Brownsville just gave up 444 acres of land near the city landfill so SpaceX could expand Starbase — and in exchange, the company is putting up $220 million toward the region’s water future.
The deal moved fast. Earlier this month, the Brownsville City Commission held an unusual 5 p.m. meeting that stretched past six hours, with dozens of residents weighing in before commissioners voted to de-annex the land, effectively handing zoning control of the property to the city of Starbase. The night before, the Brownsville Public Utilities Board and the Southmost Regional Water Authority signed off on their end of the arrangement: two water projects, funded in large part by SpaceX, that utility officials say will save the average ratepayer roughly $4,000 over the life of the investment.
In this episode, Rio Grande Valley Business Journal news reporter Kristen Mosbrucker-Garza walks through what the city gave up and what it got, then sits down with Southmost Regional Water Authority board member Joseph Hollmann to break down the two projects at the center of the deal — an indirect potable reuse system and an expanded brackish desalination plant — and why brackish desalination costs a fraction of what ocean desalination would.
Listeners also hear directly from SpaceX’s Sheila McCorkle, in her own words to the council, on why the company is calling its contribution “liquid gold” for the Rio Grande Valley.
Listen to the full conversation below.
The following is a rough, AI-generated transcript of Kristen Mosbrucker-Garza’s interview with Joseph Hollmann, public utility board member and the president of the Southmost Regional Water Authority, and also video of SpaceX’s Sheila McCorkle. Minor errors and misspellings may appear. For the full conversation, listen to the episode above or through your preferred podcast platform.
Kristen Mosbrucker-Garza: This is a pure-play donation of at least $220 million. Needless to say, that’s unprecedented for this community. Hey, y’all. This is Kristen Mosbrucker-Garza, a news reporter here at the Rio Grande Valley Business Journal. I’m outside Brownsville City Hall. I don’t typically work weekends — the Business Journal is Monday through Friday — but there was some important news I wanted to update folks on. Last week, the Brownsville Public Utilities Board met, and then the Brownsville City Commission met. The week before, the commission had preliminarily approved, or given a first reading to, a deal with SpaceX. For folks who may not be familiar, SpaceX is the rocket launch company that created the city of Starbase on the way to Boca Chica Beach. It’s widening the highway and launching rockets, and the influence shows even in downtown Brownsville, where some businesses have started playing off the SpaceX name — an Outer Space clothing store, a space-themed coffee shop, even a space-themed dog-grooming business. Every time SpaceX launches or prepares to launch a rocket, the area sees an estimated 10,000 or so credit cards from out-of-town visitors. SpaceX employs about 5,000 people locally, but economic development officials describe a broader trickle-down effect beyond employee spending. So when a company of SpaceX’s size comes to the city of Brownsville with a request — in this case, two requests — it matters. The commission met last Friday and was actually scheduled to begin at 5 p.m., which is unusual; governments typically schedule meetings for a Monday or Tuesday, often with a public hearing. In this case, SpaceX said it was under a tight deadline and wanted the city to make a decision quickly. That’s why the meeting ran six hours, with dozens of people speaking during public comment — some in support of SpaceX and Starbase, including Starbase Economic Development Corporation leaders and SpaceX officials who testified in favor of the request. So what did SpaceX want? Essentially, the company wanted the city of Brownsville to de-annex roughly 444 acres just east of the Brownsville landfill. Annexation is a zoning tool — when property is inside city limits, it can be annexed or de-annexed. As cities grow, they often use annexation to expand their tax base, since property inside city limits is subject to city taxation and zoning control. SpaceX is under contract to buy land in the area — about 1,300 acres total, currently owned by roughly 28 different landowners, some of them local families. The 444 acres SpaceX wants de-annexed sit north of Boca Chica Boulevard, also known as Texas Highway 4, which is being widened because of SpaceX operations. According to the company, the area south of that highway is expected to become industrial space for SpaceX’s vendors, subcontractors and contractors, while the north side is for SpaceX’s own use. The company has not fully disclosed its plans for the 444 acres. The property sits close to Port of Brownsville land, where SpaceX already holds two leases — one for an employee fishing camp, and another tied to the port’s core business of handling vessels. It’s unclear whether that second lease involves rocket parts, fully manufactured rockets shipped from SpaceX’s Florida facility, or something else. Because the area has no zoning of its own, and because the plan is for the city of Starbase — technically part of Brownsville right now — to annex the land into its own city limits, Brownsville is effectively giving up 444 acres of zoning control to Starbase. That doesn’t involve a land purchase by the city; it means the Starbase Economic Development Corporation and the city of Starbase will now set zoning for that property. Much of the SpaceX-controlled land in Starbase has ended up zoned heavy industrial, and increasingly so, which opens a wide range of possibilities for what SpaceX could eventually build there, next to the landfill. The land was already zoned industrial, and according to the city of Brownsville, if SpaceX had chosen to fight the city in court over the request, it likely could have won. That possibility fueled hours of public debate over whether the city should force SpaceX’s attorneys to spend time and money in court by voting the request down. Ultimately, Brownsville officials approved it. Starbase’s annexation plans would end up covering roughly 7,000 acres in total, and the city now has its own police department as well. Then there’s the water situation. This community is served by the Brownsville Public Utilities Board, known locally as BPUB, and the Southmost Regional Water Authority. BPUB board members, including the board chairman, were at last night’s meeting, and I interviewed several of them about their decision, because as Brownsville was considering the de-annexation request, SpaceX was separately offering to invest in regional water infrastructure without acquiring any stake in the utility.
Kristen Mosbrucker-Garza: So, you look good, and you sound good. If you could, please say your name and title.
Joseph Hollmann: Howdy. I’m Joseph Hollmann. I’m a public utility board member, and I’m also the president of the Southmost Regional Water Authority.
Kristen Mosbrucker-Garza: So my name is Kristen Mosbrucker-Garza, a news reporter here at the Rio Grande Valley Business Journal. What inspired you to come out today, and where are we?
Joseph Hollmann: There’s a very difficult decision in front of the city commission right now, and we wanted to come out and show our support. This is nearly a quarter-billion-dollar investment in our local water resources. It’s transformational. It will allow us to reduce our dependence on the river. I also came out because I know people are worried about water and electricity, and I have years of experience with this — I’ve been focused on water scarcity since I was a kid here in Brownsville.
Kristen Mosbrucker-Garza: SpaceX today announced publicly that it’s willing to invest $200 million toward regional water infrastructure. What are your needs, and what could that look like?
Joseph Hollmann: That’s a great question. We have two projects we’ve pitched. The first is indirect potable reuse — basically, we have water that goes out of our sewage plants, and the idea is to take that water, filter it and make it safe for consumption, which we know how to do. We’d gain the benefit of roughly another eight million gallons of water per day.
Kristen Mosbrucker-Garza: And I believe you’re already investing in a project like that, or a pipeline.
Joseph Hollmann: We’ve started that process — we’re doing the initial study. That’s one project. The other is expanding the Southmost Regional Water Authority’s desalination plant. Right now, that plant produces roughly seven and a half million gallons of water a day, and it’s shared within the region. We’re looking at doubling that and making some basic improvements to get to 20 million gallons of water per day. One interesting thing is that this is groundwater — it comes from the Rio Grande alluvium below. Right now, this water is brackish, but not super salty. Because of that, we’re able to take the leftover water and deliver it toward the bay, and it actually has a beneficial effect — it’s less salty than the ocean, and it helps improve the wetlands in that area.
Kristen Mosbrucker-Garza: That’s interesting. For folks who may not be familiar, effluent water refers to discharge — is that always from reclaimed or wastewater, or can effluent also come from water treatment at a desalination plant?
Joseph Hollmann: Yes, exactly. In this case, it’s the water that’s left over after we’ve removed the salt.
Kristen Mosbrucker-Garza: This comes at a time when there’s also a proposal for a $1 billion desalination plant from a totally private company that’s been building support from cities in the community, and the Laguna Madre Water District has been piloting a project of its own. I know Brownsville Public Utilities also did a pilot of pure desalination. Just to be clear for our audience, we’re not talking about ocean desalination here — BPUB doesn’t have ocean desalination right now. This is inland, brackish-water desalination, which can be a bit complicated, so I try to do a lot of explaining.
Joseph Hollmann: You’re doing a great job, actually. And you’re absolutely right. About 20 or 30 years ago, we tried a small experiment to see if ocean desalination made sense, and it was very expensive. A lot of factors make ocean desalination costly, but the electricity usage is much more significant, because you have to push the water much harder through the filters, and the leftover water ends up saltier than the ocean itself. That concentrated salt means you have to be very careful about how you discharge it. The advantage with brackish water is that it’s roughly 10 times less salty to begin with, so our leftover water is still much less salty than ocean water.
Kristen Mosbrucker-Garza: And to be clear, the city of Brownsville draws its water from a portfolio of sources — it’s not just the Rio Grande River, and it’s not just brackish desalination. You’re also the water supplier for the Port of Brownsville. So for folks who may not know, this isn’t just for residential and commercial customers — you already serve industrial-scale customers, too. SpaceX isn’t your only commercial customer, I guess is my point.
Joseph Hollmann: That’s a very important point. Yes.
Kristen Mosbrucker-Garza: Would it be fair to say you voted, or approved, as of Friday, to move forward with your pitch to the company you want to work with?
Joseph Hollmann: Yeah. That’s fair.
Sheila McCorkle: Under industrial activities, the reason we’re seeking to expand there is that we have key operations that would take advantage of the shipping channel and port operations. And the reason we’re asking is that right now, there are no services provided by the city in this area — no utilities or other critical services. In partnership with the city of Starbase, we can bring these services online quicker and more economically. But we realized that when we ask the community to support SpaceX’s growth, that growth should benefit the entire greater community, which is why we’d like to commit to spending up to $220 million to help expand water infrastructure for Brownsville and the greater area. This is the reason we thought deeply about what we could do to give back to the greater Brownsville community. We think of it as liquid gold — something that will support families, support residents, support investing businesses, and allow for more jobs and economic growth in the region, well beyond what Starbase itself is doing. In partnership with BPUB, they brought us some critical projects to greatly expand water resources in the community for decades to come, and we talked about how we could invest in that critical infrastructure. Why are we doing this? This is our home, too. We’re here. This is our headquarters. We’re raising our children here — yes, I’m raising my children here. We’re here to stay, and we want to invest in critical infrastructure that allows the greater community to grow alongside us. You can see this commitment in the thousands of jobs we’ve created — on any given day, there are over 5,000 people working at SpaceX and Starbase, and indirectly, tens of thousands more supported by our operation. Seventy percent of the people who work at SpaceX and Starbase were born and raised in this environment and the surrounding area. We want to expand that. We want to grow near the port, and we have room to do more here.
Kristen Mosbrucker-Garza: We believe we’re saving the average ratepayer about $4,000 over the term of these two projects. SpaceX will be using some of this water — about 28 million gallons per day that isn’t currently being produced. That water is slated to come from two projects. One is a potable reuse project, which the utility was already planning but didn’t have full financing for; it had received a $17 million grant toward it. The other is expanding the existing brackish desalination plant, which is co-owned by Brownsville along with Los Fresnos and some other communities in the area. Combined, the value of these two projects is more than $200 million. SpaceX officials told the commission they were on a tight budget and a tight timeline, that they believed it was a good deal, and that they’d been a good neighbor — and that a decision needed to be made that evening. Around 10 p.m., the commission decided to move forward with what the company wanted, and the deal was signed. This was a very different process than you’d typically see for a piece of land or a company of this kind, and one of the economic development directors described it as essentially a hundred-year project, largely because of how water projects are funded in Texas. Voters approved $1 billion from the state’s water fund through Proposition 4, but a lot of that funding comes in the form of low-interest loans, not grants outright. Brownsville Public Utilities did receive some grants, but officials said they felt uncomfortable placing the burden of a large capital investment, repaid through borrowing, entirely on ratepayers, since that’s ultimately how utilities recover costs — they’re a nonprofit organization, and those investments get passed on to the people who pay their water bills. Because this deal with SpaceX went through, the utility believes it’s saving the average ratepayer roughly $4,000 over the life of these two projects. The capacity of the existing brackish desalination plant is about 7.5 million gallons per day, which covers roughly a third to two-thirds of the community’s actual needs. The original plan was to expand that, since it’s modular, to 10 million gallons per day. With this investment, the plan now calls for 20 million gallons per day. Combined with the potable reuse project, the Brownsville Public Utilities Board and the Southmost Regional Water Authority would be able to produce about 28 million gallons of potable drinking water per day — not just for SpaceX, but for other companies, other businesses and residents across the area. That’s what officials mean when they talk about a regional water investment. So, that’s what they mean by regional water investment. I know this was a lot of detail, but there was a lot to cover. I’ll likely have a follow-up story on this water portfolio, and on what SpaceX could ultimately build on that 444-acre site. Stay tuned. Take care.
