Grimes County commissioners voted 4-1 to approve a 100% property tax abatement and reinvestment zone for SpaceX's proposed semiconductor facility
Ethan Swope / Bloomberg via Getty Images
SpaceX secured a property tax abatement from Grimes County, Texas, on Wednesday for its proposed Terafab chip manufacturing facility, despite strong opposition from residents who raised concerns about environmental damage, strained local resources, and a lack of transparency from the company.
Both a reinvestment zone designation and a 100% property tax abatement cleared the Grimes County Commissioners Court by a 4-1 margin, covering a project SpaceX has put a $55 billion price tag on. Rather than paying property taxes, SpaceX agreed to hand Grimes County a $10 million lump sum at the outset, followed by annual payments of $20 million stretched across a 35-year term. Grimes County Commissioner David Tullos cast the lone dissenting vote.
The public hearing drew a crowd that overwhelmed the Grimes County Justice & Business Center in Anderson, with well over 100 attendees filling every seat and overflowing into the corridors outside. Among those who addressed the court, opponents and critics of the process outnumbered supporters by a wide margin. "This agreement is a disappointment, we could have achieved so much more," Tullos said. "This hasn't felt like a negotiation, it's felt like a capitulation."
John Federspiel, senior director of Starlink Product Engineering at SpaceX, told the court the company was committed to addressing infrastructure and environmental concerns. Federspiel outlined several commitments: the facility would draw water from the Gibbons Creek Reservoir instead of tapping county groundwater, bring its own fire and emergency medical teams on-site, and generate roughly 1,800 jobs. Wednesday marked the first occasion since Terafab was unveiled that SpaceX dispatched someone to attend a county meeting face-to-face, according to KBTX.
Resident opposition centered on the project's potential to alter the rural character of the county. "On a community level, I'm against the tax abatement for the world's richest man," resident Sadie May said, according to Reuters. Marie Egyed, representing the resident advocacy group Grimes County Citizens for Responsible Development, told commissioners the way the project had been handled would invite "distrust, backlash and possible future litigation," as the Financial Times reported.
Late Wednesday, Musk took to X $TWTR to defend the arrangement, posting that the payments SpaceX committed to would lift Grimes County's overall tax revenue by around 25% and position the company as the county's single largest revenue source, according to Reuters. Musk also argued that levying standard property taxes on the expensive equipment inside a chip plant would leave Terafab at a structural cost disadvantage against rival semiconductor operations elsewhere in the world.
The planned facility sits near the former Gibbons Creek Steam Electric Station, a shuttered coal plant. As Quartz reported when the project was announced, total investment in Terafab — a joint venture between SpaceX and Tesla $TSLA, both run by Musk — could reach $119 billion across multiple phases. Chips produced there would supply Tesla's autonomous driving and robotics programs as well as SpaceX's Starlink satellites and planned orbital data centers. SpaceX's own S-1 filing acknowledged that Terafab's goals might not be achieved on schedule or at all.
For a county of about 34,000 residents, the arrival of a facility on this scale would amount to a "generational change," Judge Joe Fauth said, according to KBTX.
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