As data centers surge across Texas, residents press city halls to slow down—while officials weigh growth against water and power strain

Texas’ rapid buildout of large-scale data centers—facilities that house the servers powering everything from streaming and banking to artificial intelligence—has collided with a rising wave of local pushback. From Williamson County to the Hill Country, residents are pressing city councils and planning commissions to “push pause” on new projects, arguing that the promise of tax base growth and prestige comes with real costs: heavy electricity demand, added water use for cooling in a drought-prone state, and around-the-clock industrial activity near homes. Local officials, meanwhile, say the developments can strengthen municipal finances and position cities for the state’s shifting economy, even as they face increasingly organized protests and marathon public hearings.

The clash has been especially visible in Round Rock, where the City Council recently approved an ordinance clearing the way for the Skybox Data Center after hours of public comment, and in San Marcos, where opposition to a proposed data center has centered on fears that already-stressed water resources could be pushed past a breaking point. Across Texas, the debate is becoming a test of how much control local governments can exert—through zoning, permitting, and development agreements—over an industry that often arrives with deep-pocketed developers, big power needs, and the allure of long-term property-tax revenue.

Data centers have become one of the fastest-moving development trends in the state, drawn by comparatively available land, access to major fiber routes, and the growth of the Texas power market. Many facilities are built in clusters, often near highways and substations, and can be expanded in phases over years—meaning a single approval today can shape an area’s infrastructure demands and land use well into the next decade.

That change has also shifted what “economic development” looks like for many communities. Unlike warehouses or retail centers, a modern data center can represent a huge amount of taxable value while employing relatively few workers once construction is complete. Supporters describe the projects as long-term anchors for local tax rolls and a signal that a city is ready for a technology-driven economy. Critics counter that residents may see fewer everyday benefits, while bearing higher utility loads, new noise and lighting, and increased pressure on water supplies.

In Round Rock, those competing views came into sharp focus as Skybox moved through city review. Residents packed meetings and lined up for public comment, arguing that city policy was tilting toward a corporate deal at the neighborhood’s expense.

“Skybox is getting a great deal and the people who are giving them that great deal are doing it at the cost of the actual residents around it,” said Marshall Dungan, a Round Rock resident. https://communityimpact.com/austin/round-rock/development/2026/02/09/round-rock-officials-weigh-neighborhood-compatibility-for-skybox-data-center/?utm_source=openai

Dungan’s concern—echoed by other speakers in the Skybox debate—was not simply about the building itself, but about perceived fairness: who benefits, who pays, and whether the city’s incentives and land-use decisions are being calibrated for the people already living nearby. In coverage of the council’s deliberations, Community Impact reported that residents questioned the project’s neighborhood compatibility and whether the agreement’s advantages were proportionate to the burdens.

At earlier stages of the process, residents also raised a pocketbook argument that has become increasingly common as more Texans worry about the reliability and cost of power: even if a data center expands the tax base, could it indirectly raise electric bills or worsen strain on the grid?

“I know you want to do a good job with property taxes, but it doesn't help us a lot if you save on property taxes, but we get charged ... more on electricity cost because we're going to have a high electricity usage data center in the area,” said Karen Choate, a Round Rock resident. https://communityimpact.com/austin/round-rock/government/2025/12/04/round-rock-officials-to-revisit-skybox-data-center-rezoning-in-january/?utm_source=openai

Choate’s warning captured a broader skepticism seen in public testimony: that the math of “economic development” can look different from a resident’s driveway than it does on a city budget spreadsheet. In reporting on the project’s trajectory, Community Impact described residents’ concerns that tax incentives or policy choices aimed at attracting data centers might shift costs—especially electricity-related costs—rather than deliver a clear net gain for households.

Still, Round Rock officials ultimately moved forward, adopting an ordinance approving the Skybox Data Center after extended public comment. The decision reflected an approach increasingly seen in Texas: local governments trying to reconcile the industry’s scale with existing zoning categories and development rules, often by adding conditions or negotiating site-specific agreements rather than stopping projects outright.

Supporters of data centers often point to construction activity and the long-term value of the facilities themselves—high-dollar buildings filled with specialized equipment—as a stabilizing influence on property-tax revenue. Cities facing rising service demands from fast population growth can view such revenue as a way to fund roads, public safety, and other infrastructure without pushing residential tax rates higher.

Opponents, however, say the approvals are coming faster than the public can assess their cumulative effect. Because data centers can arrive in waves—one campus spurring others—the argument is often less about any single facility than about what a corridor or region looks like after multiple projects are built.

Those fears have been especially pronounced in San Marcos, where water has become the center of gravity for the local data center debate. Located along the San Marcos River and within a region that routinely faces drought conditions, the city has seen rapid population growth in recent years, with residents watching water planning and river levels closely.

“Our water is being depleted at a hazardous rate simply with the increase in residency alone,” said Max Payne, a San Marcos resident. https://www.expressnews.com/news/article/san-marcos-data-center-20825827.php?utm_source=openai

Payne’s comments, reported by the San Antonio Express-News, were part of a broader wave of testimony pressing city leaders to treat water as a limiting factor, not a line item. “While I hate to watch our river water levels drop every year, I’d leave this city with contempt for this council if that data center is built and depletes the water to a trickle,” Payne said. https://www.expressnews.com/news/article/san-marcos-data-center-20825827.php?utm_source=openai

In that debate, residents have argued that the city’s fundamental responsibility is to protect the long-term health of local water systems—especially during dry stretches—before accommodating large new industrial water and power users. The Express-News reported that local concerns extended beyond technical water planning into trust and governance: whether residents believe their elected officials are prioritizing resource security over development pressure.

In multiple communities, the tone of public engagement has also shifted from isolated testimony to visible activism. Protests and organizing—sometimes including students—have become part of the landscape around controversial developments, reflecting a broader trend in Texas civic life where major land-use decisions are increasingly treated as community identity issues, not just planning matters.

That activism has placed local governments in a difficult posture. Cities have wide discretion over zoning and can impose development standards, but they also compete regionally for large taxable projects. And while local leaders can ask for infrastructure upgrades or study requirements, the basic market forces driving data center expansion—exploding demand for cloud computing and AI capacity—mean developers often have multiple locations to choose from.

Even when city councils approve projects, the hearings themselves have become a venue for residents to shape conditions, push for limits, and demand clearer accounting of trade-offs. In Round Rock, the Skybox public comment period stretched for hours, with residents pressing the city on compatibility and potential utility impacts. The fact that council members proceeded after that testimony has only sharpened the sense among opponents that approval processes are not fully responsive to neighborhood concerns.

At the same time, officials and supporters argue that rejecting major projects can have real opportunity costs. City budgets in fast-growing areas are strained by the need for expanded services and infrastructure. Large taxable facilities—especially ones that don’t bring the traffic and school enrollment impacts associated with major residential growth—are often viewed as a way to help pay for growth already underway.

Yet the dispute is increasingly about scale and pace as much as it is about any single project. For residents, the core question is whether Texas communities can keep up with the compounded demands of population growth, industrial electrification, and new categories of high-intensity development. For elected officials, the question is how to exercise local authority in a way that is legally defensible, economically competitive, and credible to constituents who feel their quality of life is being negotiated meeting by meeting.

The result is a statewide conversation that looks different city to city but follows a similar script: developers present a project as a clean, quiet use compared to heavy manufacturing; officials weigh projected tax benefits and the city’s longer-term economic positioning; residents respond with worries about water, electricity, and whether the benefits will ever feel tangible at the neighborhood level.

In Round Rock and San Marcos, the arguments have also underscored how intimately local land-use decisions are now tied to Texas’ broader resource challenges. Water planning, grid reliability, and neighborhood livability—once treated as separate policy lanes—are converging around data centers, which by design concentrate demand for energy and, in many designs, water-based cooling.

For now, data center proposals continue to move through city agendas even as opposition hardens. What comes next in communities across Texas may depend less on whether residents show up—many already are—and more on whether local governments translate that pressure into new ordinances, stricter conditions, or a willingness to slow approvals long enough to answer the question at the heart of the debate: how to weigh a city’s economic future against the finite resources that make daily life in Texas possible.

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