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Galveston

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  • Statehood 1845
  • privatized
  • Public-public partnership
  • Sandy SpringsPublic/Private Partnerships for Local Governments; Porter
  • 20” rain over 16 day period7 week period
  • Transcript

    • 1. The Port of GalvestonCase Study #2Public-Private EnterprisePresented by: Julie RadaPUB 650PR – SummerJuly 19, 2010 http://www.capmetro.org/images/train_port.jpg
    • 2. The Port of GalvestonHistory• 1825 – designated as provisional port and customs entry point by the Congress of Mexico• 1837 – declared a port of entry by Congress• 1854 – Galveston Wharf and Cotton Press Company ▫ Chartered by State of Texas ▫ Coalition formed by various local dock and warehousing interests
    • 3. The Port of GalvestonHistory (continued)• 1860 – 1900 ▫ Railroad access to the island ▫ Cotton exchange organized ▫ Establishment of Galveston District Corps of Engineers ▫ U.S. Congress – deepen the natural channel and build protective jetty system ▫ Built first grain elevator ▫ Completed wagon bridge between island and mainland
    • 4. The Port of GalvestonHistory (continued)• 1900’s ▫ Leading U.S. port for cotton export ▫ Third most important in wheat export ▫ Import of sugar from Cuba• 1940 – City of Galveston voted to acquire the holdings of the Galveston Wharf Company, known thereafter as Galveston Wharves
    • 5. The Port of GalvestonHistory (continued)• 1950 – 2000 ▫ Completion of rail and vehicular causeway connecting Galveston Island to Pelican Island ▫ Continuous commercial growth  Container operations  Cruise industry  Mixed-use cargo facilities ▫ Sold railroad equipment and leased tracks to Galveston Railway, Inc.
    • 6. The Port of GalvestonHistory (continued)• 1950 – 2000 (continued) ▫ Secured replacement tenants, or assumed operation of defunct enterprises ▫ Expanded real property holdings (850 acres) ▫ Completed improvements and rehabilitation projects  General obligation bonds  Tax Reinvestment Zone Bonds  Loans  Surplus revenues
    • 7. The Port of GalvestonHistory (continued)• 1950 – 2000 (continued) ▫ Established a committee to promote and create business opportunities ▫ Entered into a lease agreement with Port of Houston Authority for the operation of Galveston’s container terminal ▫ One-half cent tax effort failed
    • 8. The Port of GalvestonHistory (continued)• 2001 – Citizens of Galveston defeated an election to merge the Port of Galveston and the Port of Houston• 2002 – Design Build Agreement entered into with CH2M Hill ▫ Cruise Terminal #2 at Pier 27
    • 9. The Port of GalvestonStructure• Operates as an enterprise utility• Financially independent from the city• Board of Trustees of the Galveston Wharves ▫ Complete management and control of the port, including income and revenues generated ▫ Power to contract for all essential purposes  Galveston City Charter  Chapter 54 of the Texas Transportation Codehttp://www.dredgingtoday.com/wp-content/uploads/2010/04/galveston-port.jpg
    • 10. The Port of GalvestonFinancial Considerations• Limited ability to issue new debt to support project development• Existing bonds - restrictive covenants pledging all future earnings toward debt repayment• Debt service coverage mandated at 150%
    • 11. The Port of GalvestonThe Challenge• Meet growing demand of cruise ship capacity• Rapidly capitalize on the financial benefits to local and state economy and tax base ▫ $10 million direct impact on the Galveston community ▫ $15 million indirect impact per year round operation of one cruise ship• Complete phase 1 within 7 weeks of contract execution with CH2M Hill
    • 12. The Port of GalvestonThe Solution• Formation of a public-private partnership ▫ Port of Galveston ▫ Royal Caribbean Cruise Lines ▫ Carnival Cruise Lines ▫ CH2M HILL• Creation of “third party” legal entity – Galveston Port Facilities Corporation ▫ Hold the cruise line contracts and lease with the port  Allowed for retention of operating profits for future investment in other infrastructure expansion
    • 13. The Port of GalvestonThe Solution (continued)• Negotiated bridge loans from Royal Caribbean and Carnival (short term financing) ▫ Bond guarantee language facilitated replacement of bridge loans with construction loans• Bond issuance by Galveston Port Facilities Corp. (long term financing) ▫ Tax exempt interest
    • 14. The Port of GalvestonThe Project• Phase 1 – Terminal 2 ▫ Upgrade dilapidated warehouse into passenger terminal (added 80,000 sq. ft. to cruise complex) ▫ Extend wharf facilities - 2,000 ft. long berth ▫ Roadway improvements to accommodate increased number of passengers ▫ $3 million negotiated budget
    • 15. The Port of GalvestonThe Project (continued)• Phase 1 – Terminal 2 (continued) ▫ Delivered within schedule and budget with $100,000 shared cost savings  Expanded dock  Upgraded interior to double amount of usable space new main waiting area, VIP check in/waiting area, ticket counters, three-level raised corridor to new passenger loading bridge, fire exit stairways, sprinkler and alarm systems, security facilities, and a rolling bridge
    • 16. The Port of GalvestonThe Project (continued)• Phase 2 ▫ Implosion of 236-foot-high headhouse ▫ Demolition of numerous reinforced concrete silos, railcar unloading facilities and offices ▫ Asbestos abatement - ±500 windows ▫ Three month schedule ▫ Completed within schedule, with nearly 100% of debris re-used or recycled, for $1 million less than the next lowest bid
    • 17. The Port of GalvestonEconomics• Private Sector • In exchange for commercial terms re: return on investment, provided up-front capital• Public Sector ▫ Conserved its capital funds ▫ Continued to receive increased revenues from growth in related employment and commercial revenues ▫ Strengthened ties with the business community
    • 18. The Port of GalvestonSummation• The public-private partnership arrangement produced appreciable cost savings by: ▫ Providing the facility on time to start cruise and parking revenues flowing ▫ Saving time and money by renovating and reusing an existing building and wharf infrastructure, generating revenues much sooner than would occur in design and construction of a new facility
    • 19. The Port of GalvestonEnd Note• In 2003 ▫ Cruise lines, their passengers and crews spent nearly $631 million on direct purchases in Texas ▫ Cruise industry activity generated 9,767 local jobs paying $425 million in income ▫ 96% of Texas cruise activity is attributed to Galveston
    • 20. The Port of GalvestonReferencesCernak, S. (2007, Jan. 11). Traditional and alternative financing of cruise terminals. Retrieved Jul. 14, 2010, from www.aapa.com: http://aapa.files.cms-plus.com/SeminarPresentations/Cernak.Steve.pdfNational Council for Public-Private Partnerships. (n.d.). Port of Galveston cruise terminal development. Retrieved Jul. 14, 2010, from ncppp.org: http://ncppp.org:80/cases/galveston.shtmlPort of Galveston. (n.d.). History of the port. Retrieved Jul 14, 2010, from port of galveston: http://www.portofgalveston.com/about/history.shtm