STARBASE — Since establishing a South Texas headquarters more than a decade ago, SpaceX has quickly grown its operations here, expanding its staff from 300 in 2020 to more than 3,400 in 2024. The company is growing once again, taking on two new projects that will enable SpaceX to launch rockets more frequently.
Construction crews are already at work to expand SpaceX’s presence in this once little-known South Texas community. And the company has hired hundreds of workers for the next phase of fulfilling CEO Elon Musk’s goal of landing on Mars.
As SpaceX moves forward, the company is seeking to benefit from doing business in one of the poorest regions in the state, the Rio Grande Valley. The new city of Starbase— created and run by employees of SpaceX — is helping the company apply for a multimillion-dollar state tax refund.
SpaceX wants the refund from the state for hiring staff and spending on its operations along the U.S.-Mexico border. But the significance of the projects in advancing the company’s goals raises questions on whether SpaceX is seeking to benefit from investments it already planned and whether communities are truly benefiting from economic incentive programs.
Late last year, the Starbase City Commission, the three-member governing body that consists of two SpaceX employees, nominated two SpaceX projects for the Texas Enterprise Zone Program, which provides tax relief for companies that create jobs in economically distressed areas.
SpaceX has already received preliminary approval for one tax break. The governor’s office, in September, accepted SpaceX’s GigBay program application. The company began work in April 2025 on the 700,000-square-foot facility meant to produce 1,000 rockets per year. The work began within a 90-day window before the application deadline.
In November, Starbase commissioners nominated a second project: the Starship Infrastructure Expansion Project, which will invest in two launchpads, allowing for an increase in launches per year.
If the expansion project is also approved for the enterprise program, SpaceX would be eligible for up to $7.5 million in sales tax refunds.
Though, advocates say state tax dollars could be better spent elsewhere than on SpaceX, a company valued at hundreds of billions of dollars.
“Elon Musk is like the wealthiest person alive,” said Kristan Wong Karinen, a researcher with Good Jobs First, a D.C.-based nonprofit that promotes government accountability in economic development. “He’s supposedly set to be the first trillionaire, so there’s an ethical question here about — I pay my taxes … so why does Elon Musk get a pass?”
Starbase and SpaceX officials declined multiple interview requests for this article.
Rio Grande Valley counties are considered economically distressed
The Enterprise Zone Program is meant to encourage job creation and investment from private companies in low-income zones. For companies like SpaceX that are located in a zone, at least 25% of newly created jobs must be filled by people who are economically disadvantaged or are zone residents. If a business is outside a zone, at least 35% of jobs must meet that criterion.
An enterprise zone can be a low-income community or neighborhood with a 20% poverty rate. It can also be a county that is deemed economically distressed. In 2024, there were eight economically distressed counties in Texas. Four of those counties make up the Rio Grande Valley, including Cameron County, where Starbase is located.
“This program is kind of targeted to areas that are kind of [high] poverty areas, trying to help out and bring jobs and opportunities to the area,” said Will Ramirez, vice president of Site Selection Group and former auditor with the Texas comptroller’s office.
The two projects are each expected to create 500 new jobs. GigaBay is a $506 million investment for the company. And the expansion project represents a $480 million investment. That puts both projects in the Triple Jumbo Project designation of the Enterprise Zone Program. That designation, the highest level, requires a capital investment of at least $250 million.
The application process is competitive, Ramirez said. The state program issues 105 designations every two years, and each community is limited to receiving up to six or nine enterprise project designations, depending on population.
“We’re seeing the companies competing in McAllen or Brownsville … they’re going against companies in Dallas, in Houston, all around,” Ramirez said.
During the application process, companies are scored on three things: the distress of the area, which makes up 40% of the final score; local effort, which is the community’s willingness to offer local incentives and which accounts for 25%; and private effort, accounting for the remaining 35%, can be based on jobs, average weekly employee wages, and projected capital investment.
If approved by the state, the two projects could each result in a refund of up to $3.75 million in state sales taxes, according to the Texas Economic Development and Tourism Office. A company representative told the commission that SpaceX plans to reinvest those funds into Starbase operations and infrastructure.
“The project drives ongoing work for local and regional contractors, suppliers and service providers tied to the Starship operations,” Damian Barrera, a tax manager at SpaceX, told the commission in November.
But receiving those refunds is far from a guarantee, Ramirez said.
“Trust me, there’s no rubber stamping on these audits,” he said. “Everything gets reviewed thoroughly. I mean, this is the state’s money so they’re very stickler about the process.”
SpaceX infused $13 billion in region’s economy
SpaceX has called South Texas home for more than 10 years, settling on Boca Chica Beach for its remote location and proximity to the equator. It made the area the site of 11 test flights of its rockets since 2023. Last year, SpaceX received approval from the Federal Aviation Commission to increase the number of launches from five to 25 times per year.
For its continued growth, including the production of the new generation of Starship vehicles, SpaceX already hired 500 new, full-time employees for the GigaBay project from April through mid-September 2025. Nearly 100% of those employees are Cameron County residents, Barrera told the commission.
Because SpaceX has been present in South Texas for several years and could reasonably have been expected to undertake the projects regardless of the tax incentives, Kasia Tarczynska, a senior research analyst with Good Jobs First, found SpaceX’s eligibility for the tax refund to be dubious.
“By already having this company within that town, and then retroactively giving it subsidies, it doesn’t meet the definition of an incentive,” she said.
Tarczynska said enterprise zones are generally not found to be effective economic development tools because many businesses in that zone are existing businesses that just moved from another part of that county.
“This project is already happening, and subsidies did not change anybody’s opinion about locating that project in that particular place,” she added. “So in a way, it’s just a simple giveaway to the company.”
The governor’s office, which oversees the program, clarified in an email to The Texas Tribune that the sales tax refunds are also intended to support companies already located in Texas. They said the program is designed to encourage continued capital investment and the creation or retention of jobs by both new and existing Texas businesses. Many other large companies have received the tax credit, including Chevron Corp. and the Boeing Company, according to state documents.
Ramirez, the former state official, said the program undoubtedly helps create jobs that would not have existed without it.
“It makes it a lot easier to make a decision [on] if they want to invest in the area,” Ramirez said.
SpaceX infused more than $13 billion into the county’s economy between 2024 and 2026, supported more than 24,000 jobs, and contributed more than $305 million in indirect taxes, according to county officials.
The company also benefited from its presence in Cameron County by not having to pay taxes on the increased value of its property for 10 years. The Cameron County commissioners court approved the final year of this tax abatement last year.
In support of the two projects, and part of the local effort portion of their applications, the city of Starbase may approve a similar deal on real property improvements and eligible personal property located in the designated enterprise zone. The city may also provide business relief to businesses through local sales tax refunds, tax abatement, and exemptions from unnecessary building code requirements among other methods.
The city may also provide improvements to community resources such as water and sewer lines, roads and parks. Additionally, they proposed improvements to housing through low-interest loans for rehabilitation or new construction and the transfer of abandoned housing to individuals or community groups.
Conflicts of interest questioned
As SpaceX’s operations grow, the town that sprang up around it is expected to grow as well. But people who lived or frequented the area long before SpaceX arrived have resisted the changes prompted by the company.
Environmental and indigenous groups have protested, petitioned and filed lawsuits to prevent the further encroachment of SpaceX on the land, which they’ve argued is sacred or essential for the preservation of local species.
To them, SpaceX’s presence in the Valley is a detriment, and they argue that the city of Starbase is just an extension of the company.
SpaceX and Starbase have a close relationship, with two of three members of the commission working for the company. And it was SpaceX employees who largely voted to create the city last year.
Mayor Bobby Peden works at SpaceX as vice president of Texas Test and Launch. Commissioner Jordan Buss is the senior director of environmental, health and safety at SpaceX. Former Commissioner Jenna Petrzelka, who voted to nominate the projects for state tax breaks, worked at SpaceX until July 2024. She was an inaugural member of the commission but resigned in December to focus on her family, according to her resignation letter.
Their positions within the company and on a governing body that deals with matters concerning the company raised questions of potential conflicts of interest for Tarczynska.
“What’s the relationship between applying for the zone, getting the tax breaks, but being designated by people who work at this facility?” she said.
State law requires elected officials with a substantial interest in a company — meaning that at least 10% of their gross income came from the company the previous year — must file an affidavit disclosing that interest. However, when a majority of the members have a conflict of interest, they do not have to abstain from voting.
Ross Fischer, an ethics attorney based in Austin, said state law anticipates scenarios like these.
“The law intends to strike a balancing act,” Fischer said. “The idea behind the law is, the public gets to know if there’s a conflict of interest, but a conflict of interest should not disable the city from conducting its business.”
It is unclear in this case whether the mayor or any of the commissioners filed affidavits disclosing business interests. The city has not yet responded to an open records request for the affidavits. And neither Peden nor Buss responded to requests for comment.
Reporting in the Rio Grande Valley is supported in part by the Methodist Healthcare Ministries of South Texas, Inc.
Disclosure: Chevron and the Boeing Company have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.
This article first appeared on The Texas Tribune.
Subscribe to SA Current newsletters.
Follow us: Apple News | Google News | NewsBreak | Reddit | Instagram | Facebook | Twitter | Or sign up for our RSS Feed
