City Council progresses toward moratorium on data centers
Denton City Council is moving towards a proposed 90-day moratorium on new data center development, with a potential extension to 180 days. This action is driven by concerns over high electricity and water usage, and the tax exemptions benefiting data centers like Core Scientific, despite their economic contributions. The city aims to use this pause to study and implement new regulations, with public hearings scheduled before a council vote.
The Denton City Council is advancing a proposal for a temporary moratorium on new data center construction within city limits. The initiative, championed by Mayor Pro Tem Nick Stevens and Mayor Chris Watts, seeks to halt development for 90 to 180 days to allow for a comprehensive study of data center impacts and the implementation of new regulations. Public hearings are scheduled for September 22 and October 27, with a supermajority vote required for the moratorium to pass, potentially going into effect as early as December and lasting until May 2027.
The move follows significant community concerns regarding the environmental and economic effects of data centers, including the existing Core Scientific facility in Denton. Stevens highlighted that Core Scientific's presence "doubled the amount of electricity" for the city, consuming 394 MW and millions of gallons of water annually. While Denton Municipal Electric states Core Scientific covers its power costs, the city has raised issues about the state sales tax exemption on electricity utility rates for data centers, which results in a loss of local sales tax revenue.
Advocacy groups like Denton’s Democratic Socialists of America and the Denton County Green Party have previously hosted a town hall to address community apprehension. Former city council member Brian Beck expressed skepticism about the six-month duration of a moratorium being sufficient to address all concerns.
Despite an expected $194 million in property tax revenue from Core Scientific over the next decade, the city has experienced shortfalls in projected electric revenue, partly attributed to data centers not materializing income as quickly as planned. The proposed moratorium also aligns with broader state-level scrutiny, as Gov. Greg Abbott has criticized data center tax exemptions and seeks policy shifts including stricter audits from the Public Utility Commission of Texas and the Electric Reliability Council of Texas. The city's goal is to implement its moratorium before the state audit concludes, preventing potential overlap and ensuring local regulatory control.