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Posted on: July 26, 2022

Port Moving Forward with Major Cargo Expansion Projects

By Rodger Rees, Galveston Wharves port director and CEO

Now is the time for the Galveston Wharves to leverage its hard-earned cash reserves, built up over the last four years, to fund major capital projects delayed by the pandemic. Guided by our 20-Year Strategic Master Plan, we’re planning and executing projects for long-term economic and jobs growth. 

We continue to recover from the $45 million revenue loss suffered during the 15-month-long suspension of our cruise business but have great confidence in the port’s future. 

Our cruise business, which typically generates 65 percent of port revenues, is making a strong return. We have 330 sailings scheduled for 2022. If occupancies continue at the current rate, we should approach 1 million revenue passengers this year.

During the pandemic-related drop in revenues, our board and staff continued to cut costs and maximize revenues to protect cash reserves designated for essential capital projects. While we don’t have the cash to fully self-fund these critical improvements, we can leverage our savings with grants, loans, bonds and public-private partnerships. In this column, I’ll cover some of the major cargo projects that we’re working on now.  

Growing Our Cargo Business

I’m pleased to announce, that pending final Wharves Board approval and acceptable financing, we’re moving forward with two projects totaling about $50 million to expand acreage and infrastructure at our West Port Cargo Complex. Our goal is to bid these projects concurrently to save time and money and to continue the close-out of Federal Emergency Management Agency (FEMA) funding for Ike projects.  

By 2024, we plan to:

  • Fill two outdated slips to gain 18.6 much-needed acres
  • Extend rail to the waterfront for direct ship-to-rail cargo transfers
  • Increase valuable dock space by 2,200 linear feet by filling the slips and repairing long-neglected, unusable docks

According to our cost-benefit analysis, these improvements will generate 423 construction jobs, $23.2 million in wages, and $1.7 million in state and local taxes, as well as support long-term economic growth. 

The port qualified for a $30 million low-interest federal loan to fund one slip fill and a new rail spur to the waterfront. The U.S. Department of Transportation awarded the Railroad Rehabilitation & Improvement Financing loan through a competitive application process earlier this year. The port will draw from its cash reserves to pay between $500,000-$750,000 in loan execution costs, as well as annual debt service.

One of the biggest expenses in a slip fill project is buying and transporting fill materials. We hope to cut costs by using spoils from a scheduled Galveston Ship Channel dredging project. This is a great example of how our citizen-owned port looks for ways to be cost-effective. We must be very careful with how we leverage these improvements because we’ll have annual cash payment requirements to service principal and interest, in addition to maintaining day-to-day operations.

We’ll finance the $20 million cost for the second slip fill project with cash reserves and short-term borrowing. FEMA will reimburse us for about half of this project.  

All of this comes with a cost. We need every penny to develop this port to its full potential to boost jobs, sales tax revenue for the city and regional economic growth. I look forward to telling you about our cruise-related projects in my Aug. 6 column.



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