SEPTEMBER 23, 2016
THE PORT ISABEL PRESS
The City of South Padre Island Economic Development Corporation (EDC) heard a presentation on the state of the Island economy as well as a report by the Friends of RGV Reef in its Sept. 20 meeting.
Dr. Mostafa Malki with Aaron Economic Consulting presented a report entitled “City of South Padre Island Economic Index, September 2016.” In his opening remarks he stated, “I’m glad to report that the Island is doing fine even though the economy of Texas is slowing down. It’s not tanking, but it’s slowing down because of low oil prices and a very strong dollar relative to our big trading partner (Mexico).”
He further stated that Mexico is feeling the crunch of this big drop in the value of the peso due in large part to the increase in the strength of the U.S. dollar. He also cited the fact that the peso is the most widely traded currency of the emerging countries, and speculators and investors tend to use it to hedge their bets as a contributing factor to the devaluation. The report further states that the appreciation of the U.S. dollar negatively impacts Texas and U.S. exports as well as Mexican visitors to the U.S.
According to the report, while the Leading Economic Indices for Texas shows a downward trend for the last few months, the forecast for the state is to increase by 1.6 percent. The forecast for growth in the U.S. is 1.4 percent in 2016 and 1.9 percent in Mexico in 2017. Mexico is expected to grow at 3 percent on 2016.
“Everything is pointing in the right direction for real estate,” said Malki. He cited increasing average home sales prices, an increase in the number of homes sold, increasing home sales dollar volume, and a decreasing number of months’ worth of inventory as indicators of the success.
He also stated local hotel occupancy tax revenues are expected to increase by 2.39 percent in 2016 and 2.33 percent in 2017.
Sales tax revenues are expected to increase by 2.62 percent in 2016, 2.55 percent in 2017, and 5.39 percent in 2018. As the peso recovers, bank deposits are expected to increase by 1.63 percent in 2016, 2.5 percent in 2017, and 3.76 percent in 2018. Finally, building permits are expected to increase by 3.21 percent in 2016, and 5.43 percent in 2017.
Malki concluded that local monthly disparities in the indicators will remain in the short run and the magnitude of those disparities will depend on the Island’s ability to attract off-peak seasons.
Gary Glick of Friends of RGV Reef provided the next presentation. “RGV Reef (has) just been born after 14 months of permitting,” proclaimed Glick. The cost of permitting was approximately $100,000. The location, 13 miles north of the SPI jetties, is close enough for relatively small bay boats to make the trip most of the time. Another unique feature, according to Glick is the size of the reef for which they have approved – 1,650 acres is by far larger than any other reef project in Texas. The key concept behind the project is creating a low profile artificial reef suitable for growing fish. The group plans to deploy 30,000 cinder blocks this fall over a 50-acre site. Glick asked the EDC to consider helping to fund the project.
Next on the agenda was public hearing on EDC projects including the skate park, Sand Dollars for Success Grant Program, and the Design Façade Improvement Grant Program. EDC President Joanne Williams opened the public hearing by calling for anyone who wished to speak for or against any of the programs. No one present wished to speak for or against and the hearings were closed.
In her activity report, EDC Director Darla Lapreye stated that they have four applicants for the Sand Dollars for Success program and about 15 applicants for the Kauffman Entrepreneurship program. She also announced that the ribbon cutting ceremony for John L. Tompkins Park was scheduled for Wednesday, Oct. 5 at 10 a.m.
In its final agenda item, the EDC went into executive session to discuss the Executive Director’s Performance Improvement Plan.