SpaceX Seeks Tax Break for $24 Billion South Texas Data Center

The project would cover more than 400 acres on land Brownsville agreed in August to remove from its jurisdiction at SpaceX’s request. Under that deal, the company is to contribute up to $220 million for regional water and wastewater infrastructure: $40 million initially, followed by six quarterly payments of $30 million each.

Brownsville commissioners last week unanimously approved a 90-day pause on permits for data center construction. SpaceX vice president Sheila McCorkle told the city’s six commissioners that removing the land from Brownsville would let the company build infrastructure “quicker and more economically,” KRGV reported. She also said the move could support growth and the Lower Rio Grande Valley’s water supply. SpaceX has projected its Starbase operations will eventually use about 2 million gallons of water a day, in a region facing a severe water crisis.

Residents have objected to both the project and the proposed tax break. At a November 4 Brownsville City Commission meeting, South Texas Environmental Justice Center co-founder Bekah Hinojosa urged commissioners to impose a full 180-day moratorium and ensure public input. “We don’t know what SpaceX is building on the 444 acres. It’s frankly terrifying,” she said. Attorney Jacqueline Morales told officials that residents had raised concerns for months and said the commission had ignored them.

The dispute comes amid wider resistance to data centers and public incentives for large projects. In Louisiana, Gov. Jeff Landry’s administration has offered SpaceX an estimated $27.5 billion incentive package for a launch facility on 125,000 acres in Vermilion Parish. Nearly $24 billion would come through a 25-year property tax exemption, according to the Louisiana Illuminator. More than 1,000 people sent the Federal Aviation Administration comments raising environmental concerns, including effects on wetlands, wildlife habitats and the eroding coastline.

Texas lawmakers are also considering changes to data-center tax incentives ahead of the legislative session beginning January 12. State Sen. Judith Zaffirini (D-21) has introduced a bill to bar local governments from granting property tax abatements to data-center operators. Two Texas House bills would end sales tax exemptions on electricity used by data centers and limit counties’ ability to sign nondisclosure agreements with the companies.