Texas has to do a better job with data centers in growing communities
Texas is experiencing a rapid increase in data center proposals, particularly in North Texas, leading to concerns about electricity, water, and land use. Gov. Greg Abbott has released sweeping recommendations for the 2027 Legislature, including requiring data centers to add their own power generation, pay interconnection costs, use closed-loop water systems, and repealing sales tax exemptions. The article argues that local communities need greater authority to make strategic land-use decisions that prioritize long-term economic development over short-term tax revenue from data centers.
Texas is experiencing a significant surge in data center development, particularly in the Dallas-Fort Worth metroplex and surrounding counties like Tarrant, Denton, and Collin. This rapid expansion is straining the state's infrastructure, with ERCOT receiving proposals from nearly 200 data centers and large energy users for 438 gigawatts of new power, a demand five times the state's all-time peak.
The political landscape is shifting, as evidenced by Governor Greg Abbott's comprehensive recommendations for the 2027 Legislature. These proposals include mandates for data centers to incorporate their own power generation, bear their interconnection costs, utilize closed-loop water systems, and report their electricity and water consumption annually. Additionally, the governor called for the repeal of the sales tax exemption, which currently costs Texas approximately $1 billion annually, signaling a recognition that the existing regulatory framework is insufficient.
Authors Laura Huffman and Steven Pedigo, co-founders of CivicSol, argue that residents are not being unreasonable in their opposition, citing concerns over depleted water tables, rising utility bills, and landscape transformation. They highlight the struggle of local governments, which, constrained by legislative caps on property tax revenue, often find it difficult to decline lucrative data center proposals. The core tension lies in giving local communities the authority to strategically allocate their limited, investment-ready sites to developments that offer broader economic benefits beyond just tax revenue and a small number of jobs, such as semiconductor manufacturing or biotech clusters. The authors emphasize the need for clear public-return standards and robust benefit-matching for any approved projects.