SpaceX Pulls Out of Terminal Island Lease to Build Rocket to Mars

Elon Musk's SpaceX aerospace firm is pulling out of a deal with the city of Los Angeles to lease an 18-acre site on Terminal Island, where it had planned to build a rocket for manned flights to Mars, Councilman Joe Buscaino said Wednesday.

Buscaino, who represents the San Pedro area, announced the news on Twitter.

"While I feel crushed about #SpaceX pulling the #SuperHeavy out of the @PortofLA, I feel confident that other innovators will see the huge value they get in San Pedro," Buscaino wrote.

SpaceX's reasons for the move remain unclear, but the company said it is moving the rocket-building operation to Texas.

Branimir Kvartuc, a spokesman for Buscaino, told City News Service that SpaceX informed the councilman's office last week it was pulling out of the lease, but Kvartuc did not want to fully comment on SpaceX's reasons.

He said the lease included an option for the company to pull out this coming summer.

"The reason they are pulling out has nothing to do with the Port of L.A., has nothing to do with California, it has nothing to do with taxes. It has to do with materials that they are going to build it with," Kvartuc said.

The City Council unanimously approved a 10-year lease with SpaceX in May of last year, with up to two 10-year extensions at a beginning rent of $1.38 million annually.

"This is game-changing for our city, and for the harbor-area communities," Buscaino said at the time.

The Hawthorne-based rocket maker said at the time that the new facility on the former Southwest Marine Shipyard was to be used to build the company's Big Falcon Rocket -- now referred to as the Super Heavy for the booster component and the Starship for the second stage and spacecraft.

The rocket is being developed for possible missions to Mars and to transport passengers around the world in record time. Musk has predicted that the rocket will be ready for a launch to Mars by 2022. SpaceX already leases 8.1 acres in San Pedro's Outer Harbor, where rocket boosters and other spacecraft returning from orbital missions can be docked, and that operation will remain, according to the company.

"To streamline operations, SpaceX is developing and will test the Starship test vehicle at our site in South Texas," Eva Behrend, a spokeswoman for SpaceX, said in an email. "This decision does not impact our current manufacture, design and launch operations in Hawthorne and Vandenberg Air Force Base in California. Additionally, SpaceX will continue recovery operations of our reusable Falcon rockets and Dragon spacecraft at the Port of Los Angeles."

SpaceX officials said initially the company wanted to use the port for its rocket-building operation so it can ship rocket parts by sea to potential launch sites in other parts of the country, as the vessels would be too large to transport by land.

According to a project description in a California Environmental Quality Act review, "the vessels, once complete, would be too large for delivery by road and thus must be taken via supply barge, necessitating the facility be located adjacent to the water."

Earlier this month, SpaceX announced it will be laying off about 10 percent of its workforce. The company, which carried out a record 21 satellite launches last year, has roughly 6,000 employees. Next month, the company will conduct a test launch of its "Crew Dragon" capsule designed to take astronauts to the International Space Station.