The San Marcos City Council voted 5-2 early Wednesday to deny a request for a land use change that would have cleared the way for a data center southwest of downtown.
When the vote came at 2:14 a.m., the overflow room to the city council chambers roared with cheers.
The 50 or so people who remained in the building represented a small portion of the hundreds who showed up for the vote. The meeting began at 6 p.m., but demonstrators started gathering in front of the city hall at around 3 p.m.
Citizens who showed up to testify were overwhelmingly against the proposed data center. There were 125 people who signed up to speak in the citizen comment section of the meeting, and another 57 who signed up talk during the public hearing portion.
Fort Worth-based Highlander SM One LLC proposed to build the data center on a 200-acre site on Francis Harris Lane between San Marcos and New Braunfels, next to the Hays Energy Power Station. Speakers came from all parts of Hays County, where droughts and water shortages have been felt for years.
"You are either going to greatly harm your relationship with your community or you're going to buckle down and work with us and come up with an alternative which we are all willing and eager to help you on," Torrie Martin, who lives on a ranch next to the proposed data center, told the council.
Data centers are large buildings filled with computer equipment that supports things like cloud storage and artificial intelligence and typically use huge amounts of water and energy. Developers had touted the jobs their proposal would bring to San Marcos and made some concessions on things like water use at the site.
Among the citizens who showed up in support of the data center were dozens of union construction workers in reflective orange shirts, who were assured the facility would be built with union labor.
"You have an opportunity to vote in favor of this data center, to generate revenue, to create good, quality jobs on a construction project like this that could last up to five years," said Matthew Gonzales, president of Laborers' International Union of North America Local 1095.
Outside of construction jobs, however, there has been limited insight into the number of permanent positions the data center would offer to San Marcos. Still, the $1.5 billion project would have provided tax revenue to the city.
The promise of construction jobs was not persuasive to the vast majority of the people who showed up to register their opposition, each getting three minutes to speak their mind to the council.
"I ask you to envision what your future of San Marcos looks like," said Melanie Babot, a San Marcos resident. "Is it one … that values natural resources for people, not AI?"
The dismissal of the proposal comes just a day after the Hays County judge, Ruben Becerra, proposed a moratorium on new building permits that require large amounts of water.
Local water managers have also said that the Edwards Aquifer is "not in a great place" and that, if dry conditions persist, the drought could trigger a stage four emergency response period.
This is just the latest setback for this data center development. Last summer the council failed to pass a zoning change that required a supermajority vote. Even with this latest denial, the site's developer could refile its request again in six months.
Copyright 2026 KUT News