San Marcos Data Center Revives Bid After Zoning Stalemate

30 December 2025

A $1.5 billion data center campus proposed for San Marcos is back on the city’s agenda after a zoning stalemate, giving Central Texas another shot at a high-stakes test case in the region’s data center boom.

Fort Worth-based Highlander SM One and New Braunfels landowners Donald and Germaine Tuff have restarted the entitlement process for the five-building project at 904 South Francis Harris Lane, the Austin Business Journal reported.

City officials and the development team said the application was formally reset in October, teeing it up for its first hearing before the Planning and Zoning Commission in January and the City Council in February.

The proposal hasn’t materially changed. At full buildout, the campus would include five data center buildings with 76 megawatts of power capacity each, totaling a $1.5 billion investment. No job count has been released, though most employment would be tied to construction rather than permanent operations.

The project has drawn sustained opposition from nearby residents and skepticism from some council members, in part because it’s been conflated with a separate gas-powered data center proposed nearby in unincorporated Hays County, according to the publication. This site, however, is different — and now fully back in play after the council unanimously approved annexation of the remaining 64 acres in August.

Still, the zoning effort collapsed last time around. Council members voted 5-2 to amend the city’s comprehensive plan in TK, but the move required a six-vote supermajority after the planning commission recommended denial. Rather than triggering a formal denial and mandatory waiting period, the applicant opted to restart the process.

One notable shift: Dallas-based CyrusOne is no longer contractually tied to the development. The data center giant had been associated with the project and even held a community meeting, but delays caused its agreement to expire, Highlander manager John Mayberry said at a Dec. 16 meeting. He added that multiple potential operators remain interested but can’t move forward without zoning in place.

To win approval, the developers are offering concessions. They’ve proposed restrictive covenants addressing water use, drainage, impervious cover, noise and LEED standards. Cooling would rely on a closed-loop system requiring a one-time fill of up to 70,000 gallons, with daily water use of roughly 20,000 to 35,000 gallons — far less than a residential subdivision, city staff said.

The stakes are real for San Marcos. City officials estimate the project could generate $9 million in property taxes for the city, $15.2 million for the school district and $5.3 million for Hays County. That revenue looms large as the city stares down a projected $13 million budget shortfall by 2029.

— Eric Weilbacher