Texans are demanding their local governments push pause on data centers. Can they?
From Amarillo to Waco, College Station to Harlingen, Texans are raising concerns over the proliferation of data centers — and the tremendous amounts of water and energy they are poised to suck up.
Seemingly overnight, these sprawling campuses of computer servers meant to store information from websites and power artificial intelligence are popping up all over the state.
Just this month, the largest proposed data center in the U.S. was approved in Pecos County. That follows the start of construction of a $500 billion data center on the outskirts of Abilene and a planned 5,800-acre project in the Texas Panhandle that will include the world’s “largest energy campus,” according to its backers.
Together with more modest proposals near Waco, and just outside of Harlingen, Texas is emerging as a contender to challenge Virginia’s dominance in data centers.
In many of these places, Texans are demanding local elected officials intervene.
The small town of Lacy Lakeview north of Waco is partnering with the developer Infrakey on a proposed $10 billion data center, drawing an organized opposition campaign from rural neighbors around the 520-acre site.
Since November, the opposition has circulated a petition with some 3,000 signatures, created a Facebook group and website and held regular strategy meetings that have been attended by political leaders such as state Rep. Pat Curry, R-Waco.
Rena Schroeder, a Republican candidate for Texas Senate District 22, has also made appearances at the meetings, promoting herself as the voice for rural data center opponents.
Similar grassroots resistance efforts are taking place across the state.
In Harlingen, several residents addressed the City Commission during a public meeting after learning of a developer’s plan to build a data center in their area. They asked their elected officials to oppose the development, citing water and electricity use concerns.
The South Texas city officials said they have no power to intervene since the site is outside city boundaries.
In North Texas, Hood County leaders rejected a proposal to pause data center construction after a state senator threatened legal action.
As public outcry mounts over concerns about water and power usage, mayors and other elected officials claim they are powerless to stop the inevitable. But while city and county officials’ control over data center development may be limited, they have tools available to protect the public from some of the effects of the projects.
The Texas Tribune and Waco Bridge set out to answer some of the thorniest questions about data centers and the role that local elected officials play in where they’re built.
What are data centers?
Data centers are facilities that store large-scale computing infrastructure. They store all kinds of digital data.
“Data centers are really the brain of the internet,” said Dan Diorio, vice president of state policy with the Data Center Coalition, an association for members of the data center industry. “Data centers are really a far more efficient way of doing all the computing and processing we need.”
They’ve gained a lot of attention as artificial intelligence has become more prominent in everyday use. But while data centers to power AI are gaining traction, Diorio said the vast majority of data centers built today are for cloud infrastructure — a mix of hardware, software, data storage and other components that allow people to access virtual resources.
What are they promising local communities?
Data centers projects tend to come with the promise of jobs and a massive boost to local property taxes. However, those jobs aren’t always long-term.
Infrakey’s $10 billion data center proposal near Waco would be the largest industrial development in McLennan County history, generating $50 million a year in tax revenue for Lacy Lakeview and its 7,000 residents, according to company officials.
“For the city, a tax base of this quantity is a paradigm-changer for us,” Lacy Lakeview Mayor Charles Wilson told the Waco Bridge in November. Wilson has defended the project as the solution to years of underfunding for streets and other city services. Tax base considerations were also central to negotiations with the CyrusOne project northwest of Waco in Bosque County, population 19,000.
That data center, which is already under construction, is projected to increase Bosque County’s tax revenue by 120% or $70 million over the next three decades, according to county officials.
Texas cities statewide are facing tight or deficit budgets. And their ability to raise additional revenue is constrained by state laws, which may become even more restrictive in the next legislative cycle.
That could explain why small and rural municipalities are some of the most ardent boosters of data center development in Texas. And many of the same cities with revenue shortfalls also struggle to create jobs, which data centers have promised to provide, too.
Eneus Energy, the developer of the RGV Data Center Project near Harlingen, is projecting about 1,000 new jobs. Of those, about 360 would be data center jobs, according to the company’s website which does not clarify what the remaining positions would be.
The company also expects more than $14 billion in capital investment in Cameron County and more than $9 billion in total economic impact through 2045.
The projections are based on a study produced by Mangum Economics, a Virginia-based research firm. But Eneus states that the projections “are not guarantees of future outcomes,” according to its website.
The Texas data center market produced 61,060 direct jobs in 2023, and the projects are the main source of construction activity throughout the country, Diorio said.
In one year, from May 2023 to May 2024, data center construction increased by 69% across the U.S., Diorio said.
He added that they also contribute to local tax revenue, contributing $3.5 billion in Texas state and local tax revenues in 2023. Meanwhile, ConstructConnect News, a trade publication for the construction industry, sounded a note of caution in September when it comes to the long-term prospects for data center job creation.
“While massive data centers mean short-term construction jobs and add revenue to local municipal tax rolls, the longer-term employment picture is not as rosy. Completed data centers don’t require a high number of long-term workers,” ConstructConnect reported, citing the 1,500 workers needed to construct Abilene’s Stargate Project data center, and the approximately 100 required to operate it once complete.
“(That’s) a fraction of the number who might work in a similarly sized commercial development like an office park, factory, or warehouse,” the report states.
State tax incentives don’t necessarily encourage high job creation either.
To qualify for state sales tax exemptions, a data center of at least 100,000 square feet is only required to create a minimum of 20 jobs.
Why are some residents concerned?
Many of the Texans who have shown up to town halls and city council meetings are worried data centers will use up resources such as water and electricity, potentially driving up costs for people in low-income areas.
In College Station, city leaders rejected the sale of property to a data center developer after mounting pressure from residents who raised concerns over water and electricity usage. If the deal had gone through, the developer would have been required to find its own source of electricity to not tap into the city’s power transmission system. It would have had to find its own water source if it planned to use more water than the city had already allocated for that area.
“Even though you may not be drawing on our water or our electricity, you’re drawing on somebody’s water, and somebody’s electricity somewhere,” said Mayor John Nichols. “And that is a thing that we don’t want to see our city participating in.”
In Harlingen, where residents raised similar concerns, the city-owned utility entered an agreement to provide a company with more than 4.6 million gallons a day of reclaimed waste water for a data center. The city of McAllen, with a population of about 150,000, uses an average of 23 million gallons of water per day.
The company states that its use of wastewater will allow it to avoid tapping into the potable water supply.
Tammy Lozano, a Harlingen resident, was among those who addressed the commission over her concern about data centers. Lozano had previously lived in Northern Virginia, an area leading the country in data center development with more than 250 facilities.
From what she’s learned about data centers there, Lozano worries that the few jobs created by the project will not outweigh the potential harm to the community.
“I’m afraid that what’s going to happen is that we’re going to be used by the folks who run these data centers,” Lozano said. “They’ll use us for our water and our energy, not provide jobs, not provide economic stability, and I’m afraid it could literally destroy the town.”
What are local elected officials saying?
City and county elected officials have told their incensed residents that they have little power to put limits on data centers that are swooping up large parcels of land.
After concerns and questions raised by Harlingen residents, Cameron County Judge Eddie Treviño issued a statement saying that the county would do its research into data centers, but that the county’s authority was limited.
“When a business seeks to invest in Cameron County and complies with all applicable standards, permitting requirements, and resource arrangements that fall outside the Cameron Court’s authority, we have limited ability to restrict that business’s operations,” Treviño said.
In El Paso, where a data center for Meta had prompted opposition, the city’s electric utility said it was required to provide service to any customer that requested it.
But some city officials, like those in College Station and Bryan, are trying to be proactive by considering possible guardrails that the city can implement in case of future data center proposals.
Do local elected officials have any power?
A governmental entity, whether it’s the city or the county, can’t say no, just for the sake of saying no or because it’s controversial, said Trey Wilson, a real estate lawyer from San Antonio with experience in land use law and who served as counsel to water districts in Texas.
Otherwise, the developer could sue the governmental entity for deprivation of private property rights. But within those limitations, there remains a lot of power in local government, he said.
Cities can control what happens within their limits through land use and utility control, while counties have no zoning authority and typically don’t operate utility systems.
City zoning maps determine what categories of uses are allowed in a given area, and if a data center project doesn’t have the needed zoning, it would have to secure a rezoning or variance.
Additionally, cities often control the water and electrical utilities needed for development, as in the case of College Station. Often, a city will require a developer, whether it’s a data center or a housing subdivision, to bring new water supply with them on condition of approval. The same thing applies to electricity usage.
“They don’t have a right to refuse service to a customer, they’ve got to make service available on reasonable terms,” Wilson said. “But if they already are struggling to keep up with existing demand or planned future demand, they have a right to impose conditions for approval on a new heavy water user.”
Existing city ordinances can come into play as well. If a data center creates a nuisance that violates zoning regulations, such as noise or light pollution, a government is not obligated to grant a variance to the developer.
In many instances, data centers are being built and proposed in areas outside city boundaries.
County governments have far fewer tools to regulate data centers — or any business for that matter. But counties do get to decide who gets tax breaks. And if county officials wanted to kill a project, they could refuse to extend favorable terms.
Nicholas Miller, policy associate with the National Conference of State Legislatures, said these companies look at a variety of factors when deciding where to build a data center, including cheap land and cost of construction. But incentives are definitely a factor too.
“They are keenly aware of incentives,” Miller said. “In a state like Texas, where state-level regulation is already set, if you’re just comparing cities or just comparing counties, whether or not a particular city or county is willing to offer an incentive, I think, would be a pretty significant factor.”
Jeff Snowden, principal at Capex Consulting Group, a Frisco-based financial consultancy specializing in tax abatement negotiations, said he was not aware of any data center projects that went through without an abatement, an indication of how important they are in a developer’s decision of where to locate.
Snowden said counties can also impose restrictions on county road usage, and they have permitting authority over on-site sewage facilities such as septic systems. But aside from that, any other safeguard a county could impose would have to be through a tax abatement agreement with the developer.
Bosque County in rural Central Texas recently contracted Capex Consulting to negotiate a tax abatement with data center developer CyrusOne. The abatement for the 400 megawatt facility along the Brazos River included a condition to repair and rebuild roads damaged during construction, which was approved by Bosque County officials in November 2024. The agreement also included a “buy local” provision for local manufacturers, suppliers and labor, and required CyrusOne meet employment and economic impact goals to retain the tax incentives.
A well-structured agreement can embed noise and light reduction, setback requirements, vegetative screening and more into the performance metrics, Snowden said.
“That’s where the counties can really work with constituents and impose those restrictions,” he said.
What is the state doing?
Through last year, state leaders, including Gov. Greg Abbott, had forged ahead with a vision of Texas as the country’s leader in data center development, leveraging the state’s reputation for abundant gas supply and business-friendly regulations to attract billions in investment. At the same time, Republican leaders have taken steps to limit the power of local governments to enact rules in the interest of their residents.
That said, the state has taken belated steps to account for the rapid spread of data centers and other large, energy-intensive facilities. In 2025, the Texas Legislature passed a bill establishing requirements for companies that consume large amounts of electricity to run, such as industrial and petrochemical facilities and data centers.
Through Senate Bill 6, the Electric Reliability Council of Texas has the power to oversee energy transactions between power generators and large consumers like data centers that didn’t ordinarily involve the state’s grid. ERCOT also has the authority to cut their power and redistribute it during an emergency.
In parts of Texas where electricity comes predominantly from a single source, such as a municipal utility or an electric cooperative, companies interested in that power are expected to pay for the cost of that connection.
As Texas voters increasingly demand action on data centers leading into the March primary elections, the political momentum around regulating the industry has accelerated.
In February, the State Republican Executive Committee, which sets party priorities for the next legislative cycle, passed a near-unanimous resolution calling for “rigorous independent assessments” of proposed data center projects and their impact on grid reliability and water shortages before final approval. The resolution additionally called for a pause on “open loop” data centers, which use the most water to cool computer chips, as well as several other oversight and local control measures.
Republican Texas Senate District 22 candidate Rena Schroeder has made opposition to data centers the centerpiece of her campaign, while Schroeder’s Republican primary opponents – state Rep. David Cook and Jon Gimble – have embraced a more moderate but still critical stance on the industry.
Texas Senate District 22 encompasses several counties in Central Texas, including McLennan, Bosque and Hill Counties, each with contentious data center developments planned or under construction. On Wednesday, Cook’s campaign announced his commitment “to filing comprehensive legislation addressing data center development.”
Texas Agriculture Commissioner Sid Miller also wants to protect farmland from being converted into data center sites by creating federal or state-designated Agriculture Freedom Zones that would offer tax incentives for data center developers to build elsewhere.
“The unchecked spread of data centers onto prime farm and ranchland is a real and growing threat to our food supply,” Miller said in a news release. “But America also needs data, innovation, and technology infrastructure to stay competitive. America will continue to lead the world in both agricultural production and technology innovation, but only if we do it the right way.”
Wilson, the real estate lawyer, said counties could adopt a similar strategy at the local level for future projects.
“A county could look at imposing those types of requirements too — to only allow these types of projects in certain corridors,” Wilson said.
This article was co-reported with The Waco Bridge, a new local newsroom serving the Waco-area.
1 comment:
Central Texas has been in a severe drought for over a decade. Over development has taken a toll on the Edwards Aquifer. Galveston County hasn't been affected by drought as much. However, a huge desalination plant is being sought for San Leon for which protests are planned.
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