VW signs on the dotted line

The Facts
By KENT HOLLE kent.holle@thefacts.com
October 5, 2022

FREEPORT — A lynchpin has been dropped to clench a Volkswagen presence in Port Freeport with the European auto manufacturer signing a 20-year lease for ground under their ownership.

In a press release Tuesday morning, Port Freeport announced that Volkswagen would be using them as a new Gulf Coast hub for the annual import of over 140,000 vehicles for delivery to over 300 retail dealers.

The hub is expected to result in over 110 local jobs for VW and their subcontractors who will be operating out of the facility.

“Volkswagen Group of America, Inc. today announced Port Freeport as the new major Gulf Coast hub for its future vehicle logistics port operations, in collaboration with Port Freeport and developer PRP and KDC. With a 20-year lease agreement, Volkswagen Group of America aims to further improve vehicle logistics efficiency and increase importation capacities to serve nearly 300 dealers in the United States. The new port facilities are set to be operational in early 2024,” according to the release.

Ground is expected to be broken on the project later this year. Previous estimates gave an 18-month window to completion.

“We are thrilled with Volkswagen Group of America’s decision to choose Port Freeport, which offers state-of-the-art infrastructure and is a rapidly growing port with water, highway and rail accessibility,” Port Freeport Executive Director and CEO Phyllis Saathoff said. “The port’s proximity to Houston and access to major manufacturing zones make it an ideal location as Volkswagen’s major Gulf Coast hub,”

Rumors regarding the company putting a new hub in Freeport were circling as early as this spring, with verification coming from the company in May by way of legal filings.

VW representation began securing tax abatements from both the City of Freeport and Brazoria County earlier this year.

Freeport put their requirements for the abatement out as of the end of May, including that the company install their own utilities and not challenge valuations at the end of the agreement. In exchange they OK’d a seven-year, 100 percent abatement. Commissioners approved the same length of abatement in July.

“I think the other entities did the same — the Brazosport College, the port, as well as the Velasco Drainage District,” Freeport City Manager Tim Kelty said.

The facility would not be manufacturing vehicles, but putting the finishing touches on imported vehicles before they are delivered to retailers across the United States, Volkswagen said.

Freeport city officials have used a $115 million figure, including $28.5 million in above-ground improvements, regarding VW’s potential investment in the project, on land owned by Port Freeport. The site is 147 acres. Last week, ads for contractor bids appeared in the Facts.

“The majority of what they’re investing is inside work in preparing the site,” Kelty said.

Volkswagen had ongoing legal conflict with Texas in recent years due to alleged misconduct with regards to emission standards, but was very positive regarding the Port Freeport deal.

“We’re continually working to optimize the business and environmental impact of our logistics operations,” VW Group After Sales and Service Executive Vice President Anu Goel said. “Our new hub at Port Freeport will allow us to serve nearly one-third of our U.S. dealer network more efficiently and more sustainably. We couldn’t be more excited to work with Port Freeport and developer KDC on this next chapter,”

The 20-year lease contains an option for an additional 10 years as he understands it, Kelty said.

“The anticipation is that they’re going to be there for the long-term,” he said.