Photo credit: AST SpaceMobile

What to know: The MDC Board of Directors will consider a performance-based economic development agreement with AST & Science, the Midland-headquartered satellite manufacturer known publicly as AST SpaceMobile.

The proposed agreement would pay AST up to $66 million over 30 years if the company builds a satellite manufacturing plant of at least 400,000 square feet at the Midland Spaceport Business Park and invests at least $100 million in the facility and its equipment. The agreement also requires 1,600 positions by 2036, including 1,100 new jobs beyond AST’s existing operations and previous MDC agreements.

The MDC pays nothing up front and commits no future payments unless AST delivers. AST must build the plant, create jobs, make the required investment, and verify its performance before receiving any incentive payments. The MDC board will review the proposal on Monday, July 20. If approved, it goes to the Midland City Council for consideration on Tuesday, July 21.

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Catch up quick: The MDC is a Type A economic development corporation (EDC). Midland voters created the MDC in 2002 and dedicated a quarter-cent of the city’s sales tax to fund it. That sales tax generates about $15 million a year for the MDC, and they collect it whether or not the MDC ever spends a dime.

The MDC cannot use the money for general city expenses such as police, parks, or routine street maintenance. Some residents oppose government incentives for private businesses as a matter of policy, but that is a debate over state law. Under current Texas law, Type A EDCs exist specifically to recruit manufacturing and industrial employers that create jobs and investment.

Why it matters: At full buildout, the MDC projects about 1,800 direct jobs, making it one of the largest private employers in Midland and one of the region’s largest non-oil employment centers. The agreement requires an annual payroll of at least $128 million by 2036. That works out to an average compensation of about $80,000 per job, including benefits.

The MDC currently collects about $15 million in sales tax each year. If collections stayed at today’s level for the agreement’s 30-year term, the corporation would receive roughly $450 million. The proposed agreement caps total payments at $66 million over that period, about 15% of those collections.

During the years when payments are highest, AST could receive about $4 million, roughly one-quarter of the MDC’s current annual sales tax collections. However, AST only receives those payments if the company continues to meet its job, payroll, and investment commitments.

What they’re saying: “At the end of the day, this agreement is designed to protect the community long-term,” MDC Board Chairman Brad Bullock told The Permian Press.

“We’re excited about the future of AST and what its growth could mean for Midland,” Bullock said. “It has the potential to be a real game changer for diversification and create great jobs for years to come. But AST doesn’t get a check just for showing up, they have to deliver on their commitments first. We think that’s the right balance: supporting a tremendous opportunity while protecting taxpayer dollars.”

The big picture: The proposed agreement contains three performance-based incentives, all capped.

  • Rent reimbursement: Up to $16 million over 30 years to reimburse AST’s lease payments on city-owned airport land. Because AST leases city-owned land, those lease payments ultimately go into the city’s airport fund.
  • Annual performance payments: Up to $30 million total ($3 million annually from 2027-2036), paid only after certification that AST has met the agreement’s annual job and payroll requirements.
  • Expansion incentive: Up to $20 million more from 2037-2042, but only if AST exceeds the base agreement by growing to at least 1,800 jobs, a $135 million annual payroll, and $150 million in investment by the end of 2038.

Construction must begin by March 2027, and the building must be substantially complete by March 2029. The agreement also allows AST to ask for up to an additional $10 million if it reaches 2,060 jobs and a $164.8 million annual payroll by 2038. However, the MDC did not promise that money, and that money is not part of this agreement. It would require separate future votes by both the MDC board and City Council.

Go deeper: There are no guaranteed annual payments, and AST has to earn every payment, every year. The MDC will reduce or eliminate payments if AST fails to meet its job, payroll, or investment requirements, and may claw back previously paid incentives if AST misses major milestones.

If the plant is not substantially complete by 2029, AST must repay any payments it received during construction. If the company invests less than the required $100 million by 2034, it must repay incentives equal to the shortfall amount, plus 7% annual interest.

If AST shuts down the plant for more than 180 days or its workforce falls below 120 employees for two consecutive quarters, the MDC can end the agreement and recover up to 100% of the incentives it paid during the previous two years.

The MDC also has the right to audit AST’s records, review state workforce filings, and inspect the plant to verify the numbers behind the payments. The agreement does not include property tax abatements or sales tax abatements.

Zoom out: AST SpaceMobile is building what it describes as the first space-based satellite network that connects directly to ordinary smartphones. The company has agreements with more than 50 mobile network operators worldwide, including AT&T and Verizon, covering a combined subscriber base of approximately 3 billion.

In January, the U.S. Missile Defense Agency selected AST as a prime contractor for its SHIELD program, positioning the company to compete for future missile-defense work. In February, the U.S. Space Development Agency awarded AST a contract to demonstrate tactical satellite communications using its commercial satellites.

AST is still in a heavy spending phase before full commercial revenue begins. The agreement addresses that risk by requiring AST to show it has the funds to build the plant before the MDC owes anything.

The bottom line: Weighing opportunity cost is comparing one real choice against another. The alternative to approving this agreement is leaving the funds uncommitted while waiting for another project that may or may not materialize. Midland voters created the MDC to recruit jobs and investment, not simply build larger cash reserves. Deals like this are why the MDC exists.