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Can someone explain the Grimes County Terrafab Tax Abatement?

2,789 Views | 17 Replies | Last: 6 days ago by TyHolden
BlueHeeler
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12:22p, 6/4/26
AG
They are saying this is a $55B investment (minimum). At a 1% tax rate (assumption - and I would assume that's low), that's a 550M a year income. Also, aren't most tax abatements capped at a much smaller timeframe - like 10yrs, not 35 years?

I understand there are other economic impacts like jobs and people coming to the county and spending money, but does this make up for the tax income difference? Is agreeing to 20M/year for 35 years a good deal for Grimes county? This seems like an excellent outcome for SpaceX.
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FlyRod
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12:25p, 6/4/26
It is.
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1Aggie99
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In reply to BlueHeeler • 12:47p, 6/4/26
AG
Seems like an incredible deal for SpaceX and like Grimes Co is betting on the log game payoff. Risk involved but, on the surface, looks like they have grand designs or ideas of this area becoming much more than just SpaceX which will help cover the tax break.

SpaceX is the anchor or the carrot that gets the best deal. Assuming no one else will get such a break.

If they are right, this area likely becomes its own community and 35 yrs from now folks will tell stories of "I remember when this was all just...".

If they are wrong, who knows.
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BlueHeeler
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1:19p, 6/4/26
AG
I am just having trouble comprehending the order of magnitude and duration. If I lived in Grimes county, I would be up there questioning the county government people over this. It just seems unreal.
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AggiePhil
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1:28p, 6/4/26
AG
We already have a thread about this:

https://texags.com/forums/35/topics/3265190
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1Aggie99
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In reply to BlueHeeler • 1:32p, 6/4/26
AG
Probably a terrible example of future development but look at how Walmart growth changed Bentonville/Rodgers AR or how Musk and others are driving growth around Bastrop.

Crazy to look at the reinvestment map. That's a huge chunk of land so potential is off the charts.

The trip from BCS to Houston or Huntsville could be a real rodeo if this thing takes off.
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BlueHeeler
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In reply to AggiePhil • 1:36p, 6/4/26
AG
Thanks, but I was attempting to just discuss the tax abatement specifically. I am not against the project, but the terms of the tax abatement seem ridiculous to me.
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TyHolden
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1:43p, 6/4/26
AG
Look at Dell / AMD and Austin...
I hope I did not offend anybody with this post. If I did, please come see me at my address in my profile so we can talk.
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normaleagle05
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In reply to BlueHeeler • 2:06p, 6/4/26
AG
Remember that this applies only the the taxes paid to the County. I posted in the other thread about the upcoming ISD Value Limitations. That's where the big money is and there are two districts to deal with as well as the State.
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GrimesCoAg95
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2:34p, 6/4/26
AG
History will be the judge. It seems to be a very long contract in that it is 35 years. It will significantly raise the county's income starting right now. I spoke to someone with more information about it than me that liked the deal, but I have a couple of concerns.

1. The payment each year is not adjusted for inflation.
2. This will absolutely increase economic growth in the area. I just think much of that will go to Brazos county. Carlos is much closer to College Station than people realize. There is an abundance of shopping, hotels, dining, and housing in Brazos. This is probably why Bob Yancy is so excited on other threads, but I don't want to speak for him. That said, there may be another convention center joke here.
3. It is huge. Drive out east of College Station and see. It is from Carlos to Roans Prairie and north to Singleton. So head out east then drive up 90 to Singleton. I am glad to see something use the land where the coal plant was, but it is interesting that the reinvestment zone is about 3.5-4x the size of that property.
4. What does this mean for the future of the highways here?

Look at Taylor, they gave huge abatements to Samsung. That plant is 1/3 the size of this one. I think that is the best example. People also say to look at Bastrop which is another example.
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1Aggie99
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In reply to BlueHeeler • 2:42p, 6/4/26
AG
Short answer to your question. It is crazy but there is competition and Grimes Co obviously wants this deal.

The growth that follows is where the money will be made for everyone with a stake even landowners that want out.
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woodometer
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In reply to BlueHeeler • 2:55p, 6/4/26
AG
BlueHeeler said:
They are saying this is a $55B investment (minimum). At a 1% tax rate (assumption - and I would assume that's low), that's a 550M a year income. Also, aren't most tax abatements capped at a much smaller timeframe - like 10yrs, not 35 years?

I understand there are other economic impacts like jobs and people coming to the county and spending money, but does this make up for the tax income difference? Is agreeing to 20M/year for 35 years a good deal for Grimes county? This seems like an excellent outcome for SpaceX.

Let here it directly from Elon. From X

Something that perhaps isn't clear is that, if this location works out (other locations are still in the running), SpaceX will still be paying an annual amount that increases tax revenue for Grimes County by ~25% and will be by far the biggest source of revenue for the county.

Taking into account taxes paid by SpaceX employees and contractors, Terafab will far exceed ALL revenue that Grimes County currently earns!

The reason SpaceX asked for this, which is standard practice for massive capital investments, is because Terafab will have a large number of extremely expensive machines for making chips. Property tax on these crazy money machines would put us at a serious competitive disadvantage relative to other chip fabs in the world.
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BlueHeeler
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In reply to woodometer • 3:01p, 6/4/26
AG
Oh, well, then. I guess it's all good. Thanks.
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fcag
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In reply to BlueHeeler • 3:39p, 6/4/26
AG
BlueHeeler said:
Thanks, but I was attempting to just discuss the tax abatement specifically. I am not against the project, but the terms of the tax abatement seem ridiculous to me.

Staff already locked a second thread about the project in an attempt to keep all discussion related to it in the one thread.

[That was another thread that was general discussion about the development and this thread is about a specific subject. We are going to try and keep this thread discussion about the abatement. Thank you. -Staff]
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TXAGBQ76
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In reply to woodometer • 5:18p, 6/4/26
AG
Fabs are expensive- i.e. in the $15-30B range before the first wafer is made, diced, tested, packaged, tested and shipped.
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TyHolden
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4:03p, 6/6/26
AG
Google just started paying SpaceX 2 billion a month for compute power. What's ironic is that Google is one of the largest cloud companies in the world. SpaceX is not even in that market but Google needs them. I guess for the GPUs. This is a massive project. Whoever gets it will be golden for a good while.
I hope I did not offend anybody with this post. If I did, please come see me at my address in my profile so we can talk.
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BuddysBud
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In reply to TyHolden • 7:25p, 6/6/26
AG
TyHolden said:
FlyRod said:
Muzzleblast said:
Here's the KBTX story. Our commissioners are not talking to the residents about it. No public forums.
SpaceX has not held any informational meetings either. They only showed for the last abatement meeting.
I'm hearing that none of the ones who voted for the abatement will seek re-election.
There's nothing in all this that passes the smell test. I'd love to see an investigation by the Texas Rangers into our County Judge, commissioners, and sheriffs finances.
It's so TxAgs that everyone unaffected by all this is fully for it.

Grimes county releases documents detailing SpaceX Terafab agreement https://www.kbtx.com/2026/06/06/grimes-county-officially-releases-spacex-terafab-agreement-documents/







If somebody wants to pay my taxes for 3 years for doing absolutely nothing, I'll certainly let them.

Quote:
SpaceX can terminate the agreement at any time with 30 days' notice. If the company walks away or defaults, the penalty is repayment of up to three years of taxes.



Repayment of taxes is a funny term. It almost reads like the county would owe SpaceX three years of back taxes if SpaceX backs out. I would think that it should be specified that SpaceX would pay the equivalent of 3 years of taxes (i.e., $60M) if they default or end the agreement early.
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TyHolden
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In reply to BuddysBud • 8:26p, 6/6/26
AG
BuddysBud said:
TyHolden said:
FlyRod said:
Muzzleblast said:
Here's the KBTX story. Our commissioners are not talking to the residents about it. No public forums.
SpaceX has not held any informational meetings either. They only showed for the last abatement meeting.
I'm hearing that none of the ones who voted for the abatement will seek re-election.
There's nothing in all this that passes the smell test. I'd love to see an investigation by the Texas Rangers into our County Judge, commissioners, and sheriffs finances.




If somebody wants to pay my taxes for 3 years for doing absolutely nothing, I'll certainly let them.

Quote:
SpaceX can terminate the agreement at any time with 30 days' notice. If the company walks away or defaults, the penalty is repayment of up to three years of taxes.



Repayment of taxes is a funny term. It almost reads like the county would owe SpaceX three years of back taxes if SpaceX backs out. I would think that it should be specified that SpaceX would pay the equivalent of 3 years of taxes (i.e., $60M) if they default or end the agreement early.

Some people on the SpaceX thread on /16 think it could all be for the IPO. I find that hard to believe but I don't own a trillion dollar portfolio either...
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