By Rodger Rees, Galveston Wharves Port Director and CEO
The Galveston Wharves Board and staff are weighing our best options for funding major capital projects slated for the next few years. We’re considering issuing $100 million in bonds to help fund much-needed, time-sensitive projects, including expansion of the West Port Cargo Complex, improvements to the Pier 25 cruise terminal, and construction of a proposed fourth cruise terminal at Pier 16.
These three projects are critical for port growth to continue to boost port revenues, local jobs and the regional economy. The bonds could be leveraged with millions of dollars in grants, private-sector funds and the port’s operational reserves for maximum benefits. As a self-sustaining city entity, we’ll seek approval from our Galveston Wharves Board of Trustees and the city for issuance of the bonds.
Much of this work, including the cargo complex and the proposed fourth cruise terminal, are included in the port’s 20-Year Strategic Master Plan adopted in 2019. The plan details more than $600 million in critical projects, including an interior roadway and rehabilitation of long-neglected, deteriorating docks.
How loan proceeds are allocated will depend on whether the port is able to secure $44 million in American Rescue Plan Act money from the state of Texas. We’re hoping to get a favorable decision from the Texas Legislature this session to reimburse the port for some of the $58 million in revenues lost during the CDC-mandated, 15-month-long cruise suspension.
INVEST MONEY TO MAKE MONEY
A third of the $100 million in proposed bonds would fund the port’s portion of improvements to the 2-decades-old Cruise Terminal 25 to accommodate the brand-new Carnival Jubilee. The LNG-fueled ship will arrive in December. Carnival is also contributing to the improvements.
The Jubilee is much larger than the Carnival ships currently sailing from the terminal. Preparations for the Jubilee, as well as repairs to the aging building, will include berth upgrades, a roof replacement, gangway modifications, and passenger area changes to efficiently move more passengers.
Included in Cruise Terminal 25 improvements is $10 million projected for mandated improvements to facilities used by U.S. Customs and Border Patrol, which provides essential safety and security services at the terminal.
More than half of the $100 million would fund construction of a fourth cruise terminal at Pier 16, in a proposed partnership with MSC Cruises. According to a recent economic study, a fourth cruise terminal will generate 925 jobs, $177 million in annual local business revenue, and almost $5.1 million in state and local taxes per year.
Shifting to cargo improvements, $12 million is budgeted to build a wall to enclose Slip 38 and to begin filling the slip at the cargo complex to add dockage and to eventually expand cargo laydown areas. Completing the fill project could cost another $18 million or so.
None of us likes debt, but I think everyone understands that we have to go into debt to finance time-critical projects of this magnitude. We have healthy cash reserves and strong financial projections based on our cruise growth.