Some Boca Chica landowners reject SpaceX offer


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Capitalism in space: SpaceX’s offer to buy the last homes in the hamlet of Boca Chica for its Starship spaceport has been rejected by some of the landowners.

Their reasons are obvious. They don’t want to move, and they also claim the appraisals SpaceX used to set its price, which the company claims is three times the value of the homes, are too low.

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.”

If they obtained an appraisal five years ago that is less than SpaceX’s now, than SpaceX is certainly not offering them three times the value of their home.

SpaceX does not have the right to condemn these properties, as does the government. It must reach an equable deal with the landowners. In the case of the Heatons and several others, it sounds like this is going to take a lot of money. They want enough so that they can buy something comparable elsewhere.

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20 comments

  • Kyle

    Under Texas law SpaceX does indeed have a right under law for transport projects to claim their property.

  • Kyle: Can you cite and quote this law for me?

  • Calvin Dodge

    Robert,

    It’s a transportation project, so theoretically it’s a public good. https://ftp.dot.state.tx.us/pub/txdot-info/sla/education_series/eminent-domain.pdf

  • Calvin Dodge: I’m sorry, but if I was the landowner here I would fight hard against SpaceX if it tried to use the Transportation Department’s eminent domain authority. This is not a transportation project, and to make believe it is to my mind is a downright lie. DOT’s authority has to do with obtaining right of ways for installing roads from two points in Texas. SpaceX is launching rockets into space.

    So far SpaceX has done nothing to suggest they are trying to use this law for their benefit. Good for them, so far. They need to offer fair prices to these landowners, which in this case is probably far more than the basic appraisal price, for it to be fair.

  • Lee S

    Elon now has deep pockets…. If he/SpaceX has any sense they will pay what needs to be paid to the remaining residents, get them to sign a non disclosure agreement, so as not to annoy the folks who took the lower offers..and move on.
    Nothing but capitalism in action… And I have nothing bad to say about it.
    Everything has a price…. It’s just if the buyer is prepared to pay the price the seller demands.

  • Michael

    It would seem to me that in comparison to the cost of getting to Mars this charge is a mere pittance. Hopefully SpaceX will negotiate in good faith with its eye on the overall prize and not ruin is reputation over this situation.

    I have always felt that this type of situation was a ticking time bomb since the first announcement that SpaceX was going to create a major launch center at Bolsa Chica. I am really surprised that this issue has not been tackled already (speaking for ignorance of all the facts, of course).

  • Cotour

    Lee S: You believe in the market place and two individuals / entities setting a price for something when it comes to real estate?

    Why shouldn’t the government tell the home owners what they will be taking for their property?

    I find that odd.

  • commodude

    Basic appraisals have little to nothing to do with actual fair market value of a home.

  • Cotour

    What would it be based on then?

    Other than if a multi billion dollar company needs to come to an agreement on a price because they may blow you up at some point.

    Comperable values would have to be used to establish some base number. No?

  • commodude

    It depends on what the appraised value is based off of. Comparable fair market values, or assessed values as established by the municipality?

    I read assessed value, not appraised, which normally has little to do with market conditions.

  • Edward

    It seems to me that the offer’s short time limit was a mistake. It gives little time to ponder the consequences of selling or time to find some form of similar housing, which would be a factor in the decision to sell. The similar housing problem is what makes the Heaton couple complain most.

    The time limit also has that “or else” sense to it, which is why so many of us have the idea that SpaceX’s agent may attempt an eminent domain seizure. ‘Sell to us this month, or it will be no more Mr. Nice Guy. (Mwahaha!)’

    According to item 6 of the landowners’ rights listed in Calvin Dodge’s link, “The entity proposing to take your property must make a bona fide [good faith] offer to buy the property before it files a lawsuit to condemn the property“. SpaceX’s agent has now done this.

    Technically this is a transportation project, but as Robert notes it is not the type of transportation that was intended by Texas’ eminent domain law. According to Calvin Dodge’s link, the law intends land seizure to be used for rights of way for highways, not safety zones for rocket launches. “The commission may acquire an interest in real property, a property right, or a material under Section 203.051 only if the commission determines that the acquisition is necessary or convenient to a state highway to be constructed, reconstructed, maintained, widened, straightened, or extended.

    However, adding to our expectation that eminent domain is imminent is the Kelo v. City of New London ruling by the Supreme Court, which allows governments to seize land for non-public use, so long as the government profits from the deal. Did the Supreme Court think that this benefit to the government makes it seem like public use? Whatever they were smoking, they need to go to rehab.

  • wayne

    This is a classic example of the “hold-out” situation. Any time you get more than *about* 5 (on average) people involved in a deal such as this, someone inevitably doesn’t want to go along.

    Don’t have a good link handy, but– Prof Richard Epstein [Chicago & Hoover] has done a lot of good work on this subject.

  • Chris

    Wayne – “Don’t have a link handy”….. It cannot be.
    Your statue comes off the mantle for one week probation.

    A good YouTube of Epstein talking eminent domain could reduce that.

  • wayne

    Chris–
    You are too kind!
    Didn’t have any time to do a proper search for exactly what I wanted, and now I can’t find it! (Increasingly with YouTube– I’m not able to readily locate material I know exists, they are obviously manipulating their algorithm.)
    –there should be something inside this one—

    Richard Epstein on Property Rights, Zoning and Kelo
    EconTalk with Russ Roberts
    https://youtu.be/Ukc42En-ejQ
    41:45

  • wayne

    Chris–
    going way tangential here…
    If I recall correctly, you enjoy Dr. Jordan Peterson

    Peterson Family Update –
    September 19, 2019
    https://youtu.be/SPwaixIuTrU
    8:42
    In brief, (earlier in the Spring) wife Tammy was Dx’ed with terminal kidney cancer and had one removed, followed by complications which almost killed her. The Dr. was stressed outa-his-mind and was prescribed Klonopin for anxiety by his Doc. He then checked himself into rehab when he started having nasty side FX’s from stopping the Klonopin (a fairly potent benzodiazepine).

  • wayne

    SpaceX has no inherent right to acquire this land, they can try to buy it, but nobody has to sell.
    In Reality: SpaceX will enlist the government to take it. They will start at the local level, then move/outward, up as needed. (“Health & safety powers” are always good.)
    –For what exactly is this facility licensed and by what level of government? Therein lies the pesky Administrative Law aspects of all this.

    –assuming SpaceX goes the regulatory route–
    Does the Law of Regulatory Takings Impede Growth or Protect the Community?
    Prof Richard Epstein
    Federalist Society 9-22-09
    https://youtu.be/XmF85sIJSGI
    1:07:15

  • wayne

    “Remembering Poletown”
    Hamtramck, Michigan
    https://youtu.be/8Is3BoqVisw
    2:38

    40 years ago, GM utilized eminent domain and seized the village of Hamtramck to build an assembly plant.
    =thousand of citizens, 100’s of businesses, 6 Churches, and one Hospital all went POOF….for an assembly plant that the government-motor company closed.

  • wayne

    The Libertarian:
    “Understanding Takings”
    Prof Richard Epstein
    June 2019
    https://www.hoover.org/research/libertarian-understanding-takings
    (download or stream embedded audio player)

    –this is however pretty short, given that Epstein wrote a whole book on eminent-domain.

  • pzatchok

    Obviously none of the residents has as of yet expressed a desire to stay at any price. So..

    All Space X has to do is just tell the hold outs to go pick out a house to replace the one they are giving up.

    Just set limits.
    About the same square feet.
    Not ocean front.
    About the same acreage.
    A few months to find it and a few months to move.

    Remove the excuse that a suitable replacement can not be found at a reasonable price.

    Anyone that wants to hold out can deal with the obviously rising home owner insurance that being in a rocket testing and launch/landing zone will entail.

  • Steve C

    It’s a judgment I dislike but Kelo v. City of New London gives the right of public confication for private development.

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