A city disrupted: Why Arkansas’ second largest city trails state, national jobs growth, and what can be done about it?

Fort Smith has fought its way back from losing its traditional manufacturing base. But while there is excitement among regional leaders about recent job announcements and capital investments — particularly in the city’s east-side Chaffee Crossing district — Arkansas’ second largest city still faces anemic jobs growth nationally and statewide.

Fort Smith’s record of new jobs creation places it dead last among the four major metro areas. Out of 19,011 new jobs created from October 2015 through October 2016, the Fort Smith metro region claimed just 1,052 (up 0.9%) compared to the state’s other three hubs — Central Arkansas (8,322 new jobs, up 2.49%), Northwest Arkansas (7,215, up 2.89%), and the Jonesboro metro (2,422, up 4.1%).

Fort Smith Regional Chamber of Commerce President and CEO Tim Allen, is encouraged by where the city is as well as the improvements it has made in just three years.

“Since 2013, Fort Smith and the Chamber have been able to secure $680 million in capital investment towards economic development projects. We’ve created 5,000 new jobs. We’ve been through some rough times in the past, but we’re well back on track where we need to be.”

However, there remains a chasm between Fort Smith and the rest of the state. Most Fort Smith area business leaders say the city is still in a state of disruption from changes in recent years, not all of which were negative. As First National Bank of Fort Smith President and CEO Sam Sicard put it, “disruptive change in leadership, disruptive change in opportunities, disruptive change in potential threats, and even a disruptive change in our community’s image.”

“My view is that disruptive change is often a net positive for a community in the long run, and that a bigger threat to a community in a rapidly evolving market economy is an unwillingness to change,” said Sicard, who served as the Fort Smith Chamber’s 2016 chairperson and announced in October a $2 million economic development campaign to attract additional employers to the city in 2017. “Our community has faced many challenges over the last decade.  While I acknowledge we have some challenges ahead of us, I’m pleased with how our community is responding. It is clear to me the city wasn’t willing to accept the status quo, knew it had to change to improve the retention and attraction of human talent and enterprise, and is positioning itself for economic growth and success in the future.”

A CITY DISRUPTED
Part of the disruption Sicard refers to comes in the form of city government. The public body has undergone continued budgetary, regulatory, and personnel-related tempests in the last two years. On the personnel side, it began with the abrupt resignation of the late former City Administrator Ray Gosack, who had been with the city for 16 years when he resigned. His position remained vacant until May 2016 when City Administrator Carl Geffken took over. It was immediately followed by a string of high-profile departures in city leadership. Former Fire Chief Mike Richards announced his retirement in September 2015. He was followed one month later by Human Resources Director Richard Jones. Ten-year Sanitation Department Head Baridi Nkokheli was terminated in December. Police Chief Kevin Lindsey announced his resignation the following March, admitting to a complaint he had made racially insensitive remarks over the city’s minority hiring deficiencies.

Former Fort Smith Utilities Director Steve Parke, who endured frequent scrutiny from the city’s Board of Directors over his part in a federal consent decree, retired on April 1. For years, the U.S. Environmental Protection Agency (EPA) found, the city had violated safety standards to its wastewater system as mandated by the 1972 federal Clean Water Act. The order allowed the city just 12 years to make approximately $480 million in necessary changes, resulting in many Fort Smith residents seeing increases to their sewer bills in excess of 160% practically overnight with the threat of future water rate increases looming.

Since Geffken took over on May 9, 2016, he has continued compliance with the consent order and filled all but one of the vacant positions — Parke’s.

When asked what role the city can play, Geffken said, “the city needs to provide services that the citizens expect along with those that are required in the most efficient way possible, maintain and improve the quality of life, and do this in the most cost efficient manner,” adding that “a clean and safe city attracts people to move here and businesses to expand or relocate.”

Providing those services, however, is getting more difficult on an ever-tightening budget that for 2017, featured just a $27,000 surplus, and that’s without addressing the diminishing LOPFI retirement pension fund for police and firefighters. At present, the city must make $2.5 million in additional annual contributions on top of the general requirement to cover the shortfall, but it has been unable to do so without the threat of insolvency.

THE WHIRLPOOL ‘CONVERSE’
As city government finds its footing, Chaffee Crossing remains a bright spot for champions of Fort Smith like Rodney Shepard, president and CEO of Arvest Bank in the Fort Smith region. It has been a long time since the words “optimistic” and “Whirlpool” appeared in the same sentence from someone with ties to the region, but Shepard said, given the changes at Chaffee Crossing, he is optimistic for a “Whirlpool converse” effect in the coming years.

The Benton Harbor, Mich.-based company closed its refrigerator manufacturing plant in June 2012 resulting in an immediate loss of 1,000 jobs after cutting another 3,500 in the five years prior. The seismic economic event had further reaching effects than on its employees.

“When an employer like Whirlpool goes, it creates a ripple effect,” Shepard said. “When it left, it wasn’t just those jobs affected, but all the buildings and businesses that supported it. Other jobs, housing, restaurants, retail.”

Shepard believes the Arkansas Colleges of Health Education (ACHE), which will open the first facility in the Arkansas College of Osteopathic Medicine at Chaffee Crossing in August 2017, will create that desired converse.

“I don’t think all of us can fully appreciate the impact when that’s up and running. By year four or five, when the first class graduates, there will be around 600 students out there. You’re likely to have a situation that is somewhat the converse of Whirlpool leaving. Look at that in conjunction with ArcBest. The housing, the retail that’s going to be needed to support that side of town should leave everyone very optimistic.”

Combined, ACHE and ArcBest offer a glimpse of where the Fort Smith jobs market is heading — higher end jobs in healthcare, education, and administration — a fact not lost on Fort Chaffee Redevelopment Authority (FCRA) Executive Director Ivy Owen, who said Fort Smith leaders need to “finally acknowledge that we are no longer a heavy manufacturing town.”

“Job types have changed to more technical, higher skilled and, fortunately, higher paid ones. Advanced manufacturing is upon us and our workforce training folks are quickly trying to adapt to the changes as well as UAFS and the other universities. … If all of the powers can embrace this, we can become competitive with NWA and other major population centers,” Owen said.

CHAFFEE’S FOOTSTEPS
That Chaffee Crossing has experienced astronomical growth in the last two decades is undeniable. That it would far outpace the city’s historic downtown riverfront district is to be expected. The district was helped along by 1995’s federal Base Realignment and Closure (BRAC) Commission, which recommended closure of Fort Chaffee — then an active U.S. Army post with around 72,000 acres.

The FCRA began actively marketing the property in 2000 and has since sold off 4,405 acres leaving 2,595 acres altogether — 1,754 marketable, 841 wetlands. Since its existence, the area has attracted more than $1.2 billion in capital investments as well as a number of industrial and commercial businesses, which have in turn helped create 1,400 jobs, 19 residential developments, and a number of recreational amenities.

Downtown Fort Smith is more landlocked and expensive to maintain. Nevertheless, stakeholders there hope to follow in Chaffee Crossing’s footsteps. One such group is 64.6 Downtown, an organization of private stakeholders formed in January 2015 to improve quality of place and boost the profile of Fort Smith’s riverfront with the goal of attracting businesses, customers, and increased recreational activities. 64.6 Downtown Executive Director John McIntosh helped manage the city’s Unexpected Project, which went live later that year and continued in 2016.

The event, which the group refers to as a “festival of murals” created by artists from all over the world, isn’t a job creator per se, but it has put the area on the map and expanded notoriety for downtown Fort Smith across the globe. One illustration of that is in social media views, which surpassed 5 million as of September 2016. Since the event’s inception, 64.6 Downtown has contracted with Dallas-based Gateway Planning for a downtown strategic redevelopment plan that is expected to be finished by the spring of 2017, McIntosh said.

Aiding anticipated growth, the U.S. Marshals Museum executive board announced in late October the long-delayed facility would open its doors on Sept. 24, 2019 to coincide with the 230th anniversary of the U.S. Marshals Service. A little over $29 million is listed in “committed fundraising” at this point, leaving approximately $33 million for completion.

Additionally, McIntosh said, amenities like the recently finished Greg Smith Riverfront trail, resurfacing on the Rice-Carden trail (expected completion in early 2017), and a new soccer complex on Riverside Drive beginning construction in 2017, will help attract higher end jobs like Propak Logistics, which moved its corporate headquarters to downtown Fort Smith in early 2016.

WORKFORCE TRAINING, RETRAINING
Central to growth in all of the city’s key locations is the University of Arkansas at Fort Smith, which has had to work quickly at embracing changes, particularly where workforce retraining is concerned. UAFS Chancellor Dr. Paul Beran said the university is working with business and industry leaders to “develop programs to specifically help.”

“What should we be doing to help grow the area? What should we stop doing? We’re trying to react to the business community and be somewhat proactive regarding where things are going,” Beran said, adding the university has only been offering four-year degrees for 10 years and the graduate program is just getting off the ground. “The only program up and going at present is our Master’s in healthcare administration. By the fall of 2017, we will have a Masters in nursing education, and we have a goal of in 18 months having programs in education tied into specific discipline areas, so a high school teacher can build on their degree field.”

The rollouts are particularly strategic when observing Sebastian County’s top employers. No. 1 is St. Edward’s Mercy Medical Center and No. 2 is the Fort Smith School District. Beran said this is by design in order to expedite workforce training targeted specifically to Fort Smith.

“We have to have patience as a community,” he said. “The bus hit us harder than anywhere else in the state in the sense we were the manufacturing center of the state. … Fort Smith had a very strong niche, but the way that business is carried out has changed, and we’re still adjusting.”