Boca Chica Homeowners Scoff at SpaceX’s Low-ball Offers
The Valley Star reports that SpaceX’s offer to buy out a group of homeowners near its Texas test site at Boca Chica Beach is not going over very well with everyone.
Although the Hawthorne, Calif.-based rocket company, in a letter dated Sept. 12 and sent via FedEx, is offering the Heatons three times the appraised value of their home, they say the offer isn’t close to what they’d need to sell. The appraisal conducted by SpaceX is several thousand dollars less than an appraisal the Heatons got through their bank five years ago, Terry said.
“I sent them an email the day after we got this letter, not being sarcastic or anything else,” he said. “I just told them the facts, that (their) appraisal is extremely low.”
SpaceX said the offers are not negotiable and gave the homeowners two weeks from the date of the letter to respond.
“It’s just big money bullying little people,” Terry said. “That’s really what it is.”
47 responses to “Boca Chica Homeowners Scoff at SpaceX’s Low-ball Offers”
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Gom get ugly
Limits on the negotiations. I suspect that SpaceX does not want to buy the properties but has been (informally) told to. Buying the houses may be cheaper than the legal fees for a compensation claim if anyone is killed by an exploding rocket.
The properties being worth more 5 years ago is interesting. A legal case to establish this could be very expensive for both SpaceX and the home owners.
The homeowners may be lucky and get 4 times the current value of their homes. I suspect SpaceX is preparing to do something dangerous within a month so book those removal vans and look for a new house.
Let’s see now. SpaceX is offering 3 times the appraisal value. The current appraisal value is $50,000, down from the $100,000 purchase price. That would make the offer $150,000, $50,000 more then the purchase price. That is a nice profit. But of course a $1 million would be an even nicer profit.
But this may be a blessing in disguise for SpaceX. It would be better for them to move up the coast now to a better site then to wait and invest more in Boca Chica. They could just switch flight testing to the Cape and not even lose much time in developing the Starship. As I noted before they will have a difficult time launching the Super Heavy from Boca Chica because of the proximity of South Padre and the Mexican Border. By contrast the old Matagorda Island AFB location would allow them to launch Starlink satellites from Texas as well as equatorial flights to deep space with room for multiple launch pads for both the tankers and exploration Starship.
The losers of course will be the folks in Brownsville, losing both jobs and it’s place in the space economy that SpaceX was creating for them by its flights. But maybe SpaceX could move its Raptor production out of LA to Brownsville. It would both shorten its logistic chain and lower the cost of the Raptor.
The homeowners should act like a business and maximize their extraction of funds from the buyer. The value of those homeowners not being there is high to SpaceX and they should set their prices to reflect the space operations facility that Boca Chica could become with them not there.
But sometimes you just want to live where you want to live. It’s their property.
If it were me, I would not be amused. And yet, ultimately, I would have my price
I can understand that if that’s how they view it. However the GOM beach out there is nothing to brag about. But … home is home.
I think my price would be the (greatly increased) cost of finding better beachfront housing plus moving expenses and cash. These folks predated the nuisance and SpaceX should pay a hefty price for its buffer zone. In fact, this calculation should have gone into the original proposal to build at Boca Chica beach.
Yeah, personally, I want my little beach house more than some money to go get some town house inland by a strip mall or whatever. Quiet, low property taxes, wildlife preserve nearby, ocean nearby, small community – hard to replace that.
Additionally, for some people, although it’s a remote area, the location may involve the above plus reasonable proximity to relatives. For some, they may have been in the area for over a generation.
Regarding “this calculation should have gone into the original proposal to build at Boca Chica beach” – it probably did. This is just that playing out; it was always going to come to this. The nightmare (from SpaceX’s perspective) is the lone old loon who ain’t movin’ at any price, lol. To that they might add their somewhat unique problem of a Superfan or two who refuse to give up “the best seat in the house”.
Could take a while to play out
The problem is these homes are very low value, take a look at them on Google Maps. Even at 3 times fair market (which is pretty generous) they would have a hard time finding accommodation that close to the beach, say on South Padre near by.
Perhaps not one of the condos on South Padre Island, but Port Mansfield could work. For around $250,000 you might even find properties on the water front. And its somewhat isolated as well.
Condos suck. Well, for some people a condo could actually be better, and they should go for it. However, a condo is undeniably a different vibe than having your own house and yard (aka ‘The American Dream’)
(Actually, I’ve owned a condo by the beach and liked it – not ragging on anyone if they’re living in a condo. But i didn’t have my own yard, had to deal with a downstairs neighbor just from me making noise that would have stayed inside a house, had nowhere to plug in an electric car, etc. But there were benefits – condo security, parking lot cleared of snow by the maintenance crew, no yard work or exterior maintenance, etc. Pluses and minuses. But it ain’t your own house with your own yard)
There aren’t condos in Port Mansfield. It’s mostly single family homes on the water or near the marina. It’s basically an up scale version of Boca Chica, but not that much more expensive.
Ah, I see. Misread ya there
The big issue is these people own their homes. It isn’t the multiplier on appraised value, it’s an issue that the money being offered (take it or leave it) is insufficient to purchase a replacement. Those people might go from owning a home to having to rent someplace else. They’re being penalized for getting a good deal in the first place and that the replacement cost is significantly more than what’s being offered.
Maybe SpaceX could do better by building a groups of homes not too far away and offering a swap.
Sounds like a good idea but these folks essentially live at the beach. How does SpaceX find real estate for this housing development? Once word got out that SpaceX was looking to buy property with beach access for a housing development, the real estate price would soar.
The beach is at least a mile away, and before SpaceX came you probably wanted to be armed given the border crossers in the area. That is why the Border Patrol has a checkpoint just outside the village. The low property values aren’t entirely a result of SpaceX being nearby.
It seems to me from what I’ve read that the low property values have been due to a lack of jobs and infrastructure in the vicinity. That in turn is in part due to it being a storm prone area with lack of bedrock
The same is true of Houston but it does OK. The problem with Brownsville is that it isn’t on any direct transportation route to anywhere, like Houston is. It’s main industries are Oranges and scrapping ships, especially Navy ships from frigates to aircraft carriers that must be scrapped in the U.S.
The boom in natural gas in West Texas should help as there are three pipelines being built to Brownsville to export it. Just before he left office President Obama approved, over the objections of environmentalists fighting climate change, the building of a large LNG terminal and dredging the ship channel to allow access to it. It will be located a few miles to the northwest of Boca Chica, about 6-8 miles from the launch site.
Agree with all your points.
Also, I like your idea: Build a 20 home development nearby with the homes a bit bigger/newer nicer, cover their expenses plus some cash for their troubles (not too nice though, or property taxes become an issue for the new owners going forward)
5 years ago they werent next to a rocket testing range. Tends to not embellish property values
Perhaps a little imagination is required. Bed, Breakfast, and rocket viewing from the beach. .
Actually, they were. Ground was broken for SpaceX’s Boca Chica facility on Sept. 22, 2014. It was no secret that the plan was to launch rockets from the property.
Any offer higher than what you would get for eminent domain isn’t “low ball”.
Here in the Cincinnati area a few years ago a city decided to use eminent domain to take away a bunch of land with old houses on it because the owners refused to sell to developers. The city then sold that land to the development company to put up a bunch of new hotels, parking garages, shops, and etc. Home owners think they can refuse in a case like this, but they really can’t. The commercial development would bring more economic activity to the area as well as more tax revenue for the community, so it’s pretty easy in court to prove that the community would benefit, which is what eminent domain is all about.
So, if I were the owners of a Boca Chica property, I’d take the SpaceX offer rather than what the local government would give them via eminent domain.
There are state specific laws on the application of eminent domain though (Kelo decision not withstanding). I am very familiar with the Cinci developments by the waterfront, casino, OTR and even old Queen City area on the west side, which mostly abandoned houses were raised. Lots of changes in the last decade.
I just want some photographic evidence that the people bullied are actually little
A week ago, Doug published a video report by the local CBS affiliate that has some interview footage of some of the Boca Chica Village residents. Unless the cameraman was some kind of prodigy anent forced perspective, they looked to be about the same size as most people – e.g. not Shaq and not Dinklage. 🙂
hmmm.
Not to me.
When I saw them on TV, they appeared to be less than 2′ tall.
The residents may be able to get the price up to 4 times value plus removal fees. Removal firm to be chosen by SpaceX so it can bulk buy.
Boca Chica Village is unincorporated. Any eminent domain action would be taken by Cameron County. I’m sure the residents would object rather vigorously. They might gain substantial public support by arguing they are being tossed out of their homes by a company run by a billionaire who owns five mansions in California and flies around in a private jet.
If eminent domain is pursued for the sake of residents’ own safety, they are going to have a major beef with the FAA that approved a launch site this close to a residential development.
The fact the the company is run by a billionaire with access to a private jet is wholly irrelevant to the issue of eminent domain as it applies under Tx law. Now if you are a jealous socialist type, then it is the only thing that is relevant for some odd reason. The Kelo decision gives wide discretion on the purpose/benefit of the development. The question is about Tx law itself. And how many houses Musk has in Ca is a petty joke.
Edit: This is a decent primer on the topic. Interesting fact is the land can be bought back if not used after acquired via eminent domain…which if is just for a keep-out zone is interesting wrinkle. Tx as expected hardened their statues post Kelo as it was seen (rightfully so) as a threat to private property rights.
https://stpra.org/wp-conten…
“The power to take private property for public use is only available to entities upon which the state
has properly conferred condemnation authority. Texas does not specifically address who has the authority to condemn within the Texas Property Code. However, the Texas Comptroller’s Office keeps
an updated list of entities’ condemnation applications and registrations. Most states have general
provisions addressing condemnation authority similar to Texas, but these provisions may be more
narrow or broad.”
“Texas responded strongly to Kelo in 2005 by enacting §2206.001, which provides that no entity may
take private land if the taking (1) confers a private benefit; (2) has a public use that is mere pretext;
(3) is for the purpose of economic development, unless the economic development is a secondary
benefit resulting from urban renewal; and (4) is not for public use.123 Texas also defines public use in
the state constitution and expressly excludes the transfer of private property to a private entity for
the primary purpose of economic development or increasing tax base.124″
If that statute is enforced in the spirit in which it was written then it would seem that the use of eminent domain in this instance is not imminent, though Texas strikes me as more of a law & order state than a rule of law state.
Legal niceties or the lack thereof aside, forcing retirees off their land is not a good look. It’s also probably not a cheap move. I expect SpaceX to up their offer once the two weeks expires.
Well let’s put this way, there was a law that public beaches couldn’t be closed temporarily by private firms….now there isn’t.
Let’s hope it doesn’t come to that. It would be better for all concerned if the residents of Boca Chica Village were persuaded rather than coerced to leave.
Agreed. It would be sad to see one of the poorest regions in Texas lose so many high paying aerospace jobs.
Oh yeah, that beach access law got changed? I was wondering about that
It’s a negotiation. An opening move has been made and a countermove has been made in response. This is a process and it seems unlikely it will run to completion in two weeks regardless of SpaceX’s drop-deadline.
Quite the opposite. SpaceX said the non-negotiable offers lapse in two weeks. That means nothing new will be offered until the two weeks passes. If they made a second offer before that time, they would be undermining their credibility, which is not how you make a deal. Fundamentally, deals are based on trust. So it is bad form to start a negotiation by saying that you will do something and then promptly doing the opposite. No negotiations for two weeks. Count on it.
Once the clock runs out, everything about the offer, including its non-negotiability, is void and another offer or some other form of negotiation can proceed. Therefore, given that the residents of Boca Chica Village have made it clear that they will not accept the offer, it is fairly certain that nothing will have been resolved during the two weeks specified. Any new initiatives by SpaceX will only occur after the 2 weeks have passed.
lol
Still, Kilo vs New London was awful.
I was at a luncheon for entrepreneurs in LA in 2005 that Elon Musk spoke at. He told how when he first moved to Silicon Valley he couldn’t afford rent so he slept in his office and joined a gym nearby to have somewhere to shower. I would say he earned the right to own five houses if he wants them.
wow this is a surprise… 🙂 Musk miscalculated
if Cameron country uses imminent domain for this there will be a massive blow back at the polls ID whould not be used for private concerns by the local governments
Miscalculated? I doubt it. Surely SpaceX knew this day would come when they selected the site. I knew it would come. They knew it would come. Boca Chica Village is barely 1.5 miles from the pad site. This was obvious on day one. I recall guesstimating the distance in Google Maps on day one. And I am not especially insightful, nor are we talking about my money.
In the ensuing years, they bought up what they could quietly, while seeking to refrain from telegraphing a sense of overeagerness. Now that push had come to shove, they made an opening offer which was neither insulting nor over the top. It’s all game theory from here, and that uber nerd knows game theory.
The next offer will be better. Every one of these homeowners has their price. The strategy here for SpaceX has to be to make those deals as close to those prices as possible. In the mean time, SpaceX will refrain from sweating in public and the judge, the local boss man, which is apparently how they roll in Texas, will continue to voice his support for SpaceX. Thus SpaceX will signal “don’t try to roll us,” whilst preparing to get rolled, hopefully not too badly.
This will get done, simply because a windfall for every one of those homeowners will not come anywhere close to SpaceX’s cost to move shop.
not really.
lets say plot A was bought for 50K and Elon gives out 150K…thats a capital gains improvement which is taxable. the way most people get around that is that they immediately reinvest the money in “something else”….real estate which negates that charge or work it into retirement cared.
Problem is that few of the people who own those homes can support a house that cost XX times more.
the odds are that Elon will have to go to 5 or 6 times and work out some issue to pay for lawyering to move the money …
as the rockets get bigger the footprint will only get larger
the odds are that Elon will have to go to 5 or 6 times
With some of them, he may have to go 10 times. It’s a price of doing business.
They have been planning on buying up the village since at least IAC 2016 when primary sources inside SpaceX were already talking about it.
should have done a better job of it