Fixing Fayetteville

Business, City Interests Divided On What's Ailing Economic Development

Last updated Saturday, March 22, 2008 6:37 PM CDT in News

By Dug Begley
The Morning News

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"The main thing we've got to do a better job of in my opinion is being consistent," Ramsey said about the city's leadership and how it interprets its rules.

Fayetteville Mayor Dan Coody said both camps might be right, and putting the city on track isn't about who wins or loses. It's about finding middle ground.

Right now, nearly everyone agrees, it's just about doing something.

Up, Down

Fayetteville's success or failure in economic development depends on the tenor of the conversation. City officials applaud the growth and success of the past decade, but cringe when monthly sales tax collections arrive. Coody cheers the city on, then talks about how city government is strapped for cash.

Statistics also give a muddy view of the city's success. The Arkansas Department of Labor calculated Fayetteville gained roughly 11,000 people and 8,500 workers from 2000 to 2007. The job gain is more than that of any city in Northwest Arkansas, but the figure can be misleading because it counts workers based on where they live, not where they work.

Collins and Kathy Deck, director for the Center for Business and Economic Research at the University of Arkansas, said a better measure of Fayetteville's economic development effort would be determining how many people work in the city. That would give officials a glimpse of how many residents commute north every morning, Deck said.

Collins lamented the figure was not available for any cities in Northwest Arkansas.

Steve Rust, president of the Fayetteville Economic Development Council, said businesses would also like to get a better idea, but no one - not the council, chamber or city - has compiled the data.

Vital to overcoming the city's recent drop in sales tax collection is a game plan to add business, Rust and others said. A study by the business research center estimated Fayetteville's sales tax should continue to grow over the next decade.

"We're just not going to grow at the same kind of rates we've been seeing," Deck said. "And from a city services perspective, you have to look at dollars coming in."

The study found sales tax collection in Fayetteville grew by an average of 5.8 percent each year from 1995 to 2006. From 2008 to 2017, sales taxes are expected to increase 3.3 percent annually.

Coody said the city isn't in a dire situation - yet - but must confront some obstacles. The mayor said he thinks Fayetteville will be fine in the long run if it takes advantage of its quality of life, but must find a way in the next decade to fix its funding conundrum.

Fayetteville used to rely on outsiders shopping in the city to buoy the city's sales tax collection, Coody said. With competition, primarily the Pinnacle Hills retail area of Rogers, the mayor said the city can't depend on money from Benton County shoppers. Unprecedented commercial and residential development to the north won't go away and won't bring tax dollars to Fayetteville.

"We've lost that," Coody sighed in early February.

Money, Trails And Parks

Officials have a choice: Find new sources of money or cut spending.

Alderwoman Brenda Thiel said that after eight years on the council, she knows the latter isn't an option, adding the city has consistently done more with less.

"We haven't added that many programs or added staff that much," Thiel said. "I don't know how we can cut our expenses without laying people off."

Thiel said Fayetteville could stop mowing city land and taking care of its parks, but that comes at a cost.

"If people leave because it's not attractive, then what good have we done?" she asked.

Part of the city's allure is its "character," Deck said. Leveraging that charm by loosening development rules could backfire, she said.

"From my perspective it is worth keeping the character," Deck said.

That does not mean shutting the door on development, she stressed.

Fayetteville cannot stop development without losing its identity, either, said mayoral candidate Walt Eilers. Without new businesses and residents, the city cannot keep pace with increasing costs. Growth cannot happen if projects run into a small but vocal opposition. Some projects denied by the City Council are deemed ideal by city staff because they adhere to City Plan 2025, Fayetteville's guiding growth and development manual.

"When we get a business that fits for Fayetteville, they get denied because two little old ladies show up at the council meeting and talk against it. And the council votes against it," Eilers said.

Rust said he agreed, adding a 2006 decision to deny a cold storage business on South School Avenue is a recent example. The 272,000-square-foot building would have added 35 jobs and a $30 million investment in the site, Rust said. The concern of residents overruled the fact it was a sound business in an area already designated industrial by the city, he said.

Most proposed developments are approved, said Jeremy Pate, director of planning for the city. He said an analysis of Planning Commission votes found 87 percent of items considered by the Planning Commission in 2007 were approved, compared to 5 percent denied. The numbers do not reflect items the commission tabled and might have acted on later, Pate said.

The council approves most items passed to it from the commission, Pate said, though no one tracks the percentage.

Fayetteville is also constantly adding commercial space, to the tune of more than 860,000 square feet last year, down from 1.6 million square feet in 2006. That development, fueled by growth, is changing the city, many claim. Fayetteville remains the dominant commercial center in the area, if building permits are an indication. The city's $9.4 million in commercial building permits issued in February was nearly half the value of the $20 million in permits issued in Benton and Washington counties, according to estimates.

Staying The Course

Others contend Fayetteville's economic development fortunes are tied to getting the council to live up to its word.

Jeff Koenig, another mayoral candidate and former Fayetteville Economic Development Council chairman, said consistently regulating business is a vital need.

Ramsey, the chamber president, pointed to projects such as Ruskin Heights that are lauded as exactly what Fayetteville wants to see but must compromise to gain council approval. He said he believes that double standard also torpedoed the canceled 11-story Divinity project on Dickson Street, which ran into stiff opposition from residents.

Ruskin Heights passed City Council muster only after developers redesigned the 295-unit project with less density. Council members approved the project despite remaining opposition from residents, citing a need to follow the city's goals. Ramsey said the victory indicated developers will always have to conform to win favor in Fayetteville.

"That sends a signal," Ramsey said. "Will developers want to go through that?"

Koenig said the fights indicate a lack of clarity that cloud economic development attempts.

"In my viewpoint, where we've had the most difficulty is in the City Council defining what they want," he said.

What is clear is council members assume certain projects in Fayetteville will lead the way, such as the Arkansas Research and Technology Park. The park is a partnership formed in 2004 between the city and the University of Arkansas.

Phillip Stafford, president of the University of Arkansas Technology Development Foundation that oversees the tech park, said the purpose of the center at Cato Springs Road and School Avenue is transferring research begun at the university to the private sector. The process can take years, but yield results, Stafford said.

"At most places you're kind of reliant on growing your own," Stafford said.

The tech park also works to lure companies outside Arkansas to move and partner with existing business. In four years the efforts have started to show results.

"When we assumed management of the park we had 13 partners, public-private partnerships," Stafford said. "Now we have 30."

The quantity of jobs is not enormous when compared to an automotive plant or manufacturing business, but Stafford said the jobs are very valuable to the community. A survey of businesses in the tech park found the average worker makes approximately $80,000. Stafford stressed the survey was not comprehensive.

"Nonetheless, I was shocked by that," he said.

As growth continues, officials on both sides of the issue said, it will change Fayetteville. Coody said last month the trick is being open to more density and development, even if it requires some sacrifice on the part of neighborhoods and residents.

That hasn't happened enough, Rust said. What's worse is it has led to a culture where companies don't want to risk doing business in Fayetteville, many said.

"I lay that right at the feet of the City Council," Rust said.

On Target

Chamber and other private sector officials have cited problems with Fayetteville's rules before, to mixed results. The city's sign ordinance and tree preservation rules were all passed over the objection of business owners who claimed the measures would curtail development. They didn't, as Fayetteville continued to experience unprecedented growth.

Business groups also led the effort opposing road impact fees last year, calling the charges double taxation. The fees were defeated by a single vote in an April election. People on both sides said the election indicated the city is divided when it comes to Fayetteville's fiscal fix.

Alderman Lioneld Jordan, who also announced he is running for mayor, continues to champion impact fees. The charges, which apply only to new development, place some of the cost of new streets and public utilities on the growth causing the infrastructure upgrades. Jordan noted in his March 9 candidacy announcement the city needs at least $44 million in road repairs. Someone has got to pay for it, he said, and it should be the additional growth.

Jordan said preserving existing Fayetteville neighborhoods is important to keeping the city's character. He added he continues to support regulations calling for dense, mixed-use projects.

They can have it both ways, explained Collins, but only so far. Fayetteville can keep its charm and grow if it protects its interests and extremists on both sides of the divide recognize the following: Not all growth is good, and not all growth is bad.

Fayetteville can also do itself some favors by not trying to be like the rest of Northwest Arkansas, he added. The city has things Springdale, Rogers and Bentonville will never have, such as the university. But it also needs to recognize its role in the region is changing.

"What we need to do is run the city the best that we can," Collins said. "If Ms. (Alice) Walton wants to build a 2,500-seat performance hall to the north she is going to do it. And there is not a damn thing we can do about it."

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