SAN MARCOS — The San Marcos City Council voted 4-3 on June 16, 2026, to amend its zoning laws to define data centers and make them ineligible for any part of the city. This action makes San Marcos the first city in Texas to ban data centers within its city limits.

The city council cited concerns that data center developments could funnel water and energy resources away from the local community. State Senator Paul Bettencourt stated his intention to challenge San Marcos' ban. He argues that the ban violates 2025's House Bill 2559 and the state's 2023 Death Star Law, which bars cities from exercising powers more stringent than those the state uses. "They should not use zoning to ban anything everywhere in the city, because that's not lawful under the state of Texas guidelines," Bettencourt said. "[A ban] doesn't work here, and this will get challenged." Dan Diorio, Vice President of State Policy for the Data Center Coalition, said that a local moratorium on data centers discourages investment from both the data center industry and other advanced sectors.

San Marcos currently has no data center projects proposed within its city limits. However, at least two data centers have been proposed in unincorporated areas of Hays County. Hays County commissioners passed a resolution to pause data center development due to severe water scarcity, though this resolution is not legally binding. In February 2026, residents expressed concerns at a city hall meeting that a proposed 200-acre development by Highlander SM One LLC could consume more than 25 million gallons of water annually from local aquifers. The San Marcos City Council later rejected Highlander SM One LLC's request to annex into the city.

Council member Amanda Rodriguez first proposed the data center ban at the end of March 2026. Initially, council members rejected the proposal due to its restrictive nature. Council member Lorenzo Gonzalez moved to reconsider the proposal, and Council member Alyssa Garza seconded the motion. Rodriguez said, "You're seeing a lot of cities in the age of preemption being creative about things."

Why It Matters

The San Marcos City Council's decision to ban data centers by amending its zoning laws represents a new approach by a Texas city to manage resource allocation, particularly water and energy. This move positions San Marcos as a test case for how local ordinances interact with state laws regarding development. The outcome of the potential challenge by State Senator Paul Bettencourt could establish a precedent for 352 other Texas cities that possess home rule powers, which allow them to create their own zoning codes and control development.

This situation also highlights potential conflicts between local community resource concerns and the interests of industries like data centers. With nearly half of the 248 data centers planned for development in Texas projected for unincorporated areas, the San Marcos ban, if upheld, could influence how other local governments address similar issues regarding large-scale infrastructure projects and their environmental impact.