BROWNSVILLE, Texas (CNN) -- Hurricane Dolly was downgraded to a Category 1 hurricane Wednesday afternoon, about an hour after it made landfall on South Padre Island, Texas, the the National Hurricane Center said.
Dolly's sustained winds decreased to about 95 miles an hour (150 km/h).
The eye reached the island around 2 p.m. Wednesday afternoon, the National Hurricane Center said, packing steady winds of 100 mph and gusts reaching 120 mph.
The storm, the second of the Atlantic hurricane season, had moved out to 35 miles east of Brownsville, Texas, by 1 p.m. CT (2 p.m. ET), the center said. Earlier, it had been just 30 miles from the city.
It was expected to resume its push to the northwest soon, forecasters said. Watch coast pounded by wind and rain »
National Weather Service radar spotted at least one tornado in the Brownsville area on Wednesday morning. A tornado watch was in effect for a swath of southern Texas and some Texas coastal waters until 7 p.m.
The hurricane center said Dolly is expected to produce from 8 to 12 inches of rain, with up to 20 inches in some isolated spots, and widespread flooding is likely.
It forecast coastal storm surges of 6 to 8 feet above normal tides.
People in the path of the storm had stacked sandbags around their homes, nailed plywood over windows and prepared generators to keep power going in the event of a blackout.
Maribel Vallejo, of Brownsville, waited in line for two hours Tuesday for bags of sand.
"It's something we have to do to avoid any flooding going into our homes," she told CNN. iReport.com: Are you in Dolly's path?
Dolly's strong winds forced the closure of South Padre Island's causeway to the mainland Tuesday night. Residents who chose to remain there took shelter in their homes to ride out the storm. Officials said the causeway is closed any time winds reach 39 mph.
The island has a population of about 2,400 residents.
Steven Murphy, who owns a charter fishing company with his brother on the island, lived through a previous, more powerful hurricane where he saw boats bigger than his tossed onto land.
"I had nightmares about that last night," he told CNN by telephone as he sheltered with his girlfriend inside his 65-foot double-decker fishing boat named Murphy's Law.
He said the wind outside sounded like a tornado, and added that he'd seen several items blow past the windows of his vessel.
"It's starting to tear it up real good," Murphy said. See images and videos from affected areas »
Although some people's homes were in the storm's path, others -- like vacationer like Pedro Martinez Sanchez -- had unknowingly traveled into the danger zone.
Martinez Sanchez said he was stuck in Brownsville Wednesday after he and his wife drove some 12 hours from Veracruz, Mexico, to do some shopping.
He had no idea that the hurricane was coming when he scheduled the trip, Martinez Sanchez said. He had planned to leave Wednesday but now would be stuck in a motel until the danger had passed.
More than 13,000 customers were without power in Cameron County, where Brownsville is located, utility company AEP Texas told The Associated Press.
Along with civilians, Dolly's arrival had members of the military in the area scrambling. The Navy had moved 89 aircraft from its Corpus Christi base to other locations in Texas and New Mexico. See Dolly's projected path »
Texas Gov. Rick Perry issued a disaster declaration for 14 counties before Dolly arrived. The declaration "allows the state to initiate necessary preparedness efforts," according to a statement from Perry's office.
More than two dozen state agencies and organizations such as the Red Cross are on standby to help with evacuations and other needs.
The National Guard has set up staging areas in Houston, Austin and San Antonio, officials said. As many as 1,200 National Guardsmen have been called to help, and 700 are already deployed to targeted areas.
An incident management team has been pre-positioned in south Texas, including six UH-60 helicopters, to provide support to first responders.
"We have been preparing for this kind of event for well over a year," Col. William D. Meehan, a spokesman for Texas Military Forces, told CNN.
Several hundred people had taken refuge in shelters in Cameron County, where Brownsville is located, and in Hidalgo County, just to the west, county officials told AP.
Cameron County Emergency Management Coordinator Johnny Cavazos told AP that officials were concerned that levees along the Rio Grande might not be able to hold a deluge of water from Dolly.
Hidalgo County spokeswoman Cari Lambrecht told AP that people living in low-lying areas were encouraged to come to shelters. "It's so much easier for them to go now instead of us having to pull them out later," she said.
A hurricane warning remained in effect for the Texas coast from Brownsville to Corpus Christi and for the Mexican coast from Rio San Fernando to the U.S. border.
A tropical storm warning was in effect from north of Corpus Christi to Port O'Connor. A tropical storm warning and hurricane watch were in effect from La Pesca to south of Rio San Fernando, Mexico.
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