After hours of mostly negative comments from residents Wednesday, the Grimes County Commissioners Court approved a 35-year tax abatement agreement with SpaceX, which plans to build a chip manufacturing plant in the county northwest of Houston.
The vote comes as SpaceX — the private spaceflight, artificial intelligence and telecommunications company owned by technology mogul Elon Musk — is planning what's anticipated to be thelargest initial public offering (IPO) in historybefore the end of the year.
The largely rural county, which has a population of just over 34,000, according to the U.S. Census Bureau, approved both the tax abatement and the creation of a reinvestment zone surrounding the planned site of the manufacturing facility in two separate 4-1 votes. Grimes County Precinct 2 Commissioner David Tullos was the only dissenting vote.
"This agreement is a disappointment," Tullos said ahead of the tax abatement vote. "The hurried, rushed process by which we've conducted this has limited the effectiveness of even entering into the agreement in the first place. For me, personally, it hasn't felt like a negotiation. It's felt more like a capitulation."
As part of the agreement, SpaceX will invest a minimum of $5 billion and create at least 1,800 jobs in the county. The company said it plans to invest between $55 billion and $118 billion in the region over the coming years.
In turn, the county will provide SpaceX with a significant tax break.
Mike Dixon, the outside attorney hired to represent Grimes County in the negotiations with SpaceX, said during the meeting the tax abatement would be what's referred to as a "PILOT agreement," which stands for "payment in lieu of taxes," meaning the company would pay a set annual amount to the county instead of paying property taxes.
This is different from a traditional tax abatement agreement in which a municipality charges a company a small percentage of the tax amount in exchange for the company's investment.
By the end of the 35-year agreement, SpaceX would have paid Grimes County approximately $700 million, assuming it meets the investment requirements.
"The first upfront payment that's due 60 days after signing is for $10 million," Dixon told the court. "That's for immediate needs we have, but there'll be [payment of] $20 million a year for a 35-year period."
Grimes County’sbudget for fiscal year 2026, which passed before negotiations with SpaceX, had a projected total revenue of just over $38 million.
SpaceX's pitch to Grimes County
John Federspiel, the leader of the project for SpaceX, spoke at length about how the company's facility would benefit the county and clarified that no rockets would be used or launched from the facility.
"Why Grimes County? This offers strategic advantages for long-term industrial investment, including infrastructure access, available land and proximity to major Texas markets," Federspiel said. "The proposed tax abatement here today is intended to help support the scale and long-term nature of this investment while creating economic activity for the region."
Federspiel said the facility would bring semiconductor manufacturing to the United States and help alleviate the country's reliance on international chip production.
"This project is intended to manufacture semiconductors which will support advanced AI computing, space-based computing systems and orbital data centers, satellite infrastructure and next-generation aerospace technologies," Federspiel said. "Initial phases are estimated at approximately $55 billion in capital investment, with the potential for future expansions bringing that total investment much higher."
SpaceX also has promised to follow all state and federal environmental requirements, Federspiel said.
"We recognize that large projects bring legitimate questions about infrastructure and environmental stewardship," he said. "Our company is committed to proactively addressing those concerns and taking care of them responsibly. ... We'll ensure we are compliant with all applicable environmental and pollution control laws, and any hazardous materials, chemicals and industrial byproducts will be managed in accordance with all those regulations."
Federspiel did not discuss any specific hazards or hazardous materials during the meeting that could be used by the facility.
Pushback from residents
The commissioners court spent approximately half of its nearly four-hour-long public meeting listening to the concerns and questions local residents had about the agreement.
Robert Irving, a local business owner, told the court he believed facilities like the one proposed by SpaceX were necessary for the future, but also said the commissioners’ decision could have repercussions for decades to come.
"This is an advanced manufacturing of the most sophisticated technology ever created. They turn literal sand into AI thought," Irving said. "We shouldn't be afraid of this opportunity. ... Support the project, work with their [SpaceX's] team, protect this county, put the commitment in writing, because these decisions won't last one election cycle."
Other residents, like Heather Buchanan, were against the proposal.
Buchanan said she owns land that directly borders the proposed reinvestment zone, which would cover a broader area than SpaceX’s planned facility. She said she’s worried about how the facility could affect her property.
"This is going to affect the value of our homes by either an increase or a decrease. Either will cause a financial burden on us and everyone else," Buchanan said. "If the value drops, then it affects the value of our assets, and we have just retired. If it increases, then we will be burdened with an increase in taxes that may force us to sell."
Environmental concerns were also top of mind for several of the speakers, such as Susan Scott Watts, who said an independent environmental review is necessary.
"We're a government that's supposed to be for the people and by the people, and I don't think we've had any of that process here," Scott Watts said. "Why should we, the people, the taxpayers of Grimes County, have this rezoned for a company that is flush with cash and will launch the most successful IPO in the history of the world? I recommend that we slow down and put this to a vote."
Ahead of the final SpaceX-related agenda item vote, the commissioner Tullos again stressed his worries about unanswered questions.
"If you take that $20 million a year and you depreciate it over the span of this agreement, which is 35 years, at the end of that 35 years, that $20 million is no longer worth $20 million," he said. "So, I'm going to ask the members of this court — even though, again, as I referred to earlier, I feel like it’s the freight train that's coming down the tracks that's going to run right over me — I would ask that you reconsider and that we try to engage again in negotiations to get a better deal."
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