Hays County, the fast-growing county between Austin and San Antonio, wants developers of data centers and other heavy users of water and electricity to meet specific limits before the county will offer them incentives. The proposal appears in a 225-page draft of the county’s Development Regulations, dated Oct. 15. The Commissioners Court has called a public hearing for 11 a.m. Oct. 27.
The approach reflects a gap in Texas law. Counties have no general power to zone, meaning to decide what can be built where. The Legislature has granted county zoning-style authority only in named places, according to Chapter 231 of the Local Government Code: Padre Island, the area around Amistad Recreation Area, military zones, the shores of certain lakes, the El Paso Mission Trail area and Hood County. Hays County is not on that list. County judges told senators on Sept. 1 that they have “no authority” over data centers. Hays County’s draft leans instead on the tools counties do have: rules for dividing land into lots, and incentives and contracts with developers.
The draft defines a “high-intensity use” as any project that meets one of three tests. The first is water demand averaging at least 100,000 gallons a day or peaking at 250,000 gallons. The second is peak electricity demand of at least 20 megawatts. The third is the use of mechanical cooling to support data centers, cryptocurrency mining or high-density computing.
For those projects, the draft sets minimum standards to qualify for county incentives. A facility that needs 100,000 gallons a day or more must use air-cooled or hybrid cooling, or design a closed-loop system that recirculates its water. Evaporative or once-through cooling is prohibited unless the project uses less than 10 percent of the water an equivalent open-loop system would and meets at least 75 percent of its demand with reclaimed water, on-site reuse, brackish groundwater or other non-drinking sources. Drinking-quality water could be used only for the initial fill and for small top-ups, under 5 percent of annual demand, unless the county approves otherwise.
The power conditions are just as specific. Incentives “may be withheld or denied” unless on-site generation or storage covers at least half of peak demand or provides full backup. Projects of 50 megawatts or more would also need dispatchable generation, meaning power that can be turned on when needed, or a firm contract for it, plus battery storage or the ability to shed load. Applicants would have to show no adverse effect on local transmission limits, coordination with ERCOT, the nonprofit that runs the state grid, and the electric utility, a schedule for ramping up demand and a plan to cut use during grid emergencies.
As written, these are conditions for qualifying for incentives, not outright bans. A separate chapter on development agreements says such contracts let the county “provide incentives for desired Development conditions that exceed the legal authority of these Regulations” and “enforce land use and Development regulations other than those presented in these Regulations.” The draft’s authority section says it rests on statutes that “include but are not limited to” Local Government Code chapters on subdivisions, county fire marshals and economic development, along with health and water chapters of state law.
The county presented the update at its Oct. 13 meeting, when consultant Freese Nichols briefed commissioners and the court called the hearing. The county’s posted materials do not include public comment on the draft, and whether developers, landowners or neighboring cities will support the standards or argue that they go too far remains to be seen. Next door in Caldwell County, commissioners were scheduled to take up a development agreement for a 3,130-acre project at an Oct. 22 workshop, another sign that counties are using contracts to fill the gap.
The Commissioners Court takes public comment on the draft at 11 a.m. Oct. 27. The agenda does not say when commissioners would vote to adopt it.