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Ambitious plans for space economy in Brownsville area have flamed out

A space-themed mural by Rogelio Ortiz on 9th Street in downtown Brownsville.
Gaige Davila
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TPR
A space-themed mural by Rogelio Ortiz on 9th Street in downtown Brownsville.

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Editor’s Note: This story was updated on August 19, 2023, at 4:30 p.m.

During the height of SpaceX fever in Brownsville, city officials rephrased the city's motto, “On the border, by the sea,” by adding, “and beyond.”

Brownsville claimed it was on its way to becoming the new “Silicon Valley of Space.” Officials publicized the arrival of space industry startups and venture capital funds. However, a recent compliance audit conducted by the city suggested that few of the companies publicized by officials remain today.

The audit, which describes a partnership between the city's economic development corporation and 9Point8 Capital, a venture capital firm, found that some of the businesses that promised to set up shop in Brownsville may have never established themselves after their publicized arrivals.

The City of Brownsville did not respond to TPR's requests for comment.

J. Brant Arseneau and the venture capital firms building 'New Space City'

Joseph Brant Arseneau speaks at a press conference hosted by the Greater Brownsville Incentives Corporation on November 8, 2021.
Screengrab
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YouTube
Joseph Brant Arseneau speaks at a press conference hosted by the Greater Brownsville Incentives Corporation on Nov. 8, 2021.

9Point8 Capital is a space-focused venture capital firm, one of several companies promoted by former Mayor Juan "Trey" Mendez and then-GBIC Executive Director Helen Ramirez as the future of Brownsville's new space economy. Joseph Brant Arseneau, the company’s owner, said in a November 2021 press conference that 9Point8 Capital would help Brownsville pioneer the new space industry.

The city-led audit of the $1 million, two-year contract between 9Point8 Capital and the Greater Brownsville Incentives Corporation (GBIC) showed that the company’s plans to operate in Brownsville never came to any meaningful fruition. According to the audit, GBIC paid 9Point8 Capital $250,000 within five days of the contract being signed in October 2021, then another $250,000 in April 2022, without the company proving it had done any work.

GBIC is the city’s “Type A” economic development corporation, tasked with attracting and financing large job-creating industries, usually in manufacturing, to Brownsville. Organizations like GBIC can also help businesses secure permits, find sites and arrange job training.

GBIC’s contract with 9Point8 Capital said the company had to employ at least 20 people, create $10 million in taxable property, fund program scholarships for the University of Texas Rio Grande Valley, create a “hatchery” to find funding for space businesses coming to the city and attract capital investors to Brownsville-based space startups, according to the audit.

9Point8 Capital founder Arseneau had already made another agreement with the GBIC under a different company, Spaced Ventures, which the audit stated paid him $250,000 over the span of two years to bring more space startups to Brownsville and employ four people.

The audit found that Arseneau had not done any of this.

In September 2022, GBIC gave Arseneau six months to show proof of establishing in Brownsville and making progress on the business. On May 11 this year, GBIC attempted to recover the $750,000 it gave Arseneau through a clawback provision, according to the audit.

At the time of the audit’s publication, the money had not been recovered. The City of Brownsville’s auditing department wrote that it last attempted to contact Arseneau in late April, where they were “referred to contact his attorney.” TPR’s attempts to contact Arseneau were unsuccessful.

According to interviews by the city’s auditing department of former consultants hired by 9Point8 Capital, the company’s management felt they could not satisfy the hiring requirements because “they could not find qualified employees.”

Space-centric housing

Astreia's "Habitat Zero" housing project rendering.
Courtesy photo
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City of Brownsville
Astreia's 'Habitat Zero' housing project rendering.

Astreia’s goal was to help develop housing for the first SpaceX settlement on Mars, and the space startup planned to use Brownsville to build a prototype on Earth they called “Habitat Zero.”

The project was championed by the City of Brownsville, with Mendez affirming local demand for the project as “immediate relief to the urgent and rising housing needs of our growing aerospace and technology sectors.”

In March 2022, Brownsville’s city council rezoned a portion of land along Highway 4, the lone road to SpaceX’s Boca Chica facility, to accommodate Habitat Zero. Mendez touted the project in a now-deleted Facebook post. “Thank you Astreia for believing in Brownsville,” Mendez wrote.

A few months after the rezoning, Astreia announced that it would break ground on the 25 acres with homes move-in ready by early 2023. In May 2022, Astreia’s founder and CEO Natalie Rens rented a warehouse space from the airport, which she announced in a tweet, to develop the homes, a source told TPR. Astreia is not currently listed as a tenant in the airport.

None of the planned 125 homes appear to have been developed, even after Rens sold at least one home to a UTRGV student.

A For Sale sign advertising the property rezoned for Astreia's "Habitat Zero" housing development. The land sits along Highway 4, the lone road to SpaceX's Boca Chica Beach facility, and borders the Brownsville South Padre Island Airport boundary.
Gaige Davila
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TPR
A For Sale sign advertising the property rezoned for Astreia's 'Habitat Zero' housing development. The land sits along Highway 4, the road to SpaceX's Boca Chica Beach facility, and borders the Brownsville South Padre Island Airport boundary.

Astreia’s previous website allowed visitors to view Habitat Zero’s floor plans, with an option to make a deposit to secure a home. The link to that website is now dead, and the company’s social media accounts have been deactivated.

Astreia has since rebranded as “Astrea.” According to the company’s X profile, Astrea is based in Miami, a city that has spent the last two years trying to attract crypto and tech startups. Rens’ profile, which stated Rens has not been active since June, claimed she is based in Miami.

Astrea’s homes are now focused on “support[ing] athletes and high performance individuals,” according to Rens’ website, with the goal still to develop these homes on Mars.

In a YouTube video Astrea published promoting Habitat Zero, a user purporting to be Rens wrote in response to a question about the homes that Astreia faced an “insurmountable challenge” with the property and shifted their plans “elsewhere.”

The company’s new website has no interactable elements, except an email address, which did not respond to TPR's questions about the status of the company’s Brownsville development.

A vacant home sits on the property rezoned for Astreia's "Habitat Zero" project.
Gaige Davila
/
TPR
A vacant home sits on the property rezoned for Astreia's 'Habitat Zero' project.

The property, which borders the Brownsville South Padre Island International Airport and curves along a resaca, sits vacant. The land is for sale now. The property’s broker, Mark Johnson, told TPR that Rens walked away from the project after she couldn’t secure investors or afford the property’s increasing interest rates.

TPR’s attempts to contact Rens were unsuccessful.

Brownsville’s air taxi service never takes flight

Paragon VTOL Aerospace is one of several companies owned and founded by Dwight “Thanos” Smith, a self-proclaimed pilot and entrepreneur from Jamaica. Smith is chief visionary officer and lead inventor at Paragon.

Paragon VTOL Aerospace arrived in the city around the same time 9Point8 Capital signed its contract with the GBIC. A city press release said the company would provide 50 air taxis for use in Brownsville by 2025.

In June 2021, GBIC announced that Paragon VTOL Aerospace was moving its manufacturing to the city. Specifically, the company was moving its manufacturing hub to the Brownsville South Padre Island International Airport. Mendez called the move the “first step” in establishing Brownsville as “New Space City.”

A piece of a Starship prototype on display at the Brownsville South Padre Island International Airport. The piece was given to the city by SpaceX.
Gaige Davila
/
TPR
A piece of a Starship prototype on display at the Brownsville South Padre Island International Airport. The piece was given to the city by SpaceX.

In a Facebook post, Mendez said Smith chose to relocate Paragon VTOL Aerospace to Brownsville without any incentives offered by the city. GBIC never entered into a financial partnership with the company.

Smith said in a June 2021 press conference that the company would start by building package delivery drones, then move onto cargo aircraft before ultimately producing passenger aircraft. He said the cargo aircraft would be unveiled in 2022.

Two months later, in September, the city and GBIC held a second press conference for Paragon VTOL Aerospace, this time with Smith announcing that the company now had a chief executive officer and a chief financial officer. The executives, Ken Peterman, who is the CEO of ComTech, and Jeff Mobley, a financial consultant for CirclesX, respectively, do not mention Paragon VTOL Aerospace on their LinkedIn profiles.

Smith said the company would partner with Texas Southmost College (TSC) as a workforce trainer in microgrid, aircraft and software development. A host of other companies were part of the partnerships, according to the city, including Rolls Royce, which builds aircraft engines.

The following year, TSC approved a contract with Paragon VTOL for students to construct a drone for the company. The contract, which had Paragon VTOL Aerospace paying around $41,000 for the drone’s construction, was approved during the TSC board’s August 2022 meeting. It was the last time the company was mentioned in a meeting agenda. It was not clear whether the drone was built or used.

That same month, GBIC gave Brownsville Independent School District (BISD) $86,000 for a drone academy led by Paragon VTOL Aerospace.

Updates from the city or Paragon VTOL Aerospace on the air taxi or drone programs have stopped. Regardless, Paragon VTOL Aerospace’s Facebook is still posting about its Brownsville-based partnerships, such as with the school district and TSC.

TPR requested the contract and communications between Paragon VTOL Aerospace and TSC. The college did not respond to TPR's requests to confirm whether it is still partnered with the company. A spokesperson for BISD said that the district had a year-long contract with Paragon VTOL Aerospace for a drone academy in 2022, but the contract was not renewed.

Little information is available about Smith or his companies. An article in the Jamaica Observer said Smith was living in California before relocating to Brownsville. In the same article, Smith said he built a glider plane at when he was 7 and was flying planes regularly by the time he was in high school — a story he also shared during the city’s first press conference with Paragon VTOL Aerospace.

Dwight Smith, founder of Paragon VTOL Aerospace, speaks at a press conference hosted by the Greater Brownsville Incentives Corporation on June 17, 2021.
City of Brownsville
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YouTube
Dwight Smith, founder of Paragon VTOL Aerospace, speaks at a press conference hosted by the Greater Brownsville Incentives Corporation on June 17, 2021.

According to Texas tax data, Paragon VTOL Aerospace has a mailing address inside a Houston office building and was incorporated in Delaware. The company’s YouTube channel promotes a small electric car called NVI EV, a product of another of Smith’s companies, NV Motor Group. It’s unclear whether those cars are currently for sale or if they are manufactured in Texas.

Videos on the company’s YouTube channel uploaded in June promote the Paragon VTOL Aerospace and GBIC press conference from 2021. Other than animated promotional videos that show the aircrafts’ designs, there were no videos providing updates on the status of the air taxis or the company’s aircraft development.

TPR could not confirm whether Paragon VTOL Aerospace ever began manufacturing aircraft at the Brownsville airport. The company is not currently on the airport’s tenant list. Bryant Walker, the city’s airport director — who will soon leave for a Federal Aviation Administration job — did not respond to TPR’s questions asking if Paragon VTOL Aerospace was manufacturing at the airport.

Paragon VTOL Aerospace did not respond to TPR's request for updates on its business plans in Brownsville.

Did any space companies successfully make Brownsville their home? 

Adams Street in downtown Brownsville, home to artist Pop Culture's "Boca Chica to Mars" mural.
Gaige Davila
/
TPR
Adams Street in downtown Brownsville, home to artist Pop Culture's 'Boca Chica to Mars' mural.

A few space companies did establish in Brownsville during the heyday of SpaceX test launches. This included Expanding Frontiers, a space entrepreneurship business based in Brownsville that the Brownsville Community Incentives Corporation (BCIC), the city’s “Type B” economic development corporation, gave money to.

Another company was Space Channel, from Los Angeles, which sought to be a global news channel for all things space and SpaceX in Brownsville. The company hoped to document regular launches of SpaceX’s Starship rocket.

Space Channel was introduced to the City of Brownsville by 9Point8 Capital founder Arseneau, through his other company, Spaced Ventures, according to the city audit. Space Channel announced it would move its headquarters to Brownsville from Los Angeles in April 2021. The 9Point8 Capital audit also showed that GBIC made a two-year, $500,000 agreement with Space Channel.

But the Starships stopped launching by the time the Space Channel arrived. SpaceX had not launched a Starship since May 2021, the month after the city announced Space Channel’s move. Starship would not launch again until April 20, 2023. Space Channel would continued to report on the Starship program for a year and produced a documentary.

But with no Starships launching and with limited activity at the launch site, Space Channel pitched an internship program to the GBIC for the company’s second year production. GBIC accepted, and Space Channel moved into the South Hall of TSC.

The internship program focused on studio production and editing, with students producing newscasts about the Starship program. After a season, Space Channel approached the city for more funding. The city declined, according to Space Channel’s CEO, Chad Mallam.

Mallam was interviewed by the city in its audit of the 9point8 Capital agreement, telling officials that he lived in Brownsville for 14 months at the time of the audit. Mallam told the city that as far as he knew, he was the only CEO of a space-related startup that moved to Brownsville.

“He also added that he did not receive the assistance from the [City of Brownsville] that he understood would be forthcoming and he believed no one had done the research to understand what was needed for the company to be successful,” the audit read.

Mallam confirmed to TPR that Space Channel was no longer active in Brownsville and was considering moving the operation elsewhere.

TSC did not respond to TPR's questions about its partnership with Space Channel.

Does Brownsville still want to be New Space City?

An alley in downtown Brownsville.
Gaige Davila
/
TPR
An alley in downtown Brownsville.

The space industry is projected by some analysts to reach $1 trillion in revenue, a statistic often cited by Mendez during his mayoral term.

That’s because going to space is expensive, as SpaceX knows. Though the National Aeronautics and Space Administration (NASA) was the at forefront of space development in past decades, spaceflight development has since largely moved into the private sector. SpaceX has received NASA contracts to go back to the moon before the end of the decade, as has Amazon CEO Jeff Bezos’ Blue Origin. SpaceX CEO Elon Musk said he plans on spending at least $2 billion on Starship development this year.

Those high costs are not limited to the giants of the new space industry, however, which is why it’s difficult for smaller companies to get into the industry, according to Robert Hebner, the director of the Center for Electromechanics at The University of Texas at Austin and an expert on technology and economic development.

The space industry comes with significant financial risk, Hebner said. While it’s not uncommon for economic development initiatives to fail, a city staking its economic future on a single industry is, he explained.

“Most cities won't take that risk, just because the downside risk is too big,” Hebner said. “If you fail as an entrepreneurial developer, you just get to try it again. If you fail as an elected city official, you're out of a job. So it's a very different risk scenario. That's why most of this development is done in the private sector and not with cities or states.”

Hebner said city officials need to invest better, and more broadly, into space and other industries in the hopes of recovering losses. If SpaceX ends up succeeding in the way Musk hopes, the city should embrace the space companies that would likely come to the area, Hebner added.

“The worst case scenario, from my point of view, is that if SpaceX succeeded, Brownsville felt like they got their fingers burned by trying to help Brownsville grow in the space area, and they tried to run away from it,” Hebner said. “It would be a lose-lose situation.”

While Mendez did not lose his job, he did not run for mayor again. Like in years past, he mentioned SpaceX during his final State of the City address this year, which was held a day before SpaceX’s Starship launch.

Mendez also mentioned in his address the $150,000 Launch BTX grant given to spacecraft and satellite radiation shielding company Cosmic Shielding, signaling that the city was still interested in the new space industry. However, that grant,which is overseen by GBIC, has since been put on hold, and is currently “under review,” according to the GBIC’s website.

Mendez did not respond to TPR's request for comment.

Before Helen Ramirez was selected to lead GBIC in the interim, the corporation and its former executive director, Mario Lozoya, were heavily scrutinized for an improperly vetted land deal. A city audit after the purchase ended in the city commissioners disbanding the entire GBIC board of directors and Lozoya resigning.

Two months after the board was cleared, Ramirez was tasked with repurposing a stagnating $13 million budget to bring more economic development to the city. The previous board, according to then-interim GBIC board chair John Cowen, now Brownsville’s mayor, was not using the money effectively. Cowen told the Brownsville Herald that, under Ramirez’s leadership, GBIC would see “quick wins” in the short term.

Those “quick wins” included GBIC partnerships with Spaced Ventures, 9Point8 Capital, and the Space Channel, along with the corporation promoting Paragon VTOL Aerospace’s move to Brownsville.

Ramirez, who worked for the City of Hawthorne, California, where SpaceX is headquartered, before coming to Brownsville, focused on the new space industry as part of her economic development plan.

Seeking to improve the image of GBIC after Lozoya’s term, Ramirez promoted the companies and signed off on partnerships without GBIC properly vetting them, according to people familiar with the matter.

The city’s audit of GBIC’s partnership with 9Point8 Capital also noted this. The audit said GBIC had “inadequate” policies that relied on Arseneau to prove 9Point8 Capital was operating as promised in Brownsville.

The audit recommended that GBIC develop better vetting systems to use when considering partnering with companies, including running background checks on the businesses and their owners. According to the audit, GBIC did not complete a background check on 9Point8 Capital. If officials had done so, they would have found that Arseneau had not registered the business with the county or state, the audit stated.

“There's really good ways in which you can create agreements with clawbacks and the like, that can still assist the company in its endeavors within the city while still doing your due diligence,” Nathan Burkhart, director of business development at BCIC, told TPR.

He added: “You can still do all that, and then if you share a stage or you have some great posts or photos, that can kind of come back and haunt you. That is a gamble that I feel like any sort of city can take.”

GBIC, which recently hired a new executive director, did not respond to TPR's requests for comment.

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