SpaceX to fund up to $220M in Brownsville water projects in exchange for land

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McALLEN — Brownsville could receive up to $220 million from SpaceX for water and wastewater projects after the city agreed to remove roughly 445 acres of land from its city limits.

During a special meeting over the weekend that lasted six hours, Brownsville city commissioners unanimously voted to de-annex the land, which is located near the Port of Brownsville. In exchange, SpaceX agreed to give the city up to $220 million for water and wastewater projects.

Sheila McCorkle, SpaceX’s vice president for Starship legal and regulatory issues, told the commissioners during Saturday’s meeting that the company sought deannexation because the city was not providing any services to the area. Those services, she said, could be brought online through the city of Starbase faster and more economically.

As part of the agreement between the city and SpaceX, the company agreed to contribute $40 million initial escrow followed by six additional quarterly payments of $30 million for a max of $220 million.

The funding will be used for two projects, including a wastewater reclamation project that will provide an additional 8 million gallons per day; and an expansion of a water plant owned by the Southmost Regional Water Authority in Brownsville which is expected to increase water supply by approximately 10 million gallons per day.

The city currently uses about 21 million gallons per day — 70% of that comes from the Rio Grande while the rest is produced through their groundwater water desalination plant.

“This investment will allow us to reduce or completely eliminate our reliance on the Rio Grande River,” Brownsville Mayor John Cowen Jr. told the Tribune on Monday. “So if the Rio Grande River goes dry for any reason, we are assured water sustainability for generations to come.”

Obtaining the money from SpaceX also means the city won’t have to compete for grant funding for the water projects, and won’t have to borrow money, which could lead to higher costs for customers to offset the cost of the loan.

But the offer from SpaceX to contribute funding for those projects came with a deadline.

If commissioners didn’t approve the deal that very day, McCorkle said the deal would be off the table.

“If the council decides to not deannex, we will look at other opportunities at our other facilities,” McCorkle told the commissioners.

SpaceX did not respond to questions from the Tribune on Monday.

At the meeting, residents objected to how quickly the deal came together.

“Why are we rushing this? Why are we here on a Saturday?” said Uriel Gavito, a Brownsville resident. “Why can’t we know what they’re going to do with the land? Why can’t we know why they need it to be outside of the city’s jurisdiction? These are valid questions. These are questions that a regular city should ask and understand before voting on something.”

Cowen Jr. acknowledged the deal had been rushed, with SpaceX proposing the deal only about a week and a half prior to Saturday’s meeting.

“It is rushed. There’s no doubt,” Cowen said during the meeting. “I wish we had another month or two to really work this out, but this is a take it or leave it deal.”

The deannexed land, tucked between the city’s landfill and other industrial activity, is strategic for SpaceX, giving the company access to the Brownsville ship channel. The majority of the property is zoned for heavy industrial use while the rest is zoned for agriculture, Cowen said.

By deannexing the land, the city will no longer have the authority to zone the property for specific uses.

“I believe that they will be producing their Starship rockets at Starbase, and then transporting them through this property to be transported, via barge, to Louisiana,” Cowen said.

The space rocket company, owned by billionaire Elon Musk, has been rapidly expanding its footprint near Brownsville.

The company purchased 54 acres of land on South Padre Island and obtained approval for a nearly 40-acre heavy industrial development in the city of Starbase, according to local reporting by the Rio Grande Valley Business Journal.

Additionally, the one road leading to Starbase, the home of SpaceX’s South Texas headquarters, is set to receive an upgrade with a $192.4 million road widening project. The project, which will widen State Highway 4 between Brownsville and Starbase, was included in the the Texas Department of Transportation’s 2027 Unified Transportation Program. It is expected to begin construction in fiscal year 2027.

The city of Starbase, incorporated largely by SpaceX employees, is also seeking to annex approximately 7,133 acres of land in Cameron County. The city has scheduled public hearings on the matter in September.

For all of the company’s operations, McCorkle told the commissioners that SpaceX’s water usage accounted for two million gallons per day. She noted that the funds SpaceX was contributing for the projects did not buy the company water usage.

“We’re not guaranteed any water by [the Brownsville Public Utility Board] through this agreement,” she said. “We are in line like everyone else.”

Reporting in the Rio Grande Valley is supported in part by the Methodist Healthcare Ministries of South Texas, Inc.