Wednesday, August 19, 2009

Miracle in McAllen

Imagine a having a giant shopping center whose only purpose is to serve the needs of half the population of a large country. McAllen is that shopping center. Due to tariffs and other economic reasons, the United States offers many goods, particularly electronics, at a much lower price than commonly found in Mexico. It is for this reason that McAllen, and a large portion of the Rio Grande Valley of Texas is weathering the "Great Recession" better than many other areas of the United States. In the Rio Grande Valley retail sales are higher than in other areas of the United States but the McAllen area is doing better than that of Brownsville and Harlingen to the east. There are many reasons why this holds to be true.

The McAllen Metropolitan area is in close proximity to Monterrey, Nuevo Leon, one of Mexico's largest and most affluent cities, sharing a stroke of luck that their sister city to the west, Brownsville, Texas doesn't share. Many Mexicans, who after learning their lessons from the peso-devaluation and economic meltdown in the latter part of the 20th Century, never quite hopped onto the whole idea of a credit based society like their neighbors to the north. This means that the credit crunch has less of an impact on the retail based border economy as people save for their big shopping trip. In essence they tend to spend only what they have and what they have is a disposable income that despite a slight drop, is still reminiscent of the boom times in the United States.

What McAllen has done better than any other city in the Rio Grande Valley, South Padre Island excluded, is a great job concentrating on quality of life improvements that make McAllen a tourist destination, a concept that Brownsville and neighboring Harlingen have completely failed to incorporate, despite cultural and geographic strengths, particularly in the case of Historic Brownsville, that could have more to offer than McAllen and its surrounding cities combined. The quality of life improvements in turn attract more businesses, investment, and residents which in turn reinforce McAllen position as the strongest destination economy in all of the Rio Grande Valley. And while there has been significant commercial growth in Harlingen and Brownsville the lack of emphasis on quality of life and tourist improvements has led to a different style of shopping tourist who drops in to buy their goods then leaving to other more interesting locales to spend the bulk of their time, and their money.

The Brownsville Herald reports that sales tax revenues in Brownsville have dropped 6.82 percent over the last year, while Harlingen, the city on the road between McAllen and South Padre Island saw a 1.76 percent increase in sales tax revenue over the last year.

Texas Real Estate Business reports that the cities of the McAllen Metropolitan area have seen increases in retail tax revenue between 8 and 12 percent over the last year, in fact the corridor between McAllen and South Padre Island are among the very few areas of the United States which has seen overall growth during the latest economic downturn.

There is a clear trend illustrated here that shows the bulk of Mexican shoppers are coming into the Rio Grande Valley and spending their money in McAllen where quality of life improvements combined with geographic advantages are quickly transforming this once sleepy border town into the economic and cultural hub of the region.

Harlingen has seen some retail sales growth due to new commercial construction and through locational advantage, being on the main highway between McAllen and South Padre Island. South Padre Island has always been a tourist destination and recognized the benefit of quality of life projects and cultural programing early on in its development.

Brownsville, despite substantial retail development, has not yet tapped into its full potential and needs to offer attractions so as to capture some of the flow of tourists and shoppers traveling between McAllen and South Padre Island in order to overcome what is slowly becoming a geographic disadvantage. Not to say that there aren't attractions or cultural activities in Brownsville. Quite the opposite, but what is lacking in Brownsville is the sort of unified vision, political will, and overall cooperation that seems to be taking place in McAllen. Where McAllen succeeds, Brownsville is often tearing itself apart. However there is promise on the horizon for Brownsville.
Following McAllen's lead, the City of Brownsville has just completed a City-wide Comprehensive Plan that if followed, may help position Brownsville for higher quality growth and higher tax revenues. Its implementation depends on the political will and strength of the local populace.
Will McAllen and the rest of the Rio Grande Valley will be able to maintain its growth and economic momentum throughout the course of the economic downturn? No one can know for sure but what is evident is the symbiotic relationship that exists between the United States and Mexico and it is for this reason that the Rio Grande Valley is becoming one of the most interesting and dynamic regions in the United States.

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