THE FINE PRINT: SPACEX'S $220 MILLION "DEAL" FOR DEANNEXING 444.5 ACRES COMES WITH CONDITIONS. CAN THE CITY MEET THEM?

Special to El Rrun-Rrun

By Nadia Tamez-Robledo

MyRGV

Various Sources

Brownsville woke up the morning after losing its virginity to an empty bed. The City Commission had already approved the disannexation of 444.45 acres that SpaceX wanted removed from Brownsville’s jurisdiction.

Then came the morning after.

City Attorney Will Treviño disclosed an important detail about the agreement: It has a two-year term, and money could have to be reimbursed if Brownsville fails to meet required milestones.

The controversial deal between the city and SpaceX to secure funding for major water infrastructure upgrades includes terms that will refund unused portions of the $220 million if the city fails to meet milestones, along with provisions to restart the flow of money.

SpaceX got the land. Brownsville got a clock.

And suddenly the question isn’t how much SpaceX promised. It’s how much of that up to $220 million Brownsville can actually receive and keep. Brownsville doesn’t have to guess how long major infrastructure takes. It already has a project to compare.

Take, for example, the Greater Brownsville Tech District that covers roughly 730 acres. Work began in 2025, yet roughly a year and a half later Brownsville has still been working through the first approximately 85 to 100 acres.

And this isn’t a complicated water-treatment facility. It is primarily the infrastructure necessary to develop industrial property — roads, electricity and utilities.

As late as January 2026, GBIC (now Greater Brownsville Economic Development Corporation, GBEDC) was considering a $1.17 million payment to BPUB for electrical infrastructure and equipment in Phase 1 West.

Now compare that with what Brownsville must accomplish under the SpaceX agreement.

The potable-reuse project involves treatment systems, engineering, specialized equipment, pumps, electrical systems, major pipelines, excavation, testing and connections into Brownsville’s existing water infrastructure.

Then add the Southmost Regional Water Authority expansion — another major water project that the City says could cost approximately $202 million for the potential full expansion.

Upgrades to the SRWA and BPUB facilities would increase water capacity by a combined 12.5 million gallons per day and later add another 10 million gallons per day.

Joesph Hollmann, board president of the SRWA, was asked by the commission during the meeting to give an overview of the challenges Brownsville’s water supply is facing. He said 30 percent of the roughly 22 million gallons Brownsville uses each day comes from the SRWA’s brackish water desalination plant, which filters aquifer water.

“The rest comes from the Rio Grande, which has long been a problematic source,” Hollmann said, because the water is shared with Mexico and its dams sit in high, dry desert areas.

The Falcon and Amistad reservoirs are at about 23 percent and 38 percent capacity, respectively, as of Friday. And BPUB’s own published schedule puts completion of its Water Renewal Project in 2030.

Brownsville has taken roughly a year and a half working through the first 85 to 100 acres of comparatively basic industrial infrastructure. Now it faces a two-year agreement tied to milestones for two much more complicated water projects. That comparison should concern every taxpayer.

The deal between the city and SpaceX to secure funding for major water infrastructure upgrades includes terms that will refund unused portions of the $220 million if the city fails to meet milestones, along with provisions to restart the flow of money..

“(These projects) gives us a way to reduce our dependency on the Rio Grande River so that if things go wrong, which they do, we are still independent of that water source,” Hollmann said. “The idea that we could step back from worrying about what’s happening in the Rio Grande, what’s happening way out west in Falcon Dam, is extremely important.”.

Hollmann said that aside from choosing to do nothing, the other option is taking out a loan to pay for the facility expansion, the cost of which would be passed on to customers.

“Other communities have kicked the can down the road, and they’re paying for it now,” Hollmann said. “Our other option is to pray for rain in West Texas.”

Projects that will be funded under the agreement include Quantum Leap, referred to as Project Quantum on meeting agendas, and it will double Brownsville’s capacity for water production, City Attorney Will Treviño said.

The water reuse project, estimated at $40 million, is underway and will allow the BPUB wastewater treatment plant to produce an additional 8 million gallons per day of potable water. It has $12.7 million in funding from the Texas Water Development Board. But it has taken a year since the state granted it in February 2025 for the cash to arrive in Brownsville. 

The optimization and expansion of the SRWA facilities is estimated at about $202 million. The project would increase its water production capacity from 7.5 million gallons per day to 10 million gallons per day through desalination plant upgrades and the reclamation and construction of water wells. It would eventually raise capacity to 20 million gallons per day.

The agreement between the city and SpaceX, which the public saw for the first time on Saturday, funds “qualifying projects” up to $220 million. The city did not respond to a request for a copy of that agreement.

Under the terms, SpaceX will deposit $40 million into an escrow account for the BPUB project within 30 days after the agreement is signed. The remaining funds are to be deposited in six quarterly installments of $30 million and dispersed based on project milestones, Treviño said.

“I will say that SpaceX has additionally offered the use of their engineers, as well,” Treviño told commissioners. “BPUB has engineers in house but with any project, they have other work that they are working on right now.”

The SRWA project is pending design and was not in the works previously because of lack of funding, Treviño said.

“BPUB is stepping up the gas to get the design and engineering done for that project,” he added.

SpaceX would have the right to a refund if no qualifying project was identified within a year of the initial escrow deposit, a process that includes a “written resolution naming the project, describing scope, and committing funding subject to milestones,” according to the presentation.

If all of the $220 million is not committed to the project within two years, SpaceX would be entitled to a refund of uncommitted funds and suspend pending payments.

Even after a refund, SpaceX would fund “identified projects” up to $220 million within seven years of the initial escrow deposit. Suspended payments will also resume if contract conditions are met.

District 4 resident Rosemary Martinez told commissioners that Starbase has its own governing body, and it’s not them.

“They want (the property) to be deannexed because they don’t want the city ordinances to apply,” Martinez told The Herald while commissioners were in executive session. “That begs the bigger question: Why? There’s a cost to us that hasn’t been quantified because we don’t know. If they build a data center, then you’re paying to build the infrastructure for the water that you’re gonna use..."

(And to add gasoline to the fire, a local social media facilitator posted a job listing at SpaceX's Starbase site for a Data Center engineer.)

SpaceX Vice President of Starship Legal and Regulatory Sheila McCorkle confirmed that SpaceX was under contract to purchase the disannexed land from a private owner. She did not provide specifics on how it would be used but said projected water usage for the project, plus all other commercial and residential operations in Starbase, is under 2 million gallons per day.

The vote for disannexation came days before the commission’s Tuesday hearing on a proposed moratorium on data centers within city limits. But by deannexing the 445 acres, Starbase would have the final say on whether to approve a data center or not.

“Why are you blindly doing what that company asks you to? Why are you not being transparent?” Rosas, holding her baby on her hip, told commissioners during public comment. “Disannexing land for it to become a data center is a loophole that does not absolve you of responsibility. Yes, I’m assuming, but that’s all we have because no one is demanding answers.”