SAN MARCOS (THE TEXAS TRIBUNE) – San Marcos has become the first Texas city to ban data centers within city limits, banking on its local authority to stop the data center boom and setting a precedent for other municipalities to follow. <\/p>\n
San Marcos City Council voted 4-3 on June 16 to define data centers and make them ineligible for any part of the city in its zoning laws, citing concerns that these developments would funnel water and energy resources from the local community.<\/p>\n
The city has no data center projects proposed within its limits, although the threat has reached its borders where at least two data centers have been proposed in surrounding unincorporated parts of Hays County, according to Data Center Map, an industry research tool. Powerless to leverage any of their laws to outright ban data centers, Hays County commissioners recently passed a mostly symbolic resolution to pause data center development over severe water scarcity but the resolution isn\u2019t legally binding.<\/p>\n
San Marcos is testing a novel approach to outright ban data centers by exerting its home rule powers, which gives certain bigger cities \u2014 352 of them across the state \u2014 the right to create their own zoning codes and control development, land law experts say. Compared to counties and cities without home rule powers or zoning authority, municipalities like San Marcos have a better chance at surviving legal challenges to their data center bans because of their expanded powers, experts say. <\/p>\n
Some counties have tried testing their authority to restrict data centers but have failed. Early June, Hill County rescinded its data center moratorium after a developer sued the county for $100 million. Hood County commissioners also tried to pass a moratorium, but pulled it after state Sen. Paul Bettencourt, a Houston Republican who leads the Senate Committee on Local Government, asked for an attorney general opinion on whether counties have the right to enact such restrictions.<\/p>\n
Similar to what he did with Hood County, Bettencourt told The Texas Tribune he plans to challenge San Marcos\u2019 ban, arguing that it violates 2025\u2019s House Bill 2559, which restricts the ability of municipalities to issue indefinite moratoriums on certain types of property developments and the state\u2019s 2023 Death Star Law, which restricts municipalities from enacting local law that contradicts state law. <\/p>\n
\u201cThey should not use zoning to ban anything everywhere in the city, because that\u2019s not lawful under the state of Texas guidelines,\u201d Bettencourt said. \u201c[A ban] doesn\u2019t work here, and this will get challenged.\u201d <\/p>\n
Texas is on track to become the top data center market in the U.S but a majority of Texans oppose the construction of data centers in their community, citing concerns over water usage, energy demand, and noise pollution. The issue has become bipartisan, drawing calls for regulation from Gov. Greg Abbott who recently wrote a letter to state regulators outlining proposals for data centers such as eliminating state sales tax exemptions for data centers. <\/p>\n
While San Marcos is the first in Texas to ban data centers, local officials elsewhere are using whatever authority they have to restrict the rapidly growing industry without drawing the ire of the state government. Other home-rule cities are amending their land development code to restrict data centers. Cities and counties are also including restrictions in incentive agreements they enter into with developers. <\/p>\n
\u201cYou\u2019re seeing a lot of cities in the age of preemption being creative about things,\u201d said Amanda Rodriguez, a San Marcos city council member.<\/p>\n
Multiple cities interested in passing their own bans have reached out to San Marcos to see how the city will survive legal challenges from state lawmakers and private citizens who can also sue the city over its ban. <\/p>\n
\u201cAll cities are watching what happens to San Marcos,\u201d said Taylor Burge, a council member for Lockhart. In February, residents packed San Marcos\u2019 City Hall and aired concerns about how a proposed 200-acre development by Highlander SM One LLC, a Fort Worth-based developer, could consume more than 25 million gallons of water annually from local aquifers. The council ultimately rejected the developer\u2019s request to annex into the city.<\/p>\n Rodriguez first proposed the ban at the end of March, but fellow council members rejected it because of how restrictive it was. It received a new life when council member Lorenzo Gonzalez \u2014 who originally rejected the change \u2014 moved to reconsider it, seconded by council member Alyssa Garza.<\/p>\n \u201cI think we debated this to death,\u201d Gonzalez said in the council hearing. \u201cThe promised benefits remained speculative while many of the concerns raised by residents remained unresolved.\u201d<\/p>\n The city\u2019s ban works by defining data centers in the city\u2019s land development code and setting restrictions on this type of future development, effectively making data centers impossible to build in the city.<\/p>\n \u201cI don\u2019t see how any business minded developer would want to reapproach, hoping they\u2019ll read the room,\u201d Garza said.<\/p>\n In response to San Marcos\u2019 ban, Dan Diorio, vice president of state policy for the industry association, the Data Center Coalition, said the ban signals that San Marcos is \u201cclosed for business.\u201d<\/p>\n \u201cA local moratorium on data centers discourages further investment, both from the data center industry and other advanced industries,\u201d Diorio said.<\/p>\n Land use experts and city council members believe San Marcos has a better shot at passing a ban because cities have more power in regulating land use than counties. Nearly half of the 248 data centers that are planned for development in Texas will be built in unincorporated areas.<\/p>\n Although land use bans are uncommon, \u201ctheoretically, I think the courts could uphold it,\u201d said Robert Paterson, a University of Texas at Austin professor who specializes in land use and environmental planning. As long as the ban aligns with a city\u2019s comprehensive plan \u2014 a long-range policy document which governs the protection of public health, safety, and general welfare \u2014 it falls within the city\u2019s power.<\/p>\n But, the 2023 Death Star law complicates city authority. The Death Star law \u201ctheoretically pulled back home rule authority,\u201d said Paterson, adding that it bars cities from exercising powers more stringent than those the state itself uses. Republicans and business groups argued that the Death Star was needed to undo a \u201cpatchwork\u201d of progressive local policies that made it difficult to do business in cities and it remains unclear what local regulations are out-of-bounds under the law.<\/p>\n Paterson said the law has \u201ca chilling effect on our ability to do our police power, protect the public health and safety,\u201d which is one reason cities are being cautious now.<\/p>\n Bettencourt said a ban on any development has never been upheld in court and he is confident that the state will make San Marcos reverse its ban if a developer doesn\u2019t file a private lawsuit first.<\/p>\n \u201cIf you overuse existing legal principles, eventually they get challenged, and\/or \u2026 laws are changed to make it clear that this can\u2019t happen,\u201d Bettencourt said.<\/p>\n He also says San Marcos is violating HB 2559 that states that property development moratoriums can last no longer than 180 days, and according to Bettencourt, this would apply to San Marcos\u2019 \u201cde facto ban.\u201d However, land experts said that this law would not apply to San Marcos because the city changed its zoning laws to ban data centers, and did not issue a moratorium.<\/p>\n While Bettencourt is among the Republican camp that support data centers, San Marcos\u2019 state senator Judith Zaffirini, a Democrat, says the city\u2019s decision reflects concerns that many communities across Texas share and that the City Council acted \u201cdecisively and appropriately\u201d to ensure the safety of the community.<\/p>\n \u201cAnytime you\u2019re operating in the state of Texas and you\u2019re wanting to do something that goes against the grain, there\u2019s always that thought in the back of your head,\u201d Rodriguez said about legal pushback to the ban. <\/p>\n In response to Bettencourt\u2019s plans, Rodriguez said San Marcos\u2019 ban is different from Hood County\u2019s proposed moratorium, which Bettencourt contested using HB 2559. Council members said the Death Star law has yet to be tested in court and they\u2019re willing to try. <\/p>\n \u201cIf they want to make this the precedent case for the bill, they\u2019re gonna have to explain why this is the priority and not addressing the problem [data centers] at hand,\u201d Rodriguez said. Bans aren\u2019t the only way to stop data centers. Smaller cities like Lockhart and Kerrville have adopted strict zoning rules that make it difficult for data centers to build, hoping the effect will feel like a ban without immediately triggering legal challenges. Cities that don\u2019t have authority to approve development and counties are exploring other tools to signal or impose restrictions, including through resolutions and tax abatement agreements.<\/p>\n \u201cI think the smartest cities in Texas are already doing this, but they\u2019re doing it in such a way that is not going to raise the hackles of the state Legislature,\u201d Paterson said.<\/p>\n Local lawmakers like Burge are communicating with other city and county officials to figure out what they are permitted to do to stop development in their communities. \u201cThis is a big game of telephone,\u201d Burge said. <\/p>\n To pre-empt legal action, Lockhart and Kerrville have instituted regulations in hopes of banning data centers without having to technically ban them. They worry that outright bans would leave them open to lawsuits they do not have the resources to fight, said Burge.<\/p>\n In May, Lockhart City Council moved to define data centers in its zoning codes. The council limited data centers to one land-use category \u2014 heavy industry \u2014 confining such development to two areas in the city. <\/p>\n In addition to zoning restrictions, Burge also said they want to implement restrictions through special use permits, which add another layer of requirements for developers to meet before they are allowed to build. She hopes the \u201cintense filtration\u201d provided by a permit will have the same effect as a ban. <\/p>\n Like Lockhart, Kerrville City Council updated its zoning code to restrict \u2014 but not outright ban \u2014 where developers can build data centers. The council also added water capacity approvals, requiring developers to disclose cooling systems and water usage amounts. \u201cMy experience is that an outright ban usually ends up more contested,\u201d said Drew Paxton, Kerrville\u2019s director of planning and development.<\/p>\n For municipalities without zoning, like Alvin, they have passed resolutions declaring they don\u2019t want data centers within their city limits. While these resolutions cannot produce anything actionable and are more symbolic, local officials hope state legislators will empower localities like them with more protections, said Dixie Roberts, Alvin\u2019s assistant city manager. <\/p>\n \u201cResolutions do not have a lot of meat to it,\u201d said Roberts, but the hope is \u201cto get the word out that the council is not interested in this kind of development.\u201d<\/p>\n Still, cities that are using other ways to restrict data centers instead of ban are not completely ruling out that a developer or the state will thwart their decisions.<\/p>\n \u201cWe know the state\u2019s going to keep working on this [data center policies]. We don\u2019t know which direction the state\u2019s going to go, but let\u2019s go ahead and get something in place in case we get a request,\u201d said Kerrville\u2019s Paxton.<\/p>\n Another way for cities and even counties to exert some control over data centers are in their incentive programs, such as Chapter 380, Chapter 381 and Chapter 312 agreements. For example, a city could offer a reduction in their property tax bill and in return, require additional development standards. <\/p>\n \u201cThis is a tool that counties could maybe use in this period of time when they don\u2019t necessarily have a good amount of development authority,\u201d said Kayla Landeros, a land law professor at Baylor University and a former Temple city attorney.<\/p>\n State lawmakers will likely decide whether to give counties more authority or strip cities of the power to make these kinds of bans, in the next legislative session, depending on what the general reaction is from constituents, said Landeros. San Marcos\u2019 ban will be the first test of which direction state legislators will take.<\/p>\n \u201cLocal officials are in the best position to understand the unique needs, infrastructure constraints and priorities of their communities,\u201d Zaffirini said.<\/p>\n","protected":false},"excerpt":{"rendered":" SAN MARCOS (THE TEXAS TRIBUNE) – San Marcos has become the first Texas city to ban data centers within city limits, banking on its local authority to stop the data center boom and setting a precedent for other municipalities to follow. San Marcos City Council voted 4-3 on June 16 to define data centers and … Continue reading San Marcos becomes the first Texas city to ban data centers, testing its local control<\/span><\/a><\/p>\n","protected":false},"author":65,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[164],"tags":[],"class_list":["post-1519371","post","type-post","status-publish","format-standard","hentry","category-state-news"],"publishpress_future_action":{"enabled":false,"date":"2026-07-02 16:14:39","action":"change-status","newStatus":"trash","terms":[],"taxonomy":"category","extraData":[]},"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/ktbb.com\/post\/index.php?rest_route=\/wp\/v2\/posts\/1519371","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ktbb.com\/post\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ktbb.com\/post\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ktbb.com\/post\/index.php?rest_route=\/wp\/v2\/users\/65"}],"replies":[{"embeddable":true,"href":"https:\/\/ktbb.com\/post\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1519371"}],"version-history":[{"count":3,"href":"https:\/\/ktbb.com\/post\/index.php?rest_route=\/wp\/v2\/posts\/1519371\/revisions"}],"predecessor-version":[{"id":1519375,"href":"https:\/\/ktbb.com\/post\/index.php?rest_route=\/wp\/v2\/posts\/1519371\/revisions\/1519375"}],"wp:attachment":[{"href":"https:\/\/ktbb.com\/post\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1519371"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ktbb.com\/post\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1519371"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ktbb.com\/post\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1519371"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nThreats to local control<\/strong><\/p>\n
\nWhat other municipalities are doing<\/strong><\/p>\n