SpaceX receiving millions in taxpayer funds to build industrial complex

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(The Center Square) – SpaceX is constructing a multi-phase industrial complex near the Gibbons Creek Reservoir in Grimes County with the help of millions of dollars in tax incentives.

The complex will include semiconductor manufacturing, power generation, an AI advanced computing campus, supporting power generation, a space compute test facility, among other projects.

The office of Gov. Greg Abbott and SpaceX announced the first phase of the development: a vertically integrated semiconductor fabrication plant is being built.

SpaceX says it’s investing $16.8 billion to build the 100-million-square-foot facility to accelerate semiconductor manufacturing. It’s expected to create 3,000 new jobs, including engineers, technicians and plant operator personnel.

SpaceX, owned by multibillionaire Elon Musk and valued at $1.7 trillion, received a $30 million Texas Enterprise Fund grant (TEF). Two local school districts approved its application to not pay local school property taxes for 10 years through the Texas Jobs, Energy, Technology, and Innovation (JETI) program.

Gov. Greg Abbott, a strong advocate of using taxpayer funds as incentives for businesses to relocate or expand operations in Texas, supported SpaceX receiving both grants. 

“The first-of-its-kind Terafab facility will accelerate chip production in Texas at an unprecedented scale, create thousands of good-paying jobs in Grimes County, and expand economic opportunity for generations of Texans,” he said.

The TEF grant, awarded through the Texas Economic Development & Tourism office, “may be awarded to a business relocation or expansion project for which one Texas site is in competition with out-of-state locations to create new, good-paying jobs in the community and attract significant new capital investment to the state,” the office says.

Abbott signed House Bill 5 into law to create the JETI program “to attract large, capital-intensive economic development projects that bring new capital investment and create new, good-paying Texas jobs while ensuring robust reporting and transparency.”

The program gives tax breaks to corporations at the expense of school districts and local taxpayers, critics argue. It allows a company to enter into an agreement “for a 10-year school district maintenance and operations (M&O) tax appraised value limitation of 50%, based on qualifying job and capital investment minimums. Projects located in qualified Opportunity Zones are eligible for an additional 25% limitation on taxable value.”

Critics argue TEF is corporate welfare and companies would expand operations in Texas anyway because of Texas’ business friendly policies. The grants impose additional costs on cities “in the form of reduced revenues and increased liabilities,” and there’s no meaningful measurement to quantify incentives to economic well-being, the Better Cities Project has argued, The Center Square reported.

The Texas Public Policy Foundation argues TEF should be eliminated and has proposed an alternative solution, noting that “The interstate subsidy race represents an ever-spiraling stairway to more government intervention in the market.” 

Despite the tax revenue loss, Anderson-Shiro Consolidated Independent School District Superintendent Dr. Sarah Borowicz said the JETI agreement “will strengthen our district, expand opportunities, and better prepare our students for their future. There are defining moments in the life of a school district, and this is one of those moments. Our commitment now is to ensure that every opportunity created through this agreement is managed wisely, transparently, and always with students at the center of every decision.”

Iola ISD Superintendent Jeff Dyer also said the district’s Board of Trustees voted for the JETI agreement “after much thought and consideration. The Board’s stated priority has always been to do what’s best for Iola ISD. Throughout this process, the Board welcomed public input, regularly communicated with SpaceX’s representatives, and engaged a school finance consultant about the impact of this project. Ultimately, the Board determined that providing the requested tax incentives for this project was in Iola ISD’s best interest.” 

Grimes County Citizens for Responsible Development published extensive information about the project, including maps of where the industrial complex will be built. It’s encouraging residents to review “the public documents, understand what was approved, and follow the potential impacts to land, water, roads, emergency services, taxes, and rural quality of life.”

“A project of this size is not just a private business decision. It has the potential to affect schools, roads, water, emergency services, land use, utility demand, and the long-term character of Grimes County,” GCCRD says.  

When it comes to the impact on local taxpayers, it points to public records that “indicate that school finance consultants were preparing to discuss the potential impact of the JETI agreement on taxable value, M&O revenue, I&S revenue, tax rates, and existing taxpayers.” This reinforced GCCRD’s concern “that citizens are being forced to piece together a major public incentive package through Public Information Act requests rather than receiving one clear, complete explanation before public votes and long-term commitments are made.”

GCCRD said that what’s being built “is not simply one building or one factory.” Public documents describe a multi-phase industrial campus that includes multiple buildings, plants, transformers, water treatment and recycling facilities, industrial waste treatment facilities, gas turbines, utility scale battery storage, among others.  

Grimes County Judge Joe Fauth said SpaceX expansion was “a generational change” and developing an industrial site next to a major reservoir “makes all the sense in the world.”