Point Isabel ISD shuts down $160M tax break for proposed LNG project

Point Isabel Independent School District board members voted unanimously against $160 million in property tax incentives for a liquefied natural gas export company proposing to invest $4 billion in Brownsville on Monday night. 

Monday’s vote marked the second time the school board rejects a corporate tax incentives for Texas LNG, which is still considering its investment, and the third time it has voted against LNG tax abatements in general. 

In 2022, Texas LNG proposed a different economic incentive program under the Chapter 313 program, which has since been eliminated, but the school board voted against it.

A decade ago, the board also voted against a proposal for Rio Grande LNG, which is currently under construction and owned by NextDecade Corp. 

“It did not benefit the district in the way that we felt would outweigh some of the concerns brought by the community members that we would not otherwise receive even if they did come to our community,” Point Isabel ISD Board President Heather Scott said about Texas LNG. 

Scott also voted against the same project in 2022. 

“Based on the number presented to us, we didn’t feel like the district would be receiving any economic benefit that it would not otherwise,” she said. “Whether somebody wants to frame it as going against the project or going against the tax abatement — what was before the board tonight was the JETI agreement. So that was the board’s action. There’s no comment from the board or on behalf of the district as far as the project itself.” 

The company said a yes vote would have delivered an additional $15 million per year to the Point Isabel ISD. 

“We are at a loss at how school board leadership could have made such a decision,” the company said in a statement to the Rio Grande Valley Business Journal. “There is no economically rational benefit for this vote, which should be about how to benefit students”

Texas LNG Brownsville LLC promised the school district $15 million under the Texas Jobs, Energy, Technology, and Innovation, or JETI program, in addition to 110 high-paying permanent jobs. During the school board meeting, the company offered that the district could use that windfall to pay down debt or lower property taxes for local residents. 

Texas LNG, owned by Houston-based Glenfarne Group, expects to make a final investment decision this year. If approved, the company expects to begin construction by the end of the year and begin operations in 2030. 

The company initially projected it would support 975 jobs and produce $823 million in gross domestic product during the construction phase — which includes $40 million in sales taxes, $1.5 million in franchise tax fees, $12.3 million in other revenues to the state, and $3.1 million in sales taxes to nearby cities. 

“This project is going to contribute to the local economic fabric through creating jobs, the economic tax base, and through garnering another partner that will work collaboratively,” Holly Reed, a partner at Ryan, a tax consultancy hired by Texas LNG, said. “Every element that we are designing is to ensure that the project has the smallest environmental impact. The permitting plan has passed every federal and state agency that it has been reviewed by.” 

In 2016, Texas LNG — which has dual headquarters in New York City and Houston — began the federal permitting process for an LNG export terminal in Brownsville to export 4 million tonnes of LNG each year. 

In 2020, it signed a 50-year lease with the Port of Brownsville for a 625-acre site along the Ship Channel. 

Texas LNG pitches itself as a greener export terminal because it plans to plug into the electric grid to power the facility instead of burning natural gas brought in by pipeline. 

The company said its facility will produce significantly lower carbon emissions than most LNG plants, which typically burn natural gas or steam to power refrigeration compressors — sometimes using up to 10% of incoming gas as fuel.

 Because the South Texas grid includes wind and solar power, Texas LNG said it will not need carbon capture or offsets to meet its emissions goals.

The company said its carbon dioxide and other emissions would be significantly lower than those of the majority of global LNG-producing plants, which typically rely on gas or steam turbines to power refrigeration compressors. 

It noted that many large-scale LNG export facilities in the U.S. and abroad burn natural gas or steam to run those systems — in some cases using as much as 10% of the plant’s feed gas as fuel — contributing to greenhouse gas emissions. 

The company added that the South Texas power grid includes a mix of renewable energy sources, including wind and solar.

“Texas LNG will not need to resort to expensive carbon storage or indirect carbon offsets to achieve its green credentials,” company officials said. 

By contrast, NextDecade’s Rio Grande LNG has proposed a carbon capture facility on the site, which is still in the planning phase. 

After Monday’s vote, if Texas LNG Brownsville moves forward with the project, it’s on the hook for 100% of the property taxes the school district would levy.

The appraised value of the project is estimated at $31.8 million in 2027 during construction, and is expected to grow to $3.4 billion in 2031, when the export terminal begins operations, according to its application for incentives. 

By 2065, at the end of the proposed deal, the property’s value would be $1 billion, taking depreciation into account. 

In 2024, Cameron County leaders approved a 95% tax abatement for the company. . 

But on Monday, more than two dozen community members gathered to oppose the LNG project at the school board meeting. 

Safety, pollution, environmental destruction, and corporations not paying their fair share of taxes were key issues, advocates said. 

“Those things are inherently safe, but what happens when things do go wrong, especially with infrastructure, the pipe system, pumping stations, all the other components?” said former South Padre Island Council Member Kerry Schwartz, a local business owner who runs a retail surfboard shop. “We’ve seen the graphics where it shows the danger zone. Those who are familiar with the island, if anything happens, Louie’s [Backyard] is gone.” 

Schwartz added that it bothers him that the tax abatements are being used after the company decided on its location. 

“Tax abatements are used to attract industry,” he said. “We’re getting screwed. These industries come here anyway, regardless of the tax abatements.” 

For Juan Mancias, tribal chair and member of the Carrizo/Comecrudo Tribe of Texas, his goal is to stop the project from being built. 

Mancias says he’s concerned about the destruction of tribal artifacts on the land where Texas LNG would be constructed, but calls to halt the process have not moved regulators. He’s also trying to block the Rio Bravo pipeline, which would carry natural gas to the export terminals. The tribe owns land where the proposed pipeline would be built and refuses to sell. 

“We bought some land out there near Loma Alta on both sides and now they’re threatening to bring that Rio Bravo pipeline through there that’s going to be bringing LNG to these places,” he said about a 23-acre plot. “They call it progress, I call it destruction of the land. They’re asking for tax abatements on leased land. That’s crazy.” 

Mancias is also a co-founder of the South Texas Environmental Justice Network, which has been opposing the LNG projects in Cameron County for years and lauded the school board’s decision. 

Rebekah Hinojosa, co-founder of the South Texas Environmental Justice Network, also celebrated Monday’s vote. 

“Their constituents have made it clear that they don’t want tax abatements on LNG facilities because of the environmental destruction, pollution, and threatening the local economy, which depends on fishing, shipping, and beach tourism,” Hinojosa said.