Oak Ridge North economy recovers following sales tax revenue slump

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For the first time in three years, Oak Ridge North saw an increase in total sales tax revenue in fiscal year 2018, giving optimism to city officials as they focus on implementing projects to continue the city’s upward economic growth.

Home to about 150 businesses across 1.5 square miles, Oak Ridge North Mayor Jim Kuykendall said sales tax revenue is a key revenue stream for the city as it accounts for approximately 70 percent of the city’s total revenue and provides the majority of funding for city services, programming and projects.

“Sales tax is a factor in determining the health of our business environment,” Kuykendall said. “[It is] the biggest factor in keeping property taxes low.”

While the city experienced a dip in sales tax revenue between fiscal years 2015-17, city officials said FY 2018 ended on a positive note, as the city’s sales tax revenue peaked, surpassing its last increase in 2015. However, after two years with lower-than-anticipated sales tax revenue, in FY 2019, Oak Ridge North officials increased the city’s property tax rate for the first time in eight years to help fund projects from the Master Drainage Plan.

City officials are now turning their attention to the ongoing Robinson Road improvements to capitalize upon the upward economic trend.

ECONOMIC OBSTACLES

Between fiscal years 2012-2015, Oak Ridge North experienced a steady increase in sales tax revenue, increasing from $1.4 million to $1.95 million, according to city financial records. However, the city’s sales tax revenue dropped to $1.83 million in 2017.

City officials claim the oil and gas downturn may have contributed to the decline. The price of oil dropped from $105 per barrel in mid-2014 to $26 in early 2015, according to the U.S. Energy Information Administration—the same year the city’s revenue began declining.

“We were somewhat fortunate that although oil and gas has an effect on our economy, the larger downturn was in downstream oil, while most of the industries in our area were upstream,” Economic Development Director Heather Neely said.

Then, in August 2017, Hurricane Harvey devastated Texas’ Gulf Coast region, damaging portions of Montgomery County, including areas along Rayford Road south of the city, creating another challenge for local businesses.

“After Harvey, people just didn’t have a lot of extra money to spend because they were working on fixing their homes,” said Jen King, owner of Space Cadets Collection Collection—an Oak Ridge North comic book shop.

On top of Hurricane Harvey and the oil and gas slump, in October 2017 city officials announced The Crowne Plaza Hotel & Conference Center would not be developed in the city creating another economic barrier.

The 154-room hotel was slated to open at the intersection of I-45 and Robinson Road and was expected to bolster the city’s revenue sources, as the city’s first hotel. After the hotel failed to materialize, City Council had to reduce its projected sales tax revenue in FY 2017 by $284,658.

Neely said the city is continuing to work to find a solution for the site.

Despite these obstacles, sales tax revenue continues to climb in 2019. Allocations were up by nearly 19 percent year over year from January 2018, according to Texas comptroller data.

PHYSICAL LIMITATIONS

Aside from the external factors affecting the local economy, local business owners say physical barriers—including traffic and a landlocked perimeter—have also affected Oak Ridge North economically.

While city officials have been working for many years to improve Robinson Road—one of Oak Ridge North’s primary thoroughfares—local business owner Adam Lewandowski said the road’s traffic affects his business, Wood’s Feed Store, on a daily basis as it is located on Robinson Road.

“We generally have to tell our customers to come before 4 p.m. and after 5:30-6 p.m. to avoid the traffic,” Lewandowski said.

Despite Oak Ridge North only having a population of 3,107, according to 2017 data from the U.S. Census Bureau, the section of Robinson Road between I-45 and Hanna Road had a traffic count of 16,170 vehicles per day, during a traffic count in 2017. That number is projected to double to 32,000 vehicles per day by 2025, according to the Houston-Galveston Area Council’s South County Mobility Plan from 2014.   

While Phil Nicosia’s 25-year-old restaurant, Pallotta’s Italian Grill off I-45, is not located directly on Robinson Road, he said he also would like Robinson Road to be addressed.

“I think people, if they can, avoid the area, and that’s not good for business,” Nicosia said.

The city’s lack of available land to annex also creates challenges, city officials said. Neely said much of Oak Ridge North is built-out with limited land available within current city limits. As a general law city—a city with a population of less than 5,000—future annexation of land in its extraterritorial jurisdiction could be a challenge. ETJ is the legal ability of a government to exercise authority beyond its normal boundaries.

“The city’s ETJ still has approximately 200 acres of vacant land available,” Neely said. “However, while we have ample developable ETJ, we are not eligible to annex those landowners without their initial petition.”

ONWARD, UPWARD

With sales tax revenue moving upward, Kuykendall and Neely said the city is already working to address the biggest issue cited by business owners: Robinson Road.

“We have a solid plan in place that will eliminate much of the congestion at Hanna Road,” Kuykendall said.

Neely said engineering work on the realignment of Robinson and Hanna roads is slated to be finished in February. Additionally, city officials hope to combine the additional turn lane from Robinson Road into Oak Ridge North Commerce Park with the realignment project when funding for the project becomes available.

Neely said the city is also continuing to work with Montgomery County Precinct 3 to create a single-point interchange at Woodlands Parkway and Robinson Road. The $4.5 million project will improve the I-45 overpass into Oak Ridge North through the Patsy Lane/Westwood Drive intersection and reconfigure the intersection with a dedicated center turn lane and synchronized traffic signals.

The city is also funding a turn lane into the commercial properties located at the southeast corner of Robinson Road at I-45, Neely said. However, construction timelines for these projects had not been announced as of press time.

Despite some of the limitations the Oak Ridge North business community faces, local business owners agreed the pros outweigh the cons.

“When we first started, this center that we’re in was mostly empty, and some of it had been empty for quite awhile,” King said. “Today, I think we’re fully occupied, so that’s success right there.”

Neely said 2019 is already off to a great start with new businesses such as Faded Glory Barbershop, Emler Swim School and Joinus Vinyl.

Kuykendall said he is confident in Oak Ridge North’s future as a business-friendly community.

“I would like to see a hotel and conference center on the vacant property between Lane Lane and Robinson Road,” Kuykendall said. “We have had one project that fell through and are actively working to bring another such project home. As anyone would tell you, I also want a Whataburger or some other burger franchise in Oak Ridge North. We have the traffic and are waiting for one to find us.”

additional reporting By ben thompson

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Hannah Zedaker
Born and raised in Cypress, Texas, Hannah Zedaker graduated from Sam Houston State University in 2016 with a bachelor's degree in mass communication and a minor in political science. She began as an intern with Community Impact Newspaper in 2015 and was hired upon graduation as a reporter for The Woodlands edition in May 2016. In January 2019, she was promoted to serve as the editor of the Spring/Klein edition where she covers Spring ISD and Harris County Commissioners Court, in addition to business, development and transportation news.
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