Mayor Frank Scott scores big economic development wins amid pandemic, nationwide recession
November 30 - December 6, 2020
By Wesley Brown
As a former banking executive, a Little Rock Port Authority board member, and an economic adviser to Gov. Mike Beebe, Mayor Frank Scott Jr. entered office nearly two years ago with major bona fides as a job recruiter and creator.
Hit by a global pandemic just over one year after he entered office in January 2019, Scott has tabled his ambitious penny sales tax initiative to fund future city growth. However, he remains on point as the city’s “Chief Growth Officer” after his historic millennial-powered campaign in 2018 that lifted him into the position as the city’s first duly elected black mayor.
In an interview with The Daily Record, Scott credited his staff, city administrators and workers, the Little Rock Chamber of Commerce, and a cadre of state and economic development officials and private business leaders across the city for helping him to bring more and better jobs to Arkansas largest city. Altogether, Scott’s job recruitment campaign has added 5,000 jobs to local payrolls, 2,000 more than the 36-year old city leader first announced in his “State of the City” address at the beginning of the year.
“As I said many times during our campaign, creating jobs must be the next mayor’s top priority because Little Rock has not sustained the kind of job growth our residents have come to expect,” said Scott in a wide-ranging interview. “As a city, we need to intentional and have a clear vision for the kind of investments we need to make in our people, our infrastructure, and our institutions that can create the kind of local economy Little Rock deserves.
“That was my first promise that I made when I made the decision to run for mayor of Little Rock that we would fulfill the potential of our workforce and economy as a model for other cities in the South and across the U.S.,” continued Scott, calling his high-profile economic development wins during the pandemic “a citywide team effort.”
As noted by Little Rock real estate icon Hank “Henry” Kelley, Mayor Scott’s deal-making began right out of the gate when the city worked behind the scenes to bring a Trader Joe’s location to the Capital City. The privately held, California-based grocer known for its quirky merchandising and loyal shoppers first revealed in the summer of 2019 that it had applied for a building alteration permit at 11500 Financial Centre Parkway.
So goes the story, Kelley and his firm’s partners Cynthia Lu and Brooke Miller and others worked for several years to bring Trader Joe’s to Little Rock. The biggest problem was trying to “figure out how to take a 30,000 square foot Toys R’ Us building and turn it into 15,000 square foot Trader Joe’s,” said Kelley.
“And that doesn’t happen by snapping your fingers,” said Kelley, who split amicably from longtime partner and Little Rock commercial real estate icon John Flake in May. “So, our client in New Jersey said, ‘folk’s there is a lot of work to do to get this done,’ and Mayor Scott wants to make sure it gets done. So, we get that done and Mayor Scott tells me: “Hank – next on my list is Costco.”
But weeks before the Costco deal was signed and sealed, Little Rock and the rest of Arkansas were knee-capped by the worst economic downturn since the Great Depression as COVID-19-enforced stay-at-home orders decimated the 1.3 million worker labor pool. According to data by the U.S. Bureau of Labor Statistics (BLS), Arkansas lost more than 98,000 jobs amid the pandemic, including a February-to-July decline of more than 62,000.
Still, just over a month later after Gov. Asa Hutchinson declared COVID-19 a public health crisis in Arkansas, Scott announced in April that Costco had applied with the city to build its first location in Arkansas. That application before the city’s planning board included plans by the Kirkland, Wash.-based warehouse membership club to build a $23 million new store on a nearly 32-acre site at the junction of Chenal Parkway and Kirk Road.
That project, which will include a $1.8 million gas station, a liquor store, and other amenities, is well ahead of its planned February 2021 construction start and summer grand opening. As of today, TD Farrell Construction crews are already excavating the 32-acre site at the busy West Little Rock thoroughfare.
Kelley credited the Little Rock’s mayor with closing the Costco deal, “but I’ve been working on this for five years,” the longtime real estate developer said jokingly.
Big deals: Amazon, Costco and Trader Joe’s highlight major job announcements
Still, Mayor Scott and others involved in the Costco and Trader Joe’s deals had to work around the fact that other cities across the South were tabling or halting big economic development deals during the pandemic. In the second quarter, the U.S. saw a 32% real Gross Domestic Product decline even as trillions of dollars from the Coronavirus Aid, Relief and Economic Security Act poured into the economy, including more than $4 billion in Arkansas’s economic aid.
Kelley said Little Rock has all that is need to keep moving upward, praising Scott and community leaders for being smart enough not to allow national politics to get in the way of working together to build Central Arkansas’s economy.
“We are small enough to make it possible to know and work with the decision-makers in the community but large enough to have community assets like the Robinson Auditorium, The Arkansas Arts Center, The Clinton Library, the University of Arkansas at Little Rock, the Port of Little Rock, and our entire selection of Regional Hospitals for health care,” said the local real estate executive. “I am grateful to live in a community that has enough density and diversity of population to make it attractive to a company considering a new location to expand its retail footprint, manufacture and distribute products, or create a more tech-oriented service company.”
Meanwhile, according to the Association General Contractors of America (AGCA), two-thirds of the nation’s metropolitan areas had shed 67% of the nation’s construction jobs by the end of the third quarter, mostly in public and commercial construction projects. AGCA officials said public and commercial project delays are starting to pile up nationwide as the leading edge of local and regional economic development.
“An increasing number of nonresidential contractors are experiencing cancellations that are forcing them to lay off workers,” said Ken Simonson, AGCA’s chief economist. “Although single-family homebuilding and remodeling contractors are adding workers, most states are likely to have a net loss of construction workers soon, especially from high-paying, nonresidential jobs.”
“With the pandemic raging again in most parts of the country, countless construction jobs are at risk as owners cancel or delay construction projects amid uncertainty about the future,” added Stephen Sandherr, the association’s chief executive officer.
AGCA also recently noted that construction employment had only increased in 88 or 25% of the nation’s 359 largest metropolitan areas over the past 12 months. But that is not the story in Arkansas, especially the Little Rock area. According to recent AGCA data compiled from U.S. Bureau of Labor (BLS) statistics, Arkansas is ranked 17th in construction job growth in 2020 with a total of 54,500 workers at the end of October, up 1,000 from a month ago and 1,300 compared to the same period of 2019.
Nearly half of that job growth is in the Little Rock area, where new construction sites spring up every day. More specifically, the Little Rock-North Little Rock-Conway MSA is among the few regions with positive job growth of 18,800 in the construction trade, up 600 jobs from a year ago, BLS data shows.
But Scott’s crowning achievement amid the pandemic occurred in the summer when the city’s long courtship of Amazon.com finally bore fruit. On July 7, the Seattle-based e-commerce giant announced plans in early July to open its first fulfillment center in Arkansas at the Little Rock Port Authority, where Scott once served as a board member.
Following that groundbreaking ceremony that included an $11 million transportation infrastructure package by the Port of Little Rock, Amazon announced that Little Rock employees would soon work alongside robotics to pick, pack and ship small items to customers anywhere.
Amazon officials said the new 825,000 square-foot fulfillment facility would create over 1,000 new full-time jobs with starting pay at an average of $15 per hour with full benefits. The company’s sortable centers, such as the one planned for the Port of Little Rock, are usually more than 800,000 square feet and employ up to 1,500 workers.
Amazon would not disclose the financial terms associated with the project. Still, similar company fulfillment centers across the U.S. have seen real estate and land acquisitions cost range between $175 million and $300 million. The City of Little Rock’s Board of Directors first gave final approval for a sale of 80 acres at the city’s largest industrial park to Amazon, Arkansas Business first report in early April.
Besides the new fulfillment center, Amazon is also planning a new 85,000 square-foot delivery station to launch in late 2020. Delivery stations power the last mile of Amazon’s order fulfillment process. Packages are then shipped to delivery stations from Amazon fulfillment and sorting centers and loaded into vehicles for delivery to customers.
The delivery station will also create hundreds of permanent, full-time, and part-time jobs, in addition to offering entrepreneurs and independent contractors a chance to build their own small business delivering Amazon packages, company officials said. In late 2018, the Seattle-based e-commerce giant also opened a distribution center in North Little Rock with about 100 employees.
“Little Rock welcomes Amazon in Arkansas’ first major investment from the company and is excited to provide new economic opportunities to our residents,” Scott said during the groundbreaking ceremony. “The COVID-19 public health crisis has caused deep concern among many Little Rock families as they struggle to stay afloat due to current economic uncertainty. (This) announcement provides reassurance that Little Rock will rebound and that jobs are on the way.”
Indeed, Scott’s deal-making, with an assist from the local chamber, state economic development officials, and the governor’s office, has not only brought new, good-paying jobs to Little Rock but added some of the nation’s most highly respective and profitable corporations to its roster of employers. In January, Trader’s Joe, Amazon, and Costco were rated among the top four U.S. grocery retailers in the third annual dunnhumby Retailer Preference Index (RPI), a nationwide study that examines the $700 billion U.S. grocery market.
Texas-based regional grocer H-E-B was rated as the nation’s top grocery store, bumping Trader Joe’s from the No. 1 spot it held for two years. Amazon and Costco were third and fourth, respectively. Bentonville-based Sam’s Club and Walmart Stores USA, subsidiaries of Walmart Inc., were ranked 8th and 9th in the annual study. The RPI study surveyed 7,000 U.S. households to determine which of the top 60 largest grocery retailers have the best combination of financial performance and emotional consumer sentiment.
Looking Ahead: Economic momentum continues in 2021
But Amazon, Costco, and Trader Joe’s are not the only big wins that Scott has announced in 2020 during the city’s most significant economic downturn since the Great Depression. Other prominent local job events included expansions by Little Rock-based Revolution and its Delta Plastic subsidiaries and Italian firearms manufacturer Fiocchi of America.
That Fiocchi facility in southern Little Rock will complement an earlier job announced in April 2019 that CZ-USA, a Czech Republic-based gun manufacturer, would locate its North American headquarters in the Little Rock industrial park on the Arkansas River. SCA Pharma, an FDA-registered outsourcing facility, also announced in July that it would expand its operations in Little Rock to double its current Little Rock workforce of 180 workers. Altogether, those projects will inject total capital investments exceeding $200 million with 500 payroll jobs.
According to Little Rock Chamber of Commerce President and CEO Jay Chesshir, the city has made 17 major job announcements during Scott’s tenure as mayor that will add 2,800 jobs to employer payrolls. The longtime chamber executive notes that the job totals are “conservative,” meaning those numbers could jump as the economy proves and those companies are fully operational.
“Mayor Scott and I met a few days after he was elected to brief him on our active economic development projects and strategy more broadly,” Chesshir said of Scott’s leadership. “With the Mayor’s banking experience, he immediately became engaged in leading our team as we competed for these new companies and jobs. We’ve worked seamlessly together through one of the most difficult economic times in our history, to achieve significant results.”
In the recent Black Founders Summit sponsored by ReMix Ideas Inc., Scott also issued a “call to action” for the city to increase its current threshold of 15% for contracts and procurement with minority and black-owned businesses. He also said he may revisit the one cents sales tax initiative if the economy sufficiently improves in 2021 or beyond.
Still, Scott takes no credit for his economic development gains amid the pandemic at a recent sit-down at the new Fidel’s coffee shop in Little Rock’s East End community, which ironically is experiencing new business development from the mayor’s Opportunity Zone initiative.
“We have a great team in Little Rock, and I’m just trying to make it easy for them to do their job and bring more, good-paying jobs to our city,” he said.
1. More than 5,000 jobs have been added to local payrolls during Mayor Frank Scott Jr.’s nearly two-year tenure as Little Rock’s chief job recruiter, city officials say.
2. Little Rock Mayor Frank Scott Jr. surveys plans for a local development in his role as the city’s Chief Growth Officer.