The scale shows up in basic counts, too. Texas has 408<\/a> data centers listed statewide, second most in the country, with the Austin market currently at 46.<\/p>\n Once these projects hit a city council agenda, the debate is usually the same: water, power, and whether residents have any leverage before a campus becomes a done deal.<\/p>\n For organizers watching the region, that leverage often comes down to zoning. \u201cThe biggest thing that I think that we were able to do with the San Marcos one was identify the one point where communities still have an ability to say \u2018No,\u2019 and that was zoning,\u201d said Bobby Levinski of the Data Center Action Coalition.<\/p>\n In a Dec. 23 memo<\/a>, Austin City Manager T.C. Broadnax and city staff wrote that \u201cAI is challenging the definition of high growth\u201d for Central Texas utilities. He has warned that AI-related demand is already creating an issue in planning for utilities.<\/p>\n Revived Data Center Fails in San Marcos<\/p>\n The proposal San Marcos rejected was a revived plan for a roughly 200-acre data center by Fort Worth-based Highlander SM One. The project stalled last summer, then returned to the city\u2019s agenda this winter after the San Marcos Planning and Zoning Commission approved recommendations to annex and rezone the project on a 6-2 vote.<\/p>\n \u201cThe people do not want this,\u201d said San Marcos River Foundation\u2019s Executive Director Virginia Parker, who spoke during public comment. \u201cBut from a river\u2019s perspective, we are out of water \u2026 ERCOT will be tasked to grow the grid for things like this and not for the residents.\u201d<\/p>\n Her warning landed in a drought-strained Hays County, where water is the county\u2019s defining pressure point. Hays County Judge Ruben Becerra has pushed for a temporary pause on new permits for high-water-use industrial projects and urged the strictest Stage 4 drought restrictions as aquifer levels drop to historic lows. ERCOT has also said Texas energy demand will be up 71%<\/a> by 2031, partly due to data centers.<\/p>\n Supporters, including labor representatives, urged Council members to see the campus as new revenue and construction jobs. One speaker called it a chance to create \u201cgood-quality jobs.\u201d<\/p>\n But even with the 5-2 denial, residents\u2019 anxiety is not limited to one project. Along Francis Harris Lane, this proposal is part of a broader push to make the area workable for large-scale development. And under the city\u2019s process, Highlander can bring the proposition back in six months.<\/p>\n Round Rock Approves Another Data Center<\/p>\n A similar debate played out Feb. 12 in Round Rock \u2013 this time with a different outcome. After hours of public pushback, City Council unanimously approved Skybox Datacenters\u2019 request to rezone about 30 acres off East Old Settlers Boulevard for a single 75-megawatt building capped at about 250,000 square feet.<\/p>\n Taking water supply into consideration, the company said annual use would not exceed about 300,000 to 400,000 gallons annually, mostly tied to administrative needs and landscaping, which is about 2.7 to 3.7 households\u2019<\/a> yearly at-home water use.\u00a0<\/p>\n At the Feb. 12 Council meeting, Skybox Chief Development Officer Haynes Strader pitched Central Texas as a growth market \u2013 one that can bring investment and jobs. \u201cSkybox believes very strongly that Central Texas, and Texas as a region, is incredibly important to the overall data center market,\u201d he said.<\/p>\n The Round Rock facility will be one of three Skybox data centers in the area, alongside a 141,000-square-foot, 30-megawatt building in Pflugerville and a 1.28-million-square-foot, 600-megawatt campus in Hutto.<\/p>\n Opponents questioned whether the pitch matches the trade-offs. \u201cNot all business ventures are business opportunities,\u201d said Denisce Palacios, the Texas state lead for Climate Cabinet. \u201cWithout water, nothing else works: not growth, not jobs, not agriculture, not security, and certainly not data centers.\u201d<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/us-tx\/wp-content\/uploads\/2026\/02\/n.s1.-San-Marcos-residents-stand-outside-City-Hall-to-protest-the-proposal-of-a-new-data-center-on-T.jpeg\")
San Marcos residents stand outside City Hall to protest the proposal of a new data center on Feb. 17 Credit: Lauren Tourish<\/p>\n