, founder and president of Fort Smith-based Propak Logistics, announced in May 2013 the acquisition of the Friedman-Mincer (former OTASCO building) and a $2 million renovation. Clark is working to convert the three-story, 24,000-square-foot building into offices for the about 40 employees of Propak. The company provides logistics, transportation and supply-chain management services.

Work began in earnest just a few months ago on the Garrison Pointe West development, a $3 million project that will convert six Garrison Avenue buildings into a mixed-use commercial and luxury apartment building. When the project was announced April 25, 2013, developer Rick Griffin said the project would be a "complete historic renovation, both interior and exterior, of the six buildings" located in the 400 block of Garrison.

Just a few days ago we learned that Oklahoma City-based Bricktown Brewery had acquired Varsity Sports Bar and Grill in downtown Fort Smith and plans a $750,000 renovation of the historic structure that is estimated to add 40 new jobs.

It’s not all about Chaffee Crossing and downtown Fort Smith. Additions at the University of Arkansas at Fort Smith and the Ozark campus of Arkansas Tech University will create more than $20 million in announced construction. That investment total is likely to rise – if not double – in the next 12-24 months.

In a more broad view, Fort Smith regional home sales have also been positive. In the Fort Smith area, home sales totaled 194, up 24.36% compared to May 2013, and up 32.88% compared to May 2012. The value of the sales in May were up 7.11% compared to May 2013. For the first five months of 2014, home sales in Crawford and Sebastian counties total 747, well ahead of the 635 in the same period of 2013 and the 627 in the same period of 2012.

Airport enplanements, another sign of economic activity, is also positive. The Fort Smith Regional Airport posted May enplanements of 8,371, up 4.95% compared to May 2013. Enplanements for the first five months of 2014 total 36,337, up 6.35% compared to the same period in 2013.

And there is the $80 million investment in a casino and hotel expansion by the Cherokee Nation just a few miles over the Oklahoma border in Roland.

The Dixie plant in Fort Smith, one of the first manufacturing operations to move to the city after World War II, is receiving a $40 million equipment and facility upgrade for a new plate line expected to begin production in 2015. The investment may not add a notable number of new jobs, but the 350 jobs at the plant are more secure because of the plant modernization.

Marty Shell, owner of Five Rivers Distribution, is making long-needed renovations at the ports in Fort Smith and Van Buren.

Just the few examples cited above roughly tallies an investment of more than $280 million. Not bad. It would have been closer to $300 million if not for Fort Smith Directors Kevin Settle and Mike Lorenz helping to scuttle a planned $20 million renovation of Fianna Hills Country Club.

The signs of positive economic change was first measured by the fourth quarter analysis of The Compass Report – an independent economic analysis managed by The City Wire.

“Data for the fourth quarter was very encouraging. Data for the Fort Smith regional economy had been mixed for some time but now a clear trend indicates the local economy has stabilized,” explained Jeff Collins, the economist hired by The City Wire to prepare The Compass Report.

But here’s the reality check. Stabilization is not a return to previous conditions. It’s simply the end of economic trends heading in a negative direction. And not everything is positive. Sales tax collections – a key indicator of economic health – in Fort Smith are well below estimates and below where they should be if following historic trend lines.

Much of that is a function of considerably fewer people employed in the region. In April 2014, the number of employed in the region was 119,003, more than 10.37% fewer than the regional high of 132,779 in November 2007. That’s 13,776 fewer people in the region receiving a paycheck. That’s potentially 13,776 fewer people in the region engaged in taxable commerce. Assuming an average annual wage of $25,000 (which is low), that’s a potential reduction of $344.4 million in regional payroll.

The Fort Smith regional economy has indeed stabilized and has witnessed several positive announcements in recent months. But the region has a lot of economic ground to make up. Think about this: It would take more than 14 of the ArcBest corporate announcements to return in the next seven years to the regional employment levels of less than seven years ago.

The recent positive announcements are worth celebrating, but perspective should prevent anyone from getting comfortable. Considering the growing awareness of the dysfunction of Fort Smith city government, it may prove difficult to retain an environment conducive to regional economic development that is necessary to return fully to previous levels.

But I remain optimistic. And while I fully doubt the existing form of city government is the best path toward long-term success, I continue to hold fast to the the mantra I penned several years ago: What’s wrong with the Fort Smith regional economy is no match for what’s right with the Fort Smith area. Within our people and within our many public and private entities, we have the potential for great things; we have the potential — through better leadership — to direct overwhelming people-power on whatever problems and obstacles we face. We are a great people, in a great place, and we are capable of great progress.