Austin doesn't have hyperscale data centers. City Council wants to ban them

Austin City Council is taking steps to prohibit large-scale and hyperscale data centers within city limits, with Council Member Vanessa Fuentes stating the move is necessary for sustainability and to prevent a crisis. This action responds to Mayor Kirk Watson's earlier directive to manage data center growth, which has rapidly expanded in the Austin-San Antonio area. Nearly all council members have expressed their intent to vote for a ban, but require approval of new zoning definitions and other changes first.

The city's initiative aligns with broader efforts across Texas where communities are considering tighter regulations on the industry. Austin recently approved water-use restrictions for large industrial users, including data centers, a move that followed Gov. Greg Abbott's call for utility regulators to audit data centers connecting to the state's electric grid. This audit, which pauses approvals until its completion in late 2024, does not impose specific water or power-use requirements.

While Austin currently has about 20 smaller data centers and no hyperscale facilities, city staff note that hyperscale data centers face significant challenges within city limits due to Austin Energy’s compact service territory, transmission constraints, and limited land. Despite this, council members like Mike Siegel affirm their commitment to preventing such facilities, arguing they are incompatible with the city's quality of life.

The council will vote on a resolution to initiate zoning code amendments, including new definitions for data centers, at an upcoming meeting. This resolution, if approved, would direct city staff to develop new land use and zoning regulations, with a final vote on these new rules anticipated in spring 2027. Council Member Ryan Alter indicated this initial process could also lead to a delay in data center approvals until a definitive ordinance is enacted.