GRIMES COUNTY, Texas (KBTX) – Grimes County commissioners approved a tax abatement package Tuesday for SpaceX’s proposed Terafab facility at Gibbons Creek Reservoir, but the documents obtained by KBTX Friday show the agreements have not yet been signed by SpaceX officials.
The deal offers SpaceX a 10-year tax abatement in exchange for annual payments and could become one of the largest single investments in U.S. manufacturing.
KBTX reviewed three documents signed by County Judge Joe Fauth: the tax abatement agreement, economic development agreement and the order creating the SpaceX reinvestment zone.
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Under the agreements, SpaceX must invest at least $5 billion by 2030 and create 1,800 jobs by 2035. No penalties exist if SpaceX hits 90% of those goals.
SpaceX has said publicly it is committed to spending at least $55 billion, but $5 billion by 2030 is what the written agreements require.
The county will allow SpaceX a 100% abatement on buildings and equipment for 10 years, beginning in 2027 through 2036. In exchange, SpaceX and its partners owe Grimes County a $10 million payment within 60 days of executing the agreement and will pay $35,000 of the county’s legal fees.
A separate economic development agreement guides the project from 2027 through the end of 2061. After 2036, Grimes County will begin collecting taxes from the plant, but agrees to return anything beyond $20 million each year to SpaceX.
Beginning in 2036, Grimes County can collect debt service taxes, road and bridge taxes and any other special taxes approved by voters. The county will also earn sales taxes on construction contracts.
For scale, Grimes County’s 2026 budget anticipates the county will collect just over $26.5 million in property taxes across the entire county.
Infrastructure requirements
SpaceX’s approved reinvestment zone covers more than 22,000 acres surrounding Gibbons Creek Reservoir, which is nearly 4,000 acres itself.
SpaceX must build its own fire station and its own wastewater treatment facility. The company will power the entire site itself and will not connect to the ERCOT grid. SpaceX plans to run its own natural gas power plants and draw water from the Gibbons Creek Reservoir.
If SpaceX wants to drill for groundwater, the company must give 30 days’ notice before applying for a groundwater permit.
One of the clauses buried in the tax abatement agreement is Section 2.18 of the tax abatement agreement states SpaceX does not intend to support or participate in the proposed Texas High Speed Rail, which would have stopped very close to the Gibbons Creek site. It’s unclear who requested the clause be included or why opposition to a separate infrastructure project ended up in a semiconductor manufacturing deal.
Property and resident protections
The agreement requires SpaceX to stay at least 500 feet away from any existing home, church or school. The company must control noise and lighting impacts on neighboring properties.
Grimes County has the right to inspect the property with seven days’ notice.
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.
School district taxes separate
The tax abatement only covers Grimes County’s portion of property taxes. School district taxes are handled by separate agreements in Texas.
Navasota ISD, Iola ISD and Anderson-Shiro CISD are not part of this deal. SpaceX will have to separately pursue what is called a JETI agreement through those school districts, which would be an additional tax break at the state level.
KBTX has filed open records requests with the school districts in the reinvestment zone and the Texas Comptroller’s Office seeking copies of any similar tax abatements.
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