Serna: Projected revenue from Rio Grande LNG to Cameron County over 31 years is $262.6 million

Just to refresh everybody’s memory. Rio Grande LNG leased a 984-acre site from the Port of Brownsville. The project will consist of five LNG trains. The estimated investment on the project is $18 billion with $12 billion of that being for phase one alone, with trains one to three. 

At the peak there will be over 5,000 construction jobs or five to seven years. At full build out the project will have 437 permanent jobs with an average salary of $100,000 per year and the annual payroll will be $43.7 million.

Tax receipts are projected in Cameron County alone from expenditures in local businesses at $136.9 million. 

Cameron County granted NextDecade/Rio Grande LNG a tax abatement in 2017 for trains one and two, for trains three, four and five. Cameron County approached Rio Grande LNG about considering some amendments to the agreement to smooth out the revenue stream for the county which would benefit the county. 

So, during the discussions, we also asked for some adjustments and amendments. And restating some of the agreements, specifically agreements for trains four and five. They want to separate those into separate agreements. So, they want to change the definition of regional residents. They want to allow anyone living within 100 miles of our zip code to count towards the 35% resident requirement. 

They want to utilize man hours to calculate compliance of regional residents to 35%. Right now, they’re using number of employees. Basically, what they want to do is, if there’s 1,000-man hours be worked out there, 350 have to be considered regional resident requirements. 

We would increase the payment in lieu of taxes for trains one through five and I’ll go over that more in a minute. We would eliminate the community benefits agreement and roll the funds into the title payments and then also separate train four and five into separate agreements. 

So, on his very top there you see the terms of the existing agreements for trains one through five. The projected revenue to the county over 31 years… 31 years is what has been projected out on values. That’s why we’re using 31. But the projected revenue on the existing agreements is $261.6 million and that tax abatement, over the ten years incentive period is $195.5 (million). 

Under the proposed amendment, the projected revenue to the county over 31 years would $262.6 million and in that tax abatement over a ten-year incentive period would be $194.4 (million). So, the proposed amendments would result in a revenue increase to the county of just over a million dollars and a decrease in net tax abatement through trains one through five with an equal amount. 

So, this is a breakdown of the PILOT (payment in lieu of taxes) payments and CBA payments in the existing agreement, payment payments CBA payments for trains one and two total $18.4 million. Total PILOT payments for train three, $5.7 (million), and PILOT payments and CBA payments are trains four and five is $18.4 million for a total of $42.5 million.

Under the new structure, we were pushing more money forward to trains one, two and three. The total PILOT payments for trains one and two would be $2.3 million, an increase of $2.9 (million). Total payments for train three will go up for $5.7 million to $7.5 million and we will split up between four and five into separate agreements and the PILOT payments for train four would be $8 million and PILOT payments for train five would be $5.7 (million). 

Because the project itself has had job creation not only during construction but permanent jobs, there is a positive impact to the local economy, with sales coming to our local vendors, increased sales to local businesses, increased sales tax revenues for surrounding cities in Cameron County, workforce training and development – they are working with Workforce Development to increase the skill level of our local folks so that they can take on these great paying jobs.  Of course, you have increasing revenues to the county schools and surrounding communities that will have a positive budgetary impact for education going through quality-of-life projects, drainage improvements, etc. 

And I’ll pass this on to David King with NextDecade. But before I do, I’m going to show a slide. So, I wanted to show this, the list of taxpayers. That is the top taxpayers in Cameron County, and you can see there, the total assessed value on the top taxpayer, AEP Texas is $331 million. That’s the current tax rate. The tax calculated revenue to the county would be about $1.4 million. The blue number there for NextDecade/Rio Grande LNG, that is during the abatement period. That is not at 100% taxable values. During the abatement period, for the five trains, they will become the highest paying taxpayer in Cameron County. 

So, during the abatement period, I want to point that out again. So, you can see that the first year is $9.6 million, and it goes on to $4 million and it stays consistent. That’s how we smooth out the revenue and about $4.2 million in revenue. So, they become the highest paying taxpayer in Cameron County. This is with the abatements and only during the abatement period. This number jumps up substantially after the abatement period is over. 

Editor’s Note: The above commentary was provided by Cameron County Deputy County Administrator Dan Serna at a public hearing held by Cameron County Commissioners Court on June 4, 2024. The hearing was held to discuss a revision to the tax abatement agreement NextDecade/Rio Grande LNG has with the county.

Editor’s Note: Here is an audio recording of everything Ed Serna said about the Next Decade/Rio Grande LNG project at the Cameron County Commissioners Court public hearing on June 4, 2024:

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