Talk resumes about redeveloping grain-elevator land at Port of Galveston

Jim Yarbrough, a member of Wharves Board of Trustees, which governs the public docks, has been arguing since at least 2016, when he was mayor, that the grain business has gotten soft and tenuous and waterfront leaders should consider whether there’s a higher and better use of that port land.

The port has been shipping grain from elevators for almost 150 years. The first grain elevator went up in 1875, then blew up in 1977 when a spark ignited grain dust, killing about 15 people.

“At one time, the grain elevators produced a lot of jobs and money,” Yarbrough said. “Over time that has dwindled down to not much. It doesn’t produce that many jobs.”

Among the first questions Yarbrough asked when he joined the board was when the lease agreement for the property expired, he said.

“It takes the port a while to move and do things,” Yarbrough said. “My hopes were to implode or get rid of the grain elevators.”

Yarbrough would like to see the land redeveloped for other cargo business, he said.

There’s probably more waiting ahead, however, because Archer Daniels Midland Co.’s lease on that 22 acres of port land won’t end until 2027, Rodger Rees, director and CEO of the Port of Galveston, said.

The Chicago-based agribusiness giant, commonly known as ADM, has leased the property since 2004 and renewed its lease in 2015.

The company usually moves wheat, soybeans and corn through the elevators and pays a base rent to lease the property, Rees said.

From 2005 to 2022, 17 years, the port made more than $43 million in revenue from the grain elevators, Rees said.

Archer Daniels Midland Co. pays the port at least $2 million a year under the lease agreement, Rees said.

The company didn’t respond to requests for comment.

What the port is making through the lease undervalues the property, however, Yarbrough said.

“I see enhanced opportunities coming our way once we’re able to put all the pieces of the puzzle together,” Yarbrough said.

“I don’t know what that property is worth, but it’s in the $100 million category and getting $2 million a year is not a good enough return on that type of asset.”

And the port also budgets $2 million to $3 million to dredge the area every two years, Rees said.

“Could you make more money off of it as something else?” Rees said. “I don’t know. We have not pursued any alternatives to it.”

“It’s 22 acres on the water,” Rees said.

Yarbrough’s not alone in seeing better uses for the land.

The port has talked about a public-private partnership with a stevedoring company to redevelop the property as cargo space, Trustee Jeff Patterson said.

“ADM has a very valuable piece of property there,” Patterson said. “If we can work out something mutually beneficial with them to free that property up, I think it adds to the valuable real estate that we have on the west end.”

Any operation that gives the port a high return is worth looking into, Galveston Mayor Craig Brown, who serves on the wharves board, said.

“The grain operations have been there for quite a long time,” Brown said. “But if they’re thinking about leaving, the port would be very open to utilize that land and make it as productive as possible and expand our footprint from the cargo standpoint.”

There’s no solid indication Archer Daniel Midland Co. is interested in leaving early, however.

Yarbrough, who like Brown was an ex-officio trustee as mayor in 2016, noted the company had been making substantial investments at the Port of Corpus Christi Authority, leading to speculation about whether the grain giant would leave town.

Port administrators at the time argued Archer Daniel Midland Co. enjoyed the low overhead costs of the public docks and had invested about $3 million in improvements at the property.

The grain operator can end the lease with 90 days notice.

Wharves Board Vice Chairman Vic Pierson wants to hear options, he said.

“I think we need to get more information,” Pierson said. “I’m open to whatever is the best economic use of that property.”

The port might soon bring up negotiating the lease with Archer Daniels Midland, he said.

“It’s certainly prime property,” Pierson said. “I’m open to getting all the information and making an informed decision.”

Redeveloping the land would benefit not only the port, but would create more waterfront jobs than the elevators do, Yarbrough said.

“I’m certainly excited for the opportunity to look at a public-private partnership with a stevedoring outfit to manage the operations,” Yarbrough said.

“If you get a player like that, they want to invest money.”

“I think this is something we can all get behind,” Yarbrough said. “From my perspective, the quicker the better.”

But while some wharves trustees see a future in cargo, Rees, who has developed the port into a cruise-industry powerhouse, has a different vision.

“Cruise business generates more revenues for the port than any other business we do, he said. “We receive 60 percent of our business from cruises.”

If the port put a cruise port where the grain elevators are, it would make more money, Rees said.

But port leaders have to respect the lease, he said.

“We can’t do anything for three years anyway,” Rees said.

“Unless something comes up and they move earlier.”