EAGLE FORD SHALE

Texas towns consider deep makeovers to prepare for inevitable oil field bust

LA VERNIA, Texas -- Crumbling streets, stark storefronts and disappearing sidewalks are the hallmarks of many rural communities in the Eagle Ford Shale.

No more, if designs laid out in a series of vision plans are brought to fruition.

Guided by architectural and economic analyses from the University of Texas, San Antonio, (UTSA) and backed by new oil field wealth, municipal officials are looking to give their towns a face lift.

Here in La Vernia, 25 miles east of the Alamo City, the makeover starts with an expansion of City Hall and ends with a pedestrian-friendly, tree-lined downtown plaza with room for new commercial and industrial ventures. The renovation will be made possible in part by a boost in La Vernia's sales tax revenue, which has more than doubled since 2002 after adjusting for inflation, state records show.

"Now that we're seeing higher sales tax revenue, the city has been able to take some of the money and reinvest it in the community," said Jennifer Kolbe, executive director of the La Vernia Municipal Development District.

A new vision plan, which UTSA published in November 2013, is La Vernia's blueprint for the future.

"We feel like investment will be a little bit protected now that we have a plan," she said.

The model gave Cynthia Buerkle an extra boost of confidence to remodel an old home, where she hopes to create an office space for her accounting firm and one or two other businesses.

"It does help in the sense that there is a direction, and the city and the Municipal Development District are doing things to create a nicer downtown area to benefit all of the businesses down here," she said.

Shale activity has been a major boon for Buerkle, whose accounting business is handling a flood of new clients, but she tries not to rely too heavily on a continued influx of shale riches.

"As soon as those people go away, your economy changes again," Buerkle said. "It goes downward in the sense that those volumes of sales are going to go away. What's going to happen if you don't diversify? Then you're putting all your eggs in one basket, and that can be a huge detriment to a town."

That's part of the concept behind UTSA's vision plans, said Gil Gonzalez, director of the university's Rural Business Program, which, in partnership with other UTSA departments, devises the community studies.

Before the shale boom, many Eagle Ford municipalities "were just trying to survive," he said. Some were involved in agriculture and ranching. Others had a tourism focus. Because of its proximity to San Antonio, La Vernia was enjoying steady growth as a bedroom community for commuting executives, but oil and gas activity has given the town a chance to be more than a night-and-weekend residential retreat.

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But they've got to do it before drilling activity inevitably disappears from the region, Gonzalez said.

"What do we have to show after we've had a boom and a bust?" he asked, echoing a central question in rural development.

Ghost town busters

It's hard to draw up an exact recipe for how to successfully embrace an oil boom, but experts agree economic diversity is a key ingredient to community survival on the downside of a natural resources cycle.

That's something Eagle Ford communities should consider as they plan for the future, said Thomas Tunstall, research director at the UTSA Institute for Economic Development, which also encompasses Gonzalez's Rural Business Program.

"We all know what happens in Texas when we rely too heavily on oil and gas," Tunstall said during a recent conference in La Vernia.

In the worst case, communities morph into ghost towns when the oil and gas industry departs, leaving residents without jobs and businesses with a significantly diminished customer base. In the best, municipal officials will grasp the boom time as an opportunity to explore other economic opportunities -- in the Eagle Ford, Tunstall said the best options are olive oil processing, geothermal, agriculture, water recycling and desalination, tourism, hunting and wine and beer making.

Tunstall's go-to success story is Houston, which reinvented itself after oil went bust in the 1980s. Prior to that time, Houston was focused on the vocational aspects of oil and gas, he said. Today, the city is a hub for not only energy strategy and industry headquarters, but also the chemical, software and financial sectors.

Not every Eagle Ford community is positioned to make that transition, "but they should at least be thinking about what sorts of other industries they could try to attract or other types of businesses that could generate employment," Tunstall said.

Improving medical facilities, education, broadband access and town branding are some of the elements that can help communities "lay the groundwork" for diversification, he said.

While the risk of a rash of Eagle Ford ghost towns is small, Tunstall notes that the work he and his colleagues were doing in the region five years ago was focused on population decrease and brain drain.

Taking that into consideration, officials should be giving some thought to what benefits their current investments will have five to 10 years from now, he said.

'A place of refuge'

In La Vernia and its surrounding region, retail and temporary lodging are missed opportunities, according to UTSA's vision plan.

By the university's estimate, the town is losing $7.3 million in restaurant, clothing, alcohol and other sales to businesses outside of the community. Its closest lodging is roughly 20 miles away, keeping La Vernia from earning tourism dollars that could be a key source of new income for the town.

It's possible that new retail and lodging establishments might initially find their customer base in the local oil and gas industry, but the hope is that they'll eventually cater to a wider audience.

Conceptual drawings from the La Vernia vision plan depict downtown Chihuahua Street decorated with freshly painted buildings, newly planted greenery and brightly striped canopies that Kolbe and other La Vernia officials hope will provide a welcoming atmosphere for street festivals, daytime shopping, and al fresco dining.

"While there are various places where people can meet, there is no one place -- a singular place or civic place, such as a plaza or park -- where citizens can gather to hold both formal and informal community celebrations," the La Vernia plan says. "Renewing the function of Chihuahua Street as a center of civic culture for La Vernia will restore it as the cultural center and civic gathering place for the community. This is one of the most important steps in improving the downtown district."

Culture and community gathering is a recurring theme in UTSA's vision plans. The university's 2012 revitalization study of Dimmit and Zavala counties near the Mexican border proposes a similar community plaza to host social events and agricultural festivals.

Outside of the Eagle Ford -- and beyond the scope of UTSA's community planning initiatives -- Williston, N.D., the city at the heart of the northern Bakken Shale, lists similar goals.

"With change slowing and speeding past the community of Williston, our downtown becomes our rock in the river that is a place of refuge ... that both welcomes new people and subsequently deepens our ties to our heritage, future ambitions, culture and each other," project planner Laura Kessel wrote in Williston's downtown plan.

Though the planning models lay out a sunny vision for communities, not everyone agrees with the restrictions and requirements they could place on business owners. Charlene Bridges, owner of La Vernia's newly opened Bridges Rifle Co. & Gunsmithing, said construction limits -- such as beautifying requirements for stone or brick exteriors -- might be prohibitively expensive for some companies.

While she agrees with La Vernia's strategies to attract hotels and retail, Bridges said she hasn't decided whether she supports the vision plan itself.

"The jury's still out," she said. "I don't know."

Financial backing

Funds for community transformation aren't coming from the oil and gas industry directly, but energy activity is playing a supporting role in boosting towns' financial ability to pursue community improvement projects.

Between 2000 and 2010, La Vernia's poverty level decreased from 12.3 percent to 6.2 percent, due to economic growth in South Texas, proximity to San Antonio and the recent increase in drilling in the Eagle Ford Shale, according to the vision plan.

The town's median income increased 33.8 percent over the course of the decade, surpassing 23.6 percent growth nationwide, the report shows.

But there's no guarantee that surge will continue.

Though the La Vernia vision plan does not include a timeline for implementation, it suggests the town "move aggressively forward" with its priority projects. La Vernia's first course of action, which is already underway, is to embark on the multiyear process to secure a bond for the relocation and expansion of City Hall, Kolbe said.

She's confident La Vernia will continue to grow, but, like other Texans, she knows how quickly an energy bust could ripple through the region's economy.

With that in mind, Eagle Ford municipalities are in agreement: Now is the time to act.

Twitter: @pamelalauren | Email: pking@eenews.net

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