April 5, 2017 4:00 PM, EDT

Proposed State Legislation Could Help Texas Ports Prepare for Larger Ships

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Ships are not getting any smaller. Legislation now headed to the Texas House would create a revolving loan fund to help ports deepen and widen their ship channels to accommodate them.

The effort is especially important now that larger ships can pass through the Panama Canal, said state Sen. Brandon Creighton, the primary author of the legislation that passed the Senate last week. Besides, he added, other states are seeking the same business.

"Texas ports are facing an unprecedented competitive threat from neighboring states," Creighton said.

The bill would authorize a revolving loan fund for ship channel improvement projects that have been authorized by Congress. Such projects are expensive and they generally require a port authority or state agency to pay 35% to 50% of the costs, according to a November report from the Senate Select Committee on Texas Ports.

Other states help pay such non-federal costs. But in Texas, there is no state funding mechanism for ports, the committee report said.

Even if Creighton's bill passes, there's no effort to fund the program immediately.

"You're creating a bank, but the vault is empty," said Mark Jones, a political scientist at Rice University's Baker Institute for Public Policy.

The November committee report points out that major infrastructure plans for Texas ports won't likely start before 2019, so "it is possible to set up the structure of the fund in 2017 and determine actual funding in a future legislative session."

Local officials welcome the intent of Creighton's Senate Bill 28.

"The state coming in and saying, 'We see the value of our ports and we're going to make sure they stay modernized and efficient' really sends the right message," said Capt. Bill Diehl, president of the Greater Houston Port Bureau.

Jim Kruse, director of the Center for Ports and Waterways at the Texas A&M Transportation Institute, said the revolving loan fund would provide another avenue for port authorities struggling to get grants or raise bond money.

Yet completing the projects may still be difficult if Congress doesn't appropriate money to fund the federal portions.

"The fact that Congress authorized it does not mean it funds it," Kruse said. "And they have not been funding these projects."

Four current projects in Texas have been given the go-ahead from Congress but have not been given federal funding. These projects — the Sabine-Neches Waterway, Freeport ship channel, Brownsville ship channel and Corpus Christi ship channel — total about $2 billion. Roughly $800 million of that is non-federal costs.

Still, many are encouraged to see legislators turning their attention to ports.

"Ensuring that we have an efficient port to remain competitive is very important," said Roger Guenther, executive director of Port Houston and president of the Texas Ports Association.

Future funding for the loan program can come from tax revenue, gifts, grants or donations. It would also be funded as port authorities repay loans and from interest earned on the fund's deposits and investments.

Jones, of Rice, said he's not sure who would give a gift or donation to the fund, so the state will likely have to appropriate money for it to be viable.

In addition to the revolving loan fund, SB 28 clarifies that money from the Texas Mobility Fund made available to ports must be used outside the gates on public road projects, Creighton said.

He said improvements for such intermodal activities as transferring goods from ships to trucks are critical. If a big ship is unloaded but goods can't leave the port fast enough to unload another large ship, then it doesn't make sense to be welcoming these behemoths.

"Unless we attend to that infrastructure and that planning, everything else is delayed," Creighton said.

The House companion bill was referred on April 4 to the Texas Ports, Innovation and Infrastructure Select Committee.

The committee chairman, state Rep. Joe Deshotel, is the primary sponsor.

"I don't think there's any opposition to this because there's really no downside to it," Deshotel said. "It's really stimulating to the economy and very much needed and very much supported."

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