Corporate sale, controversial demolition part of top Fort Smith metro news in 2022

by Talk Business & Politics staff ([email protected]) 2,084 views 

The $435 million sale of Van Buren-based USA Truck to a company based in Germany, and Fort Smith voter approval of a tax extension package valued at more than $210 million were some of the key news in the metro during 2022.

Following are the top five stories, followed by a list of other notable developments.

1. USA Truck sold
Van Buren-based USA Truck was sold to DB Schenker in a $435 million deal that closed in mid September. The deal was valued at $31.72 per share and was recommended by the USA Truck Board of Directors.

Schenker, based in Essen, Germany, is a 150-year-old company with more than 76,000 employees at more than 1,850 locations in over 130 countries. The company operates land, air, and ocean transportation services, and can provide single source logistics and global supply chain management.

Founded in 1983, USA Truck is a long-haul trucking and logistics/supply chain provider. The company has about 1,900 trucks, 2,100 employees, and partnerships with more than 36,000 active contract carriers. The company also has a network of terminals in the eastern U.S., and a freight network in Mexico.

USA Truck posted 2021 net income of $24.768 million, more than five times 2020 net income and a record for the trucking and logistics company. Full-year revenue was $710.387 million, up 28.9% compared with 2020 revenue of $551.138 million.

In a Sept. 1 SEC filing, USA Truck said the effort to sell the company officially began in early May when Evercore, a global business investment banking advisory firm, made contact on behalf of USA Truck with 10 potential buyers.

Officials with Schenker have said the Van Buren office will remain and serve as an administrative center.

2. Voters approves sales tax extension
Fort Smith voters on May 24 extended two sales tax extensions that will pay for federally mandated sewer system improvements, an across-the-board police pay increase of 23.87%, fire department needs, and ongoing and future parks improvements.

The tax package will raise more than $210 million in the eight-year extension.

Two ballot items were on the ballot for city residents, with one tax request renewing a 0.25% sales tax to be evenly allocated between the city’s fire department and city’s parks and recreation department. Collections of that tax will begin Sept. 30, 2022, and sunset Sept. 20, 2030. The tax generated $6.533 million in 2021.

The second tax request extends a 0.75% sales tax from Jan. 1, 2023, to Dec. 31, 2030, with 83.3% of the revenue going to federal consent decree work on the city’s water and sewer system, and 16.7% directed to the police department. The tax generated $19.6 million in 2021.

After years of failing to maintain water and sewer infrastructure to federal standards, the city entered into a federal consent decree with the U.S. Environmental Protection Agency and the federal Department of Justice in late 2014. The consent decree required the city to make an estimated $480 million worth of sewer upgrades over the course of 12 years. Because of inflation and the state of the city’s sewer system, that number is estimated to be closer to $650 million. Without the tax, bond funds and other revenue for the consent decree work would have run out by early 2023.

If the tax would have failed residents would likely have seen a 58% increase in sewer bills. Since 2017, the city has avoided a sewer rate increase, but sewer rate increases in 2015, 2016 and 2017 equaled about a 160% increase, he added.

3. New record for Fort Smith building permit values
Fort Smith, Greenwood, and Van Buren building permits totaled $480.376 million in 2022, almost $140 million more than the $343.289 million in 2021. The 39.9% increase sets a significantly higher new record for the regional metric, with all three cities posting healthy gains.

Building activity has continued to gain steadily in the past few years, with 2022’s totals up 80.6% over 2020’s $265.975 million.

For the year, Fort Smith had $360.381 million in permitted activity, up 22.5% compared with the $294.279 million in 2021. Van Buren, the region’s second largest city, had a huge year in 2022. The city issued $105.136 million in building permits in the past 12 months, a 173% increase from the $38.56 million issued in 2021. The city’s 2022 permitted building total is 40.7% higher than the $10.45 million in permitted activity in 2021.

Driving the significant gain were permits issued as part of a $162.5 million expansion at Mercy Fort Smith, an ongoing $145 million expansion of Mars Petcare that began in 2021, a $100 million expansion of the Simmons Food plant in Van Buren, and a $20-million skilled nursing facility at 9000 U.S. 71 South by Fort Smith-based Central Arkansas Nursing Centers.

4. Demolition of St. Scholastica
Beginning in late June, Catoosa, Okla.-based DT Specialized Services began demolishing the historic St. Scholastica Monastery.

The 82,000-square-foot monastery at 1301 S. Albert Pike Ave. – near Trinity Junior High School – was the former home of the Benedictine Sisters. The Sisters announced on May 10 their intention to demolish the almost 100-year-old building that is on the National Register of Historic Places.

The first part of the old monastery building on Albert Pike was built in 1923-1924 in the late Gothic Revival style of architecture. F.W. Redlich from Oklahoma City was the architect of the five-story building. An addition was built on the north side of the original building in 1929, including a chapel, gym, swimming pool and chaplain’s quarters.

Numerous individuals, nonprofits and state agencies came forth after the May 10 announcement asking the Sisters to delay demolition and give them a chance to pursue other options. Al Rajabi, CEO of Sky Capital Group, which renovated the historic Arlington Resort Hotel & Spa in Hot Springs, said it would be financially feasible to repurpose the monastery.

The Sisters also declined requests by Stacy Hurst, secretary of the Arkansas Department of Parks, Heritage and Tourism, Rachel Patton, executive director of Preserve Arkansas, Fort Smith Mayor George McGill, and community activist Ken Kupchick to stall demolition until a plan could be developed to save the structure.

5. CBID finally implements assessment program in downtown Fort Smith
After years of considering an assessment plan, the Fort Smith Central Improvement Business District (CBID) board voted Nov. 17 to approve a $253,000 budget for 2023 and to make public monthly reports of spending to stay transparent following the recent passing of an assessment in the district.

The assessment has been in the works for more than three years. The ordinance will allow the CBID, a semi-autonomous governing body, to levy a supplemental annual assessment of up to 10 mils on real property within the CBID boundaries – primarily in downtown Fort Smith. The assessment for 2023 will be 8 mils.

The CBID plans to use assessment funds to support an ambassador program with Fort Smith police officers as part of a downtown Safety and Security program, and a Green and Clean project. Both are estimated to cost about $110,000 in 2023, according to the approved budget.

The Fort Smith Police Department now has one downtown ambassador on staff who also services and enforces parking meters. Additional revenue from the assessment will fund at least two additional ambassadors so that more hours of the day/days of the week might be covered.

The Green and Clean project would include streetscape maintenance and landscaping, and could incorporate care of flowerbeds and pruning and possible replacement of trees, cleaning and repairs to benches, lighting and trash receptacles, litter control, conversion of lights along Garrison Avenue to LED and more. That program also is estimated to be about $100,000, the proposed budget shows.

Following are some other notable developments in the Fort Smith metro during 2022.

• Leadership change at Mercy in Arkansas
Ryan Gehrig, president of Mercy Hospital Fort Smith, was tapped to also be president of all Mercy hospitals in Arkansas, including the large Northwest Arkansas Mercy Hospital system based in Rogers. The role, which began June 12, is new within St. Louis-based Mercy.
Mercy also has an Arkansas hospital in Berryville (Carroll County). Eric Pianalto, president of Mercy Hospital Northwest Arkansas, was named strategic growth officer for Mercy Arkansas.

• New manufacturing jobs announced
Pernod Ricard USA is entering the ready-to-drink (RTD) market and doing so by investing $22 million into its Fort Smith plant. The investment will provide the facility with canning capabilities and add at least 50 jobs. The Fort Smith plant now has 220 employees.

Rheem, which produced its first unit in Fort Smith in August 1970, is investing another $20 million into the Fort Smith plant in an expansion that will add an estimated 100 jobs. Rheem now employs around 900 in Fort Smith. The company also said the Fort Smith plant remains its headquarters for the U.S. air conditioning business and the production of HVAC (heating, ventilation, air conditioning) equipment.

Siloam Springs-based Simmons Foods on Jan. 6 announced plans to invest $100 million in its prepared foods plant in Van Buren. Company officials said the upgrade will add 100 jobs, bringing total employment at the plant to 700. The 65,000 square feet added to the plant will provide space for two automated production and packaging lines.

• Propak acquired by Pallet Logistics of America
Fort Smith-based Propak was acquired by Dallas-based Pallet Logistics of America (PLA). Propak founder Steve Clark said the deal will not reduce employment in Fort Smith, and he will remain as Propak CEO. Terms of the deal were not disclosed. Propak, founded in 1999 by Clark, offers third-party logistics, reverse logistics, warehousing, transportation, and freight brokerage. The company has 1,700 employees at more than 60 national locations.

• Closure of Neumeier’s Nursery after 54 years
After 54 years, Bill and “Jody” Neumeier on July 31 retired and closed the nursery on the north side of Fort Smith that provided generations in the region with the plants to make their homes and business more beautiful and welcoming. The Neumeiers announced their plans on June 1 to retire and close Neumeier Nursery and Greenhouses. Bill, 83, and Jody, 79, decided it was finally time to slow things down and make time for things they haven’t been able to do for the past five and a half decades.