Austin begins writing data center rules, with a ban on big sites possible by December

The Austin City Council voted unanimously at its Aug. 27 meeting to begin writing land development rules for data centers. About two dozen people spoke first, most of them asking for a moratorium.

As amended, the resolution (item 61) requires the city manager to report back before the city approves any data center request for more than 20 megawatts of electricity or 85 million gallons of water a year. It also asked for a status update within 60 days.

At an Oct. 13 Housing and Planning Committee meeting, Stevie Greathouse, a division manager in Austin Planning, said staff aim to bring “an initial focused phase of work by the end of the year.” A full package is due in spring 2027.

Austin’s code has no category for large data centers today. Members said they want the largest ones kept out; the open questions are how fast, how strict and what happens in the meantime.

“We don't want big data centers in our city and we want to create durable, enforceable regulations to make that happen.”

Speakers wanted a pause now. Kaiba White of Public Citizen’s Texas office said that without a moratorium, the wait “does give developers an opportunity to get in and get those permits and get grandfathered.” None of the amendments the council adopted imposed a moratorium.

What changes on my block?

Small data centers are now treated as “communications services” and allowed in limited office zoning and less restrictive districts, Austin Planning’s interim assistant director said at an Aug. 25 work session. Larger ones fit no existing land use category.

Austin Energy serves 10 data centers, ranging from one to 20 megawatts, staff said. Austin Water serves none large enough to count as a large-volume customer, and data centers use less than 0.3% of the city’s water.

Austin Energy General Manager Stuart Riley said Aug. 27 that only three Austin Energy customers draw more than 20 megawatts, and none are data centers. Scaling a site up to that level takes a year to 60 months of work, he said.

Becky Woodward, a District 2 resident, told the council she lives 123 feet from a data center, with another under construction nearby. “Me and my neighbors are constantly woken up from our sleep,” she said.

Beatrice Anderson, a District 3 resident and Save Our Springs Alliance attorney, said 17 data centers sit on the East Side of the central city, compared with one on the west side. Council Member José Velásquez (District 3) won an amendment requiring an analysis of environmental racism and historic inequities east of Interstate 35, so new data center zones are not concentrated in lower-income areas.

How did it get here?

Mayor Kirk Watson asked staff in a May 15 message board post for recommendations on large data centers. Staff answered in an Aug. 19 memo and briefed the council Aug. 25.

Staff recommended no city incentives for data centers, resource efficiency standards, new land use definitions and possibly a zoning district just for data centers, with setbacks and noise limits.

Riley said Aug. 25 that state law obliges the utility to serve all customers in its area. “We can't withhold utility service as a means of regulating land uses,” he said, so the utility supports zoning categories instead.

On Aug. 27, Siegel’s second amendment split the code work into two phases and skipped one committee meeting, saving about a month. Phase one would create new zoning districts and define a large data center, letting the council prohibit large ones as early as December.

Under that approach, owners would have to apply to rezone into the new district. Siegel said he would like the limit set at 30 megawatts.

Other amendments added reclaimed water from Council Member José “Chito” Vela (District 4) and carbon-free power and storage, where state law allows, from Council Member Ryan Alter (District 5). Siegel’s first amendment added heat, floodplain, on-site power, enforcement and limits on clusters of smaller centers.

What supporters and critics said

Watson said the goal is “to protect our residents, their quality of life, our water, our energy to the full extent of our authority as a municipality.”

Vela urged care so the rules survive legal challenges. “I don't wanna pass something that then gets quickly overturned,” he said.

Council Member Marc Duchen (District 10) said smaller sites can also harm neighbors: “even 10 megawatts can make an impact.” He asked staff to consider quickly making data centers that mainly sell computing power a conditional use in existing zones.

Siegel pointed to 6802 River Place in West Austin, where investment materials once described a 50-megawatt data center. Riley said Austin Energy never heard it would be one, and the incoming occupant says it is not a data center.

Business groups asked for balance at the Aug. 25 session. Stacy Schmidt of Opportunity Austin said many companies run on-site data centers. “We don't wanna cause unintended consequences,” she said.

Brad Massengill urged several targeted ordinances rather than one blanket ban, which he said a single lawsuit could strike down.

What happens next?

Greathouse said the rules will define data center uses, designate zones where they are prohibited, allowed or need a conditional use permit, and may create a new data center district. A memo to the mayor and council will describe the phases.

The data center rules will likely go through a joint meeting of the Planning Commission and City Council. Staff plan a public open house, likely in early 2027, and have opened a SpeakUp Austin page for comments.

The resolution’s 60-day deadline for a manager’s update falls in late October.

Before the vote, Watson asked staff to “read the room, help bring to us what it is that the council is indicating it wants to do.”