BROWNSVILLE, TEXAS (ValleyCentral) — Back in November 2021, the city of Brownsville made a big announcement.
The city’s economic development arm, the Greater Brownsville Incentives Corp., had partnered with a Canadian entrepreneur to bring space-related businesses to Brownsville.
J. Brant Arseneau made quite the impression.
He talked about becoming the J.P. Morgan of space. He name-dropped “Elon, Jeff and Richard.” And he said Brownsville reminded him of Silicon Valley in the 1990s.
“I don’t want to miss that opportunity to be here when Brownsville becomes the Silicon Valley of space,” Arseneau said during a news conference in November 2021.
The Greater Brownsville Incentives Corp. paid $750,000 to 9Point8 Capital and Spaced Ventures, two corporations linked to Arseneau.
Nearly two years later, Brownsville has little to show for it, according to a report prepared by the city auditor.
Brownsville sent a Notice of Default and Demand for Repayment to 9Point8 Capital in May, attempting to claw back $500,000.
During the audit, questions surfaced about whether or not the Greater Brownsville Incentives Corp. conducted background checks and took other basic steps before handing over hundreds of thousands of dollars.
“Based on the lack of files, prior GBIC management and personnel did not keep files and did not verify existence and registration of the entity called 9Point8 Capital (company), documented to be a New York Corporation, before signing the Performance Agreement September 29, 2021 (agreement). Therefore, no one found that the company used an ‘assumed name’, also known as a ‘doing business as’ or ‘dba’, and incorrectly recorded the company’s state of formation and legal status to do business in Texas in the agreement,” according to the audit. “No background check on the founder was done or documented and documentation was not kept in entity files.”
Brownsville City Manager Helen Ramirez, who previously served as CEO of the Greater Brownsville Incentives Corp., told NBC 23 the city has addressed the problems identified by auditors.
The city of Brownsville also released a statement on the agreement with 9Point8 Capital:
The City of Brownsville (COB), in conjunction with the Greater Brownsville Incentives Corporation (GBIC), has initiated legal action to recover $500,000 in grant funds that were awarded to 9Point8 Capital, in 2022, for the recruitment of business development in support of the growing aerospace industry in the City of Brownsville.
The grant was awarded to 9Point8 Capital with the expectation that the company would adhere to specific rules and regulations outlined in a performance agreement entered into with GBIC to recruit businesses and jobs to Brownsville related to the aerospace industry. However, a City audit found that 9Point8 Capital has not complied with these stipulations.
Recognizing some of the challenges to this industry nationally, the City of Brownsville Office of the City Attorney, in collaboration with GBIC, twice previously issued notices to 9Point8 Capital, informing them of their breach of agreement and inviting them to update their business plan toward compliance. These letters were reviewed during a recent checks-and-balances by the City Auditor’s Office. The notices advised that failure to comply with the original terms and conditions of the performance agreement would necessitate the return in full of the $500,000 in incentive funds.
These notices were sent in accordance with the terms set out in the performance agreement, which was executed by J. Brant Arseneau, Founder and Partner of 9Point8 Capital. As of August 24, 2023, 9Point8 Capital has not responded to either notice or provided any updates or indications of compliance.
The City of Brownsville and GBIC now actively are pursuing the recovery of the $500,000 incentive grant and are considering all legal avenues available and law enforcement as appropriate. Once recovered, GBIC intends to reinvest those funds in new job opportunities across emerging and expanding industries as it relentlessly pursues economic development initiatives in Brownsville.City of Brownsville
Arseneau and Aaron Burnett, the CEO of Spaced Ventures, did not respond to requests for comment.