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By Rodger Rees, Galveston Wharves Port Director and CEO
To plan where you’re going, it’s good to take a moment to look at where you’ve been. The Galveston Wharves staff is doing just that by reviewing the progress we’ve made on capital projects detailed in our 20-Year Strategic Master Plan.
Adopted by the Galveston Wharves Board of Trustees in December 2019, the plan is designed to bring our self-sustaining, citizen-owned port to its fullest potential in terms of revenues, jobs and community benefits. The document, which envisions the port in 2040, includes major capital projects totaling more than $600 million.
As we take stock of our progress, I’m happy to report that we’re working the plan, and the plan is working.
This is due to the board’s commitment to following the phased plan, the port’s conservative fiscal approach, recent grant awards, and the cruise industry’s robust growth.
As a self-sustaining city entity with no taxing authority or money from the city, we fund projects with cash reserves, grants, bonds and public/private partnerships. That can be challenging because, unlike the city which has a guaranteed revenue stream from property taxes and user fees, we execute major capital projects as we secure funding.
So where are we on delivering projects identified in the first five years of the plan? Overall, we’re on track or ahead of schedule for the reasons mentioned above, despite the Covid years.
Here’s a summary of where we are on major projects included in the 2020-2025 schedule.
Maritime Infrastructure Improvements
One of the single largest expense categories is repair and replacement of long-neglected, deteriorating piers and bulkheads throughout the port.
With the help of a recently awarded $36 million state grant and $14.1 million of port reserves, we’ll begin construction in 2024 on a $50.1 million project to improve and expand 1,340 linear feet of berth for cargo and lay ships. Plans to fill two slips behind the new berth to create additional cargo laydown acreage are included in the port’s master plan pending additional grant funding and sources of fill material.
Major improvements, totaling roughly $30 million, were made on the waterfront at Pier 10 and Piers 23-25 as part of cruise terminal construction work in partnership with Royal Caribbean and Carnival cruise lines.
Cruise Terminal Growth
Our cruise business generates more than half of the port’s total revenues, which is why investments in cruise terminals and cruise parking will continue to help fund infrastructure improvements throughout the port.
As outlined in the 2020-2025 plan, we’ve built a third cruise terminal in partnership with Royal Caribbean, improved our 22-year-old Cruise Terminal 25 with revenue bonds and cash reserves, and expanded ground parking at both terminals to meet customer demand.
Cruise parking garages are also included in the plan. It costs roughly $30 million to build a parking garage but a small fraction to use open land for a ground lot. We’re using land for surface lots until we have a demand for a higher-revenue use for the land.
Although the return on investment for surface parking far exceeds the ROI from other parking alternatives, we will need to plan for vertical parking garages in the future, mainly due to space limitations at potential building sites and for the convenience of our cruise passengers.
We’re ahead of schedule on building a proposed fourth cruise terminal, including a parking garage, at Pier 16 because the demand for berth usage is at an all-time high. We originally planned for a fourth terminal in 2031, but due to unprecedented growth and partners like MSC and Royal Caribbean, it makes economic sense for the port now. Pending board of trustee approval, the terminal could be in operation in 2025.
Traffic and Safety Improvements
Considering future cruise and cargo growth, the master plan includes an interior roadway with a total estimated cost of $30 million. The phased project includes widening and expanding existing roads and improving drainage. Using a combination of port reserves and state grants, we’ve completed three sections with two more to be completed in the next few years.
We also recently received $3.85 million in state funds to improve and reopen the 25th Street skywalk over Harborside Drive and a $340,000 federal grant to complete an action plan in 2024 to identify projects to improve vehicular and pedestrian traffic safety. The port will spend $1.7 million of reserves and operating cash flow for these two projects.
It’s an exciting time to be at the port as we see our shared vision become a reality. Find the master plan on our website: www.portofgalveston.com/221/Strategic-Master-Plan. We are currently updating our master plan based on changes and progress since it was adopted in 2019.