Nov 16, 2016

Empty RV Parks Tell Story of an Oil-Boom Town’s Changing Fortunes

Reporting Texas

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Scorro Niavez owns and operates an RV park in Cotulla. The park has suffered from the economic downturn caused by plummeting oil prices. Carlo Nassise/Reporting Texas

COTULLA — For nearly four years, oil field workers and their recreational vehicles swamped RV parks here in the southwest corner of the Eagle Ford Shale. Business boomed.

Socorro Niavez, 69, had built the town’s first RV park 25 years ago on five acres and reaped thousands of dollars as wells drilled in the Eagle Ford grew from 26 in 2008 to 5,613 in 2014, attracting oil workers who needed places to stay.

Now, with the price of oil at less than half its peak price and only 729 permits issued by the Texas Railroad Commission so far this year in the Eagle Ford region, she’s hurting. In 2014, the peak year, the commission issued 5.613 drilling permits in the region, which spreads from the Mexican border into East Texas, roughly 50 miles wide and 400 miles long.

Niavez never planned to sell, but now has no other choice.

“Money, as it comes, it goes, into one hand and out the other,” Niavez said during an interview in September.

The fortunes of RV park owners mirror the larger economy of Cotulla, a town of 4,216 about 90 miles southwest of San Antonio. Both enjoyed a windfall during the boom and are struggling with the bust. Overall, the town has seen a 50 percent decline in sales tax revenue through October this year compared to 2013.

Sales tax receipts in Cotulla

Source: Texas Comptroller

Cotulla is in LaSalle County, the heart of the Eagle Ford shale, which by 2013 was the country’s highest-producing oil region. Local businesses across South Texas prospered with the boom, and development surged; 124 hotels shot up in the 14 counties that form the core of the Eagle Ford.

Companies still are drilling in the Eagle Ford, but activity has slowed dramatically.

Revenue at the Niavez RV Park has dropped by more than 80 percent since drilling activity began to plummet. Revenue decreased by 65 percent at JD’s Nueces River Park, three miles south. Another six parks operated at maximum capacity during the boom; at least one has closed.

“I don’t have extra savings in the bank or somewhere else and still need to cover my expenses,” Niavez said. “I put my money back in real estate. That is my retirement and my future. I depend on those investments.”

Parks were forced to lower leasing rates to hang on to tenants after crude oil prices plunged from $112 per barrel in June 2016 to about $50 today. Oil companies laid off workers, and parks lost their main revenue source.

With 45 RV spots, Niavez’s park peaked at $160,000 in gross income in 2013 and dropped to an estimated $18,000 for this year. Similarly, gross income at JD’s Nueces River Park reached $850,000 on 150 RV spaces, but it will make only about $30,000 this year.

“I’ve always tried to be careful with my money,” Niavez said. “It was all done with the hope that my family would always have something to fall back on.”

The municipal government in Cotulla is facing a similar squeeze. It collected $3.2 million in sales taxes in 2013, compared to $445,02 in 2009, before the boom started, according to the Texas Comptroller’s Office. This year, the town expects to take in about $1.7 million.

In response, city leaders have aimed to diversify the economy, steering away from energy, and has invested about $40 million in infrastructure since 2009, according to City Administrator Larry Dovalina. The hope is that projects such as a new convention center (financed by a $450,000 grant and two $500,000 loans that are paid off), $9 million in road improvements, a veteran’s memorial plaza, recreation facility, public art, and an improved water system will attract visitors and new ventures.

Dovalina has opened doors to any opportunity. He asked the U.S. Department of Commerce to create a free-trade zone at the airport and has continued exploring trade with Mexico and warehousing options on 200 acres at the Gardendale Railroad Inc. facility in Cotulla.

Even before the bust, the city started searching for more sources of revenue. The La Salle Cotulla Chamber of Commerce, led by President Brenda Talbert Wright, increased its membership to 75 during the boom. It welcomed the Blue Steer Truck Wash, which will open in November and employ 40 to 50 people. In addition, Targa Resources Corp. told the chamber it would hire up to 15 employees in October for the opening of a natural gas plant.

Dovalina says Cotulla is in better shape than the data suggest.

“This isn’t a bust,” Dovalina said. “The numbers have dropped, but we’ve reached a plateau and expect to maintain it.”

Wright remains optimistic, too. She is focused on promoting economic interests in Cotulla and said business activity was picking up. The owner of Talbert Operations, which owns an RV park, she’s not been discouraged by the decline in customers.

“My park is empty and only has three spots taken, but the parks are not the main source of income for the owners,” Wright said

Niavez, for example, is the landlord to a tire repair business to balance her income sources. Other park owners also own unrelated businesses or receive income from oil companies that drill on their property.

Even during the good times, Niavez maintained a lean operation, taking care of most routine work herself, from lawn mowing to bookkeeping. She hated the idea of selling three acres to break even after being unable to refinance a property loan. But she couldn’t afford to handle all her business alone without downsizing.

Niavez said she was taught to expect bad times with the good times. She is confident that she can make it through the highs and the lows in her hometown one more time.

“Cotulla has a future,” Naivez said. “I know it. Even if I may not see it.”