San Marcos city council rejected a proposed 200-acre data center in a 5-2 vote after heavy public opposition.
The core issue wasn’t servers or GPUs, it was water and power: residents and county leaders argued the project would strain an already stressed aquifer and local grid.
Labor unions backed the data center for construction jobs, long-term operations roles, and tax revenue, highlighting the economic upside many AI builds are leaning on.
Opponents explicitly framed it as an “AI data center,” signaling growing grassroots pushback to high-density compute sites in water-constrained regions.
Hays County’s judge is pushing stage 4 water restrictions and a moratorium on high-volume industrial water use, which directly complicates any large-scale AI or cloud buildout.
The developer, Highlander SM One LLC, can reapply in six months, but any future AI infrastructure here will have to clear an increasingly high bar on water and energy impact.
This is a useful read for tracking how local politics and resource constraints are starting to shape where next-wave AI data centers can realistically land.
Source: San Marcos leaders reject plans to build controversial data center | FOX 7 Austin
