Starbase, Texas' newest city, has liftoff; seeks $1.5 million loan from Elon Musk’s SpaceX

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STARBASE — Texas’ newest city had liftoff this week.

Starbase city leaders were sworn in Thursday and appointed a city manager. On Friday, they met again to approve a loan request to help fund the city until tax dollars trickle in. In an early sign that reaffirms just how entwined the South Texas city is with Elon Musk’s SpaceX, the city is seeking a loan from the space company, not a bank.

Known as a tax revenue anticipation note, Starbase is asking for a short-term loan of $1,550,000 from SpaceX, the space exploration company that employs the majority of the city's estimated 500 residents.

By negotiating directly with SpaceX in a private sale of the debt, the city will forgo the municipal bond marketplace and will not need approval by the Texas Attorney General's Office because the life of the loan won’t exceed a year.

The loan will cover a portion of their expenses, currently projected to be $1,941,140 in the city's preliminary budget.

The city plans to pay back the debt at a 0% interest rate with property tax revenues. The minimum tax rate the city would need to impose to pay back the note would be $0.1813 per $100 of valuation.Because SpaceX is located within the city limits, the company would also be taxed by the city, said Leonardo Olivares, a former city manager to multiple cities in South Texas. The company would simultaneously lend the city money while also paying taxes to city to help pay its debt.

"SpaceX is going to lend the city the money to build a different infrastructure for SpaceX and all their employees. It's kind of like this, you know, a shell game," Olivares said. 
"It's not wrong. Everything's legit. It's just a very tightly run organization and community."

Mayor Bobby Peden, along with commissioners Jordan Buss and Jenna Petrzelka, also approved a slew of actions during their first two city meetings this week.

After taking the oath of office, the three appointed key positions including the role of city administrator, which is filled by Kent Myers from Clear Career Professionals, a recruitment firm connecting professionals to municipal governments.

According to his biography on the firm’s website, Myers has lived in Fort Worth and has served as a city administrator in many cities over 40 years, including starting his career in Converse, a small town near San Antonio.

The commission also adopted city codes, established an emergency management plan, approved a city website and approved a schedule for public meetings, among other actions.

The city is also working on establishing a comprehensive zoning ordinance, which determines how specific land within the city can be used.

Last week, some residents received a notice that the area where their home is located is expected to be zoned as a "mixed use district" that will include residential, office, retail, and small-scale service uses.

A public hearing scheduled for June 23 will determine whether or not they can continue to use their property for its current use, according to the notice.

City officials declined requests for an interview.

Reporting in the Rio Grande Valley is supported in part by the Methodist Healthcare Ministries of South Texas, Inc.

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