Your city or county would have to write strict water and tax rules into any deal with a data center

What it does

SB 338 would set conditions for the tax breaks and incentives that cities, counties, and school districts can offer a data center, which the bill defines as one or more facilities totaling at least 100,000 square feet that house servers and related equipment. Any such agreement would have to require cooling systems that use less water, such as closed-cycle recirculating, dry, saline water, or water-efficient cooling, and would require the company to file its expected cooling water needs and then report its yearly water use and water sources to the Public Utility Commission of Texas. It would also block a city from exempting more than 50 percent of the value that would otherwise be abated for a data center each year of the agreement, keep the taxable value counted for school district maintenance and operations at no less than half of market value for these projects, and let the city or district cancel the deal and recover lost tax revenue plus interest if the company breaks the terms. The Public Utility Commission would write the rules, and the bill would take effect September 1, 2027, with the changes applying only to agreements signed and sites connected after that date.