Starbase borrows another $1 million from SpaceX

STARBASE, Texas (ValleyCentral) — The city of Starbase plans to borrow another $1 million from SpaceX.

During a meeting on Wednesday night, the City Commission agreed to borrow $1 million from SpaceX at 0% interest. The city plans to pay SpaceX back in 2026, when Starbase collects property taxes.

“If you approve the ordinance, then our bond counsel — working with the counsel at SpaceX — will finalize all the documents,” Andre Ayala, a managing director at Hilltop Securities, which advised Starbase on the deal, said during the City Commission meeting on Wednesday night. “And close the transaction, hopefully, on Monday, Sept. 29.”

Every member of the City Commission is a current or former SpaceX employee. They voted 3-0 to approve the deal.

Voters created Starbase in May.

The fledgling city had big plans — and a tight budget.

Starbase had no sales tax and SpaceX, the city’s largest landowner, wouldn’t pay any property taxes until January 2026.

That left Starbase strapped for cash.

The City Commission, though, didn’t want to wait more than six months to provide residents with basic services.

Many people in Starbase, which is located in a rural part of Cameron County near Boca Chica, had concerns about safety.

“Those of us that live in the city have experienced more than our fair share of events with folks who aren’t necessarily here for the right reasons,” City Commissioner Jordan Buss said during a meeting in June.

In one instance, Buss said people who lived on Memes Street were involved in a “potential altercation with somebody who was here for malicious reasons.”

Buss didn’t offer any details.

To address concerns about safety, Starbase inked a five-year, $3.5 million contract with the Cameron County Sheriff’s Office for extra law enforcement.

Starbase also contracted with Brownsville for mosquito control and decided to fund a volunteer fire department.

To pay the bills, Starbase borrowed $1.5 million from SpaceX in June.

The City Commission agreed to pay SpaceX back in 2026, when Starbase collects property taxes.

It’s a safe bet for SpaceX, which is expected to pay more than $4 million in property taxes to Starbase next year, according to information published by the Cameron County Appraisal District.

The City Commission decided to borrow another $1 million in September.

“The fiscal year starts Oct. 1,” City Administrator Kent Myers said during a meeting in July, when the City Commission discussed the second loan. “And we really don’t have major sources of revenue for the first four months of our fiscal year.”

Dallas-based Hilltop Securities advised Starbase on both transactions.

The loans, which are commonly called “tax notes” or “tax revenue anticipation notes,” allow local governments to borrow cash for operating expenses.

Long-term loans must be reviewed by the Texas Attorney General’s Office. Short-term loans, like the deals between Starbase and SpaceX, aren’t subject to state review, but the debt may only be sold to sophisticated buyers.

“And I have been given direction to negotiate the sale of this tax note with Space Exploration Technologies Corp.,” Ayala said during the meeting in July. “So they would be the sophisticated buyer — in this case, the ‘qualified buyer’ — for this tax note.”

The City Commission approved the second loan Wednesday night.

“And we may have to do some in the future too,” Myers said. “Because of the fact that we don’t get the majority of our revenue until four months after the fiscal year begins.”