Central Texas Data Centers: The Real Cost Communities Are Paying
Data centers are arriving in Bosque, McLennan, and Hill County — and in too many cases, residents found out after the deals were already made. An honest look at water, grid, land, and the accountability gap.
They didn't ask. That's the part that keeps coming up in community meetings from Ross to Hillsboro to the halls of the Texas Legislature. Not whether data centers should exist — they're a fact of modern infrastructure — but whether the communities being asked to host them got a real seat at the table before the bulldozers showed up. In Central Texas, the honest answer is: largely, no. Projects worth tens of billions of dollars were quietly sited, tax abatements were negotiated behind closed doors, and residents found out about proposals affecting their water, their grid, and their land through local newspapers — not public hearings. That's the problem at the center of this story.
This isn't about whether data centers are good or bad in the abstract. It's about what happens when multi-billion-dollar industrial projects are pushed through before communities have the tools, information, or time to make informed decisions about whether — and on what terms — they want them.
What's Actually Being Built — and Where
Several projects are already in motion across counties immediately surrounding Waco. This is not speculative pipeline news. These are active developments with real financial commitments, real tax negotiations, and real consequences for the communities nearby.
- CyrusOne — Bosque County: A 400-megawatt data center campus along the Brazos River, northwest of Waco, is already under construction. County officials approved a tax abatement in November 2024. The pitch: a projected 120% increase in Bosque County tax revenue — roughly $70 million over 30 years. What the pitch leaves out: the abatement period means that revenue is deferred for years, the facility will be one of the largest electricity consumers in the county from day one, and its location along the Brazos raises direct questions about water withdrawal in a drought-affected region.
- Infrakey — Ross / Lacy Lakeview (McLennan County): The proposed $10 billion Infrakey facility near Ross would be the largest single industrial development in McLennan County history. Lacy Lakeview Mayor Charles Wilson backed it publicly as a budget solution for a city with chronic financial strain. Residents weren't persuaded. In December 2025, two community meetings at the Ross Volunteer Fire Department drew crowds of concerned locals — many hearing the full scope of the proposal for the first time. Press coverage was significant. Decisions remain unclear.
- Hill County: Hillsboro and surrounding areas, about 35 miles north of Waco on I-35, have been repeatedly flagged by data center site selectors as a target market. Fiber access, available land, and proximity to DFW make it attractive to developers even without a single announced project yet. That can change quickly.
- Texas Senate District 22 — McLennan, Bosque, and Hill Counties: Data center policy became an explicit campaign issue in the 2026 Texas Senate race for this district. That level of political salience doesn't emerge from nowhere — it reflects the intensity of the underlying community concern.
The Real Costs That Aren't in the Press Releases
Developer pitch decks and county economic development reports emphasize tax revenue projections and construction employment. They don't lead with water withdrawal figures, grid load projections, or the ratio of permanent jobs to acres consumed. Here's what communities being asked to host these facilities are actually grappling with.
What Communities Are Actually Up Against
Water — The Most Urgent Problem
A mid-sized data center consumes over 300,000 gallons of water per day. A hyperscale facility can top 4.5 million gallons daily — the daily water demand of a city of 10,000 to 50,000 people, running indefinitely. The Houston Advanced Research Center projects Texas data centers will demand up to 399 billion gallons annually by 2030 — potentially 6.6% of the state's total water use. Central Texas sits on the Brazos River basin with already-stressed aquifer systems in a state experiencing repeated severe drought cycles. The question isn't whether data centers use a lot of water. They do. The question is whether the communities downstream of these decisions ever got to weigh in on that trade-off.
The ERCOT Grid Is Already Under Pressure
ERCOT forecasts data centers will consume over 12,700 megawatts in 2026, more than doubling in 2027. A single hyperscale campus can draw hundreds of megawatts — the equivalent of hundreds of thousands of homes. In February 2021, the Texas grid failed during a winter storm and 246 people died. The grid has been patched since then but not fundamentally overhauled to accommodate this scale of new industrial demand. Asking residents to absorb that risk — on top of already-strained summer peak loads — without meaningful input or compensation is a serious problem.
Farmland Lost Is Farmland Gone
Texas Agriculture Commissioner Sid Miller called the conversion of prime agricultural land to data center sites a 'real and growing threat to our food supply.' Some proposed facilities involve thousands of acres that have been farmed for generations. Once graded, paved, and fenced with industrial infrastructure, that land doesn't come back. Ranching and farming families are being told the land their grandparents worked is now a more efficient site for server racks than for cattle or crops. The noise, 24/7 lighting, and construction traffic affect everyone nearby — not just the facility footprint.
Tax Abatements: Who Actually Benefits?
Nearly every large data center proposal in Texas arrives with a request for significant tax incentives running 10, 15, even 20 years. During that window the facility consumes public infrastructure — roads, emergency services, water systems — while contributing far less to the tax base than it eventually will. Long-term revenue projections are real. They're real 15 to 25 years from now. In the interim, the benefit flows to large landowners who sold at industrial prices and to corporate developers. The ordinary property taxpayer subsidizes the deal. Asking whether that trade-off is fair is not anti-business — it's basic civic accountability.
The Jobs Pitch Doesn't Hold Up to Scrutiny
Data centers are capital-intensive, not labor-intensive. A facility representing billions of dollars in investment and consuming hundreds of megawatts of power will typically employ 50 to 200 permanent workers on-site. Construction jobs are real but temporary — the build phase ends. After that, you have a large, automated, lightly staffed industrial facility operating on your community's water and grid, with a workforce smaller than a mid-sized restaurant group. Communities in Ross asked this question directly: for thousands of acres and billions in investment, what are we actually getting in terms of jobs? The honest answer is not a lot.
Local Governments Have Almost No Tools
Most proposed data centers in Central Texas are sited in unincorporated areas — outside city limits — where county governments have extremely limited regulatory authority. Counties can negotiate or deny tax abatements. They cannot easily impose zoning, noise ordinances, environmental buffers, or operational requirements the way a city can. State law in Texas has historically prioritized property rights and economic development over local regulatory control. The result is that communities can show up at fire station meetings, speak at county commissioner hearings, and write letters — and a project can still move forward with minimal modification.
The Premature Approval Problem
Several projects in Central Texas were approved — or substantially advanced — before comprehensive environmental impact assessments were completed, before water withdrawal studies were public, and before communities had access to independent analysis rather than developer-produced projections. The pressure tactic used to justify speed: if Texas doesn't approve these, other states will. That may be true. It's also how communities get rushed past the decision points where they might have asked harder questions or demanded better terms.
What Gets Negotiated — and What Doesn't
Tax abatement agreements in Texas are public records, but they're often finalized before the public knows a proposal exists. When communities do engage, the negotiations that matter most — water usage caps, noise limits, setback requirements, grid curtailment commitments — are often already locked. Some agreements include local procurement provisions and road repair requirements. Very few include enforceable water withdrawal limits, independent grid impact studies, or community benefit funds accessible to residents rather than landowners.
The Bigger Picture: AI's Footprint Is Landing Here
AI models — the kind powering chatbots, image generators, and automated systems — require enormous, persistent compute power that lives in data centers. The explosion of AI investment since 2022 has triggered a data center land rush across the United States, and Texas is a primary target. Central Texas communities aren't just being asked to host a facility. They're being asked to host the physical infrastructure of a global technology transformation, with the costs and trade-offs falling locally while the profits flow to corporations headquartered elsewhere.
In December 2025, residents of Ross, Texas packed the local volunteer fire station twice in a single month to oppose the proposed Infrakey data center. Many attendees said they had learned about the full scope of the project from local news coverage — not from county officials or the developer. The meetings drew regional and statewide press attention and put a human face on a debate that had largely been conducted in economic development offices and corporate boardrooms.
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See Our ServicesWhat Accountability Actually Looks Like
Communities that have had the most success shaping data center outcomes have focused on demanding specific, enforceable commitments rather than blanket rejection. The following are examples of terms advocates argue should be baseline requirements — not negotiated exceptions.
- Independent water impact studies — paid for by the developer, conducted by a county-selected firm — required before any tax abatement is approved. Not developer projections. Independent assessments.
- Enforceable water withdrawal caps written directly into abatement agreements, with automatic penalty triggers and mandatory public reporting.
- Grid curtailment commitments: binding agreements that the facility will reduce or halt operations during ERCOT emergency conditions, verified by third-party metering.
- Community benefit funds: a per-megawatt-hour fee paid to a locally controlled fund for infrastructure, education, or direct resident benefit — not just landowner sale prices.
- Mandatory public hearings with a minimum 60-day notice period before any tax abatement vote — enough time for residents to commission independent analysis.
- Sunset provisions on abatements: if employment or investment benchmarks aren't met by specified dates, the abatement terminates — not just gets renegotiated.
- Moratoriums on additional approvals within a county until environmental impact data from already-approved projects is publicly available and independently reviewed.
What the Legislature Has — and Hasn't — Done
Texas SB 6 (2023) requires new large electrical loads to install backup generation capable of islanding from the grid and responding to ERCOT emergencies — a meaningful provision that partially addresses the grid reliability concern. It does not address water use, land use, local regulatory authority, tax abatement transparency, or community input requirements. Several bills in the 2025 legislative session aimed at strengthening county authority over data center siting failed to pass or were substantially weakened in committee. The gap between what communities are asking for and what the Legislature has delivered is significant.
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What This Means for Local Businesses — Honest Version
There are real secondary effects for businesses in and around Waco, and they aren't all negative. But the honest version is more complicated than any economic development brochure.
- Broadband and fiber: Data center development tends to accelerate fiber deployment along I-35 corridors — a genuine downstream benefit for businesses that need better connectivity.
- Construction-phase spending: Multi-year, multi-billion-dollar build-outs generate real spending on local labor, materials, equipment, lodging, and food. That spending is real. And temporary. It ends when construction does.
- Water costs: If aquifer stress increases water pricing or availability constraints in the region — a realistic scenario under projected data center demand — agricultural businesses, food service, and any water-intensive operation bears that cost directly. It won't show up in a county press release.
- Grid reliability: If ERCOT emergency events increase in frequency due to higher peak demand loads, business continuity risk goes up for every small business that can't afford a generator or extended downtime. The 2021 freeze cost Texas businesses an estimated $90 billion.
- Commercial real estate near facilities: Industrial land prices near large data centers tend to rise during the site selection and construction phase — a short-term financial gain for nearby landowners, and a cost increase for businesses trying to expand into nearby space.
- Your digital infrastructure, regardless of what happens locally: Your business's website, software, and online presence operate on infrastructure that exists somewhere. Having a fast, reliable, independently owned digital foundation protects you regardless of how the data center debate resolves.
Questions People Are Actually Asking — With Honest Answers
These are the questions coming up most often at community meetings, in comment sections, and in conversations across Central Texas.
- "Doesn't the tax revenue outweigh the concerns?" — Over a 30-year horizon, potentially. In the near term, during the abatement period, the community bears infrastructure costs while the full revenue benefit is deferred. Whether the trade-off is worth it depends on what other terms are in the agreement — and who negotiated them.
- "Can't data centers use recycled water instead of freshwater?" — Some can and some do. Very few Central Texas agreements to date have included binding requirements to use reclaimed water. The technology exists. The contractual obligation often doesn't.
- "If Texas doesn't approve these, won't they just go somewhere else?" — Yes, some will. It's also a pressure tactic. The question isn't 'data center or no data center' — it's 'on what terms.' Communities that have pushed back hardest have sometimes gotten meaningfully better terms.
- "Aren't the jobs good?" — Construction jobs are real and temporary. Permanent data center employment is typically 50–200 on-site positions. Whether that's a good trade for the water, land, and grid commitments involved is a legitimate question that deserves a real answer.
- "What can I actually do?" — Attend county commissioner meetings when tax abatements are on the agenda. Demand independent water and grid impact studies before approvals. Contact your state representative about strengthening local regulatory authority. Stay informed through The Texas Tribune and The Waco Bridge — not just developer press releases.
The Bottom Line
Data centers are coming to Central Texas — some are already being built. What is still in question is whether the communities hosting them, funding them through tax abatements, providing their water, and absorbing their grid load will get anything close to a fair deal in exchange. The early evidence — from Ross to Bosque County — suggests that without sustained, organized community pressure and stronger legal frameworks, the answer is often no. The decisions being made right now, in county courthouses and commissioner hearings and legislative committee rooms, will shape what Central Texas looks like for the next generation. That's worth showing up for.
This post reflects publicly reported information from The Texas Tribune, The Waco Bridge, ERCOT public forecasts, and the Houston Advanced Research Center as of April 2026. It represents the editorial perspective of Scott Applications and is not a legal or regulatory opinion. We will update this piece as the situation develops.
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