Year in Review: Ranking NWA’s top 10 stories of 2018

by Talk Business & Politics staff ([email protected]) 1,191 views 

2018 saw plenty of significant business and political news stories in Northwest Arkansas.

In our annual Top 10 list, we present the developments that had the most impact on the region’s business community last year.

NO. 1 WALMART GROWTH
The company name is the only thing that shrank in 2018 for the world’s largest retailer. Wal-Mart Stores Inc. became Walmart Inc. on Feb. 1. The rest of the year was filled with acquisitions, as the company continued its buying spree of the past couple of years with an eye on growing its e-commerce business.

Eloquii, Bare Necessities and Art.com were a few of the companies Walmart bought in 2018. But those deals were dwarfed in comparison to a blockbuster announced in August — a $16 billion deal in which Walmart said it plans to buy a 77% stake in India’s online retail powerhouse Flipkart.

The deal represented the largest acquisition in Walmart’s history and will transform the company’s position in a country with more than 1.3 billion people, strong GDP growth, a growing middle class and significant runway for smartphone, internet and e-commerce penetration.

Annibal Sodero, professor of supply chain at the University of Arkansas, said growing through acquisition is the best way for Walmart to expand its international footprint.

“Walmart is not going to find a perfect glove to fit their hand, so they have to make strategic plays when they can do so,” Sodero said. “One thing for certain is that Walmart is going to have to invest in acquisitions to grow e-commerce share against the likes of Amazon and Alibaba.”

A change to Indian law set to begin in February 2019 could negatively affect the investment, but analysts are still sorting out the impact.

NO. 2 BRIBES LEAD TO PRISON
A bribery scheme involving Ecclesia College in Springdale led to convictions of two Arkansas legislators, a college president and consultant.

Former Sen. Jon Woods, R-Springdale, was sentenced Sept. 5 to 18 years and four months in federal prison for his role in the widespread scheme. Consultant Randell Shelton Jr. was sentenced Sept. 6 to six years in federal prison; Oren Paris III, former president of Ecclesia College, was sentenced Sept. 12 to three years in federal prison; and the next day, former Rep. Micah Neal, R-Springdale, received three years of probation.

In early May, a federal grand jury returned guilty verdicts against Woods and Shelton for their involvement in the fraud that used the state’s General Improvement Funds (GIF). Neal pleaded guilty Jan. 4, 2017, and Paris pleaded guilty April 5.

U.S. Attorney Dak Kees said Woods and Neal authorized and directed the Northwest Arkansas Economic Development District, which was responsible for disbursing GIF, to award about $600,000 in GIF money to two nonprofit entities. Woods and Neal received bribes from nonprofit officials, including Paris, and Shelton covered up the kickbacks by funneling them through his consulting company.

Woods has since appealed his conviction and sentence handed down by U.S. District Judge Timothy Brooks.

NO. 3 BIG DEAL, BIG DEPARTURE
The calendar year at Tyson Foods was marked by one big acquisition, and an equally big departure.

The Springdale-based meat giant announced in August it agreed to pay $2.16 billion in cash to acquire Pennsylvania-based Keystone Foods, a deal that will grow the company’s prepared foods and international segments. Keystone was previously owned by Brazil-based Marfrig Global Foods.

Tyson Foods President and CEO Tom Hayes said at the time Keystone’s footprint in high growth markets in the Asia Pacific region and abilities to export to markets in Europe, the Middle East and Africa will provide a significant foundation for international growth. Hayes said the deal will also help the company deliver more value to its foodservice customers. Keystone, which had $2.5 billion in revenue in 2017, is a major supplier to quick-serve restaurant chains such as McDonald’s.

As for Hayes, he announced less than a month later he was leaving the company after just two years, effective Sept. 30, citing “personal reasons” for his departure.

The board of directors chose Tyson Foods veteran Noel White to succeed Hayes as president, CEO and board member. White, who joined the company with the 2001 acquisition of IBP, had held several leadership positions during his Tyson Foods career, including chief operations officer.

NO. 4 INTERSTATE EVOLUTION
In Northwest Arkansas, the most important thoroughfare is Interstate 49. Sometimes referred to as the area’s “Main Street,” I-49 carried even more traffic in 2018, as an expansion project to widen the road to three lanes in both directions between Fayetteville and Rogers was completed after nearly five years.

In addition to that milestone, 2018 was a busy year for the future development of I-49. Most notable was $25 million in federal funding announced in December to build a 4.81-mile segment of I-49 in Missouri and to complete the 18.9-mile Arkansas/Missouri Connector, or the Bella Vista Bypass.

When the bypass is completed, it ultimately will allow for the completion of the interstate between I-40 in Fort Smith and I-70 in Kansas City, Mo. According to the Northwest Arkansas Council, the city of Bella Vista is the only location in the 270-mile stretch between the two cities where traffic must leave I-49 to continue traveling north or south through nine traffic signals on U.S. Highway 71.

Other developments related to I-49 in 2018 included:

  • The first section (4.6 miles) of the future U.S. Highway 412 bypass opening to traffic in April.
  • Construction of the first single-point urban interchange (SPUI) in Arkansas started in September, at the I-49/U.S. Highway 71 interchange in Benton County. The $27 million project should be completed in late summer 2020.
  • Work is also in the home stretch for the $29 million Eighth Street interchange along I-49 in Bentonville. It’s expected to wrap up this spring.

NO. 5 PINNACLE HILLS GROWTH
The Pinnacle Hills area west of I-49 in Rogers is arguably the hottest area in Arkansas for commercial development. Where else will you find two planned “new urbanism” developments (Pinnacle Heights and Pinnacle Village) within a few hundred yards of each other, both valued at more than $100 million?

2018 was filled with news of millions of dollars more in the construction pipeline for Pinnacle Hills, but two projects in particular attracted the most attention.

In May, a long-simmering rumor was confirmed with the official announcement that Dallas-based Topgolf is planning to develop 11 acres south of the Walmart Arkansas Music Pavilion (AMP) for its first Arkansas location. Topgolf will lease the land on South J.B. Hunt Drive from Rogers developer Hunt Ventures, the longtime developer headed up by philanthropist Johnelle Hunt. It’s on track to begin construction in the spring, with an opening planed in 2020.

And speaking of the AMP, the outdoor music venue has been a primary attraction driving Northwest Arkansas’ growing arts and entertainment economy since opening in 2014. And it’s about to become bigger.

Information was released in November about a $13.9 million expansion to increase seating capacity to 11,000 and add several amenities. Construction will start in November 2019 and is scheduled to be completed in seven months, in time for the start of the 2020 Cox Concert Series.

NO. 6 BAPTIST HEALTH ACQUISITION
After announcing the deal in July, Little Rock-based Baptist Health completed its acquisition in November of Sparks Health System operations in Fort Smith, Van Buren and clinics in western Arkansas and eastern Oklahoma.

Baptist Health CEO Troy Wells said later he expected the acquisition to lead to some stability.

“We pride ourselves on stability of leadership, in culture and the staff and the community recognizes it and are wanting that,” he said.

The deal added nearly 600 beds and 1,600 employees to the Baptist Health network. Baptist Health operates 11 hospitals and employs about 11,000 workers.

Harrison Dean, a 35-year employee with Baptist Health, will serve as Regional President of Western Arkansas/Eastern Oklahoma for Baptist. Former Sparks CEO Dan McKay resigned in July to take a job in Kentucky. Dean will oversee the system’s hospitals in Fort Smith and Van Buren as well as affiliated physician clinics.

The sale will reduce property tax revenue for schools and local governments in Sebastian County. Property tax payments in 2017 tied to Sparks totaled $1.14 million. The Fort Smith Public Schools received $791,124 from the 2017 property tax payments, the Sebastian County general fund received $108,384, and the city of Fort Smith general fund collected $108,373.

NO. 7 XNA CELEBRATES 20 YEARS
Northwest Arkansas Regional Airport (XNA) celebrated its 20th anniversary Nov. 1 — less than three months after opening a $35 million parking deck and selecting the Highfill-based airport’s next CEO.

The parking deck opened in early August, and Aaron Burkes, former president of the Arkansas Development Finance Authority, was selected Sept. 27 as CEO and executive director of XNA. Burkes started in the position Oct. 30 and succeeded Scott Van Laningham, who retired Dec. 31. Kelly Johnson, who was one of the final three candidates for the CEO position, was promoted Oct. 24 from airport director to chief operating officer.

Executive search consultant Russell Reynolds started seeking the next CEO after XNA on Dec. 13, 2017, approved spending up to $200,000 to hire the company. Earlier in 2017, Van Laningham announced his plans to retire.

Nabholz began construction on the nearly 500,000-square-foot, four-story parking deck in January 2017. It has 1,489 parking spaces, all of which are covered, and the ground level will be for rental cars until a separate deck is built for the rental car companies.

Between January and November of 2018, XNA’s enplanements, or departing passengers, rose 8.8% to 726,883, from the same period in 2017.

NO. 8 TAX INCREASE PASSES
Fort Smith voters on May 22 approved the first property tax increase in 31 years for Fort Smith Public Schools, with 62% of the vote. The increase is expected to raise $120.82 million, with $35 million going to safety improvements in the district. The tax will rise from 36.5 mills to 42 mills. A mill is 1/1000th of $1, and property taxes in Arkansas are based on the full assessed value, which is calculated using 20% of the market value of a property. For property worth $100,000, the increase would equate to a $110 rise in taxes.

Some of the safety improvements are expected to be completed in fall 2019, while others will be completed in August 2020, and recently, retired Sebastian County Sheriff Bill Hollenbeck was hired as director of security and facilities for the school district. Along with the safety improvements, the $78.52 million allocated to Southside and Northside high schools will be used to renovate or build gyms, each with a capacity of 2,500 people, and might be completed as soon as August 2021.

The money also will be used to build a $13.72 million Career and Technology Center, which should be completed in August 2020.

NO. 9 FORT SMITH, BENTONVILLE ELECT NEW MAYORS
Bentonville voters on Dec. 4 selected former city council member Stephanie Orman to be mayor, and Fort Smith voters on Aug. 14 chose former Rep. George McGill, D-Fort Smith, to serve as mayor. Orman and McGill received 63% and 57% of the vote, respectively, in their elections and were sworn in Jan. 1.

In a Dec. 4 runoff, Orman, former director of social media and community involvement for a Bentonville automotive dealership, defeated Jim Webb, who had served on the city council and works for an outdoor toy company supplier. Orman succeeded Bob McCaslin, who endorsed her for mayor. McCaslin had served as mayor for the past 12 years but didn’t seek re-election.

In an Aug. 14 primary election, McGill defeated Wayne Haver and Luis Andrade. Because McGill received more than 50% of the vote in the primary, he was elected mayor. Haver, a long-time principal of Southside High School, received 33% of the vote, while Andrade, a student at University of Arkansas at Fort Smith, had 10%. Former mayor Sandy Sanders, who endorsed McGill, decided to not run for re-election.

Another headline of the year in politics happened in Fayetteville where newcomer Denise Garner, a Democrat, defeated four-term incumbent GOP State Rep. Charlie Collins on Nov. 6 to win election to the Arkansas House of Representatives in District 84, which covers parts of Washington County, including Fayetteville.

Garner was one of two female first-time candidates who won against Republican incumbents. Democrat Megan Godfrey narrowly unseated State Rep. Jeff Williams in District 89 in Springdale. They’ll join Nicole Clowney of Fayetteville as first-time Democratic legislators representing Northwest Arkansas.

10. AEP CANCELS WIND CATCHER
The $4.5 billion Wind Catcher project was canceled the day after the Public Utility Commission of Texas denied it.

Columbus, Ohio-based American Electric Power (AEP), the parent company of Southwestern Electric Power Co. (SWEPCO), was behind the project. The Arkansas Public Service Commission, Louisiana Public Service Commission and Federal Energy Regulatory Commission approved the project, and a decision was pending with the Oklahoma Corporation Commission. However, AEP needed approval from all states for customers to realize its full benefits as timely approvals were required for completion by the end of 2020 and eligibility for 100% of the federal production tax credit, said Nicholas Akins, AEP chairman, president and CEO.

AEP canceled the project July 27. It had the support of businesses, including Springdale-based meat producer Tyson Foods, and cities such as Fayetteville, but Texas commissioners agreed with those who argued the project was too risky for ratepayers.

The project was significant to Fayetteville’s commitment to power all city operations with 100% clean energy by 2030. The city has since approved a project with Ozarks Electric Cooperative and Today’s Power Inc. to build the state’s largest solar power system on municipal land. It should increase the clean energy consumption from city operations to 72%, from 16%.