City of Starbase plans to borrow about $1.5 million from SpaceX

STARBASE, Texas (ValleyCentral) — The city of Starbase plans to borrow about $1.5 million from SpaceX to cover operating costs for the next four months.

During a meeting on Friday morning, the Starbase City Commission approved a plan to borrow about $1.5 million from SpaceX.

“We need to do that because the city, as of right now, has no money,” said Andre Ayala, a managing director at Dallas-based Hilltop Securities, which is advising Starbase on the deal.

Starbase needs the cash to cover operating costs until Sept. 30.

“We anticipate that we will have a second set of financing to recommend to you later on, in either August or September, that will get us from Oct. 1 to the end of January,” said City Administrator Kent Myers.

Mayor Robert Peden and the City Commission voted 3-0 to approve the plan, which may be finalized next month.

Approached by reporters after the meeting, Peden and Myers politely declined to comment further.

Nearly everyone in Starbase, which is located about 20 miles east of Brownsville, works for SpaceX.

In May, they voted to make Starbase a city and elected a three-member City Commission to govern the community. All three members of the City Commission are current or former SpaceX employees.

SpaceX supported the push to make Starbase a city.

The company allowed Starbase to hold public meetings in a SpaceX building and struck a deal with the City Commission to repair local streets.

SpaceX may also provide the city with a short-term, zero-interest loan to cover operating costs.

Ayala, the managing director at Hilltop Securities, discussed the plan with the City Commission on Friday morning.

Starbase needs about $1.9 million to cover operating expenses until Sept. 30, when the city’s financial year ends.

The city expects to collect about $520,000 in revenue, according to information Ayala provided to the City Commission.

Starbase plans to borrow another $1,550,000 by issuing a tax revenue anticipation note.

Ayala said the note would be sold to a “qualified institutional investor” — SpaceX — in a deal called a “direct placement.”

Starbase would keep $1.5 million for operating expenses. The additional $50,000 would cover financing costs.

The city would pay SpaceX back in January, when the company and other local landowners pay their property taxes.

First, though, Starbase must set a property tax rate.

Ayala said that property in the city of Starbase had an estimated taxable assessed valuation of $855 million.

To pay SpaceX back, the city would need to adopt a property tax rate of 18.13 cents per $100 of taxable assessed valuation.

That would add $181.30 to the annual bill for a home valued at $100,000. Exemptions and other factors may affect the amount paid by individual property owners.