The San Marcos City Council voted 4-3 on June 16 to amend its zoning code to define and prohibit data centers across the city, becoming the first municipality in Texas to enact a full citywide ban. The ordinance arrived after months of local debate and public meetings, including a packed hearing on Feb. 17, 2026 where residents expressed alarm about resource impacts tied to large server facilities.
Within hours of the council’s decision, State Sen. Paul Bettencourt R-Houston, announced plans to challenge the ordinance, arguing it conflicts with House Bill 2559 and the state’s 2026 Death Star law. Bettencourt has raised similar objections to county moratorium efforts in the region, and he told constituents at a public event on Oct. 29, 2026 that “[A ban] doesn’t work here, and this will get challenged.”
What the San Marcos ordinance does and why it was passed
The council’s change to the land development code establishes an explicit definition of data center and renders that land use ineligible in all zoning categories inside the city. Supporters cited specific local concerns: a proposed 200-acre project by Highlander SM One LLC that residents worried could withdraw more than 25 million gallons of water annually from local aquifers, and broader anxiety about energy demand and industrial impacts on neighborhoods. Council member Lorenzo Gonzalez who moved to reconsider the measure after earlier resistance, said the city had examined the trade-offs and concluded residents’ unresolved concerns outweighed speculative benefits. As he put it during debate, “I think we debated this to death.”
Council member Alyssa Garza noted that the ban’s effect is practical as well as legal: by changing zoning language, the city has made it effectively impossible for new data centers to be built inside San Marcos, discouraging developers who might otherwise reapply. “I don’t see how any business minded developer would want to reapproach, hoping they’ll read the room,” she said.
Legal arguments and the state response
Bettencourt’s stated challenge centers on two statutory points. First, he contends the ordinance runs afoul of HB 2559 which limits indefinite moratoriums on development and sets a maximum moratorium period of 180 days. He describes San Marcos’ zoning change as a de facto moratorium subject to that restriction. Second, he invokes the 2026 Death Star law arguing that home-rule municipalities cannot adopt local rules that conflict with state policy.
Supporters of the city’s approach and land-use scholars counter that San Marcos acted under its home rule authority, a power held by 352 Texas cities that allows them to set local zoning and land development standards. Those experts note that when a zoning change aligns with a municipality’s comprehensive plan — a long-range policy document guiding public health, safety and welfare — courts have in theory sustained restrictive land-use ordinances. One academic observer warned the 2026 law has chilled some municipal efforts but left unresolved which kinds of local rules courts will permit.
Regional context and stakes for other local governments
No data center projects are currently active inside San Marcos but multiple proposals lie in surrounding unincorporated areas of Hays County. Counties have tried similar restrictions with mixed results: in early June, Hill County rescinded a moratorium after a developer sued for $100 million and Hood County pulled a proposed moratorium after Bettencourt requested an attorney general opinion. Nearly half of the 248 planned data centers in Texas are slated for unincorporated land, underscoring the pressure on cities and counties to act.
Municipal leaders across the state have watched San Marcos closely. Lockhart council member Taylor Burge said, “All cities are watching what happens to San Marcos,” while San Marcos council member Amanda Rodriguez emphasized that home-rule cities are exploring creative zoning and contractual tools to manage growth without immediately provoking preemption battles.
Industry representatives have criticized outright bans as investment deterrents. Dan Diorio, vice president of state policy for an industry association, warned that a local moratorium or ban signals a city is closed for business. Still, some smaller cities such as Lockhart and Kerrville are enacting restrictive zoning definitions, special use permit layers, and water-capacity disclosure requirements to achieve effects similar to bans while reducing legal exposure.
The outcome of any court challenge or state action will likely shape statewide policy. San Marcos’ ordinance is now positioned as a test case for how far home-rule authority extends in the face of recent state limits. State senator Judith Zaffirini has defended the city’s right to protect local infrastructure and safety, framing the council’s vote as responsive to constituent concerns.
For now, San Marcos’ decision stands, legal questions remain pending, and neighboring jurisdictions continue to weigh zoning edits, incentive clauses and resolutions as they navigate the balance between attracting industry and safeguarding local resources.