Kerrville’s new rules effectively block data centers, battery storage without an outright ban

The Kerrville City Council has unanimously approved significant updates to its zoning code, effectively preventing the construction of data centers and battery energy storage systems within city limits. Councilmember Jeff Harris explained that this strategic approach avoids an explicit ban, which could expose the city to property rights litigation under Texas law and the U.S. Constitution's Takings Clause. Instead, the new Ordinance 2026-07 establishes a series of overlapping restrictions.

These regulations prohibit such facilities within 500 feet of public parks, schools, hospitals, churches, childcare facilities, and residential zoning districts. Additionally, developers would face requirements like a 300-foot setback from arterial roads, an 8-foot masonry wall, and a mandatory water capacity analysis. Planning and Development Director Drew Paxton confirmed that these cumulative requirements would make it virtually impossible to build these facilities in Kerrville.

The city's caution is informed by legal precedents such as City of Dallas v. Trinity East Energy, which ruled that an outright ban on gas drilling constituted a compensable taking. This contrasts sharply with Kerr County's limited regulatory options, as Texas counties lack zoning authority. A recent cautionary tale involved Hill County, which enacted a year-long moratorium on data centers that was swiftly challenged by developer RCM Hill, LLC in federal court, leading to its rescission within two weeks and an estimated $100 million in damages sought. Kerrville's layered regulatory approach aims to navigate this legal minefield, providing a firmer legal ground against potential challenges.