Galveston IDC OKs $2 million advance to cover Pelican Island bridge local share

The Industrial Development Corporation of the City of Galveston voted unanimously Wednesday to approve a resolution and a related economic development agreement to provide $2,000,000 to the City of Galveston to meet the local share requirement for the Pelican Island replacement bridge project.

The approval, taken as items 7C-1 and 7C-2 on the IDC agenda, authorizes the corporation to advance $2 million from its fund balance to make up for a $2 million shortfall created after the county withdrew as local sponsor and lost a $2 million TxDOT credit. The board’s action was unanimous. Board members present asked that the city be reimbursed once IDC revenues are projected to cover the advance in fiscal 2026 per the presentation to the board.

Why it matters: The Pelican Island bridge is a multi-agency project with a total participants' funding requirement presented to the board of $36,200,000. Local contributions now stand, per board discussion, at: City of Galveston $8,000,000; Galveston County $5,000,000; A&M (participant) $9,200,000; Navigation District $10,000,000; Port of Galveston $2,000,000; Port of Houston $2,000,000. The board emphasized that the $2 million IDC advance will be repaid to the city in 2026 from projected IDC revenues under the current cash-flow forecast.

Board and staff said the shortfall arose when the county declined to be the project sponsor and TxDOT removed a prior $2 million credit the county had been given for earlier county work. “When the county decided that they would not be the sponsor of this project, it moved to the city,” a board member explained during the meeting. “By doing that, the $7,000,000 from the county now is only $5,000,000 because the $2,000,000 credit was rescinded and pulled back by TxDOT.”

Finance presentation: Brandon, IDC financial staff, presented a five-year forecast showing the city could be reimbursed in fiscal 2026 under a conservative revenue projection (roughly a 3% annual revenue increase assumption). Brandon told the board the $2 million would be taken from city fund balance now and reimbursed by IDC in 2026 when projected sales tax and silo interest are expected to cover the repayment. “We’re projecting that the revenues will be available to reimburse the city for its fund balance in fiscal year 2026,” Brandon said.

Project schedule and responsibilities: Board members and staff discussed TxDOT’s continued work on environmental, design and coordination with the U.S. Coast Guard and said TxDOT has advanced the project and is aiming for construction to begin in 2028–2029, depending on final approvals and funding. Board members stressed they negotiated contract language limiting local sponsors’ exposure to cost overruns. “We did not want the citizens of Galveston on the hook for the cost overruns,” one board member said. The board reported the AFA (Advanced Funding Agreement) includes language capping local participants’ liability at the agreed total ($36,200,000) and that TxDOT has agreed to assume responsibility for additional overruns.

Other financing avenues: The board discussed options to fill remaining funding gaps and cost-overrun risk, including a short-term request to the Houston-Galveston Area Council (HGAC)/MPO and internal reallocation of transportation funds. Marie Raub, the city’s representative to the transportation policy council, told the board HGAC is forming a committee to consider stopgap funding and that the MPO’s action is expected within months. Members said HGAC likely will provide gap funding but not necessarily cover long-term cost overruns.

Related items and next steps: Earlier in the meeting the board opened and closed a public hearing on an economic development agreement to pay up to $35,000 for right-of-way title searches and legal descriptions associated with the Pelican Island bridge ROW work; the public hearing closed with no public comment and the item was scheduled to return on the April council agenda. The board also went into executive session under Texas Government Code §551.072 to discuss real property but reported no action was taken as a result of that closed session.

Vote and procedural notes: The motion to approve items 7C-1 and 7C-2 passed unanimously. Board members present discussed and accepted the plan to advance funds now with the understanding IDC would be reimbursed per the financial forecast when projected revenues materialize.

What remains: The board requested continued updates on TxDOT’s AFA timeline, HGAC/MPO funding decisions and the IDC cash-flow outlook. Staff said they will return with final documents for council consideration and that the reimbursement schedule will be revisited after updated sales tax receipts are available.

Ending note: Board members described the vote as a step to keep the multi-jurisdictional bridge project moving forward while protecting local taxpayers from future cost-overrun exposure.