14 - Spaced Out Sellout-2

The Fine Print: Exploring Musk’s Impact, Local Leaders’ Complacency, & the Community’s Struggle

Words by Erin Sheridan

Edited by Freddy Jimenez, Josue Ramirez

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One day, it was just there: Elon Musk’s face set against the planet Mars, looking out over downtown Brownsville like a cowboy ready to lift the Rio Grande Valley up by its bootstraps. The original commission had only asked for the red planet emblazoned with the name of the SpaceX photography show, “Boca Chica to Mars,” at the Livery Gallery next door, but adding Musk was all Pop Culture.

The RGV-based muralist didn’t get paid for Musk’s portrait, but the choice directed national attention to his mural and Brownsville’s embrace of private space industry capital pouring into the Rio Grande Valley, reassured by Musk’s white wealth.

For months now, public servants have been using official platforms to market the world’s richest man, enticing investors to plant a flag in one of the poorest communities in Texas and, in doing so, sidelining concerns raised by residents. To those unbothered by the billionaire’s neocolonial tendencies, his wealth and reputation as an innovator mean hope, dreams, and a chance to erase the Valley’s poverty from sight. But idolizing a mission to colonize Mars on a corridor of occupied land – one where poor Black, Brown, and Indigenous people fleeing the fallout of imperialism across the world are brutalized for trying to migrate safely – didn’t sit well with all of us. 

And three weeks before the mural went up, in March 2021, Musk told the world to move to Brownsville, touting jobs at Starbase to all of Twitter. Musk sent the tweet not an hour after SpaceX’s SN11 rocket exploded in mid-air, throwing debris all the way to South Padre Island.

The SpaceX CEO offered up $20 million to Cameron County’s public schools and $10 million to the city of Brownsville’s Downtown Beautification Project (an initiative Mayor Trey Mendez campaigned on) before the explosion even broke into the news. Explosions on public beaches and white-collar jobs going to outsiders didn’t seem like a great trade-off for locals struggling to get by, so I requested records.

But large cost estimates, weeks-long delays, and repeated objections from local governments and SpaceX’s attorneys meant that most conversations couldn’t be accessed in a timely manner, if at all. The records I eventually obtained made two things clear: that Musk’s wealth has blurred lines between corporate interests and the role of government and that officials haven’t been transparent about the fine print. 

Here’s what I learned.

CORPORATE WELFARE

Cameron County residents certainly don’t benefit from the money SpaceX pays in taxes. 

The company raised nearly $1.5 billion last year but won’t owe any taxes to the county until 2024. By the time Musk signed a decade-long, $30 million tax incentive agreement with state and local officials in 2014, Texas had already been courting him for three years. Politicians, looking to compete against other states, offered up the welfare the billionaire required.

SpaceX’s interest in Boca Chica began when the Brownsville Economic Development Council held a meeting with Elon Musk in 2011. The SpaceX CEO bought land near Boca Chica Village in 2012, the same year he made his first ever contributions to Cameron County politicians – $1,000 to state Rep. Rene Oliveira and $2,000 to state Sen. Eddie Lucio, Jr.

Beaches on the Gulf of Mexico near SpaceX’s launch site.
Photo Courtesy of Erin Sheridan

Some of Musk’s incentive demands included public funds to run electric and water lines to Boca Chica Beach, a site surrounded by state- and federally-protected lands on all sides, as well as changes to state law. The legislature did just that in 2013, approving $15.3 million for construction, altering the Texas Open Beaches Act to make it legal to close beaches for “space flight activities,” and granting space companies legal immunity for damages resulting from launches.

Local entities approved the other half of Musk’s $30 million deal, including $1.4 million in tax abatements from Cameron County, according to the Valley Morning Star. After all was said and done, Musk’s Texas donations soared. The billionaire gave $10,000 each to Governor Greg Abbott and Texas Land Commissioner George P. Bush in 2014. That year, he signed SpaceX’s incentive agreement in exchange for 300 jobs at $55,000 per year and $85 million in local investment, according to a copy of the agreement. Records from the Greater Brownsville Incentives Corporation, which oversees the distribution of a portion of Brownsville sales tax, state that as of 2021, the organization has paid $4,884,632 of a $5 million job creation credit given to SpaceX in 2014.

The agreement’s stipulations are notable. SpaceX must make reasonable efforts to fill construction jobs and permanent jobs with residents of Cameron County, according to the document. Brownsville Mayor Trey Mendez said in April that of SpaceX’s 1,600 employees, 71 percent of them are from the Rio Grande Valley, though allegations have surfaced in recent years that Musk’s companies possibly discriminated based on race and nationality, and it’s unclear from a class perspective who benefits from the various types of jobs offered at the site.

In the event that Cameron County receives a request for more information relating to SpaceX’s agreement, the county cannot immediately release the records, but is rather required under the terms of the agreement to seek an Attorney General opinion instead. The county also must safeguard information about SpaceX’s operations, according to the document.

OPPORTUNITY ZONES

The full scope of the welfare taxpayers have given the richest man on Earth might not be quantifiable, the LA Times reported in 2015. SpaceX receives billions of dollars in federal contracts and loans in addition to Musk’s own investment, and “Starbase” happens to be located in a tax haven.

The company operates in a designated Texas Enterprise Zone, which are eligible for tax rebates. On top of that, “Starbase” is located in a Qualified Opportunity Zone, created under the Trump Administration’s Tax Cuts and Jobs Act of 2017 to shield investors from paying federal capital gains tax

Such zones are branded as an anti-poverty measure but in practice catalyze the gentrification of communities already fighting displacement by driving up the cost of living and incentivizing corporate development. In an opportunity zone, appreciation on investments maintained for 10 years can be exempt from federal capital gains tax entirely. 

In 2018, SpaceX’s now-withdrawn application to fill in wetlands broke into the news cycle three weeks before Governor Greg Abbott announced the state’s chosen QOZs. Federal legislators stripped language from the law’s draft before its passage that would have required the government to monitor investments on the ground, making it difficult to know who participates in the program at all.

We know about SpaceX thanks to a 2020 Bloomberg report that revealed the use of opportunity zones by three space corporations owned by billionaires – Jeff Bezos’s Blue Origin, Richard Branson’s Virgin Galactic, and SpaceX.

DOMINO EFFECT

Emma Guevara, a Brownsville native and member of the South Texas Environmental Justice Network, got a call from her landlord about a $15 rent increase on March 31, 2021. It was the day after Musk told the world to move to Brownsville from his Twitter account. Guevara looked into moving but grew wary of prices higher than she’d ever seen in the Valley and an abundance of SpaceX-related listings. When she renewed her lease this winter, management let her know they’d be raising the rent by $200 per month. “A raise like that is astronomical here,” she said. “That’s not sustainable. People can’t afford that.”

Photos taken across the city of Brownsville.
Photo Courtesy of Erin Sheridan

Not far from town, Eddie Rodriguez’s landlord called him to say the rent for the unit he’s leased for a decade would go up by $25 per month. “The reason they gave is that taxes are increasing. It’s small. They basically rounded off to the next hundred. I’m not mad. But, the effects of SpaceX are trickling down to the average Joe like myself,” he said.

Home prices in Brownsville have skyrocketed. A Texas A&M study released in December found prices rose by 60% during the pandemic. In July, Yahoo News listed Brownsville as one of the top 40 U.S. cities poised for a housing crisis, citing 59,943 units for the city’s more than 180,000 residents and a homeowner vacancy rate of 1.7%. The Brownsville-Harlingen MSA boasts a 27% poverty rate and a median income one-third lower than the statewide average. When the growth finally arrived, it ironically priced most people out of the housing market completely. But if you bought in on time, it’s booming.

Brownsville native Linda Macias did just that. She and her partner bought their first house last year after living with his parents to save for a down payment. A friend convinced Macias to list their efficiency suite on AirBnB and the extra income covered the couple’s mortgage. Soon, she had enough in savings to buy a condo, then a duplex, then another single-family home.

Many of the people Macias hosts are SpaceX employees. She has seen people travel from states as far away as Minnesota, Illinois, and Washington who learned about Brownsville via Musk. Recently, she met a couple from California who caught wind of the aerospace boom, came to town, and bought three condos.

Communities specifically marketed to SpaceX fans, like Habitat Zero, are popping up out of nowhere. Buyers are making cash offers on homes hours after they’re listed and locals who don’t have hundreds of thousands of dollars lying around are at a serious disadvantage, Macias said.

Gentrification isn’t just beginning in Brownsville. It’s already underway. “All over Brownsville, you have your lower socioeconomic areas and they’re purchasing the houses there too,” she specified. “They’re flipping and renting them and so there is a housing shortage occurring.”

Macias sees SpaceX as an opportunity. She never thought she’d be able to afford properties and wants to teach others how to do the same. But the market also worries her. “I don’t see us ever meeting the standards of the housing market when the minimum wage is so low, when people don’t have good credit, when there isn’t enough knowledge about how to buy a home,” she said.

SPACED OUT SELLOUT

Credit – Xandra Treviño

Local activist Zak Borja organized groups of residents to attend city commission meetings in an effort to discuss SpaceX last year. As he sees it, officials have simply written off gentrification. He alleged that at one meeting, Commissioner Jessica Tetreau could be seen rolling her eyes at anti-SpaceX comments.

“I just wanted it to be known that this man, Elon Musk, has made an announcement to affluent white people up North and across the country that Brownsville is an affordable place to live, and that you’re gonna make a lot of money if you work for him down here,” Borja said. “I let them know that gentrification is not something that is a threat; it’s something that is imminent and is going to be happening unless they create policy that puts working-class communities at the center.”

People like Xandra Treviño, a Brownsville-based artist and advocate, have been trying to raise alarm for months, but instead of reception, they feel ignored (and blocked by Tetreau on Twitter). “People are voicing their concerns and nobody is listening. I feel like they either don’t know what it means to be a working-class resident or they don’t care,” Treviño said.

“A lot of the local leaders own businesses in Brownsville (Trey Mendez, Ben Neece, Jessica Tetreau); they own properties…None of this stuff is going to affect them. They can make a quick buck, get out of office and not have to worry about us ever again.”

“BTX”

Bekah Hinojosa’s landlord raised her rent by $50 this March. The increase went into effect just two weeks after four Brownsville police officers barged their way through the front door of her unit and arrested her in thin pajamas, threatening to charge her with resisting arrest when she asked to get dressed.

Hinojosa is known for her work with Another Gulf is Possible and the Sierra Club. She has been vocal for her community against space launches, pipelines, and LNG production threatening communities and ecosystems east of Brownsville. But she didn’t sign up to be doxxed by the mayor.

On February 16, officials detained Hinojosa for over 24 hours on a misdemeanor vandalism charge for which Texas law specifically allows cite and release after the words “gentrified” and “stop SpaceX” appeared underneath the “BTX” mural paid for by the Musk Foundation in downtown.

Mayor Trey Mendez took to his official Facebook page to publish her mugshot, full name, and employment information from LinkedIn. He does not appear to have previously posted about arrests on misdemeanor charges. Mendez edited the post after a civil rights attorney’s press release accusing him of violating federal law made national headlines

The affidavit authorizing Hinojosa’s arrest alleged the graffiti caused only $300 in damage and that she had been identified using articles she wrote about SpaceX. The city painted over the graffiti the next day, according to a police report.

“It’s obvious he ignores the concerns of his constituents and is willing to protect SpaceX and Elon Musk to the extent that he’s willing to be complicit in the abuse of those constituents,” Hinojosa said in March. “(Musk’s) donations have essentially become hush money. People are taking this money and they’re looking the other way.”

MAYOR MUSK

The “BTX” mural’s announcement ended in controversy. Residents flocked to Mendez’ Facebook page wondering why leadership had seemingly rebranded a predominantly Hispanic border city in the shadow of wealthier, whiter Austin (ATX), or why local artists hadn’t been considered for the $20,000 job

“I think it’s 100% clear that (Elon Musk) is a neocolonizer,” Guevara said. “And I think that anybody who wants to deny that is just as complicit in colonization. I’ve never seen so many white people walking around in Brownsville in my life…They’re trying to make it feel like Austin and you’re like 20 feet from an international bridge.”

Then, there are the ethical concerns.

It’s unclear whether city staff raised any issue when, under Mendez’s leadership, the city welcomed a $10 million donation from the CEO of a company that had just exploded a rocket loaded with methane-based fuel over eastern Cameron County. The press wrote it off like Musk was Santa Claus. Mendez and other city officials kept plugging the billionaire online. And lines blurred quickly – the money didn’t come from SpaceX; Musk gave the money from his personal charitable foundation. 

I looked into the Musk Foundation and found that it is a private grantmaking organization headed in part by Musk himself. According to Influence Watch, Musk has allegedly used the foundation to avoid paying taxes on the sale of Tesla stock. A Google search indicates the SpaceX CEO is the Musk Foundation’s president. However, Musk’s role isn’t totally clear because the website consists of a single bullet point list.

Credit – Mayor Trey Mendez.

Photos from Mayor Trey Mendez’s official Facebook page showing city officials at SpaceX, the mayor posing with Elon Musk, and Mayor Mendez congratulating Elon Musk for being Time Magazine’s Person of the Year

Emails I obtained show that City leadership and the Brownsville Community Improvement Corporation started working with Igor Kurganov, a famous poker player and philanthropist Musk hired to handle donations, in 2021. The records suggest that while the foundation has donated money, the organization has dispersed Musk’s promised $10 million in small chunks, and only when the foundation agrees it’s reasonable. 

Kurganov denied a November request by Deputy City Manager Helen Ramirez for $2.8 million that the city needed to finish the downtown Cannery and Public Market after the proposal came in too high, stating, “Unfortunately, we are not able to fund a single project for this amount.” 

Ramiro Gonzalez, Brownsville’s former Director of Government and Community Affairs, emailed Kurganov in August 2021 about a proposal to purchase street benches and trash bins for downtown. The city planned to spend $818,890 on the project but found a cheaper bench model and wanted to send a quote to Kurganov. “On this one I think I’d like to approach it much like the lighting if you would like to fund it,” Ramirez said. He also requested $77,500 for “street murals.” 

The city executed contracts for the first two murals, including Teddy Kelly’s “BTX,” in August. Gonzalez sent out a press release for feedback in September. Alex Meade, Senior Vice President at Texas Regional Bank in Harlingen, responded that Gonzalez should remove the phrase “encourage local artists,” “since we are kicking off the mural project with an artist from LA,” he wrote. Gonzalez sent a follow-up email to his staff the next day stating he would await final approval from the “artists and Musk” before publishing the news.

ON THE BORDER, BY THE SEA, AND BEYOND!

Mayor Juan “Trey” Mendez III is a lawyer and an entrepreneur when he’s not acting out his civic duties. Sometimes you’ll find him complaining about his lack of mayoral salary. On other days, he’s using his platform to credit Elon Musk for making his hometown a viable investment project.

“The Renaissance of Downtown Brownsville,” as Mendez put it in remarks for the 2021 State of the City address, has brought investment to the city he once could only dream of. Banks struggled to “understand the vision” when Mendez first started investing in downtown a decade ago. “In 2021, banks are not only comfortable lending to projects Downtown, but actively seek to fund even more…”

The mayor bracketed his state of the city speech with the space industry. He mentioned Musk’s March 30 tweet encouraging relocations to Brownsville. He spoke about the SN11 launch, obscured the part about the explosion and rocket debris, then incorrectly stated that “Starbase” is located in Brownsville.

Mendez co-owns downtown’s Dodici Pizza & Wine. He also owns properties and a law firm, some of which are located in a Texas Enterprise Zone and are eligible for tax breaks, according to maps from the Texas Economic Development & Tourism Office. Like other business owners, his downtown investments may stand to benefit as property values rise, tourism grows, and investors are no longer afraid to dive in.

One of the documents from a records request shows GBIC’s expenditures. Included on the list was a $394.39 charge from Dodici for a June 2021 dinner meeting with the city of Brownsville and “Project Momentum.” 

Last year, when officials realized Mendez’s LLC Urban 8 Properties had been awarded a $200,000 grant from the Brownsville Community Improvement Corporation (on which he is a sitting board member) to flip the old Coca-Cola building into a retail space, they investigated him on a formal ethics complaint. According to The Brownsville Herald, officials contemplated rewriting the advisory board’s investigative authority to prevent anyone from doing it again.

BCIC had stipulated that board members could apply, so officials eventually dismissed the complaint. But Ramiro Gonzalez, also managing member at Urban 8, resigned from his position in city government when the information came to light, the article stated. The story identified that $2 million in funding for the program had been donated by the Musk Foundation.

A researcher I spoke to who works at the intersection of economics and public policy made clear that at the end of the day, this is the system at work. State and local officials have incentive to interact with Elon Musk and other aerospace industry investors in ways that bolster public image and uphold that status quo. In order to entice investment and create a base of taxpayer money, leaders must first attract investment by pushing poverty out of sight. And as property values rise, displacement grows. 

The goal of those with wealth and power becomes an effort to keep signs of poverty invisible, dissent silenced, and those with a voice comfortable enough not to ask questions. After all, people with money simply work harder, are smarter and more innovative than the rest of us working for wages that barely cover rent.

Musk, Mendez, and others like them won’t acknowledge the harm most people experience as they profit in part because doing so would mean unraveling the system itself. 

Inclusive growth means examining capitalism at its roots and rethinking narratives that ask us to ignore reality. To address the problem is to roll back the blinders and take hold of a collective identity – one that doesn’t exclude the people below you.

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