WHO'S THE SPACEX MOGUL IN YOUR NEIGHBORHOOD? MUSK.

By Nancy Keates and Mark Maremont

Wall Street Journal

BOCA CHICA VILLAGE, Texas—In autumn 2019, Celia Johnson began resisting efforts by billionaire Elon Musk's SpaceX to buy two modest houses she owns near the company’s rocket-launch facility.

Then she discovered that a 1,600-gallon water tank had gone missing at one of her houses, a rental property. Ms. Johnson said she and her neighbors quickly concluded SpaceX workers were the culprits. SpaceX denied responsibility but reimbursed her, she said, as it did when she accused its workers of later breaking into the vacant rental house and sleeping there.

“SpaceX bullied us from the beginning,” she said. “SpaceX employees did what they wanted.”

SpaceX, the maker of rockets and spacecraft controlled by Mr. Musk, among the world's richest people , is facing off against a handful of households that have refused to sell their properties in this remote unincorporated village. Some 30 small ranch houses sit on a sandy spit of land near the Mexican border and Gulf of Mexico beaches, where SpaceX rockets roar into the sky and then return for a landing. Some have come crashing back on land.

Villagers said Mr. Musk's company has tried multiple times to buy them out. Some took the money, and SpaceX used the homes for its workers. Holdouts, at least seven of them, said they want more from a billionaire who’s after their dream vacation homes.

Mr. Musk and SpaceX didn’t respond to requests for comment. “We’ve got a lot of land with nobody around, so if it blows up, it’s cool,” Mr. Musk said of the South Texas location at a 2018 press conference, according to media reports.

It’s hard to know exactly why SpaceX wants residents’ houses, but indications are that it would be less of a security and safety issue not to have to worry about people living so close to launches. SpaceX has also indicated, based on the company’s job postings, that it would like to develop the area into a resort.

The Texas property scuffle is beginning to echo Old West tales of outsiders who pressure residents to give up land for development—including the classic threat of eminent domain.

In March, Mr. Musk tweeted “Creating the city of Starbase, Texas,” adding that this would happen through incorporation of the town—a tactic mining companies commonly used to create company towns. If incorporation were successful, Starbase officials would have the power of eminent domain.

If incorporated, depending on what type of municipality it became, the village could have a city manager, city counselor or mayor. There are about 14 people not connected to SpaceX living in Boca Chica Village now and a few more in surrounding areas that might be included. To incorporate the village, SpaceX would need to show that more than 200 people lived in the area and to garner a majority of their votes.

They could use that power to eject holdouts, said lawyers and law professors. They would also control the police, could issue tax-free municipal bonds and might attain statutory authority over the one road in and out of the village, opening and closing it at will, these legal experts said.

Eddie Treviño, Cameron County Judge—a position akin to the top county commissioner in most states—said he discussed the possibility of incorporation with SpaceX before Mr. Musk’s tweet, but “I didn’t think much of it at the time.” Boca Chica is in the county.

Eminent domain is “an option we may need to consider,” he said. The remaining Boca Chica Village residents might need to leave for their own safety, he said: “You don’t want individuals near rocket ships being tested and landing. We don’t want anyone to get hurt.”

Beach regulations

Since Mr. Musk founded his space company in 2002 in a converted Southern California warehouse, SpaceX has expanded to roughly 8,000 employees and has facilities from Florida to Texas to Washington state. It has focused on launching satellites for commercial uses, national security and weather forecasting.

At Boca Chica, SpaceX is developing a large new rocket, the Super Heavy, which aims to take people to the moon and Mars—a goal fortified in April when the National Aeronautics and Space Administration awarded SpaceX a contract to build a capsule to land astronauts on the moon.

Mr. Musk has had an assist from Texas. The state has allocated around $30 million in incentives for SpaceX’s Boca Chica operations. In 2013, state lawmakers passed a bill allowing Cameron County to temporarily close beach and beach-access points for spaceflight activity, despite the Texas constitution’s protection of the public’s free and unrestricted access to beaches.

The lawmakers behind the legislation didn’t respond to requests for comment. Texas House Rep. Alex Dominguez said that he has filed a bill to limit beach and beach-access closures at Boca Chica in response to constituent complaints but that he is working with SpaceX officials to try to improve beach access without limiting the company’s allowed closure hours, with measures like reducing the radius of the launch area and creating a fishing park in a separate area close to Brownsville. Mr. Dominguez said he hadn’t heard of any legal challenges regarding the 2013 legislation and didn’t believe it was a violation of the Texas constitution.

Cameron County officials have largely supported SpaceX operations, and most holdout residents said they thought the county was working to get them to leave.

Mr. Treviño said the county was “not working and would never work with SpaceX to harass any of the residents to leave the Boca Chica area.” He said the county wasn’t rolling over for SpaceX and had spoken with a developer about creating its own tourism business around the SpaceX activities. “We want SpaceX to succeed, but not at the expense of the community,” he said. “If they think they’ll be able to take over the highway or the beach, they’re mistaken.”

While some residents report that the county has told them they couldn’t get building permits they or their contractors requested to renovate houses in the village, public records show that SpaceX has been granted numerous building permits to fix up houses it owns, which it uses for its workers.

Dylbia Jeffries Vega, a Cameron County attorney, said the county did issue permits for two non-SpaceX affiliated houses: one for electrical work in 2021 and one for a renovation in 2019. The county rejected a permit application for Ms. Johnson’s rental house because there was no water source. Ms. Jeffries Vega said other residents didn’t file permit requests or only spoke to people about getting permits.

The county has granted SpaceX’s requests for beach-access closures, which include Highway 4, the only road that leads to Boca Chica. The county enforced closures even when they exceeded a 180-hour-a-year limit under SpaceX’s first agreement with the Federal Aviation Administration by a long shot, said David Newstead, a biologist with the Coastal Bend Bays & Estuaries Program, an environmental group, who has been tracking the closures.

According to a document released to The Wall Street Journal in response to a public-records request, the county is “reasonably anticipating litigation” against SpaceX regarding what the document said is the company’s violation of portions of its agreement with the county and the state, including issues related to road closures, building permits and security.

The county has learned that “SpaceX was not compliant with portions of an agreement between the County and SpaceX,” the document says. If SpaceX doesn’t rectify the lack of compliance, the document says, the county “may commence to terminate the agreement through the filing of a civil action against SpaceX.”

Mr. Treviño said there were continuing discussions to resolve a number of compliance issues that could result in litigation, but: “Just because lawyers are involved doesn’t always mean that litigation is imminent.”

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