RV Parks in Housing Mix for South Texas Oil Play
There’s oil field work aplenty on the western edge of the Eagle Ford Shale play in Texas, but not enough places for workers to live. It’s a simple supply-and-demand equation that should equal more housing, and in a hurry.
But who’s going to pay to build it?
That’s the million-dollar riddle of the state’s latest drilling boom, the San Antonio Express-News reported.
On Tuesday, even as the University of Texas at San Antonio’s (UTSA) Institute for Economic Development released a study about housing needs in the Eagle Ford, public officials and private investors said it remains difficult if not impossible to secure traditional loans to add more apartments, homes or RV parks in the rural areas.
Bob Zachariah of HotelWorks Development LLC is one of the lucky ones. His group is building a hotel in Cotulla.
But he’s been hearing from other developers about deals that can take up to two years to get financed. “Lenders are extremely nervous. They’ve gone through oil booms and busts.”
“How do they know there will be people five years from now to buy into it?” Zachariah asked.
It’s already expensive and difficult to find a place to live. And by 2025, an additional 7,900 workers are expected to pour into just the six counties on the western edge of the Eagle Ford: Dimmit, Frio, La Salle, Maverick, Webb and Zavala, according to the UTSA study.
So developers are left to find the money in the private market — and if banks are hard, family and friends can be tougher.
Banks Turn Cold Shoulders
Butch Alanis of Cotulla Development LLC has a 33-acre project in Cotulla with a man camp and an RV park. He has sold sites already to three hotels, two restaurants and an apartment complex. But he’s doing the project with private money after banks balked at the project.
“When you go to the banks and talk about infrastructure, they throw you out the door,” he said. “I don’t know how good of a resume you have to have for the banks to talk to you, but they’re not talking to us.”
And cobbling together of the needed money from friends and relatives wasn’t easy either. “It’s tough to tell people you want to come down to Cotulla and spend $5 (million) or $6 million,” he said.
Several people at the luncheon talked about the need for public-private partnerships. Alanis said he heard about several grant programs that could have helped pay for infrastructure. “We heard about this program. We heard about that program. It sounded really neat.”
But he didn’t have time to wait the 18 months to two years it might have taken a government grant to come through to pay for part of the infrastructure. Cotulla Development started work with private money.
The study did identify more than 11,700 vacant housing units across the six counties. Filling up those homes and apartments, and fixing them if needed, would be a more sustainable approach and perhaps easier in some cases than trying to build something new, said Azza Kamal of the UTSA Center for Urban and Regional Planning Research.
The big hitch?
“Who would advance the money to pay for the rehabilitation of those units?” asked Charles Kaplan, an investment consultant who spoke during a panel discussion.
Lenders remain reluctant to invest in real estate, particularly in development projects in which basic infrastructure such as water and electricity needs to be added, he said.
“They’re all risk-averse today,” Kaplan said.
UTSA and the Eagle Ford Consortium held the luncheon briefing at the Garza Ranch to release the findings. The study’s most likely scenario calls for 25,000 wells to be drilled by 2025, with 7,913 transient and permanent workers for jobs tied to them.
The study recommends housing be added in key areas within about 15 miles from oil field worksites: Carrizo Springs, Crystal City, Dilley, Pearsall, Cotulla and Laredo. The Eagle Ford sweeps from the border across the state to East Texas, but more than half the drilling has been at the western edge.
“Even for the transient workers who won’t stay long in the area, there’s a need for housing and services,” Kamal said. “There needs to be more family-oriented developments, where maybe there are things like pools or playgrounds included. Now there’s no sense of community, no phone reception. It can be expensive and difficult to buy groceries.”