San Marcos Rejects $1.5B Data Center Project After Heated Debate

City Council votes 5-2 to deny proposal, marking a reversal from earlier approval

Published on Feb. 21, 2026

Got story updates? Submit your updates here. ›

After a heated, nearly 9-hour meeting, the San Marcos City Council voted 5-2 to deny a preferred scenario map request for a proposed $1.5 billion data center campus. The project, which was backed by Fort Worth-based Highlander SM One LLC, had faced significant community backlash since it was first introduced six months ago. Hundreds of residents packed City Hall to voice their opposition, with some residents living near the proposed site breaking down in tears after the final vote.

Why it matters

The rejection of this major data center project highlights growing concerns in Central Texas communities about the impact of such facilities on local water supplies and infrastructure. As the region emerges as a top data center market, there are increasing calls for moratoriums and greater oversight to study the potential long-term effects on residents.

The details

The nearly 200-acre data center campus was proposed to be located partly within San Marcos city limits, near the Hays Energy Power Station and several family-owned farms. The project would have included five buildings, each with a power capacity of about 76 megawatts. The San Marcos Planning and Zoning Commission had previously recommended denial of the project, but the City Council had initially voted 5-2 in August to approve measures to annex and rezone the site. However, after a surge of community opposition, the Council reversed course and voted 5-2 to deny the preferred scenario map request.

  • Six months ago, community backlash helped stall the initial $1.5 billion data center project proposal.
  • In August 2025, the San Marcos City Council voted 5-2 to approve measures to annex and rezone the site for the data center project.
  • In October 2025, the landowners restarted the application process for the data center project.
  • In January 2026, the San Marcos Planning and Zoning Commission voted 6-2 to recommend approval of the revised data center project proposal.
  • On February 18, 2026, the San Marcos City Council voted 5-2 to deny the preferred scenario map request for the data center project.

The players

Highlander SM One LLC

The Fort Worth-based company that proposed the $1.5 billion data center project in San Marcos.

San Marcos City Council

The local governing body that initially approved the data center project in August 2025 but then reversed course and voted 5-2 to deny the preferred scenario map request in February 2026.

San Marcos Planning and Zoning Commission

The local commission that recommended denial of the data center project in March 2025 but then voted 6-2 to recommend approval of the revised proposal in January 2026.

Torrie Martin

A resident who lives near the proposed data center site and broke down in tears after the City Council's final vote to deny the project.

Ruben Becerra

The Hays County Judge who said he would propose a moratorium on approvals for projects seeking more than 25,000 gallons of water per day in order to study the potential impacts on the local water supply.

Got photos? Submit your photos here. ›

What they’re saying

“Oh my god, I can't believe it.”

— Torrie Martin

“While I have always supported business, I oppose unchecked water usage. We must pause approvals for high-impact operations. Yes, we must until scientific evidence confirms they will not harm our residents' water supply.”

— Ruben Becerra, Hays County Judge (Press conference)

What’s next

Hays County Judge Ruben Becerra said he would bring a moratorium proposal to county commissioners next week to halt approvals for projects seeking more than 25,000 gallons of water per day while officials study potential impacts on the local water supply.

The takeaway

The San Marcos City Council's reversal on the $1.5 billion data center project underscores the growing concerns in Central Texas communities about the strain that such large-scale data center developments can place on local resources and infrastructure. As the region continues to emerge as a top data center market, there will likely be increased scrutiny and calls for greater oversight to ensure sustainable growth.