City cuts retail spending outflow

HARLINGEN — A dozen years ago, the City of Harlingen contracted for an economic analysis of its strengths and weaknesses.

There were a lot of the latter.

The study by TIP Strategies, an Austin analytics firm, found Harlingen and surrounding communities were hemorrhaging $375 million a year in retail spending to businesses in the cities of McAllen, Brownsville and elsewhere in the Valley.

“Harlingen First! A Blueprint for Economic Vitality” indicated that “leakage” as such things are called was a target for action to keep those retail dollars at home.

“It just measured how much money you’re losing to other communities,” said Gabe Gonzalez, assistant city manager. “Back then it was $375 million that was leaving not just Harlingen but the surrounding communities” of San Benito, Primera, Combes and more.

“We knew that Harlingen had the potential to support a lot of retail,” he added. “It was just a matter of convincing industry to come down and open up shop. Obviously one of the big catalysts was Bass Pro Shops. Once it came into town, that whole area, that part of town, just took off.”

Health care cluster

The economic study proved to be an above-average fortune-teller in another area, too — the potential for the city’s health care cluster, anchored by Valley Baptist Medical Center and Harlingen Medical Center.

“Based on existing and planned local strengths, Harlingen can emerge as the most important player in health care for the region,” the study reads.

A dozen years later, with the addition of Palms Behavioral Health and the upcoming arrival of the UTRGV School of Medicine’s Institute of Neurosciences, what’s known as the city’s “medical district” is thriving.

“The medical district has pretty much flourished on its own,” Gonzalez said. “We have several sectors in the city, and of course medical is one of them … But the medical one is important because it employs high-end jobs, it brings in a lot of people with great salaries.

“The more you’re able to offer those kinds of jobs, the better for the community because they’ll buy houses in town, they’ll stay here, they’ll purchase their groceries, their fuel,” he said. “It just drives the economy.”

Stronger

Evidence of the ripple effect of the medical cluster and stronger retail sector can be seen in the single-family residential building permits the city has granted.

In Fiscal Year 2017, which ended in September, the city issued 211 permits for new houses, 63 permits to remodel or rehab a residential property, 19 new commercial permits and 77 commercial permits for renovation. The total dollar amount invested was $59.236 million.

In this fiscal year to date, 114 residential single-family building permits have been issued, along with 38 permits for renovation, 16 new commercial permits and 44 commercial rehab permits. The total dollar amount comes in at $28.835 million.

Super sales

Harlingen has prospered over the last two years when it comes to state sales tax reimbursements, a good indicator of local retail health.

Harlingen led all bigger cities in the Rio Grande Valley by increasing its percentage of sales tax monies from the state by 6.42 percent from November 2016 through October 2017. That was a definite improvement over the previous year’s perfectly satisfactory 2.23 percent increase.

Although he said he doesn’t have any updated figures, it would appear those robust numbers mean the city and surrounding municipalities are no longer losing $375 million a year in retail dollars to other cities in the Valley.

“We’re probably still losing some of it, but a lot of it we’ve been able to capture and that’s a good thing,” Gonzalez said. “Keep in mind, this was back in 2006, and we were trying to figure out how to get economic development started in Harlingen at a faster pace.

“So now it’s finally happening,” he added. “It’s taken a while but we’re there and we have a lot of infrastructure growth, a lot of retail, a lot of medical and a lot of subdivisions, too.”