In 1990, David Bronner, the high-profile and often controversial director of Retirement Systems of Alabama, had an idea.
Bronner isn't from the South. He was born in Iowa and grew up in Minnesota. He obtained bachelor's and master's degrees from what at the time was Mankato State University in Minnesota. He taught business and finance at his alma mater from 1967-69, then headed south to take classes at the University of Alabama, where he earned a law degree in 1971 and his doctorate in 1972. Bronner was an assistant dean at the law school in 1973 when he was hired to head RSA, the pension fund for state employees.
At the time, RSA had $500 million and was owed $1.5 billion by the state. By last year, it had about $40 billion in investments.
In his book The Robert Trent Jones Golf Trail: Its History and Economic Impact, Mark Fagan writes: "In 1990, Alabama had a poor economy and negative image. Alabama needed economic growth and stability in order to strengthen and secure its pension fund for teachers, state employees and judicial staff. It needed an economic development strategy that best fit its potential. This strategy included providing world-class golf courses on beautiful sites all around Alabama along with upscale lodging to get traveling golfers and migrating retirees to bring money to Alabama. These facilities also equipped communities with recreational amenities needed to entice industries."
The project resulted in 11 complexes with 26 golf courses, 40 lakes, eight resort hotels, 20 restaurants, five spas and almost 8,000 houses.
Fagan writes: "It's a massive economic development project that spans the entire state. . . . Eleven state agencies, 55 local government entities, 13 private developers and major contractors, and dozens of subcontractors assisted in land acquisition, utility expansion, access roads and final approvals. . . . The most attractive available sites were selected to showcase the entire state and feature its diverse terrain from the mountains to the coast. The sites were selected as raw canvases on which Robert Trent Jones could use his creative skills in producing golf courses with universal appeal."
Fagan notes that the Robert Trent Jones Golf Trail not only attracted thousands of visitors to Alabama, it was also a way to "get business leaders to visit our state to discover the benefits of doing business here."
Bronner had spent his first decade at RSA concentrating on traditional investments. By the 1980s, he was looking for a way to diversify RSA investments while at the same time spurring economic development in Alabama. He brought in Robert "Bobby" Vaughan, a golf expert from North Carolina, to assemble a design team. Vaughan, in turn, began securing property across the state.
Bronner then invited Jones, born in England to Welsh parents, to visit Alabama. Jones, a Cornell graduate, had designed nine holes of the university's golf course when he was a student. Following graduation, he went into business with a Canadian architect and began designing courses in Canada. Jones went out on his own in the 1930s and started designing U.S. courses. By the time he visited Alabama, he was one of the most famous golf course architects in the world.
Jones was partially retired but agreed to take on the Alabama project. Much of the detailed design work was done by his top associate, Roger Rulewich. The Robert Trent Jones Golf Trail opened in 1992 with four courses. It wasn't long before The Wall Street Journal was citing the trail as being among the best bargains in the country.
"Although the golf courses themselves are only marginally profitable when compared with other aspects of the retirement system, the overall trail initiative and accompanying hotel development served as the centerpiece of a successful effort to bolster tourism and attract industry to Alabama," James Hansen writes for the Encyclopedia of Alabama. "Indeed, the RSA became the largest hotel developer in the state."
Bronner told the Montgomery Advertiser: "The natives would say, 'Well, Alabama has great potential, but it never does anything.' So we thought about how you change an entire state. Changing a town is one thing. You bring a new factory in and you've changed a town. But if we created something in the state of Alabama that the rest of the United States doesn't have, that being the trail, could we get tourism and industry to look at us and come to us that wouldn't otherwise? Our vision was to change the whole state, similar to how President Eisenhower changed our country after World War II with the interstate system. He didn't just impact one state in the country. He changed the whole country."
What does this have to do with Arkansas? Plenty.
Both the Arkansas Teacher Retirement System and the Arkansas Public Employees Retirement System have new directors. Clint Rhoden now heads the $17.3 billion ATRS, having moved up from associate director of operations following the retirement of George Hopkins. Duncan Baird heads the $8.8 billion APERS, having come over from his job as state budget administrator at the Department of Finance and Administration following the retirement of Gail Stone. New ideas come from new directors.
What if both ATRS and APERS were to make investments that would change Arkansas the way the golf trail changed Alabama?
Golf isn't the answer for Arkansas. It's a sport in decline, and Arkansas already has plenty of golf courses thanks to the development of retirement communities during the 1960s, '70s and '80s.
I would suggest investing in downtown Hot Springs and Eureka Springs, both of which have the potential to explode as destinations during the next decade.
Hot Springs, which already is seeing millions of dollars of investment downtown, appears on the verge of again becoming a major destination, especially for those from the booming Dallas-Fort Worth market. Eureka Springs, while more isolated, is poised to better take advantage of not only the growth of northwest Arkansas but also the Kansas City, Tulsa and Oklahoma City markets.
Arkansas, a state where obtaining capital has always been a problem, must invest in itself. Alabama has its golf trail. Arkansas could see two old health resorts restored to their past glory, bringing in wealthy visitors and improving the quality of life for those who already live here.
Rex Nelson is a senior editor at the Arkansas Democrat-Gazette.
Editorial on 01/27/2019
Print Headline: REX NELSON: Investing in itself