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Is Little Rock Losing Its Luster?Lock Icon

11 min read

A Little Rock businessman traveling out West recently got a take on his hometown from a stranger living a thousand miles away.

“Little Rock, huh?” the Westerner said. “You guys have problems.”

The Arkansas executive, who spoke on the condition of anonymity, fears that Little Rock is in decline, burdened by distressed schools, crime, an aging infrastructure and limited economic vision. At very best, he says, central Arkansas is lagging behind the thriving business corridor of northwest Arkansas.

Mayor Mark Stodola and Little Rock Regional Chamber CEO Jay Chesshir counter with binders full of statistics showing that central Arkansas’ cup is substantially full, and that economic development efforts are bearing fruit.

Still, they acknowledge that Little Rock has a perception problem.

“I get frustrated with some of our political pundits who perceive this issue, I guess because northwest Arkansas has Walmart, Tyson and J.B. Hunt,” Stodola said, ticking off Fortune 500 companies based in Bentonville, Springdale and Lowell. “But they’re not looking at the specifics of central Arkansas,” said the mayor, who decided not to run for re-election after 12 years.

The Little Rock region is Arkansas’ hub of government, commerce and health care, and its GDP outpaces the northwest’s, Stodola noted. Still, five mayoral candidates are running on themes of change, emphasizing crime-fighting, education and jobs.

Three of the five — Baker Kurrus, Warwick Sabin and Frank Scott Jr. — spoke with Arkansas Business about where Little Rock stands.

“The best way to look at it is perception IS reality,” Kurrus said, citing concerns like a shortfall in sales tax collections. Sales tax proceeds, which provide nearly half of the city’s $209 million general fund budget, were off by about $775,000 over the first four months of 2018, Kurrus said. “That’s a very troubling statistic.”

Sabin, a Democratic state legislator, sees “a growing sense of what’s not happening here,” in jobs, development and other metrics. “Everywhere I go in Little Rock the word ‘stagnant’ is mentioned.”

Kurrus, a businessman and lawyer who spent 14 months as the state-appointed superintendent of Little Rock’s beleaguered public school system, says both regions of the state have low unemployment and other comparable statistics.

“But what’s holding Little Rock back is that so many people work here but don’t live here,” he said. “That’s not a big deal if workers are driving in from towns nearby, because the money and taxes stay in the area. But when people work here and live in Russellville, or similar towns farther out, which many people do,” those wages pour into other local economies.

Central Arkansas certainly trails its northwest neighbor in recent population gains and job growth. The Little Rock-North Little Rock-Conway metropolitan statistical area, which includes satellite cities like Benton and Cabot, is home to 745,553 people, up 6.5 percent from 699,757 in 2010. Nonfarm jobs numbered 363,000 in July 2018, up a modest 4.3 percent from the 348,000 of 2008, according to the federal Bureau of Labor Statistics.

But the northwest region’s population boom has been among the quickest in the nation; its 537,000 population is up 9 percent percent in just five years.

With a population of 200,000, Little Rock is Arkansas’ only large city, contending with typically urban problems. The mayor doesn’t dismiss challenges like drug-fueled crime and panhandling, but he thinks the media overplays them. He also makes a case that central Arkansas’ economic engine is humming.

“The U.S. Metro Economies growth and employment report shows that 31.4 percent of the gross domestic product of this state comes from central Arkansas,” Stodola said. “Only 22.4 percent comes from northwest Arkansas.” The central Arkansas MSA represents about 25 percent of the state’s population. The northwest Arkansas MSA is about 18 percent of the state total.

State’s Traditional Hub
Little Rock is also the state’s traditional political and commercial hub, Stodola said, with strong employment sectors in government, education and health care, which together provide nearly a quarter of central Arkansas’ jobs.

Chesshir, executive director of the Metro Little Rock Alliance, says its regional development approach has yielded 16,505 new jobs, $579 million in new payroll and more than $2.4 billion in new capital investment in central Arkansas since late 2014. These numbers represent only specific economic development projects the chamber worked.

The city has built 11 miles of 4-foot-wide sidewalks south of Interstate 630, the informal border between struggling areas and more affluent sections, and it has spent $170 million on drainage infrastructure seven years into a 10-year plan.

“We transformed Main Street, which had been dead for 30 years, into a vibrant area,” Stodola said. Starting with $400,000 in city money, the mayor snagged a $500,000 grant from the National Endowment for the Arts, then a $1 million Greening of America’s Capitals grant from the Environmental Protection Agency.

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The seed money cultivated an environment- and drainage-friendly “creative corridor” and “technology corridor” that includes new loft apartments, restaurants, art galleries, space for Ballet Arkansas and the Arkansas Repertory Theatre, which is bouncing back after suspending operations in a budget crisis earlier this year. “The $2 million we put in was able to prompt $150 million in private-sector investment. That’s a remarkable 50-to-1 return.”

The mayor also champions central Arkansas tourism, up by a million visitors in Pulaski County over Stodola’s tenure, to some 6.4 million in 2016. He points to a multimillion-dollar expansion of the Port of Little Rock, home to more than 40 companies, and the success of the Little Rock Technology Park.

The Tech Park’s first phase, opened on Main Street in 2017, is fully rented out, packed with 47 small companies, Chesshir said. Little Rock’s Venture Center’s FinTech Accelerator and its main backer, the financial services technology provider FIS, have over three years attracted 30 small companies from around the world to participate in the one-of-a-kind accelerator. After spending 12 weeks here for the program, four startups made Little Rock home.

Financial technology, with some 1,500 jobs in the MSA, is one of several sectors the chamber’s Metrock 2020 development plan is spotlighting. Others include advanced manufacturing (5,100 jobs in the area, according to chamber statistics), distribution and logistics (9,000 jobs), corporate operations (5,400 jobs), energy technologies (1,700) and health and medical care (45,000 jobs).

State, local and federal government posts, along with education and health care, provide 70,000 jobs in the MSA, the chamber says. The University of Arkansas for Medical Sciences (9,100 jobs), Baptist Health (6,590), Arkansas Children’s Hospital (4,000) and the Central Arkansas Veterans Healthcare System (2,800) are all top 10 regional employers. CHI St. Vincent (2,600) ranked 13th. The region’s top corporate employers are Entergy Arkansas, AT&T, Arkansas Blue Cross & Blue Shield, Verizon, Dillard’s and Union Pacific Railroad, all with 2,000-2,740 jobs.

But for all that, many central Arkansas business leaders see a perilous future.

The executive who got an earful out West laid out his fears, many seconded by other business leaders who spoke to Arkansas Business on background.

“A lot of local folks won’t face the reality of decline because their heads are in the sand,” he said. “Little Rock’s school system has been a debacle since the 1980s, when lawsuits got the government involved, and we thought we had rectified the drug violence and killings of the 1990s, but it has returned.”

He traces the slippage back to Alltel’s sale to Verizon and AT&T a decade ago. “Four thousand jobs paying $40,000 a year, and that doesn’t include ancillaries. The transaction spun off Windstream Holdings in an attempt to help Arkansas, but now Windstream looks likely to go bust in the next five years. Dillard’s, the other Fortune 500 company here along with Windstream, is under stress from Amazon.”

Windstream, which has continued to be an acquirer, reported a net loss of $1.8 billion in 2017 after a net loss of almost $400 million in 2016; it has repeatedly laid off employees.

“Acxiom sold off businesses and pulled jobs out, though some remain in Conway, and I think Simmons Bank or Bank OZK could be sold,” the Arkansas executive continued. “I just wonder where the jobs will be. A hospital system could close and things could get bad quick. Warren Stephens could ask if Stephens Inc. really has to be in Little Rock. Ask [Gov.] Asa Hutchinson if he’s not worried about Little Rock. Ask John Boozman.”

To be sure, many of the 4,000 Verizon jobs stayed here, and the executive concedes that he is only speculating. Bank OZK is building a $100 million headquarters in Little Rock, and Simmons Chairman George Makris signaled his commitment to the city by buying the old Acxiom building downtown. Development officials point to expansions at Caterpillar in North Little Rock and Dassault Falcon Jet at the airport to argue that the Little Rock region’s economy could just as easily be headed in a positive direction.

Hutchinson’s spokesman, J.R. Davis, said that a gain for one part of the state is not necessarily a loss for another. “You always hear about the Little Rock-northwest rivalry, but jobs are growing all over the state,” he said. “We’ve worked on a similar number of economic development projects in both places, and those in central Arkansas tend to pay more, but investment is higher in the northwest. But jobs are growing in the northeast; the Delta is picking up. These unique locations offer different things.”

Sara Lasure of Boozman’s office praised Little Rock’s history of success and said the senator is committed to continue working with Little Rock and surrounding communities “to create a business-friendly environment that encourages job growth and development.” She described Boozman as “optimistic about the bright future ahead for Little Rock.”

Chesshir, of the chamber, said companies looking for sites do not distinguish between Little Rock and North Little Rock, or even a Conway or Benton. “When Amazon puts in a distribution center in North Little Rock, that’s a win for the whole region,” he said. After all, commuters have been known to cross bridges to get to work.

Sabin, a Winrock International executive and founding executive director of the Arkansas Regional Innovation Hub, favors collaboration. “Our state’s population is 3 million, smaller than many big cities. “We have an opportunity to work with northwest Arkansas instead of being pitted against each other.”

All the mayoral candidates want to return the Little Rock School District, under state management since six individual schools were deemed to be failing, to local control, and each has new ideas for improving outcomes.

“The school district is the key component to jobs, economic development and viability,” said Frank Scott, a product of the public school system and graduate of Parkview High. “The key to influencing the system is to become a strategic investor in it, so I’ve proposed that the city fund an optional summer academy program to improve grade-level reading. Teachers who opt to work in the summer program would get extra pay.”

The candidates also agree on fortifying the Police Department. Scott, a vice president of First Security Bank and former state highway commissioner, proposes hiring more than 100 new officers, creating a force of 700. He and Sabin also favor a renewed emphasis on community policing.

“The perception is that Little Rock is not safe; that harms our ability to attract residents and businesses,” Sabin said. “It hampers selling homes and luring people to visit or shop.”

Stodola sees 2017, in which violent crime rose 6 percent in the city, as an aberration. Last year’s 52 homicides were well above the 10-year average of 37 a year, but “before I took office we had 60 homicides in the city,” the mayor said. “We’re down 37 percent in homicides so far this year, down 40 percent on robberies. Violent crime is down 24 percent, so that’s huge.”

Civilian Labor Force Estimates
(Not Seasonally Adjusted)

Little Rock – North Little Rock – Conway MSA

  June 18 May 18 June 17 Monthly Yearly
Civilian Labor Force 358,634 353,951 359,520 4,683 -886
Employment 346,059 342,505 347,023 3,554 -964
Unemployment 12,575 11,446 12,497 1,129 78
Unemployment Rate 3.5 3.2 3.5 0.3 0.0

Fayetteville – Springdale – Rogers MSA

  June 18 May 18 June 17 Monthly Yearly
Civilian Labor Force 276,175 276,589 275,015 -414 1,160
Employment 268,147 269,403 266,686 -1,256 1,461
Unemployment 8,028 7,186 8,329 842 -301
Unemployment Rate 2.9 2.6 3.0 0.3 -0.1

Source: Arkansas Labor Market Report, June 2018

Lies, Damn Lies and City Rankings

Mayor Mark Stodola loved it in 2013 when Kiplinger’s Personal Finance named Little Rock its top “great place to live” among midsize cities. He hated it this year when USA Today listed the city among the worst in the country, between Gary, Indiana, and Compton, California.

As Mark Twain said, “Facts are stubborn things, but statistics are pliable.”

Stodola took umbrage last month when columnist Rex Nelson, who has written that Little Rock is near a “tipping point,” seized on the USA Today ranking in the Arkansas Democrat-Gazette. The list was compiled by the website 24/7 Wall Street, which the mayor described as “probably a jackleg group.”

“I do agree with you that many of these are ridiculous rankings,” the mayor wrote to Nelson, underlining skepticism among academics about city rankings, which have been popular online and in print for years. As a rule, they’re statistically invalid, because methodology, data and weighting procedures are often opaque at best. Lindsey Millar summed up the category hilariously in the Arkansas Times: “The technical term for these rankings in the world of statistical analysis is ‘bullshit.’”

And speaking of ridiculous, Little Rock recently made the grade at No. 6 among “the top 12 cities that love dogs the most,” according to LawnStarter, an online platform for lawn care. So cat people, rise up!

Barry Bluestone

Barry Bluestone, a professor of public policy and urban affairs at Northeastern University in Boston, said in an email that the rankings sometimes hide more than they reveal, and he gave an example: Boston’s ranking as the city with the highest degree of income inequality.

He said Boston has a significant public housing that allows poor households to remain in the city. “As such, with very rich AND very poor households, Boston has a high degree of statistical inequality.” Meanwhile, other cities that are less forgiving of the poor, like San Francisco, rank far lower on income inequality. Poor residents have essentially been driven out.

“Boston’s inequality reflects its history of trying to house” the poor, Bluestone said, calling that impulse “admirable.”

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