FCRA director responds to Chaffee criticisms ahead of Aug. 31 meeting

The Fort Chaffee Redevelopment Authority (FCRA) has been in the middle of a boon in economic development on the east side of Fort Smith over the last decade with more than $1.5 billion in public-private investments thus far. But large numbers have not excluded the group from criticism.

FCRA Executive Director Ivy Owen, who took the reins in 2008, is aware of the charges.  Charges such as the following.
• “The trust doesn’t contribute enough to its own infrastructure.”

• “It should be selling land at higher price points, and not rely as heavily on city funds for needed infrastructure.”

• “That land should only be used for economic development; why are there so many neighborhoods?”

• “The land is being sold faster than the city can keep up. Maybe it’s time to put on the brakes.”

Owen is a self-proclaimed cheerleader for the district within Fort Smith and Barling known as Chaffee Crossing and generally tries to keep it positive, but with a likely contentious meeting slated with Fort Smith’s capital improvement plan (CIP) committee for streets, bridges, and associated drainage on Aug. 31, he decided it was time to confront the criticisms directly. In a recent interview, Owen told Talk Business & Politics he was “ready for this encounter.”

PUTTING ON THE BRAKES
The “encounter” stems from a meeting Aug. 3 when two CIP committee members — Robert Brown and David Armbruster — were hesitant to bump up widening Chaffee Crossing’s Wells Lake Road in the five-year project pecking order after receiving a request to do so from private developers in the district.

Reps from three in particular — ERC Holdings, ArcBest, and the Arkansas Colleges of Health Education (ACHE) — made the case Wells Lake Road would need to be widened as soon as possible to accommodate surges in traffic since ArcBest headquarters is bringing in 975 new jobs and the newly opened Arkansas College of Osteopathic Medicine will be welcoming classes each year at 150 students a clip, with around 200 employees.

Brown argued he is “for growth,” but suggested the FCRA bear more responsibility for improvements.

“We want more revenue. We want the city to grow. We want better streets. We’re just talking, who’s going to pay for it? And I’m saying, share some of that cost with us.”

Fellow committee member Armbruster said it “seems to me like maybe the trust needs to put the brakes on developing the land, and concentrate on what is available. Maybe increase some prices so they can have more funds available to put into projects (like Wells Lake). I read about all those sales. And I wonder, are those sales occurring because of price or demand?”

‘PRODDING’ INFLUENCES
While Owen is focusing on the meeting, he is also looking beyond it to the deeper resentment in certain silos of Fort Smith.

“I’m convinced there are some influences prompting this questioning other than just the CIP folks,” Owen said. “I’m convinced there are people prodding, ‘Let’s make an issue out of this now.'”

While Owen did not name names, he presented a scenario: “What if, and I’m not picking on them — and I don’t want anybody to think I’m picking on them, it’s just an obvious choice — but what if we selected the downtown CBID area to see how much the city has spent down there in the last 10 years? It’d be a bundle. And there are some good things going on down there, private money being spent — public and private. My whole issue is, the city is spending money down there on an area that’s been developed for 150 years, and how much new tax revenue are they getting off that? Not much. The tax revenue that’s coming in is the tax revenue that’s coming in. What they’ve spent out here has generated multitudes of tax money more than what they’ve been spending there over the years.”

Just one recent example is the now in-development planned zoning district at the ACHE, which is expected to create annual taxable revenues of $56 million. As to the point FCRA should sell land at a high enough rate to cover infrastructure, Owen said whoever made the suggestion “doesn’t know much about real estate, I can tell you that.”

“If I am buying a piece of real estate that’s had an existing use on it for years, and I want that particular piece of property, then I’m going to pay an appreciated value for that. Not the value of the land before they built the building. If you’re buying a piece of property that never has been in existence before, so to speak, has nothing on it, has no utilities, has no infrastructure, has no buildings around it, why would anybody expect us to charge more for that than we are, or why would somebody expect us to charge as much for that as they’re charging downtown?”

Eventually, Owen acknowledged, demand for property would raise the price to make it a “market-value property.”

“But in the beginning, it wasn’t that way, though it’s getting that way. But that’s how real estate works. The value of the property will seek its own level,” Owen said, elaborating if something happened on Phoenix Avenue that caused everyone to vacate, “you could buy it for pennies on the dollar, but that isn’t going to happen.”

He continued: “Out here, you’ve got to have some appreciation happening before you can expect it to sell for more unless you’ve got some dummy that comes in here and says, ‘I’ll give you a million dollars an acre for that because I like the way it looks.’ If that happens, we’ll be sitting here signing papers.”

GROWTH OF LAND VALUES
To give an idea of what FCRA was working with in land values prior to its economic development surge, Owen said the trust had undeveloped Umarex property appraised when the company was eyeing Fort Smith as the home of Walther Arms. A professional appraiser classified the plot as “farm land” and assigned it a value of just $2,500 per acre even though it was slated for industrial use.

“We were expecting it to be around $30,000-$45,000 an acre. We didn’t use that appraiser again,” Owen said.

While Owen did not know the original value of the land off-hand when the Base Realignment and Closures (BRAC) process deeded the land to the area in 1995, using the farm land appraisal as an example — at the time of BRAC, that’s likely how all the land would have been classified — the development would have carried a starting value of just $17.5 million ($2,500 times 7,000 acres). As the land appreciated, the trust has worked to get more out of the acreage, which is why its Real Estate Review Committee (RERC) is more likely to turn down offers today than they would have been eight years ago.

“There are some offers we rejected in the last six months that we would have been crawling on our hands and knees to get nine years ago. That’s just the way this works,” Owen said. “This land didn’t exist in anybody’s thinking, on anybody’s tax rolls or appraisal mind. And all of a sudden, kaboom, here’s 7,000 acres. ‘Oh gosh, we got a jackpot there. How much is it worth? Well I don’t know. Better charge a lot while we can get it.’ Well, it sat here from 2000 to 2010 before anything really started happening. Now the value of the property is getting up there. We’re selling property now for $35,000-$40,000 an acre that we were selling for $15,000 an acre seven or eight years ago.”

The increase in value is illustrated in a report from Sebastian County Assessor Zach Johnson showing assessed lands in the Chaffee Crossing boundaries from 2011-2017 had a tax value of $6.916 million. That figure is 20% of the land value, which would estimate growth from the aforementioned $17.5 million (for everything) to around $34.5 million just for the land FCRA placed back on tax rolls. The trust has unloaded around 4,400 acres of the original 7,000. The number left varies from month-to-month, but as an estimate, FCRA still has around 1,500 acres of marketable land remaining and more than 800 acres of unmarketable “wet lands.”

What individuals like the CIP committee are not taking into consideration, Owen believes, is the original mission of the FCRA and where the city would be without the lands. This argument FCRA is essentially not contributing enough to its success prompted Owen to speculate: “Let’s take the best case scenario for them. What if the $1.5 billion that has been generated out here was more public than it is private? What if that is the case? It’s $1.5 billion that somebody spent that’s going to generate tax money. That’s what the city does. That ain’t what we do. We’re here to sell property to get it back on the tax rolls to generate that money. In order to do that, we have committed all of our money that we generate outside of the operation side to go back into this project and infrastructure. That’s what we were supposed to do, that’s what we were challenged to do in the beginning, that’s what we’ve been called to do, and that’s exactly what we’re doing.”

‘NO PLANNING’
To the point the trust is unloading land faster than the city can financially keep up — made when Armbruster pointed out the city needing to maintain 15 miles of roads per year to keep up with its 480 miles in their 30-year life cycles, but only getting 5-8 accomplished — Owen acknowledged it “may be a fact” the city isn’t able to keep up.

“And if it’s happening too fast, it is a direct result of no planning because there’s no reason for the city not to be able to keep up if they’d planned, if they’d thought this was going to develop like it did. If they didn’t, then yeah, you can fall behind.”

But if the city or FCRA ever fails to provide infrastructure for one of the major developers at Chaffee Crossing, Owen argued, “we can kiss the rest of this development goodbye because that’ll end the big developers coming out here and looking for property. So we’ve got to find a way to make this happen.”

If BRAC had never happened and the city continued to grow, Owen said, there would be a need for more property, “and they couldn’t go south. They can’t go west. They can’t go north. The only way they can go is east. So they’d have to annex the property for expansion or stay at a stagnant development rate. So what would they do? What most cities do is they annex, and what that includes is a plan to provide infrastructure for that piece of property. It’s exactly the same thing as this is. What they need to be doing here would be happening anyway,” but without the help of participating entities Sebastian County, Barling, and FCRA.

Critics are too busy comparing “something that could have been to something that is,” Owen said. “They’re comparing something that might be now to something that isn’t. If the city tells us to stop selling property, by God, we’ll stop. We’ll tell Bob Cooper (land sales) to put the brakes on. We’ll go to our Board and say, ‘The city said to stop, we’re doing too much.’ And we’ll all sit here with our doors closed and dare anybody to come in. We’ll put a sign on the door: ‘Closed officially by the city of Fort Smith and the CIP Committee.’ That’s how silly and ridiculous this is.”

Owen continued: “To me, it seems like not even a comparison of apples-to-apples. They’ve gotten it so far out-of-kilter because part of what the city has done is what they would have done anyway. They would have maintained the streets; they would have put in water lines; they would have overlaid streets. They’re counting all of that as part of their contribution to anything out here. My argument is going to be, it’s not like this popped up one morning 10 years ago to the city and the county and whoever else was involved in it, that, ‘Oh my gosh, we got to be ready to put infrastructure in out there.’ This has been going on for 23 years. Somebody should have caught on by now.”

CHAFFEE DIVIDENDS
There was no real headway until 2001 when now Fort Smith Mayor Sandy Sanders took the reins as the group’s executive director, “and that’s when they (the city) really should have sat down and said, ‘Look, we got to get ready for this because it’s going to happen.’ But they didn’t. And that’s not our fault that they didn’t. It was just an overlook. I think that they thought it wasn’t really going to happen. So it’s not like we just dropped this bomb on them 10 years ago when I got here saying, ‘This is really gonna happen, now we need some help.’ Not like that at all. And in our indentured trust 23 years ago, it’s very spelled out that the city is going to contribute to the infrastructure. It’s not going to be all FCRA because FCRA doesn’t have all the money. This was a community effort the cities were expected to contribute to just like they would any other neighborhood development.”

That said, Owen acknowledged the city is now “doing what it can” and the investments at Chaffee Crossing have led to 3,500 “hard jobs” — i.e. jobs tied directly to the area and not service jobs connected to the area’s industries. Using Fort Smith’s $36,777 median income as an identifier — jobs at Chaffee Crossing range from entry-level hourly to north of $250,000 per year — the area produces an estimated payroll of $128.719 million annually to go along with the aforementioned $1.5 billion in public-private investments. The $1.5 billion figure includes at least $40 million each from ERC, ArcBest, and ACHE, and another $130 million in the old Mitsubishi/current Glatfelter plant, to name a few.

While a large amount of the development has occurred post-Owen, he attributes most of it to being a “perfect storm that came together.” The 2008 recession “helped” along with a $38 million contribution from the state highway commission to begin work on I-49. Up until Owen took over, developments were at a trickle with Graphic Packaging, The Woods at Chaffee Crossing, and Mars Petcare being among the few projects established. Then, Dick Trammel of the Arkansas State Highway Commission called with notification that some monies from southeastern Arkansas would be redistributed for construction of I-49.

“That was something that nobody expected to happen, including me. But it did, and we took advantage of it by promoting it, taking pictures of it, inviting people out here to see trucks coming and going. We got (FCRA Marketing Director) Lorie (Robertson) involved. We got Right Mind Advertising involved. And that one little construction project, we blossomed into a whole ‘this is going to happen’ idea,” Owen said. “So I attribute the highway construction to the beginning of our really selling the real estate and getting our name on the map, so to speak.”

NOT JUST ECONOMIC DEVELOPMENT
Owen also acknowledged a complaint he heard about FCRA — not from the CIP committee, but others — that Chaffee lands are not being used entirely for economic development, stating the indentured trust that became FCRA was originally charged with replacing the number of jobs eliminated by BRAC — “around 200” — and that was it.

“Well, we did that the first active year or two in 2000 or 2001. Since then, with everything else we’ve done, our job has not been just economic development. It’s to create a neighborhood, not just an industrial park. Where everybody got that idea — that all this was going to be was an industrial park — I don’t know. It never was the intent. It never was in our indentured trust. It never was in the city’s charge when they signed the agreement. It just never was. To develop what we’re trying to develop out here, you have to have neighborhoods.”

Owen said if the powers that be had said to the trust from the beginning, “‘Look, we don’t want any houses out there. We don’t want any churches, we don’t want any medical schools. We want factories.’ Then by golly, that’s all we would have done. But you know where we would have been today? We would have what we have. Because we haven’t turned anybody down for an industrial prospect because of lack of land, ever.”

The FCRA’s original land use plan did make room for recreation, industrial, commercial, and residential areas, and, as Owen observed, “When you create a source of jobs like Mars or Glatfelter or any of those — forget the medical school, just the manufacturing jobs — those people want to live somewhere, and they want to live close-by. In spite of what some people think, it’s not just manufacturing jobs that are going to make us great in the future. It’s a combination of that and technology-related jobs. And if you don’t get that way, then you’re going to be left out in the cold.”

UNDERSTANDING THE RESENTMENT
Owen observed all the pushback likely comes from a place of resentment from a select few in Fort Smith, saying he even “understands” it.

“That’s just human nature. I know what the rumors are. I know what people are saying. And it’s natural to have those feelings if you want things to stay status quo. If you see the bigger picture, you understand the rising tide floats all boats.”

Owen turned to downtown for another example, stating there were exciting things happening there. “(Propak owner and The Unexpected sponsor) Steve Clark is spending money down there. The new (Temple Live) theater is opening up with all these big acts coming in. The Marshals Museum scaled back its size, so it can actually get open. Great. That’s good news for us. Great news for us. Bring in tourists that we can bring out here to the museum.”

Fort Smith should avoid its silos, Owen said, remarking on a recent trip he’d taken to Charlotte, N.C., which has “growth everywhere you go, and everything is new and they’re still building.”

Charlotte is one of the fastest growing regions in the U.S., and “when you get out and drive it like we did, it’s incredible, and I doubt very seriously there has been a group up there bitching about anything. Everybody’s working, everybody’s got a job, and it’s not just downtown. It’s all the way out into east Charlotte. So it amazes me there is this small group in this silo … that resists change of anything — not just this, but anything. They resist growth because there’s more to do, and more to worry about if you grow.”