SpaceX Looks to Build R&D, Manufacturing Facility at Port of Los Angeles
by Douglas Messier
Managing Editor
SpaceX is looking to build a research, development, manufacturing and recovery facility at a dilapidated terminal in the Port of Los Angeles.
The Los Angeles Board of Harbor Commissioners is set to meet on Thursday to consider approving a 10-year lease with two 10-year options for SpaceX to take over the former Southwest Marine site at Terminal Island in San Pedro.
“Recovery operations may also be conducted at the site….SpaceX would develop new port-based spacecraft production facilities. The development includes an adaptive reuse of dilapidated facilities with a history of vacancy and vandalism for nearly 15 years,” according to a summary of the proposed leased.
“Other benefits of the permit include siting a prominent aerospace technology company in the City of Los Angeles that has the potential to create 130 aerospace jobs,” the document stated.
SpaceX would pay $1,699,990 during the first year, with the cost adjusted annually according to the consumer price index (CPI). Assuming SpaceX renews the lease for years 11-30, total lease payments through year 20 would total $52,888,933.
SpaceX would make improvements in the property that would enable Elon Musk’s company to offset much of the lease cost. The Harbor Department would also assume some of the expenses associated with the site.
However, it is important to note that over this initial 20-year period, SpaceX can apply $44,100,000 in tenant credits to offset invoiced amounts due. Furthermore, staff estimates that the Harbor Department will be responsible for $326,301 in cumulative property insurance costs over the initial 20-year period. Staff has also estimated that the Harbor Department will forego the receipt of $360,000 for one year of recovery operations which are currently being performed under RP 15-19, but will now be performed under the proposed Permit No. 949.
After subtracting the anticipated $44.8 million in aggregate estimated costs from the $52.9 million in aggregate estimated revenues, Staff has estimated net receipts to the Harbor Department of approximately $8.1 million over the initial 20-year term of the proposed Permit. After all tenant credits are exhausted, staff has estimated the receipt of $40.2 million in net receipts over Years 21 -30 such that cumulative net receipts over the maximum 30-year permit term may reach $48.3 million.
At the end of the 30-year permit, the land committed under the permit to SpaceX will revert back to the Harbor Department with an estimated future value of over $71 .2 million, as would the estimated $10.8 million future value of improvements completed by SpaceX during the permit term.
The summary said that the benefits to the Harbor Department do not meet the financial goals of the port’s leasing policy.
“The estimated financial rate of return associated with Permit No. 949 meets neither the 10 percent target rate of return for land nor the 12 percent target rate of return requirement for improvements as stated in the Port’s Leasing Policy,” the document said.
“While the estimated financial rate of return falls below the blended target rate of return, intangible benefits associated with attracting increased aerospace industry business activity to the Port may potentially mitigate the rate of return deficiency associated with the proposed Permit,” the summary added.
19 responses to “SpaceX Looks to Build R&D, Manufacturing Facility at Port of Los Angeles”
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back to where they were a few years ago…no more vehicles on the beach 🙂
It looks like SpaceX is go for launch to the ISS, while is still trying to pick up the pieces with its failed simulation instead of testing strategy…
https://www.teslarati.com/n…
NASA confirms SpaceX will become the first company in history to launch astronauts into orbit
By Eric Ralph
Posted: February 16, 2020
after Boeing’s goofy performance it was likely and well deserved
I hadn’t been following closely enough to be aware that the Commercial Crew costs are now $5.1B and $3.1B for the two companies. When did the $6.8B become $8.2B?
I suspect that you mean “while Boeing is”, rather than “while is”.
Yea, sure… Today at Boca Chica Beach.
https://twitter.com/SpacePa…
Looks like the shipbuilding analogy may still hold. Modern ships are final-assembled outdoors from modules built indoors, or at least under a roof. The build process, like the ships, is a work in progress.
With the port of LA–he could do Sea Dragon if he wanted.
Considering how hard it was to move even the smaller retired Shuttles around on the ground. Think SpaceX will have a few more seaside
water tower spawningbuild facilities globally instead of moving elements of the Super Heavy Starship stack overland.May or may not displacing some small seaside beach places of retreat in the the process. 🙂
Construction will be intense – I mean in tents. 🙂
They’re erecting a VAB at Boca Chica, so yes – rocket building at the beach. They’ve already started stacking Starship SN-1 made with new ring tooling from IMCAR Spa, and it’s a very smooth & shiny hull.
LA appears to be for subassemblies. Hell, they’re stamping Starship dome knuckles here in Michigan.
https://twitter.com/elonmus…
Given that Elon wants to conduct his own “1,000 plane raids” on Mars, I suspect that the Terminal Island site will be the same sort of final assembly facility as Boca Chica. Ditto for the facility inside the fence at KSC. And there could be other build sites in coming months/years as well. As for subassemblies, the Raptors, and apparently a lot of the other smaller Starship bits like the fins, are already being built in Hawthorne. It is rumored SpaceX just took over another big building in the Hawthorne Airport complex from Triumph Aerostructures. This new space could provide room for new Starship subassembly lines.
True. For now, they’re actually building what could be called a vertical integration facility for Boca Chica. So it’s possible they’ll still keep building vehicles there as well as in California.
I don’t think he will be building vehicles there. More likely it will be sub-assemblies that he will ship to Texas via the Panama Canal. That said he would have been better off building it in Huntsville. Not only would it have gotten Senator Shelby’s attention but his costs would have been a lot less.
Elon wants to send armadas a thousand ships strong to Mars ASAP. To do that, he’s going to need multiple final assembly sites in addition to Boca Chica and KSC.
Maybe, once SHS has killed off SLS in a couple years, Elon could get an attractive deal on taking over Michoud. Once ULA goes toes-up, he could also swoop in and grab Decatur.
Building thrones from the skulls of his enemies so to speak.
The terms outlined look to favor SpaceX very heavily. It’s a good thing that the port has guidelines for ROI. If they stick to them, they’ll do much better as there is no guarantee that SpaceX will extend the lease beyond the first 10 years and again after 20. If things went pear shaped, it’s possible that the first 10 year lease might not go full term. Two major questions are whether SpaceX’s usage is a good match for the property or is SpaceX targeting the property because they’re thinking they can get a lease that’s going be cheap via low rent and subsidies for construction.
I’d also question whether the infrastructure built on the site would work for any other potential tenant. The country is littered with former Walmart stores as they are too big for any other retailer to use and are designed and built to make it difficult and expensive to sub-divide after Walmart moves out. If SX builds a facility that’s optimized for large structures, is there any hope that down the road it could be re-configured for another company’s product without tearing a majority of it down?
The terms should favor SpaceX heavily. Have you seen the proposed site? I took a little trip down the Harbor Freeway to San Pedro a couple years back when SpaceX was initially dickering for the space there. In the immortal words of the late Bette Davis, “What a dump!”
Those ROI “guidelines” look a lot like the assumed rates of return on public employee union pension fund assets – “aspirational,” to borrow a term of art from SpaceX. You will search in vain for any line of eager suckers lining up to take broken-down WW2-era harbor-side infrastructure off L.A.’s hands and provide a 10% ROI in the bargain.
The fact is the property in question is, at present, the same rusty, moldering, rat-infested mess it had already been for years before SpaceX’s initial interest in the place. The L.A. Harbor Commission’s choices are not between some pie-in-the-sky ROI and whatever SpaceX deigns to grant them, but between the latter and zippity-doo-dah.
It’s unsurprising the deal, as described, is structured to provide most of the benefits to SpaceX during the first decade of occupancy. That’s when most of the expense to SpaceX in rehabbing the place will be incurred. The second and third ten-year intervals stand to make the government some reasonable money, but only if it doesn’t get too stupid or greedy during the initial decade.
Fortunately, the local politicos whose districts include the once-and-perhaps-now-future SpaceX SHS factory site seem inclined to be reasonable. Assuming that SpaceX’s imminent presence results, as anticipated, in additional non-trivial development in the area, said politicos also have sizable incentives not to do any golden goose-icide in coming decades either.
The future of humanity on the Moon, Mars and elsewhere in the Solar System is going to start in just a few years but could last indefinitely. There’s no reason San Pedro – if it plays its cards right – can’t also benefit indefinitely from said future.
Yes, I’ve seen the site. It’s not pretty, but the location is valuable. It does need rehab and a good tenant, but I’m not convinced they should just give it away. The regulatory ROI isn’t pie in the sky, it’s actually rather small compared with many other land parcels in the state.
I’ve always seen the choices for locating spacecraft building sites as completely irrational in the US. Build in CA, ship to TX for test, ship back to CA for integration and then ship the whole thing to FL to launch. Bizarre.
If the San Pedro location was “valuable,” it wouldn’t have been derelict for decades. A thing is worth what someone will pay for it – period.
And it’s hardly being “given away.” The L.A. government stands to get almost $50 million out of the deal over 30 years. That’s not exactly the wealth of Croesus, but it’s sure better than a poke in the eye with a sharp stick.
SpaceX logistics are mainly a consequence of opportunistic acquisition of widely separated bargain sites originally built by others. Still, the U.S. Interstate highway system makes moving rockets and rocket parts by truck quite economical. The SpaceX Hawthorne plant is a – quite literal – stone’s throw from the nearest on-ramp to said highway system.