Two things are happening at once around Austin, and they point in opposite directions.
The first is a data center buildout at a scale this region has never seen. The second is that the jurisdictions hosting it are, one at a time, taking away the by-right path that made it possible. Both are true right now, in the same quarter, in adjacent counties.
If you own land whose highest and best use is a data center, or you are underwriting an exit to that buyer pool, the entitlement risk on that assumption is rising fast enough to matter inside a normal option period.
What is actually being built
Start with the pipeline, because the policy response does not make sense without it.
Hutto Megasite, PowerCampus. A Skybox Datacenters and Prologis joint venture on a roughly 159-acre parcel inside the 1,400-acre megasite. Approximately 3.9 million square feet across six buildings, around 600 MW, and a minimum $10 billion capital investment. Under construction, with at least the first building fully leased. It carries a Chapter 312 abatement of 50% on personal property for ten years.
Mesone, Jarrell. 150 acres at 3911 County Road 305, behind Jarrell High School, at 200 MW served by a combination of natural gas and grid. The annexation, land-use redesignation and rezoning were adopted October 14, 2025. As of May 2026 the utility, development and tax incentive agreements were still not finalized. The city estimates $7.2 million a year in revenue once operational, which is revenue rather than capital investment. There is documented public opposition over proximity to the high school, noise, traffic, water and power use.
Skybox, Round Rock. In the Old Settlers PUD, 29.69 acres rezoned, capped at 250,000 square feet and 60 feet in height, 75 MW grid-interconnected, 70 to 100 jobs. The rezoning passed unanimously on second reading on February 13, 2026. Notably, the approval includes closed-loop cooling and an annual water use cap of 300,000 to 400,000 gallons. There was still public opposition on noise, electric demand and air quality.
Round Rock also already hosts two operating campuses: Sabey, at 213,000 square feet with a campus target of 430,000 square feet and 84 MW, home to the Texas Advanced Computing Center's "Horizon" supercomputer; and Switch, which assembled 36.76 acres in 2021 and another 32.48 acres from Dell in 2023, targeting more than 1.5 million square feet.
Bastrop County has more than 5,600 acres of data center projects countywide, with more than 5,500 acres in Cedar Creek alone. The named project there is Pacifico Energy's proposed natural gas-fired power facility paired with a data center on 2,842 acres. (Community Impact, August 19, 2026)
That is the demand side. Now the other one.
The policy turn, in order
San Marcos banned them outright
On June 16, 2026, the San Marcos City Council voted 4-3 to prohibit data centers citywide, in all zoning districts. The stated grounds were water and resource protection. This is reported as the first such citywide ban by a Texas city, and we would treat "first" as a claim to verify rather than a fact to repeat, but the ban itself is a council action on a dated record. (San Marcos City Council, June 16, 2026)
The same council adopted its full Land Development Code and Design Manual rewrite the same day, as Ordinance ORD-2026-08, incorporating 283 amendments. Worth knowing if you are reading San Marcos entitlements against anything written before that date.
Hays County hit pause a week later
On June 23, 2026, the Hays County Commissioners Court established a 180-day emergency review period for high-water-use developments, data centers included, and stood up a High Water Demand Development Review Board. (Hays County Commissioners Court, June 23, 2026)
A 180-day emergency review is not a ban. It is worse for a schedule in one specific way: it is a hold with a defined start and an undefined outcome, which is very difficult to price into an option period.
Bastrop is moving from by-right to conditional use
The City of Bastrop is moving to require conditional-use permits for data centers in Industrial districts rather than allowing them by right. They remain prohibited in Parks and Open Space and in Single-Family Residential districts. Council Member Kerry Fossler put the intent plainly: "So that any talk of data centers comes to this council first."
A staff update was scheduled for the August 25, 2026 council meeting, and the changes have to clear Planning and Zoning before council action. (Community Impact, August 19, 2026)
That is the single clearest statement of the trend. By right to conditional use is not a small change. It converts an administrative approval into a political one, and it does so for a use with organized, motivated, well-briefed opposition.
Austin is writing the rules before any project arrives
The City of Austin Planning Department has been in active policy drafting. Two items were posted for the week of August 25, 2026: a Council work session on staff findings on the 25th, and a Council meeting item on the 27th requesting approval of Land Development Code amendments. We have not confirmed the outcome of either, and Council items get postponed, so treat those as scheduled rather than decided and check the adopted ordinance before relying on it.
In May 2026, Mayor Watson and four council members directed the city manager to evaluate large-scale data center policy by July 2026. State legislature interim-charge committee reports are expected by the end of 2026.
The detail that makes Austin different: no data center has been publicly named as sited inside Austin city limits by any source we checked. A staff memo notes that Planning has "received inquiries suggesting higher-impact data centers may be under consideration for locations within City limits," but names no company, project or address. Every named project in this region is outside the city. (KUT, August 19, 2026)
Austin is regulating a use it does not yet host. That is the opposite of how land use policy usually arrives, and it means the rules will be written without a specific applicant's deal in the room.
Two projects have already died on this
Hutto, Zydeco. A rezoning at 450 Ed Schmidt Boulevard would have taken a site from multi-family residential to heavy industrial. The developer withdrew the request on April 17, 2026, ahead of a special Planning and Zoning meeting. The city's development director had recommended denial, citing inconsistency with the SOAR 2040 plan, and organized opposition operating as "Stop the Hutto Data Center" filed legal protests that forced a supermajority threshold. (City of Hutto)
Guadalupe County is in litigation. The Data Center Action Coalition sued on July 20, 2026, alleging inadequate public notice, private negotiations, unlawful conflicts of interest, Texas Open Meetings Act and Tax Code violations, and walking-quorum deliberations. At issue are a $500 million property tax abatement and development agreement for CloudBurst Texas covering more than 700 acres, approved April 21, 2025, and a separate Palomino Alpha abatement and development agreement from the same month. Palomino Alpha had requested 500,000 gallons of water per day from the Crystal Clear Special Utility District. (Community Impact, July 24, 2026)
Why water is the lever
Every one of these actions cites water, and the numbers explain why.
Texas data centers used roughly 25 billion gallons in the prior year, with projections of 29 to 161 billion gallons by 2030. For local scale: Samsung Austin Semiconductor was Austin's largest water customer in 2025 at 2.23 billion gallons at its Northeast Austin facility. Large-volume customers account for about 6% of Austin's total utility usage; residential is 52%.
Austin's own response arrived on July 23, 2026, when Council approved a resolution from Council Member Mike Siegel requiring large-volume water customers to submit detailed use projections and line extension details, connect to the reclaimed water system, reduce potable consumption, present water conservation plans during development review, and account for facility discharges. Projects that fail to meet the standards require City Council approval. Final policies are due before the end of 2026. (Community Impact, July 28, 2026)
Read that last mechanism carefully, because it is the same mechanism as Bastrop's conditional-use permit wearing different clothes. Miss the standard and your project goes to Council. Administrative path becomes political path.
What to do about it
Date your entitlement assumption. A data center approval that cleared in 2025 tells you very little about what clears in 2027. Round Rock approved Skybox unanimously in February 2026 with a hard water cap attached. Hutto lost Zydeco in April 2026. San Marcos closed entirely in June 2026. That is a fourteen-month spread across three adjacent jurisdictions with three different answers.
Assume the water question is the approval question. Skybox got approved with closed-loop cooling and a 300,000 to 400,000 gallon annual cap written into the deal. That is the shape of an approvable project now. If a scheme cannot survive a hard water cap, it is not an entitlement risk, it is an entitlement problem.
Diligence the process, not just the agreement. The Guadalupe County suit is not about whether data centers are good. It is about notice, open meetings and conflicts in how the agreements were approved. An agreement approved through a defective process is a title-adjacent risk that does not appear on a survey and does not appear in a title commitment. Ask how a thing was noticed, when it was posted, what was decided in closed session, and whether anyone has challenged it.
Price the exit, not just the entry. Nearly nine in ten megawatts in ERCOT's large-load interconnection queue are data centers. If a land basis assumes that buyer, the interconnection clock and the entitlement clock are both running, and they are running in opposite directions.
One deliberate omission. A claim circulated in early August 2026 about a statewide action on new data center projects. We could not verify it against a primary source, so it is not in this post and it is not in our underwriting. Being the person who knows which things are not confirmed is worth as much as knowing which things are.
If your land value depends on this buyer pool and you want a jurisdiction-level read on where the risk actually sits, that is a conversation we are having weekly right now. Get in touch.
This post is general information about land use policy in Central Texas. It is not legal, engineering or investment advice, and it is not a representation about any specific parcel or project. Ordinances, moratoria and litigation status all change quickly on this topic. Verify every date, vote and figure against the jurisdiction's own records before relying on it.