Confident to a fault

Jeff Collins was the director of the Center for Business and Economic Research at the University of Arkansas.He quit at the end of 2006 to complete his own research and real estate investments.


Going for Broke: Economist Goes Bankrupt

At a business gathering in mid-2006, Jeff Collins offered some sobering statistics about Northwest Arkansas’ previously red-hot housing market.

Collins, then-director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville, said the number of new, unsold homes in Benton and Washington counties was up more than 200 percent from a year earlier. Benton County alone had a nearly nine-year supply of undeveloped lots on the market.

Still, armed with a doctorate in economics and 12 years of experience in applied research, Collins perceived opportunity for himself. In fact, he was confident enough so to step down from his prominent position later that same year to focus on his housing market data business, Streetsmart Data Services LLC, and to delve deeper into buying and developing multifamily housing projects.

"I left a great job — loved the university, loved my job — but saw I had what I thought was a real opportunity," he said in a recent interview. "The math worked out for me. I felt like I would be OK if I left the university. In hindsight, obviously that wasn’t the case."

Collins’ bankruptcy in September surprised many in the state’s business community, as investors realized that the man who produced data that drove many of their decisions used the same information to guide his own failed projects. Collins listed nearly $10.3 million in liabilities and about $243,000 in assets in his filing.

While the numbers are small in comparison with bankruptcies of other big-name investors, the filing demonstrated that good data alone couldn’t ensure good business decisions, Collins said.

"Growth was occurring so quickly that that growth rate gave false signals to players in the market," he said.

Collins attributes his financial downfall to a single apartment complex that was never finished on Arkansas 12 in Benton County.

With abnormally high returns driving investment, many developers realized opportunities simultaneously, Collins said. "And instead of serving 100 percent of the opportunity, we served about 300 percent of the opportunity," he said.

Few in the real estate business saw the collapse of the housing market on the horizon, said Paul Bynum, a salesman and market researcher with Coldwell Banker Harris McHaney.

Except for a brief dip in home prices in one area of Fayetteville in 1996, he said, home values maintained a continuous upward trend, buoyed by increasing numbers of employees moving here for vendor companies serving Wal-Mart Stores Inc. in Bentonville, the world’s largest retailer.

"We were heating up in 2002, 2003 to such an extent that we were running out of inventory," Bynum said.

By 2005, he said, new homes would get two or three contract offers, and builders ramped up activity even more.

"They got caught up in the fever," he said. "Everybody was kind of drunk on the whole thing."

By late 2005, Bynum’s figures showed a dip in the mortgage market. He thought there must be a mistake and ran the numbers again. In reality, that was the beginning of the downturn.

Despite indications nationally of an economic recovery, Bynum said he sees little chance for a rebound soon in the Northwest Arkansas housing market.

"It’s going to be a while before people feel comfortable buying again ... Underneath it all, people feel devastated," he said.

Collins concedes that he was among those caught in the unbridled optimism. The sense was that the region was immune from an economic downturn, he said.


Collins earned a doctorate in economics from the University of Tennessee in 1996, the same year he married Amy Farmer, a business professor at UA. They have two daughters.

Collins took the helm of the UA’s Center for Business and Economic Research in 1999, helping to conduct research about issues such as real estate supply and the economic impact of the Crystal Bridges Museum of American Art in Bentonville.

With quick wit and a gift for speaking off the cuff, Collins soon became a go-to source for those seeking insight into the region’s growth.

"He’s got a great sense of humor for an economist, or for anybody," said Ed Clifford, president of the Bentonville-Bella Vista Chamber of Commerce. "And he was willing to speak at 6:30 in the morning or 10 o’clock at night."

Collins and Farmer, now divorced, tell somewhat different versions of their venture into the real estate business.

Collins said they both anticipated a stock market dip toward the end of 2000 and cashed out their holdings. Then, Farmer received an inheritance, adding to cash they did not intend to invest in stocks. Farmer had some university colleagues who had done OK with property investments, so the couple started looking for property for sale.

They settled on a newly built fourplex, owned by Collins’ former student Marc Crandall, who had helped build and fill multifamily projects near the university.

Later, Collins bought four more buildings with partners, including Crandall, whom Collins said knew the student housing market better than he did. (Crandall also would later file bankruptcy.)

"They were doing reasonably well. They were cash-flowing. It’s not like we were putting a lot of money in our pockets," Collins said.

At the time, Collins was working on the university’s 2010 Commission, which had an aggressive goal of see student enrollment — 15,226 in 1999 — reach 22,500 by 2010. (Enrollment last fall was 19,849.)

Collins was skeptical but nevertheless saw the anticipated growth as a good sign for the student housing market. On paper at least, his net worth was growing, based on the appraised value of the properties, minus the debt owed.

Farmer said she hoped a few investment properties with 15-year mortgages would eventually produce income that could help pay for the children’s education.

Farmer allowed Collins to keep investing, but she said she didn’t have the nerve to launch projects with little capital. She quit signing loan documents as projects became larger and more ambitious, she said.

"I just closed my eyes and held my nose and let him handle his business decisions," she said.

Farmer was opposed to the project that Collins identifies as his downfall — a 30-acre apartment complex in Bentonville that began near the end of the couple’s marriage.

"I never wanted to do that project," she said. "It was big and it was out of our control."

When the project ran into trouble, Collins used $100,000 of Farmer’s inheritance and $275,000 of equity from the couple’s home to keep it going, Farmer said.

Collins and Farmer divorced Aug. 13, 2007.

The couple’s initial divorce agreement called for Collins to repay her for the home equity and her share of business interests through his business profits over five years.

In an amended agreement dated July 7, 2008, Collins assigned the $185,000 balance of his UA retirement account to Farmer and transferred all interest in the couple’s initial investments: 44 units in six buildings.

Collins said he agreed to the amended settlement because he could not pay Farmer the $1,200 a month in child support originally ordered.

To keep from filing her own bankruptcy, Farmer said she must put several thousand dollars into the apartments each month. She anticipates the buildings will generate a profit as the economy bounces back and vacancy rates drop.

"In the long run, I think they’ll be OK," she said.


The failed Bentonville apartment project had a lot going for it, Collins said. The land was zoned for multifamily, something not easily accomplished in Bentonville, and apartment vacancy rates in the area were low, around 5 percent.

It also was his first venture away from the student housing market.

"I’d be a fool to say that wasn’t, probably, a mistake," he said. "We were doing something that was pretty out of step with what we had done in the past."

Collins and four minority partners bought the 30 acres in July 2005 for $2.58 million — $86,000 an acre — according to Benton County property records.

"In hindsight, that’s crazy," he said. "But at the time, that was the market."

Partner Cassie Elliott, a Bentonville real estate broker, said the minority partnership controlled about 40 percent of the project. The other partners were Crandall; Craig Hull, owner of Hull & Co., a Rogers land and commercial brokerage; and Dick Levin, president of Triad Title Co.

"It was one of those quick decision kind of things," Elliott said. "We all felt the rush of the moment like other people did."

Hull said he had known Collins since he joined the university and watched him speak at business gatherings.

"I was always over in the corner trying to come up with a question that would stump him," he said.

When the partners started the project, western Benton County was being talked about as "the promised land" for developers, Hull said. But quickly, the market nosedived.

Said Collins: "There were a whole lot of other people that saw the opportunity that had stronger teams of people around them than I had and they were able to come out of the ground first."

Elliott said Collins told the partners they could sell their interests if they got cold feet.

The group collectively had invested about $2 million in land and infrastructure improvements when the four minority partners decided to leave in 2006, she said. Among the indicators that gave Elliott "a lump in the throat" was that new apartment complexes in Bentonville were opening to high vacancy rates, struggling to break even.

In stepped Hollis Cunningham, a longtime developer based in Olathe, Kan., who had been working projects in Northwest Arkansas during the housing boom. Cunningham took over the debt obligations of Collins’ minority partners.

The partners thought Cunningham’s experience would make him a more suitable partner, Elliott said.

"We weren’t just abandoning Jeff," she said. "We thought a lot of him. It still upsets me because I know it’s taken a big toll on his life."


When Cunningham began working in the Northwest Arkansas market in 2004, he said he had about $20 million in assets.

"I was a successful developer and my credit was perfect," he said.

Cunningham said he started pursuing jobs in Northwest Arkansas as Wal-Mart suppliers were increasing their presence in the region. His description of the construction market at the time: "Unbelievable."

Cunningham said he contributed no cash to the Bentonville project; his contribution was the work his company was doing for it.

Collins believed Cunningham had a net worth of $13 million to $14 million, and he had a track record for getting jobs done, Collins said.

Cunningham said his trouble began in September 2007, when the former ANB Financial cut off his line of credit. Federal bank regulators closed the bank in May 2008.

When the Arkansas 12 project stalled, Cunningham issued a "cash call," saying it would take $450,000 to finish it. Collins said Cunningham told him that, without the cash infusion, they couldn’t get a loan that Cunningham had arranged to complete the project.

Collins said he took the equity out of his home to come up with his half of $225,000, but Cunningham never matched it and soon pulled out of the project.

Between December 2007 and October 2008, three subcontractors and suppliers sued Cunningham and Collins, claiming $130,170 in defaulted payments, Benton County court records show.

When Cunningham departed the partnership, Collins and the project’s lender, First Western, did not object, he said.

"At the point I got out, it was an up and up clean deal and everyone was agreeable," he said. "I’m surprised that the project didn’t get finished."

About $30,000 was left in the construction account when Cunningham left, but the job was nowhere near completion, Collins said.

He said another developer gave him an estimate of about $1.5 million to finish — double the original construction budget. Collins lost more than $300,000, including the $225,000 cash call.

"I’m certainly not ashamed of the fact that I lived up to my commitment as best I could, and put my money in," he said.

Collins’ bankruptcy filing in September showed more than $4.5 million owed to First Western Bank of Rogers for the property on Arkansas 12, another $730,181.86 owed to First Western on another property and more than $2.5 million owed to First Western for the debts of a separate limited liability company for which he had guaranteed the loan.

The 30-acre Bentonville plot is currently appraised at $1,439,400, a little more than half of its purchase price, according to Benton County property records.

Cunningham, 71, said he’s retired and living on Social Security, having lost everything he owned, including an industrial park.

"I don’t know what my future is. It’s pretty dismal at this point," he said.


Lenders played a role in fueling the construction boom that got ahead of the demand for housing in Northwest Arkansas, though not by pushing sub-prime mortgages to high-risk borrowers as happened elsewhere in the nation, said John Dominick, banking and finance professor at UA.

Rather, he said, banks rushed to establish a presence in the fastest-growing region of the state, to the point that about 200 banking offices now operate in Benton and Washington counties.

"We probably should have about half that many," Dominick said.

With stiff competition for market share, banks offered higher rates for deposits and lower rates for loans, he said.

"That is what happened … just excessive competition," he said.

Leading up to the current crisis, he said, developers got into bigger deals, big subdivisions, and some went to every bank in the region. Many formed several limited liability companies. If one project went bad, it had the potential to steamroll through several LLCs and their projects, he said.

In some cases, Dominick said, "There’s no way you can find out how much debt that borrower has."

Collins said developers had a lot of power because of the rapid influx of banks. Those banks needed to lend money. Committees, not individuals, approved the loans.

"There were lots and lots of smart people who sat in a room, listened to the particulars of a development and voted yea or nay on it," he said.

Bankers made some poor decisions because they viewed projects in isolation without realizing that other investors were rushing to fill the same demand, Collins said.

Banks also failed to ensure that borrowers had the cash to keep projects moving forward if another portion of their portfolio failed to deliver, he said. This became a problem for Collins when some of his apartment complexes were underperforming, absorbing expected profits he could have used to meet the needs of the Arkansas 12 project.

Tim Yeager, a banking professor at the university, said banks concentrated too much business in real estate. "They were doing more and more lending in commercial real estate and very little of anything else," he said.

During his time at UA, Collins helped develop the quarterly Skyline Report on real estate markets in Benton and Washington counties for Arvest Bank Group. In part because of that report, lenders were aware that the rates were steadily climbing for new, unoccupied buildings, Yeager said.

"We knew there were serious imbalances, but I think we were all in denial about how harsh the adjustment was going to be," he said.

Clifford, the chamber president, said leaders used Skyline Report data to influence school enrollment projections, determine planning guidelines and attract retail business to the region.

While still at the Center for Business and Economic Research, Collins hired Kathy Deck, who would become his successor. She said Collins was "very savvy when it came to communicating very complex economic issues in a direct way so people could understand them."

Many projects that were built from late 2006 through early 2008 were predicated on the belief that employment growth would continue to infinity, she said. But when the growth slowed, it strained developers’ cash flow.

Clifford said Collins fell prey to a "separation of his personal and professional life" while he was "warning people about the kinds of things he was experiencing," he had too much confidence in his own ability to defy market trends.

"The way that Jeff presented material, I don’t know that he sugarcoated anything and led people to the Promised Land," he said. "I think everyone led themselves to the Promised Land, including Jeff."

These days, Collins splits his time between Northwest Arkansas and Houston, where he works as a consultant developing pricing software.

Given how events played out, does he feel his credibility has been diminished?

"I’m sure it has to be," he said. "If you don’t know the step-by-step process by which someone ends up where they are, and all you do is pick up the newspaper and read that Jeff Collins, renowned or economic guru of Northwest Arkansas, files bankruptcy — well, a lot of people go, ‘Ah, too smart for his own good.’"



Jeff Collins earns a doctorate in economics from the University of Tennessee and marries Amy Farmer, a business professor.


Collins starts as director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville. He quickly becomes a go-to source for those seeking insight into the region’s growth.

January 2002

Collins launches Campus Properties with Marc Crandall, a former student who becomes his business partner. Under the partnership, the two build Bedford Loop, an apartment complex near the UA campus that never fills to capacity.

January 27, 2002

“I predict the state of Arkansas will adopt a viable strategy for creating, attracting and retaining knowledge-based industry, employment and employees,” Collins predicts in an Arkansas Democrat-Gazette column. “This will begin a long, slow and sometimes painful process of moving per-capita income in Arkansas to the national average. Mississippi will eat our dust.”


The Milken Institute ranks Northwest Arkansas the nation’s fastest-growing regional economy. The strongest job growth is in the Fayetteville-Springdale-Rogers Metropolitan Statistical Area, which includes Bentonville. Collins predicts the new jobs will spark new interest in residential real estate.

February 2004

Collins invests $7,500, less than 1 percent of the fund’s holdings, in the Fund for Arkansas’ Future, a venture capital group.

April 28, 2005

“I think there is reason to be concerned that the [local] economy is a little too hot, especially on the real estate side,” Collins tells city leaders and investors at a quarterly business breakfast. His research estimates that Northwest Arkansas’ population will surpass Little Rock’s within 20 years.

December 2005

While still employed at UA, Collins founds Endeavor Consulting, a private real estate consulting business.

March 2005

Collins partners in a land deal in Centerton. He later claims $1.5 million in debt to Bank of Fayetteville for the project in his bankruptcy filing.

July 2005

Collins partners with Crandall and three others to purchase 30 acres on Arkansas 12 in Bentonville for the construction of an apartment complex, his first outside Fayetteville. The group spends $2.58 million — $86,000 an acre — for the land.


Fearing weakness in the multifamily real estate market, Collins’ partners transfer their interest in the Bentonville project to developer Hollis Cunningham.

July 12, 2006

Collins urges Northwest Arkansas business owners and investors at a conference to seek political clout in proportion to their economic influence in the state. “The state needs us, the revenue is generated here, and they spend it. They need us, but they don’t like us,” he says.

December 2006

Collins leaves UA to form Street Smart Data Services, a market research group.

August 2007

Collins finalizes his divorce from Farmer, agreeing to repay equity he took out of the couple’s home to try to salvage the Arkansas 12 project.

December 2007 to October 2008

Subcontractors for the Bentonville project sue Collins and Cunningham, claiming more than $130,000 in defaulted payments.

Dec. 17, 2008

The region’s population growth, once reported at 1,200 new people moving to Benton and Washington counties each month, has slowed to 375 people a month, Collins tells the Democrat-Gazette.

April 14, 2009

Collins tells attendees of a Rogers-Bentonville joint development conference that Northwest Arkansas had a “not us” mentality when past recessions slowed economic progress across the nation in the 1990s and early 2000s.

Sept. 16, 2009

Collins files for bankruptcy, listing nearly $10.3 million in liabilities and just over $243,000 in assets.

March 9, 2010

Collins’ former investment partner Crandall files for bankruptcy.Residence: Fayetteville

This article was published July 3, 2010 at 1:54 p.m.

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Over the past two decades, fortunes were made and lost in Northwest Arkansas' real estate and development market. The region, dubbed the "economic engine of Arkansas," grew as developers and builders reshaped the rural landscape.
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