Austin leaders say it’s time to take a deep dive into what role data centers should play in the city’s future.
Mayor Kirk Watson and four Austin City Council members have given the city manager until July to evaluate whether new large-scale data centers should be allowed in the city limits and, if so, under what conditions.
The move comes as cities and counties across Central Texas grapple with a wave of proposed data centers tied to the rapid expansion of artificial intelligence and cloud computing. Critics warn they could strain already stressed water and electric systems while offering limited long-term community benefits, but others say the facilities can bring jobs and investment.
But economic development must be planned carefully, said City Council Member Ryan Alter. The city plan could suggest implementing water use restrictions, imposing higher electricity rates or dictating where new data centers can be built through land use regulations.
“We don’t want to grow just to grow,” he said. “We want to grow responsibly. That means if you come you are a net contributor and not just here to suck up our resources.”
Growing backlash shapes Austin debate
There are more than 70 planned or operating data centers between Temple and San Antonio, according to an analysis by the Austin American-Statesman.
Round Rock is home to two large-scale data centers, with more on the way. A Denver-based company is planning a 3,000-acre data center in Caldwell County and County Judge Hoppy Haden recently said at a town hall meeting in Lockhart that he knows at least nine additional centers in the works.
Though Gov. Greg Abbott has welcomed the industry into the state and lawmakers dole out more than $1 billion in tax breaks to data centers each year, the booming industry has also generated resistance.
Environmentalists object, saying the centers strain a drought-prone region and clash with long-term water, energy and climate planning efforts. Residents push back, too, saying they worry about potential health risks, such as air pollution. Commissioners in Hill County, roughly 55 miles south of Fort Worth, approved a one-year pause on the construction of data centers in its unincorporated areas. Hood and Hays counties have considered implementing their own such moratoriums.
Council is tackling data centers as part of a May directive to develop “a modern, progressive economic development policy.”
City Council wants the economic policy to focus on 10 target economic sectors including advanced manufacturing; aerospace technology; data management and artificial intelligence; clean energy and clean technology; and sports, entertainment and live events.
Austin leaders say the city needs to step up its economic strategy if it wants to successfully beat out other communities for projects and employers.
“Our success depends on more investment and more revenue to cover the services our growing city needs and our residents want,” Watson said. “Our peer cities recognize this reality and have built robust economic development programs of their own.”
And, in today’s economic climate, council members have determined that they need a plan that includes ways to govern the creation of data centers in the city. That means talking about ways to protect Austin’s electricity, water, natural resources and quality of life, said Council Member Paige Ellis.
“We know the discussion around data centers needs to happen urgently rather than wait until it’s too late,” she said.
Council weighs restrictions and incentives
The city has ways to ensure data centers protect Austin’s resources while contributing to the economy, Alter said.
It could require companies to have water reuse facilities or pay more for electricity. The city can dictate where data centers operate through zoning and land use rules or refuse to provide water to companies outside the city limits.
“We want business,” Alter said, “but we want business to contribute to our community, not suck us dry.”
