Winging it is no way to run your business. You've got too much at stake. Even a small change in your cash flow can cost you tens of thousands. Proper business planning is an essential tool for successful businesses. 

This is the first of a three-part series on successful business planning and is a primer on how to prepare your organization to respond effectively when things change. The discussion will cover how to align your team to reach new goals and to realize the potential for your organization. 

First in the series will be a look at the need for budgeting, forecasting, and planning. Then will come a discussion of three principles around which to to build your business, and finally how to implement your planning in the real world

Imagine you are a pilot flying a plane over mountains at night. Without your instrumentation you are toast. Now imagine trying to drive a car down the road by only looking out the rear view mirror.

Driving a business without budgeting and planning is about as effective. But a surprising percentage of CEOs is operating without any form of budgeting, forecasting or planning. Worse, they have some kind of budget based on what happened last year or on fabricated hopes and dreams. Neither is very useful.

The collective experiences of numerous CEOs of mostly small to medium-sized businesses proves that the financials of a company, over time, tell a story. Along with background information about the business provided by the CEO, this offers a solid understanding of how the business has responded to change. 

All businesses are exposed to changes in the economic and competitive landscape. The years have revealed something very powerful that separates businesses that have thrived from those that have struggled or failed.

Thriving businesses are those that respond quickly and effectively to change. The ones that struggled were the ones slow to react. They may have ended up doing the right thing, but the delay is what did the damage.

The damage of reacting slowly to change accumulates over time, resulting in hundreds of thousands of dollars in lost profits. It's hard to quantify because no one ever takes the time to go back and look at what might have been. 

Budgeting, forecasting and business planning is not about looking into a crystal ball and predicting the future. It's about a process of understanding your business, injecting that understanding into your organization, developing goals that are aggressive yet achievable, building the capacity to achieve those goals and the agility to adapt quickly when things change. 

This sounds complicated, but it doesn't have to be. Experience shows that most business owners have at least an intuitive understanding of these things.

The next column will feature an examination of three principles to start effective planning for your business.

Allen Engstrom is Managing Director of CFO Network (www.cfonet.biz), specializing in providing outsourced accounting, consulting and business planning services to small and medium businesses of all types, locally and nationwide. He can be reached at 501-823-2363 or aengstrom@cfonet.biz.

WASHINGTON — Credit card holders will soon pay more. So will people with adjustable-rate mortgages or home equity lines of credit.

But most would-be home buyers needn't worry. And auto loan rates won't likely change much. For savers? Rates should creep up, at least for the highest-yielding CDs and saving accounts, though on average they'll still pay a pittance.

The cumulative impact of another Federal Reserve interest rate hike — its fourth in 18 months — will range widely for individuals and businesses with loans or income-producing accounts.

And the consequences range beyond U.S. shores. A series of Fed hikes generally means that overseas investors in search of interest income can increase their returns by shifting money into the United States. Higher U.S. rates also tend to cause an outflow of capital from developing countries that can ill-afford it.

The most immediate effects, though, are generally on borrowers in the United States. When the Fed lifts the short-term rate it controls by one-quarter of a percentage point, as it did Wednesday, it typically translates into a quarter-point rate increase for credit card debt and home equity lines, as well as for some adjustable mortgages.

Fed policymakers have raised their benchmark rate to a range of 1 percent to 1.25 percent and indicated that they foresee one additional hike this year, assuming that the economy remains on solid footing.

For someone with a $5,000 credit card balance who makes a minimum payment each month, the Fed's four rate increases since December 2015 equal an additional $700 in payments over the life of the loan, according to Greg McBride, chief financial analyst at Bankrate.com.

"That's where consumers are feeling it and are going to continue to feel it," McBride said.

But home and auto loan rates are another story: Despite the Fed's moves, they've barely budged since December 2015, when the central bank announced its first increase after seven years of near-zero rates.

Here are some questions and answers on what the Fed's moves could mean for consumers, businesses, investors and the economy:

Q. Why haven't mortgage rates increased?

A. Because fixed-rate mortgage rates don't typically follow the Fed's changes. Sometimes they even move in the opposite direction. So it doesn't necessarily make sense to rush into buying a home or refinancing a mortgage. The hike often won't translate into higher mortgage rates.

Fixed long-term mortgages tend to track the rate on the 10-year Treasury, which, in turn, is influenced by such factors as investors' expectations of future inflation to global demand for U.S. Treasurys.

In December 2015, a week before the first increase, the average 30-year fixed mortgage rate was 4.06 percent, according to Bankrate.com. It actually fell for most of 2016, then jumped later in the year and peaked at 4.44 percent in mid-March this year.

But since then, long-term mortgage rates have declined and are back to almost exactly where they began: The 30-year averaged 4.04 percent last week.

Even the increase that began in late 2016 had little to do with the Fed. Rather, investors dumped Treasurys and bought stocks in anticipation of faster growth and higher inflation after Donald Trump's election. Better growth overseas also raised optimism.

But as Trump's tax and infrastructure spending proposals have stalled, investors' outlooks have dimmed. Demand for the 10-year Treasury has risen, and so its yield has dropped, reducing mortgage rates with it.

Other factors can also keep rates low. When global investors grow nervous, they often pour money into Treasurys because they're seen as ultra-safe. That buying pressure holds down Treasury rates.

Q. So where will home loan rates go from here?

A. Hard to tell. The Fed expects to lift its benchmark rate one more time this year and three times in 2018. Eventually, those increases should put upward pressure on mortgage rates, but it's impossible to say when.

Mortgage rates are still very low by historical standards. Before the Great Recession, the 30-year rate had never dipped below 5 percent.

Q. How could the Fed's actions affect other countries around the world?

A. Higher rates in the United States tend to attract more investment from overseas. The European Central Bank and the Bank of Japan are still keeping their benchmark rates near zero to try to stimulate those economies. So investors can earn more by investing in dollar-denominated assets.

That inflow pushes up the value of the dollar, which can make U.S. exports costlier overseas. It can also pull money out of developing countries, where rates are usually higher but government bonds carry more risk. A flow of funds out of developing nations can lower their currencies relative to the dollar, making it harder for businesses in those nations to repay debts they have incurred in dollars.

Q. My credit rating isn't so great. How will I be affected?

A. Doug Amis, a certified financial planner in Cary, North Carolina, says consumers with less-than-sterling credit can expect to pay more, especially when financing the purchase of a used car.

"There's going to be an opportunity to increase those rates higher," Amis said. "So if you have poor credit, this is going to impact you."

Still, even with another rate hike, the impact on consumers and businesses is likely to remain mild, as rates remain very low, relative to years ago, Amis noted.

Q. Have the Fed's moves boosted the puny rates available for savers?

A. In a few cases, yes. McBride says some smaller banks are starting to offer higher rates on CDs and savings accounts than larger banks are. The huge national banks already have "more deposits than they know what to do with," McBride said, so haven't lifted their rates at all.

As a result, the disparity between the smaller local banks and nationwide institutions is widening, he said: "Exploit that difference. It's money in your pocket."

So far, the average rate on a one-year CD has barely risen since the Fed's rate hikes began, inching up from 0.27 percent in December 2015 to 0.35 percent now, according to Bankrate.com. But the highest-yielding CDs have risen from 1.35 percent to 1.5 percent.

Q. What if I'm a retiree invested in bonds?

A. Amis says he tells his fixed-income clients not to stress out over another rate hike.

"This is part of investing in fixed income, and it's not a signal to jump ship and go into dividend-paying equities," he said. "I would recommend they stay the course and earn the coupon."

Since rates began rising again, Amis has been advising retirees and others with fixed-income investments like bonds to ensure that their portfolios are balanced between very short-term and long-term bonds. Longer-term bonds typically pay higher rates, and as rates rise, the short-term securities will be replaced with higher-yielding ones.

(All contents © copyright 2017 Associated Press. All rights reserved.)

James T. Ferstl of Little Rock has been named to the Real Estate Industry Council of the Federal Reserve Bank of St. Louis, the bank announced Thursday.  

Ferstl is the president of Ferstl Valuation Services in Little Rock, a real estate valuation and consulting firm.

The St. Louis Fed created four District Industry Councils in 2006, each designed to provide feedback regarding economic conditions within an Eighth District industry sector. The members' observations, along with economic data and information developed through the Beige Book and meetings of the Reserve Bank's boards of directors, help inform monetary policy deliberations in Washington.

Each council is supported by one of four of the Reserve Bank's offices: St. Louis (real estate); Little Rock (agribusiness); Louisville, Ky. (health care); and Memphis, Tenn. (transportation). The councils meet twice a year.

Sales of luxury homes in Pulaski County jumped in 2016 to a number not seen since Arkansas Business began tracking them in 2004.

Last year, 29 homes sold for $1 million or more, up from 20 in 2015.

Arkansas Business has been keeping statistics on high-end sales since 2004, when 29 million-dollar homes were sold. Sales hit a low of 13 in 2012.

This year, strong sales should continue, Jon Underhill predicted in an email to Arkansas Business last week. Underhill sells upscale home through his agency, Jon Underhill Real Estate of Little Rock. “The economy and the stock market are both doing well, and that bodes well for real estate,” Underhill said.

Since January 2017, 11 seven-figure homes have sold in the county and five more are under contract, he said.

Underhill also said more high-quality luxury homes were for sale in 2016, which contributed to increased sales. “Inventory had been low on quality homes in good locations,” Underhill said. “Many of the homes that sold had never been offered for sale.”

Homebuyers’ ideas of a dream home change annually. Few are asking for dedicated theater and wine rooms these days.

The current trends are open floor plans with comfortable living areas and designer kitchens, Underhill said. Buyers want master bedrooms and one guest room on the main level, outdoor areas, a pool and four-car-plus garage. Smart homes are a must, and buyers aren’t “willing to pay for last year’s technology,” he said.

As of last week, 44 homes in the county were listed for sale with asking prices of $1 million or more.

Underhill said that he has a list of at least nine other homes that the owners would be interested in selling but that aren’t on the active market.

For those who wonder who bought these exclusive homes in Pulaski County, Arkansas Business, using interviews, public real estate records and other documents, has provided a brief description of the homes and the buyers.

$2.67 Million

Buyer: Mace Properties LLC, led by Harry Erwin III
Seller: Wendy and Stephen LaFrance Jr.
Neighborhood: Edgehill, Little Rock    
Date: Sept. 1    
Year Built: 1929
SF: 6,844

Harry “Chuck” Erwin III bought this home that, real estate website Zillow said, features open entertaining spaces and a chef’s kitchen. Zillow touts the Edgehill manor’s “fabulous open entertaining spaces,” and the backyard highlights include a pool and gardens. Erwin founded the certified public accountants’ firm Erwin & Co. in Little Rock in 1984. He graduated from the University of Texas and started his career in 1979, according to his company’s website. He supports the Arkansas Arts Center and Arkansas Symphony Orchestra. Erwin has served on the board of trustees of Arkansas Children’s Hospital since 1990.

$2.5 Million

Buyer: Scenic LLC, led by John Stephens
Seller: Demp and Paula Dempsey
Neighborhood: Scenic Heights, Little Rock
Date: April 1
Year Built: 1981
SF: 6,823

This home features a detached three-car garage and “chiseled Terrazzo floors throughout,” according to Zillow. The house also has three fireplaces and doors that open to decks with canyon creek views, Zillow said. Scenic LLC, led by John Stephens, bought the $2.5 million house on April 1, 2016. John Stephens’ father is Warren Stephens, the president and CEO of Stephens Inc. of Little Rock, one of the country’s top investment banks. Last year, Forbes listed Warren Stephens as one of the richest people in America with a net worth of $2.4 billion.

$2.2 Million

Buyer: NPS Holdings LLC, led by Jeffrey and Cara Nolan
Seller: Estate of Kula Kumpuris
Neighborhood: Country Club Heights, Little Rock
Date: Aug. 17

NPS Holdings LLC, led by Jeffrey and Cara Nolan, bought a $2.2 million house to tear it down. On Dec. 22, residential homebuilder Fred Lord Builder Inc. of Little Rock took out a building permit for the new home project valued at $1.65 million. The work was financed by a two-year loan of $2.1 million from BancorpSouth Bank of Tupelo, Mississippi. Jeffrey Nolan is president and CEO of the land and timber management firm Loutre Land & Timber Co. of El Dorado. Since 2012, he has served on the board of directors of Murphy Oil Corp. of El Dorado. As a Murphy Oil director, his compensation for 2016 was $265,000.

$1.8 Million

Buyer: Donald and Lucinda Phelps
Seller: John and Amber Meadors
Neighborhood: Edgehill, Little Rock
Date: May 26
Year Built: 1937
SF: 4,667

Donald and Lucinda Phelps bought this home that, according to Zillow, features vaulted brick ceilings and floor-to-ceiling arched windows that overlook a pool and “immaculate grounds.” A guest cottage also is on the property. Don Phelps is the CEO of Phelps Fan LLC of Little Rock, which was founded in 1915 and is one of Arkansas’ oldest companies. He is the fifth generation of the Phelps family to run the company, which manufactures industrial fans. “From routine industrial needs to the demands of nuclear age requirements, Phelps Fan’s commitment to innovation and technology meet the needs of today while positioning itself to meet those of the next century,” the company’s website said.

$1.79 Million

Buyer: Jill and Edward Penick III
Seller: Marilynn and Robert Porter Jr.
Neighborhood: Country Club of Little Rock
Date: Sept. 30
Year Built: 2011
SF: 5,076

Jill and Dr. Edward Penick III bought this estate that, Zillow said, includes a three-car 868-SF garage. Edward Penick III practices at Central Arkansas Ophthalmology in Little Rock. The Little Rock native received his bachelor’s degree in biology from Davidson College in North Carolina and his medical degree from the University of Arkansas for Medical Sciences, according to Central Arkansas Ophthalmology’s website. He completed his ophthalmology residency at the University of Missouri-Kansas City. He specializes in Lasik and cataract surgery and sees patients for medical and eye exams, the website said.

$1.7 Million

Buyer: WVM LLC, led by Rush Harding
Seller: Maxie and Patricia Bobbitt
Neighborhood: Hickory Pointe, Little Rock
Date: April 15
Year Built: 2007
SF: 6,327

Rush Harding bought this home, featuring three bedrooms, three full bathrooms and two half-baths, because of the privacy. It has a permanent green space that surrounds three sides of the home, Harding said in an email to Arkansas Business. “I have a large, spacious office and my wife has a quiet nook to work on her photography and other projects,” he said. Harding said his wife, Linda, likes to work in the yard. “She has created a magical setting with plants and landscaping,” he said. Rush Harding is CEO of Crews & Associates in Little Rock, an investment banking firm created in 1979. He also is the CEO of Crews’ subsidiary, First Security Finance.

$1.57 Million

Buyer: Rodney and Michelle Damon
Seller: CNC Family Trust, led by Christopher and Claire Pittman
Neighborhood: Sologne Circle, Little Rock
Date: May 12
Year Built: 2008
SF: 10,810

Rodney Damon said the house on Sologne Circle was too good a deal to pass up.
The home cost $2.8 million to build in 2008, said Damon, who splits his time between Florida and Little Rock. “I bought it as an investment,” he said. “Hopefully, I can retire at some point and make some money off of it.” The estate in the gated community has five bedrooms and eight bathrooms. The brick house is “well-built,” he said. “It has all the amenities of any luxury home that you would see,” he said. Damon is a senior vice president at BOKF, which does business as Bank of Oklahoma and Bank of Arkansas.

$1.4 Million

Buyer: Terri and David Snowden Jr.
Seller: Judith and David Snowden Sr.
Neighborhood: West Little Rock
Date: June 1
Year Built: 1999
SF: 5,494

The house that Terri and David Snowden Jr. bought for $1.4 million was part of a family residential deal. They swapped their 6,272-SF home near the Country Club of Little Rock for Judith and David Snowden Sr.’s estate on 20 acres in west Little Rock. David Snowden Jr. is vice chairman at Tarco Inc. of Little Rock, which manufactures roofing products and has plants in Arkansas, Texas and Pennsylvania. Both Snowden Sr. and Snowden Jr. are members of the Arkansas Outdoor Hall of Fame and have been involved with the Arkansas Nature Conservancy since it began in the 1970s, according to the website of the Arkansas Game & Fish Foundation, which sponsors the Hall of Fame.

$1.4 Million

Buyer: Celia-Anne Martindale
Seller: George and Deborah Makris
Neighborhood: Country Club Heights, Little Rock
Date: Jan. 15
Year Built: 1998
SF: 5,986

Celia-Anne “CeCe” Martindale bought this home just a block from the Country Club of Little Rock. The house features a “large family room open to gourmet kitchen with every amenity,” according to Zillow. It also has a private covered terrace that overlooks a landscaped oversized lot, the website said. Martindale’s husband, Howard, is a co-director of information technology at Fourjay LLC of North Little Rock, a franchise of Wendy’s International Inc. Founded in 1975, Fourjay now has 49 stores with more than 1,400 employees, according to the company’s website. In August, Franchise Times, a trade jounal, estimated Fourjay’s annual revenue at between $60 million and $70 million.

$1.35 Million

Buyer: Duane and Angela Birky
Seller: Lee Bodenhamer Trust
Neighborhood: Overlook, Little Rock
Date: Dec. 2
Year Built: 2009
SF: 6,385

Angela and Dr. Duane Birky bought this four-bedroom, six bathroom home that overlooks the Arkansas River and the Big Dam Bridge. It also has “expansive decks off the rear of the house,” multiple fireplaces and floor-to-ceiling windows, Zillow said. Dr. Birky specializes in neurology and works at the Baptist Health Specialty Clinic in North Little Rock. He received his license to practice medicine in Arkansas in 1999.

$1.35 Million

Buyer: Karen E. Flake Revocable Trust
Seller: Chuck Hamilton Construction Inc.
Neighborhood: Country Club Heights, Little Rock
Date: Oct. 11
Year Built: 2010
SF: 5,091

Karen Flake bought the 5,091-SF home because she wanted the extra family space for her six grandchildren. The four-bedroom home is “probably more than we would need,” but Flake and her husband, John, frequently keep their grandchildren, she said. The split-level home has three bedrooms on the first floor and the master bedroom on the second. Karen Flake is president and CEO of Mount St. Mary Academy in Little Rock. John Flake is chairman of the commercial real estate company Flake & Kelley Commercial of Little Rock.

Home Sales of $1 Million or More in 2016 in Pulaski County

*In millions   **Property being torn down
Sources: Pulaski County Assessor’s Office and real estate records

The number of seven-figure homes sold in Washington and Benton counties almost tripled in 2016 compared with the previous year.

Twenty-seven homes in the two counties sold for $1 million or more in 2016. In 2015, only 10 homes sold at or above that price point, while 18 homes reached or surpassed the $1 million threshold in 2014.

Brandon Long, owner and broker at Weichert Realtors-The Griffin Co. in Springdale, said inventory of high-priced homes turned over much quicker in 2016 — and so far in 2017 — than it had in recent years.

“I think one of the reasons is there are more buyers for the homes,” Long said. “The absorption rate has gone down quite a bit. The reason for that is not less inventory but just more buyers. That is what the trend was saying for sure.”

Long said there used to be about 10 buyers every month looking at and buying homes priced at $500,000 or more in northwest Arkansas. Now that number has doubled.

This week, we take a look at the 10 most expensive residential sales in the two-county region. The top home on the list is one of the most expensive in recent memory. While the most expensive home in 2015 sold for $1.4 million, 2016 saw Walton Enterprises pay $5.3 million for a 4,366-SF home on Old Whayne Road in Bentonville.

The home has sentimental value; it was the residence of Ferold Arend, the first president of Wal-Mart Stores Inc. and close associate of neighbor Sam Walton. The seller was Arend LLC, led by Arend’s daughter, Debi Havner.

A $1.75 million residential sale from last August has been omitted from the list. That’s because the 3,031-SF home and acreage on SW I Street in Bentonville that Orchard Properties of Fayetteville (through its SullivanSquareBentonville LLC) bought from Real Church Inc. has already been razed to make room for a 474-unit apartment complex.

Eighteen of the 27 seven-figure homes sold last year were in Benton County, with Pinnacle Country Club being a popular neighborhood. Four of the 10 most expensive homes are there.

“There are a lot of things going on in Centerton and in Rogers and in Pinnacle,” Long said. “Benton County is for sure leading the way as far as those million-dollar homes. The million-dollar properties are still pretty unique. I would still say that someone has to be in the market for that property.”

Long said homes in all price ranges are selling much faster than in recent years.

“With the economy doing as well as it is doing, everybody has a little more money anyway,” Long said.

$5.3 Million

Buyer: STJ Holdings LLC
Seller: Arend LLC, led by Debi Havner
Location: Old Whayne Road, Bentonville
Date: April 12
Year Built: 1968
SF: 4,366
 
STJ Holdings is a subsidiary of Walton Enterprises LLC, a commercial and residential property management company run by the Walton family. The home, which includes a 1,050-SF basement, is the former residence of the late Ferold Arend, the first president of Wal-Mart Stores Inc. and longtime member of the company’s board of directors. The home sits on 3½ acres and is close to Crystal Bridges Museum of American Art and downtown Bentonville.

$1.81 Million

Buyer: Karisa N. Sprague
Seller: Michael E. and Sherri K. Long
Location: West Pinnacle Drive, Rogers
Date: July 29
Year Built: 2013
SF: 6,697
 
Karisa Sprague is a senior vice president for Wal-Mart Stores Inc. of Bentonville, for whom she runs the North Central Division of its store operations. The residence is in the gated community of Pinnacle Country Club and has five bedrooms and seven bathrooms. It also features a heated pool, a cabana and an outdoor kitchen.

$1.66 Million

Buyer: Rickie Lynn and Dianna Lynn Ellis
Seller: Wilson Trust
Location: Pine Log Road, Garfield
Date: Sept. 12
Year Built: 2010
SF: 7,189

Rick Ellis is the owner and president of Mid-River Terminal of Osceola, a harbor service company on the Mississippi River. The home overlooks Beaver Lake and sits on 3 acres. It has four bedrooms and five bathrooms and a four-boat private dock. The property also features a two-level garage with space for eight vehicles, a heated storage area in the basement and two outdoor fireplaces.

$1.59 Million

Buyer: Monica Houle and Thomas McGurk
Seller: William A. and Cheryl Lester III
Location: Prestwick North Circle, Fayetteville
Date: June 30
Year Built: 2005
SF: 6,376

Monica McGurk is chief growth officer at Tyson Foods of Springdale, and Tom McGurk is an executive with the consulting firm BluWave. The home sits on 1 acre and has a pool, a four-car garage and 5½ bathrooms. It is adjacent to Blessings Golf Course, the private course founded by former Tyson CEO and current Chairman John Tyson.

$1.51 Million

Buyer: Bradley Scott and Alexis Lynn Smith
Seller: Smith Family Living Trust, led by Ryan Taylor and Catherine Rae Smith
Location: South Sechrest Circle, Rogers
Date: July 5
Year Built: 2004
SF: 8,983

This home sits on the golf course at Pinnacle Country Club, a gated community in Rogers. The home has five bedrooms, 5½ bathrooms and a 4,000-SF basement. It also has a three-car garage.

$1.47 Million

Buyer: David R. and Beverly A. Lamp
Seller: Lessley Joint Trust, led by Bill Lessly
Location: Rocky Ridge Road, Bentonville
Date: June 30
Year Built: 1997
SF: 6,844

Randy Lamp is the CEO of Apprentice Information Systems of Rogers. The property features a seven-bedroom, 5½-bathroom home on 24 acres. The home has a saltwater pool, horse barn and four-car garage.

$1.4 Million

Buyer: Samuel M. and Kelly A. Rothschild
Seller: Derek L. Collison
Location: Churchill Downs Drive, Springdale
Date: Dec. 15
Year Built: 2005
SF: 12,230

Sam Rothschild is the COO of the restaurant chain Slim Chickens of Fayetteville. The home has seven bedrooms, nine bathrooms and a two-story library. It also has a wine cellar and a large pool with three waterfalls and a swim-up bar.

$1.39 Million

Buyer: Tracy L. and Kevin O. Mitchell
Seller: Ismat Aziz
Location: West Pinnacle Drive, Rogers
Date: Aug. 12
Year Built: 2012
SF: 5,168

Ismat Aziz was the chief human resources officer at Sam’s Club before being hired by Sprint in July 2016 to be its senior vice president of human resources. No information about the Mitchells was available. The home has seven bedrooms, 7½ bathrooms and a 1,674-SF guest house. It also features a saltwater pool.

$1.3 Million

Buyer: Louis A. and Jennifer J. Martin
Seller: Kalpesh H. & Gina M. Patel
Location: Plymouth Lane, Rogers
Date: July 17
Year Built: 2011
SF: 5,310

Louis Martin is the president of the Coca-Cola Co.’s customer relations team for Global Wal-Mart and Sam’s Club. The home has five bedrooms, six bathrooms and a wine room. It also has a pool with a connected hot tub and a swim-up bar, a four-car garage and media and exercise rooms. It is located in the gated community of Pinnacle Country Club.

$1.3 Million

Buyer: James R. and Jacqui E. Lefler
Seller: Shelby P. Field Trust
Location: East Township Street, Fayetteville
Date: Aug. 16
Year Built: 2005
SF: 5,713

James Lefler is an executive with Dragonfly Industries International of Frisco, Texas  — the company that unsuccessfully attempted to put a wind farm in Elm Springs in 2015 — and Jacqui Lefler is vice president of Heartland Payment Solutions of Fayetteville. This home made the 2015 Expensive Homes list after Shelby Field bought it in June 2014 for $1.5 million before transferring it to the trust. The home has four bedrooms, 3½ bathrooms, a wine cellar and a media room. There is a pool with a guest house, and the 3-acre property is bordered by a creek.

The main creditor in the Chapter 11 bankruptcy reorganization involving the 30-story Regions Center in downtown Little Rock has accused the building’s owners of dragging their feet.

The owners’ bankruptcy has been pending for six months, yet “Debtors have made no progress toward a reorganization,” Wells Fargo Bank, a trustee for a pool of investors who made the loan to the building owners in 2006 to buy the property, said in a recent bankruptcy filing.

(The investors have a massive legal name: the Registered Holders of COMM 2006-C8 Commercial Mortgage Pass-Through Certificates.)

The 32 LLCs with an ownership interest in the 547,000-SF building have asked a U.S. Bankruptcy Court judge in Delaware for more time to file their plan of reorganization. Wells Fargo, though, wants the request denied. Or if it is approved, the time frame should be short, Wells Fargo said.

The reorganization plan was due on April 8, but at the end of March, the owners asked for an extension until July 7.

The owners said they were “proceeding in good faith in negotiating a process for reorganizing,” according to the March 31 filing.

The owners said in the filing that they were in talks “with numerous replacement lenders and anticipate being able to file a plan of reorganization in the very near future which provides for a 100 percent recovery to all of the Debtors creditors, including unsecured creditors,” the owners said.

Wells Fargo said the creditors won’t take “anything less than the full amount owed under” the loan documents.

Last year, the 32 LLCs with an ownership interest in the building allegedly defaulted on the $32 million loan used to buy the property. The owners owed $29.6 million, according to Wells Fargo.

In December, the owners filed for Chapter 11. The total debt is listed at $30.4 million, according to bankruptcy documents. The building, the owners said, is appraised at $40.5 million.

A judge hasn’t ruled on the request for an extension to file the reorganization plan.

The Regions Center reported revenue of $1.55 million for the first three months of the year and a net income of $360,000, according to the latest operating report filed in April.

The top 10 residential real estate agencies in Arkansas didn’t change in 2016, but there was some shuffling of position as eight of the 10 reported higher sales volume than in 2015.

Memphis-based Crye-Leike Realtors, the perennial No. 1, retained the top spot with sales of $1.26 billion last year — up almost 4 percent. But the No. 2 firm was not as distant as in past years: By adding 125 licensed agents, Keller Williams Market Pro Realty of Fayetteville upped its sales volume by nearly half to overtake crosstown rival Coldwell Banker Harris McHaney & Faucette.

KW Market Pro was also helped along by having the top-selling individual agent in the state: Nicky Dou. She posted $48.81 million last year.

KW Market Pro also boasted the No. 3 selling team, Joseph Hayes & Associates, with volume of $42.5 million. Team sales are in a separate list led by the Limbird Team of Limbird Real Estate Group of Rogers, with $113.65 million, and the Eric Burch Team of Burch & Co. in Jonesboro, with almost $53 million.

At this point it’s important to explain real estate mathematics. The industry double-counts the sale of a house in recognition that the buyer and seller are often represented by different agents and companies.

The doubling reflects a system that rightfully acknowledges two sides to every transaction. However, instead of dividing the sales price of a property between the buyer’s agent/company and the sale’s agent/company to determine sales volume, both agents and companies get credit for the entire amount. The real-world dollar total of houses sold is more like half the sales volume reported by companies and agents.

Growth by the biggest agencies is reflected in the fact that the 10 largest claimed volume of $4.87 billion in 2016, up some 18 percent from the year before.

The top 40 listed this week reported total sales volume of $6.47 billion. That’s an increase of almost 15 percent from 2015. The No. 40 position belongs, for the second year in a row, to Weichert Realtors-Downum Group of Springdale, with sales volume just shy of $49 million in 2016, up almost 12 percent from the previous year.

Mergers and acquisitions were variables in play with this year’s lineup of residential real estate agencies. In Jonesboro, ERA Doty Real Estate, No. 20 on this week’s list with sales volume of $100 million, acquired Fred Dacus Associates in June 2016.

Fred Dacus Associates ranked No. 26 on last year’s list of the state’s top residential real estate agencies, with 2015 sales of almost $70 million. The company had 29 licensed agents — 11 of whom were $2 million-plus producers last year.

Linda Roster White Real Estate of Conway merged in August with Little Rock’s Coldwell Banker RPM Group, which landed at No. 6 this year. The combination expanded RPM’s central Arkansas footprint into Faulkner County.

If at first you don’t succeed in federal court, take your case to state court. That’s what the former chairman and one-time largest shareholder of Mountain View’s Stone Bank has done in Pulaski County Circuit Court.

James Barnes is once again seeking more than $4 million in damages, claiming he was pushed out of the bank that he helped launch seven years ago and was forced to sell his stake in the bank at below-market pricing.

The defendants remain the same: J.T. Compton, his son, Kevin, and David Dunlap, all bank directors; Marnie Oldner, CEO of Stone Bank; Nick Roach, president of the bank; and Stone Bancshares Inc., parent company of the $181 million-asset lender.

The two sides don’t agree on much, but they do agree that the substance of the complaints and claims is virtually identical in both cases.

“As far as we can tell, there is no difference,” said Kirby Williams, executive vice president with Stone Bank. “His case was denied in federal court, and now he’s refiled in state court.”

Barnes resigned from the bank’s board of directors on Oct. 18, 2013, and 17 months later signed a consent order with the Office of the Comptroller of the Currency that prohibits his participation in banking.

Added juice to the litigation: Stone Bank holds more than $672,000 of debt connected with the bankruptcy petition of Barnes.

Four of the leading banks in Arkansas were recognized this spring as top-performing lenders. The measuring stick used by the Independent Community Bankers of America: three-year average return on assets.

El Dorado’s First Financial Bank ranked No. 6 among lenders with assets of between $300 million and $1 billion with a 3.15 percent ROA during 2014-2016.

Among lenders with assets of more than $1 billion, Little Rock’s Bank of the Ozarks ranked No. 14 at 2.09 percent, Searcy’s First Security Bank ranked No. 16 at 2.08 percent, and Conway’s Centennial Bank ranked No. 22 at 1.83 percent.

ICBA represents more than 5,800 banks with $4.7 trillion in assets and 760,000 employees nationwide.

Government scrutiny of Harbor Portfolio Advisors of Dallas has contributed more baggage to weigh down a would-be sale of Arkansas’ smallest bank.

Two of the three prospective buyers of an 87.3 percent stake in Community State Bank of Bradley (Lafayette County) are affiliated with Harbor Portfolio Advisors: Chad Vose, president of the company, and Farzana Giga, chief financial officer.

HPA, one of the largest sellers of foreclosed homes in the nation, has drawn fire for its alleged predatory lending prices.

The company’s seller-financed home sales and operations attracted the investigative crosshairs of The New York Times last year and more follow-up this year.

HPA’s foreclosure sales practices also have drawn fire from the federal Consumer Financial Protection Bureau and the city of Cincinnati.

A U.S. Appeals Court upheld the CFPB’s subpoena power to investigate Harbor for potential violations of the federal Truth in Lending Act, the Consumer Financial Protection Act and the Equal Credit Opportunity Act.

Cincinnati sued Harbor Portfolio Advisors for unpaid fines and alleged failure to properly maintain dozens of homes sold through a contract for deed.

The action is part of a crackdown on private investment firms that sold foreclosed homes on high-interest installment contracts to poor residents who could not get traditional bank mortgages.

Lex Golden, chairman and CEO of Allcorp Inc., said in a bankruptcy court creditors’ hearing last month that the inquiry into Harbor Portfolio Advisors was a contributing factor in last month’s termination of the proposed purchase of his family’s controlling stake in Allcorp.

Allcorp, the parent company of the $15.5 million-asset Community State Bank, entered bankruptcy court 11 months ago.

Allcorp’s prime debt, secured by all outstanding shares of Community State Bank, is $1.3 million owed to Heartland Bank of Little Rock. Unpaid interest on the loan will total more than $61,900 at the end of June.

Heartland advocates selling the bank to remedy Allcorp’s flagging fortunes. The Golden family thinks the situation can be reversed if the Heartland debt undergoes a generous restructuring.

Community State lost $246,000 last year. The bank recorded a $13,000 loss in the first quarter with total equity capital of $2.6 million.

Community banks did not cause the 2008 housing and economic crisis. However, due to the regulatory creation of the Dodd-Frank Wall Street Reform Act — Washington’s response to the crisis — small community financial institutions have borne the brunt of its effects. They have been unfairly punished with burdensome regulations that have increased paperwork and reduced productivity and services in too many of our communities.

As a former chief executive of a locally owned community bank in Little Rock that existed before and after the implementation of Dodd-Frank, I saw firsthand how regulatory requirements for smaller financial institutions created an unreasonable burden that makes it exceptionally difficult for them to fulfill their roles in providing consumers, small businesses and entrepreneurs with competitive services and access to credit and capital.

The number of banks chartered in Arkansas has gone from more than 250 in the mid-1990s to around 100 today. A large contributor to this has been increased regulatory burden from the federal government. These institutions have remained well-capitalized and should never have been unfairly punished for the mistakes of the federal government and larger financial institutions.

Before the expansion of the federal safety net, first with the formation of the Federal Reserve System in 1913, followed by the creation of the Federal Deposit Insurance Corp. during the Great Depression, bank shareholders held substantially higher ratios of capital to assets. While there was a slight uptick during the early 1990s following the passage of the FDIC Improvement Act of 1991, over the past century, ratios of shareholder equity capital to assets for commercial banks have fallen.

Unfortunately for taxpayers, capital ratios at some of the largest financial institutions remained low even after the new Prompt Corrective Action penalties and new capital expectations of the FDIC Improvement Act. For example, at the time of the 2008 housing crisis, Citicorp had a capital ratio of only 4.03 percent for its Tier 1 leverage ratio.

The Dodd-Frank Act of 2010 has only worsened this issue, layering more “macroprudential” regulation and more regulatory expense, while not substantially reducing the moral hazard underlying our “too big to fail” banks. In fact, some argue that the moral hazard actually has been enhanced by the institutionalization of the “too big to fail” doctrine emphasized in the Dodd-Frank Act.

The centerpiece of the House Financial Services Committee bill, known as the Financial CHOICE Act (Creating Hope & Opportunity for Investors, Consumers & Entrepreneurs), is a significant change in approach. To reduce the moral hazard and increase the “microprudential” attention of bank managers, directors and shareholders, the Financial CHOICE Act offers a voluntary capital election.

This is being termed as a “regulatory off-ramp” for financial institutions with high capital. Generally, for a bank or credit union to be considered well-capitalized by the FDIC today, the institution must have a Tier 1 leverage ratio of 5 percent or higher. In Title VI of the Financial CHOICE Act, we double that level to 10 percent or higher.

The 10 percent level was arrived at by reviewing bank failures over time at various levels of Tier 1 capital. Additionally, in April 2015, FDIC Vice Chairman Tom Hoenig proposed a similar off-ramp concept and also established a 10 percent Tier 1 capital leverage ratio as a good working number for his proposal.

This voluntary off-ramp concept is available to all banks that would avail themselves of its provisions. However, it is unlikely that the nation’s largest, most complex institutions will be able to justify the dramatic increase in equity capital to achieve the regulatory benefits.

A recent Congressional Budget Office report confirms this: “CBO expects that most of the financial institutions that chose to maintain a leverage ratio at 10 percent would be those with assets below $10 billion, commonly known as community banks.” And that “the eight large banks headquartered in the United States that are characterized as globally systemic important banks would not make the election because they would have to raise much more capital.”

However, we estimate that about 75 percent of community banks and credit unions scattered across the main streets and avenues of our cities already hold Tier 1 capital at the 10 percent threshold. By availing themselves of this voluntary mechanism, community banks will have more options when it comes to product innovation and services for small businesses, consumers, families, farmers and our entrepreneurs across the nation.

Alexander Hamilton said that banks are the “nurseries of our national wealth.” Those of us on the House Financial Services Committee who worked on this bill believe that the centerpiece of our Financial CHOICE Act will encourage more equity capital to be maintained by banks, making our banks safer and therefore giving them the flexibility to serve the public in good times and bad.

French Hill represents the 2nd Congressional District of Arkansas in the U.S. House of Representatives. Email him online at Hill.House.gov.

Arkansas Business' "Foundations" interview series continues with Jon Harrison, owner of VIP2 of Little Rock, a consultancy that helps businesses and other organizations through leadership training programs for staff at all levels.

In this episode, Harrison talks about the capability to be a good leader, how to handle workplace conflicts, and the philosophy behind developing "values-driven, informed and passionate people" in the workplace.

The "Foundations" series aims to highlight key tools for success for businesses, nonprofits and other organizations. The first four videos of the series focus on leadership and feature interviews with Harrison, Gina Radke of Galley Support Innovations of Sherwood and Fitz Hill, director of the Scott Ford Center for Entrepreneurship & Community Development and the Arkansas Baptist College Foundation.

Full Interview

Harrison, a former plant manager for Caterpillar Inc., leverages decades of leadership experience to help companies and organizations of all sizes.

"We try to give them the tools that help them understand how to communicate with people, how to hold people accountable," he says. "For example, one thing that I wish someone would have taught me when I was a young supervisor is [how to have] difficult conversations. That's the cornerstone really of any relationship."

Harrison also talks about how personality types inform how managers relate to direct reports, how different countries have different ideas about what makes a good leader, and how managers can create a healthy workplace that has a positive effect on employees' families and communities.

Sam Selig has been hired as director of operations in the water division at Entegrity's Little Rock corporate headquarters. He was previously vice president at Instrument & Supply Inc. 

Erik Swindle has been hired as director of business development at Clear Energy in Little Rock. He was previously director of facility services at Cromwell.

Financial Services

Erica Loftis has been hired as a private lending adviser at Regions Bank in Little Rock. Loftis was previously a treasury management sales officer at IberiaBank. 

Susan S. Lanigan has been added to the board of directors of Simmons First National Corp. of Pine Bluff. Lanigan is executive vice president and general counsel of Chico's FAS Inc. in Fort Myers, Florida.

Jeff Wilkinson has been promoted from vice president of information technology to senior vice president of Farmers Bank of Greenwood. 

Ben Bailey has joined the Tabor Group, a team within Raymond James Advisor Select in Little Rock, as first vice president. 

Hospitality/Tourism

Shannon Harris has transitioned from sports manager to guest services manager at the North Little Rock Convention & Visitors Bureau. 

DeShay Major has been hired as the director of catering and convention services at the Holiday Inn Little Rock Airport & Conference Center.  

Insurance

Joshua Lundin has been promoted from supervisor to manager of payables and fixed assets at Arkansas Blue Cross & Blue Shield of Little Rock. 

Jennifer Wilson and Spencer Mathews have received promotions and Courtney Wilson has been hired at JTS Financial of Little Rock. Jennifer Wilson has been promoted to chief operating officer from executive account manager in Little Rock. Mathews has been promoted from producer/account manager to chief analytical officer in Little Rock. Courtney Wilson has been hired as an account manager in the Jonesboro office. 

Transportation

Mark Williams has been hired as director of human resources and administration at Clinton National Airport. He was previously director of human resources at the American Case Management Association. 

A 222-unit apartment project in west Little Rock weighed in at $5.15 million.

Ridgecrest LRAR LLC of Encino, California, acquired its namesake complex at 1900-2000 Reservoir Road from Tri-5 LLC, an affiliate of Trinity Multifamily in Fort Smith.

The deal is backed with a $3.3 million loan from Bellwether Enterprise Mortgage Investments LLC of Columbia, Maryland.

The 9.31-acre development previously was linked with a September 2015 mortgage of $3.9 million held by Firstar Bank of Sallisaw, Oklahoma.

Tri-5 purchased the project for $3.6 million 21 months ago from the Frank R. Warren & Joanne C. Warren Trust.

Consolidating Ownership

A 9,909-SF office building in North Little Rock rang up a $525,000 sale.

Keith and Melanie Grayson bought sole ownership of the Lakewood Professional Building at 4701 Fairway Ave. from Sharon Davis.

The deal for Davis' 50 percent stake is funded with a $681,864 loan from Centennial Bank of Conway.

The 0.79-acre development previously was tied to a July 2002 loan of $837,250 originated by Twin City Bank of North Little Rock.

The site was acquired for $233,000 in July 2001 from Land Associates of Arkansas Inc., led by William Alfonso.

Office Space

A 3,603-SF piece of a west Little Rock office building changed hands in a $412,000 transaction.

RS & CS Properties LLC, led by Russell Simmons and Creighton Simmons, purchased the Teague Vision Clinic space at 11115 Hermitage Road from the Randy & Gayle Teague Living Trust.

The property is securing $866,000 of debt held by the trust. The Teagues, investors in the half-acre TCB West de-velopment with Mark Cathey and J. Taun Berry, bought the site in October 1997 from Randall Machen for $130,000.

Church Property

A 6.53-acre church development in south Little Rock sold for $357,000.

Colonel Glenn Church of Christ ac-quired the 7001 Col. Glenn Road project from Life Unlimited Christian Fellowship.

The deal is financed with a five-year loan of $375,000 and a one-year loan of $100,000 from The Solomon Foundation of Parker, Colorado.

Life Unlimited purchased the property for $135,000 in June 1980 from the Pulaski County Baptist Association. 

Branch Buy

A 2,904-SF bank branch in Sherwood drew a $356,000 transaction.

JWJ Investments LLC, led by Steve Jenkins, bought the former Twin City Bank facility at 301 E. Kiehl Ave. The seller is Cabot Bankshares, an affiliate of Home BancShares Inc. of Conway since its acquisition more than 13 years ago.

The 0.96-acre development, originally a branch of Little Rock's Union Bank of Arkansas, was acquired for $475,000 in October 1997.

The seller was NationsBank of Charlotte, North Carolina, the predecessor to Bank of America.

Showroom Purchase

A 4,500-SF showroom in southwest Little Rock is under new ownership after a $300,000 sale.

The Jose Ernesto Turcios & Patricia Feride Zarruk Revocable Trust purchased the 8517 Geyer Springs Road project from Wells Fargo Bank of Sioux City, South Dakota.

The bank recovered the 0.41-acre development from Dairy Bell LLC of Houston, Texas, at a $288,000 foreclosure sale in November 2015.

Residential Swap

Residential lots and an 8,832-SF home in the Orle neighborhood of west Little Rock were on either side of a swap val-ued at $1.4 million.

Rick and Deanna Ferguson and limited liability companies associated with his real estate developments traded seven lots in the Waterview Estates neighborhood of west Pulaski County and one lot in Little Rock's Valley Falls Estates neighborhood for the house.

The residence, owned by the Oscar & Doris Washington Family Trust, previously was linked with a December 2006 mortgage of $880,000 held by Regions Bank of Birmingham, Alabama, and an April 2015 mortgage of $500,000 held by First Security Bank of Searcy.

The location was acquired for $147,000 in July 2006 from Deltic Timber Corp. of El Dorado.

The Orle home, now tied to a three-year loan of $845,000 from First Security, is owned by Ferguson's Waterview Estates Phase III LLC.

ODS Enterprises LLC, led by Oscar Washington, received the Valley Falls Estates lot from the Fergusons, three lots in Waterview Estates from Waterview Estates LLC and two lots in Waterview Estates each from SWLR Properties LLC and Waterview Estates Phase III LLC.

The lots are now securing a five-year loan of $1 million from Simmons Bank of Pine Bluff.

Chenal Downs

A 3,322-SF home in west Little Rock's Chenal Downs neighborhood rang up an $800,000 sale.

Robert and Carlene Lyle bought the 6.78-acre spread from Michelle Calhoun. The deal is backed with a 30-year loan of $424,100 from Simmons Bank.

The house was acquired for $725,000 in August 2005 from Steven Young Jr. and his wife, Cindy.

Waterview Meadows

A 4,313-SF home in the Waterview Meadows neighborhood of west Pulaski County changed hands in a $644,000 deal. Dear Rosie LLC, led by Jerrilyn
Clay, purchased the house from BK & BK Builders LLC, led by Larry Evans and
Brian Dumont.

The deal is backed with a 30-year loan of $515,200 from Wells Fargo Bank. The residence previously was linked with a September 2015 mortgage of $468,000 held by Little Rock's Bank of the Ozarks.

The location was bought for $76,000 22 months ago from Waterview Meadows LLC, led by Bill Parkinson.

Heights Home Site

A 0.3-acre site near the Country Club of Little Rock sold for $629,000.

Hawthorne Back Forty LLC, led by Curtis Finch, acquired the land from Porter Briggs and Diane Wilder.

The land previously was tied to a March 2017 loan of $468,750 from Simmons Bank.

Briggs and Wilder bought the land for $625,000 three months ago from James and Linda Landers. The Landers family purchased the property for $645,000 in October 2014 from Michael Carney.

Sherrill Heights Abode

A 3,312-SF home in Little Rock's Sherrill Heights neighborhood drew a $547,500 transaction.

Jeffrey and Charley Swann bought the house from Howard and Jane Turney.

The deal is funded with a 30-year loan of $379,500 from Simmons Bank. The residence previously was linked with a November 2016 mortgage of $301,400 held by Wells Fargo Bank.

The Turneys acquired the property for $186,000 in July 1997 from Joseph
and Darla Jarvis. 

Canal Pointe House

A 2,374-SF home in Little Rock's Canal Pointe neighborhood is under new ownership after a $516,000 sale.

Howard and Jane Turney purchased the house from the Mary Jo Scott Re-
vocable Trust. The deal is financed with a 15-year loan of $350,000 from Simmons Bank.

The trust bought the property for $375,000 in February 2012 from Otto Verch.

Bank of the Ozarks of Little Rock said Tuesday that it has completed a corporate reorganization that merged Bank of the Ozarks Inc., the bank's parent holding company, with its bank, which continues as the surviving corporation. 

The publicly traded firm said eliminating the holding company will create "a more efficient corporate structure," and that its operations, directors and executive officers will not change.

The Arkansas-chartered bank, the state's largest by assets, replaces Bank of the Ozarks Inc. as the publicly-traded entity. Shareholders of the holding company automatically became shareholders of the bank, and the company's common stock continues to trade on the Nasdaq under the "OZRK" symbol.

Greg McKinney, the bank's chief financial officer, describe the restructuring in an April 11 conference call. 

"This proposal is intended to further improve our efficiency by eliminating redundant corporate infrastructure and the associated duplicative federal regulatory oversight," he said. "We have studied this for several months, and we expect the elimination of our holding company will have substantial benefits and no material adverse impact on our combined company, shareholders, customers or employees."

This is an updated version of a previously published article.

As the owner of a CPA practice, I’m always interested in the daily detail and I take the time to communicate with my staff on ways to improve our tax practice and service to our clients.

Recently, there has been a lot of presidential rhetoric about major tax reform in the scope of those seen in the Reagan years. From an accounting standpoint, sometimes complexity can be resolved with simplicity. As I learned in law school, income taxation is a consortium of social policies — not a rigid set of rules for tax collections.

As April 18 has come and gone and we begin to prepare almost immediately for April 2018, I thought suggesting a few tax code tweaks to our congressmen in the name of simplicity might get us down the road more quickly and result in a more sociable, equitable tax code for my constituents, the small business owners. Here are six steps to consider that follow good social policy, which I would hope lawmakers would agree are worthy of implementing.

Step 1: Follow the social policy of helping working families, namely two-wage earning family members, and allow them to file on the same return and start at zero income and tax, and then pay tax on graduated income and rates. This effectively gets rid of stacking one spouse’s income on top of another and allows each spouse to pay tax on his or her respective income if it’s more advantageous. This step is the simplest and reaches the largest segment of the tax base, our dual income working families. They’re the backbone of society and currently bear an undue amount of taxes and paperwork. A bonus for Arkansans, this is how we calculate our Arkansas individual income tax.

Step 2: Providing further education (after high school graduation) is another sound social policy. Allow a full tax deduction by the parent or student (with a high school diploma) for all out-of-pocket educational expenditures. This extended deduction should cover all additional education in the form of technical training, serving apprenticeships, or college and university schooling. As we all know, more educated or trained individuals create higher wage earners (and taxpaying) individuals.

Step 3: Eliminate any and all limitations on itemized medical deductions. It is sound social policy to have a healthy society. Medical expense either for treatment or prevention of physical or mental diseases should be fully deductible and not subject to floor limitations. With the boomer generation aging out, if income is spent on medical care, why not allow it to be fully deducted and not subjected to income tax? I have yet to meet anyone who has been able to save his or her way to good health. Changing the perception that medical treatment is an investment and not an expense can change the overall health and wealth of our society. 

Step 4: Eliminate limitations on charitable giving. Charitable giving is good social policy for individuals and for society. If an individual wants to donate more than 50 percent of his or her adjusted gross income a year to a charitable cause, they should be allowed to do so, and to fully deduct the donation against their income earned for the year. The more we are encouraged to help those around us, the less help will be needed in the future from government programs and the tax revenues required to fund those programs.

Step 5: Provide for one graduated tax structure for all taxpayers. This can be done in a series of smaller steps:

1. Eliminate the Alternative Minimum Tax. If the tax rate structure is graduated, then leave it graduated and eliminate the flat rate tax from the tax structure. The most common AMT added back to income is state income tax. If an individual pays it, allow the deduction.
2. Reinstate the 10 percent Investment Tax Credit for all purchases of IRC 1245 type property, namely business vehicles, equipment, furniture and fixtures. Allow the credit to reduce tax liability dollar for dollar, and allow for carry backs and carry forwards for unused amounts.
3. Stop limiting capital losses on the sale or exchange of a capital asset. I have been practicing for 40 years and have never understood the practice of limiting capital losses on the sale or exchange of a capital asset. If you have a graduated tax system for income and tax rates, why do you cut the capital loss off at the pass, and say “No, you cannot deduct this loss against your other income even though you have incurred a tax loss.”? The practice has been around since I began practicing and I still don’t get it.

Step 6: Eliminate the limit on passive type losses and the limit of their deductibility against income earned, which is then subjected to higher graduated rates. The tax system is a graduated rate and income driven, but then kicks out certain types of losses and taxes the remaining income at higher rates. If the passive loss limitation were removed from the graduated tax system, then wouldn’t it serve as sound social policy to encourage investment in real estate property? If you change the depreciable lives of commercial real estate buildings and structures to 15 years, it would encourage real estate investment, the economy would grow and additional tax revenues would be collected.

Final step

On a recent flight into Little Rock, I visited with Dennis Cooper, CPA at Frost PLLC. Dennis mentioned that he had read the Six Steps to Tax Reform, but felt a seventh step was needed. He asked why there should be a tax on social security benefits. I pondered the question and thought this probably should be the number one item meshing social policy with tax policy. 

Step 7: Remove the tax on social security payments. When you pay in your social security tax on wages and profits earned from your trade or business, you pay with tax dollars that are federally and state taxed. You cannot deduct the social security and Medicare tax of 7.65 percent as a tax deduction. Yet, when you retire and/or become disabled and report over $30,000 of gross income when filing your tax return, (current tax policy) the government taxes you up to 85 percent of the amount received. If we wanted to make the tax code simple and more fair, retirees and disabled employees — who probably now live on less income than when a member of the working public — would not pay taxes on social security or disability benefits. Would that not benefit our retirees and disabled employees, who probably live on less income than when they were working yet have increased need for additional dollars for basic food, clothing, shelter, as well as added medical bills? Thanks Dennis, for Step 7.

Over the next several months, and possibly years, I am certain tax reform and discussion will continue with a positive outcome for those of us who pay all the taxes. Regardless of the level of change, it might be good social practice to start small, with the steps above. Any headway is progress. However, should our political leaders achieve a large scale overhaul, rest assured I will be more than excited to learn about the changes and assist my clients in preparing their returns.

Harps Food Stores Inc. of Springdale sold its Price Cutter Food Warehouse in Springdale a few months after buying it.

Harps sold the 48,450-SF facility for $2.1 million to P10B LLC of Springdale, which is led by Miles Kimbel. Harps bought the Price Cutter in December for $1.12 million from Harp, Harp & Van Hoose General Partnership, a group that had a lease agreement with Harps with the Price Cutter as tenant.

Harps Food Store signed a 15-year lease with Kimbel in conjunction with the sale. Harps has 10 five-year extension options and the right to match any purchase offer from a third party. 

The purchase includes six parcels that total approximately 3.6 acres. Generations Bank of Rogers assisted the acquisition with a loan of $1.78 million.

Madison Plaza

A Texas investor paid $1.6 million for a 53,000-SF Springdale shopping center.

Highway 71 Properties LLC of Katy, Texas, led by Wanda J. Braswell, bought Madison Plaza at 2505 S. Thompson St. from Madison Plaza LLC, led by John Flake. 

The shopping center covers 3.7 acres and is fully leased. Central Bank of Branson of Branson, Missouri, provided a loan of $1.36 million.

Johnson Two for One

Maverick Commercial Park in Johnson changed ownership in a pair of linked transactions totaling $2.2 million.

KWMPR 3801 Main LLC of Bentonville, led by Larry Robison, bought the 15,424-SF center and surrounding half-acre in separate deals. Robison, a real estate agent with Keller Williams, is part of a group that plans to relocate a Keller Williams office at Maverick.

KWMPR bought the half-acre fronting the park for $265,000 from Maverick Properties LLC of Springdale, led by Mat-thew Dearnley and John Flake. Dearnley is CEO of Flake & Kelley Commercial Northwest and the son-in-law of John Flake, its chairman. KWMPR paid $1.935 million to The Shoppes at the Mill LLC of Springdale for the park itself, which is at 3801 Johnson Mill Road. The Shoppes at the Mill is led by John Flake and Bill Hanna, the president of Hanna Oil & Gas Co. of Fort Smith. Citizens Bank of Batesville provided a $1.6 million loan.

All Star Sports Arena

A 120,000-SF sports arena in Springdale was sold for $2.3 million.

Arkansas Warehouse Group LLC of Johnson, led by Gary Nichols, bought the All Star Sports Arena. The sellers were Shane and Shelly Willis of Pea Ridge, who  bought the arena for $2.1 million in 2014.

The arena and lot, at 1906 Cambridge St., cover 6 acres, and Grand Bank of Tulsa provided a $1.84 million loan. The Willises bought the arena from Simmons First National Bank, which recovered the property from David and Connie Harris and Richard and Linda Harris at a $2.2 million foreclosure sale in 2013.

Former Restaurant

A former Ruby Tuesday restaurant in Fayetteville sold for just over $1 million.

The property, at 1031 S. Krupa Drive, just off MLK Jr. Boulevard, was bought by Heaven Sent Properties LLC of Fayetteville, led by Brian Smith and William Rodney Coats. Smith and Coats are partners in SmitCo Eateries Inc., a regional franchisee of Popeyes Louisiana Kitchen and Captain D's restaurants. 

The seller was Ruby Tuesday subsidiary RT Western Missouri Franchise LLC. The chain, based in Maryville, Tennessee, closed the 4,372-SF Fayetteville restaurant last year. Arvest Bank of Rogers provided a loan of $840,000.

Smith and Coats also bought property on MLK east of Interstate 49, including the former Blockbuster Video store at 2222 MLK. The 6,500-SF building is currently home to a moving company.

Smith and Coats bought the properties through SCE Properties LLC for $1.45 million from Robbie and Donald Marley, Debora and Larry Johnson and Elizabeth Ruble, all of Lebanon, Missouri. Arvest Bank lent the project about $1.3 million.

SmitCo recently sold two Popeyes in northwest Arkansas for $4.4 million to HZ Props RE Ltd. of Sugar Land, Texas. HZ is led by Amin Dhanani, president of Z&H Foods Inc., which runs a large national chain of Burger Kings and Popeyes.

Smith told Arkansas Business in early June that he had sold all his Popeyes; he did not return calls seeking clarification. 

WASHINGTON — Long-term U.S. mortgage rates were unchanged to lower this week, as the benchmark 30-year rate reached a new low for the year.

Mortgage buyer Freddie Mac said Thursday the 30-year fixed-rate mortgage averaged 3.88 percent, down from 3.90 percent last week. The rate stood at 3.48 percent a year ago and averaged a record low 3.65 percent in 2016.

The 15-year, fixed-rate home loan, popular with homeowners seeking to refinance their mortgages, was unchanged last week at 3.17 percent.

Mortgage rates have remained low even though the Federal Reserve has been raising short-term interest rates. The Fed has increased its key rate by a quarter-point three times since December, most recently this month, to a range of 1 to 1.25 percent.

At the same time, would-be home buyers are facing higher prices and fewer options. Sales listings have plunged 8.4 percent over the past 12 months to 1.96 million. The median sales price in May rose 5.8 percent from a year ago to $252,800.

Data issued Wednesday by the National Association of Realtors showed that Americans signed fewer contracts to buy homes in May, the third straight monthly decline and evidence that a shortage of homes for sale has suppressed purchases.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage this week was unchanged at 0.5 point. The fee on 15-year loans also held steady at 0.5 point.

Rates on adjustable five-year loans increased to 3.17 percent from 3.14 percent. The fee remained at 0.5 point.

(All contents © copyright 2017 Associated Press. All rights reserved.)

John W. Ahlen IV, bank chief counsel for the Arkansas State Bank Department, has been named deputy bank commissioner, effective July 2.

He will replace Luther Guinn, who is retiring on Friday.

As deputy bank commissioner, Ahlen will oversee one of two commercial examination groups based in Little Rock, the commercial examination group in Jonesboro and the trust examination group. He will also be responsible for the training and information technology areas of the department.

Ahlen will retain his current position too. He joined the department as bank chief counsel in August 2016.

Previously, Ahlen served as general counsel for the Arkansas Auditor of State and as assistant parliamentarian and legislative analyst for the Arkansas House of Representatives.

He received his juris doctorate from the William H. Bowen School of Law at the University of Arkansas at Little Rock in 2014 and a bachelor’s of arts in history degree, with an emphasis on politics, from Hendrix College in 1998.

In other staff moves, the department has assigned Bob M. Henry as manager of its newly formed “large bank” examination group.

The new group was developed in response to the growth of several state-chartered banks. As of March 31, five of those banks reported assets in excess of $5 billion.

Henry was hired by the department as a commercial examiner in May 1992 and advanced to certified bank senior examiner. He was promoted to bank examiner manager in February 2013.

In January 2015, Henry was assigned as manager of one of the commercial examination groups based in Little Rock.

He received a bachelor’s degree in business administration in 1991 from Southern Arkansas University in Magnolia. His emphasis was in finance and accounting.

In 2012, Henry earned his credential as a certified fraud examiner from the Association of Certified Fraud Examiners.

Dharmin H. Patel was promoted to Henry’s position as manager of one of the commercial examination groups in Little Rock.

Patel was hired as a commercial examiner in June 2005 and advanced to certified bank senior examiner.

He received a bachelor’s degree in finance and banking, with an emphasis on investments, from the University of Arkansas in June 2005. Patel is also a certified fraud examiner.