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Lake Houston retail makes a strong comeback after Harvey

September 17, 2018

Local officials are still tracking Hurricane Harvey’s effect on sales tax revenue after the storm impacted 1000s of businesses in the Lake Houston area.

A decline in sales tax revenue is especially important for the city of Humble, whose budget is funded more by sales tax revenue — including large retail centers, such as Deerbrook Mall and the Townsen Boulevard development with Main Event and Costco — than property taxes.

“In the immediate months following Harvey we saw a precipitous decline in sales tax revenue,” Humble City Manager Jason Stuebe said.

In August and September 2017, Humble witnessed only a 2 percent decline and a decrease of 2.67 percent year-over-year, respectively.

However, the city was down more than 11 percent year-over-year in October and in November sales tax revenue was down another 6 percent.

“In December of 2017 we started to see the turnaround — between the holidays, people getting their lives back together, and businesses returning — we were up 7.9 percent for the month and that trend has continued throughout the rest of the fiscal year to present,” Stuebe said.

Lake Houston Area Economic Development Partnership President Mark Mitchell said sales tax numbers dropped as families tried to piece their lives back together during the first few months after Harvey.

“If your home was flooded and you had no other family in the immediate area, then you were actually staying with either parents or in-laws or cousins while they’re doing the remediation of their homes. So it’s kind of a ‘chicken and egg’ (issue). We lost businesses and we lost individuals as a result of the hurrricane so that really depressed the retail sales in the area for several months,” Mitchell said.

Stuebe said out of the 64 commercial properties that were impacted by flooding within the city of Humble’s boundaries only seven have permanently closed.

However, Mitchell said about 3,300 businesses across the Lake Houston area filled out applications with the Small Business Association stating that they were physically or economically affected across the Lake Houston area.

“We know at least that many businesses felt compelled to go through the (SBA) process and we know at least 350 businesses received some type of flood waters into their stores and that’s just us within the context of the chamber,” Mitchell said.

Mitchell said in the Lake Houston area there are 7,500 identified businesses.

“I wouldn’t be surprised at all if 10 or 20 percent of that make up in some way shape or form a retail and maybe a little higher percentage,” Mitchell said.

From Fiscal Year 2016 to Fiscal Year 2017 Humble’s sales tax revenue dropped from $13.6 million to $13.2 million. Stuebe mentioned the Fiscal Year 2018 budget looks like it will be above their budgeted $13 million in estimated sales tax revenues, possibly hitting $14 million.

“Based on the most current data we have, we are already seeing a sales tax revenue increase of 3.45 percent year-over-year, which is a very good thing to not only see that we are returning to where we were but in fact headed towards a more positive position,” Stuebe said.

Mitchell said as businesses such as Best Buy, Target and Kohls made a comeback in the community sales tax revenue started to increase.

“The positive note of all of this is the significant majority of those businesses have come back within the context of our retail base and the Hwy. 59 corridor,” Mitchell said. “Kingwood as well. In the Kingwood area you’ve seen a significant number of new establishments taking up that space that was actually brand new space and now it’s occupied with new retailers, which is a very positive side.”

While some businesses saw a decline due to harvey, others noticed a boon.

Hallmark Mitigation & Construction Owner John Hallmark said his business opened in December 2016 and was located on Townsen Boulevard. He had to relocate his business to his residence since his office got some mold.

Hallmark has not moved back to his office since then due to mold and is currently looking for another location to re-establish his building.

Business, rather than depleting, was on the rise since many of businesses and residences in the area needed repairs and reconstruction.

“This business has only been in operation for a year and nine months. Our first year we made $600,000 and this year we’re about to come close to double, $1.2 million,” Hallmark said.

Hallmark said business started slowing down in the last month.

“It’s been mostly reconstruction obviously. Mitigation is typically the first week after a flood and then it’s just reconstruction and we’ve been pretty steady until the last month and now we’re finally starting to chase work again. Until then it’s just been all coming our way and we didn’t have to chase.”

According to Stuebe Fiscal Year 2018 could possibly be one of their strongest fiscal years ever due to the recent trends in sales tax revenue.

“Obviously, we remain a retail hub for northeast Harris County but as you know, many folks who lost their homes are still in the process of rebuilding. So, have we returned to business as usual or is this an artificial bubble driven by the thousands of families and businesses in the area refinishing their homes and businesses? That’s what we will need to monitor in the months and years ahead,” Stuebe said.

With the City of Humble’s financial health becoming better than ever, city officials are still monitoring and looking to diversifying their retail industry.

“I would say we are cautiously bull-ish on our local economy and future right now, which speaks to the resilience of our community. But that doesn’t mean we can take our foot off the gas pedal,” Stuebe said. “We will need to continue to attract new development and redevelopment and also continue the push to get long term regional solutions to our flooding problem because our primary fear will remain ‘What if it happens again?’”

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