Re-Zoning Hearing

July 2025

Highlander Real Estate Partners

Currently platted for 500 homes, Highlander Real Estate Partners is proposing a data center development at 904 Francis Harris Lane - a less intensive use that serves as a strategic buffer between heavy industrial and rural residential areas. At the direction and recommendation of City Staff, HREP is seeking to rezone the property to Light Industrial-Data Center, prioritizing environmental stewardship, sustainable development, and a smarter approach to growth in San Marcos.

Less Impact, More Benefits:

A Proposed Data Center for San Marcos

1

Point of Interest #1

Existing Heavy Industrial Site

This property is located within the full purpose city limits of San Marcos and is zoned for heavy industrial use. The Hays Energy natural gas power plant operates here. Per City Planning staff - adjacent parcels should be developed at an incremental step down in intensity, hence their recommendation for light industrial zoning.

  • Adjacent residential developments are not ideal
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Point of Interest #2

City Data Center

Highlander is seeking to rezone the property from high density single family residential (CD 2.5) to light industrial. The company plans to build a LEED CERTIFIED data center on the site. The data center will use 50% less water than the current CD 2.5 zoning. The data center will have improved water quality standard relative to City code. The County does not require water quality. Stormwater management and detention will exceed City code. Impact to City services will be significantly less than CD 2.5. The $10MM in annual tax receipts far exceeds the tax revenues of CD 2.5 development. A data center located in the County across the street will produce no tax revenue for the city and will have no environmental regulations.

  • -50% water consumption vs residential
  • Enhanced water quality
  • Enhanced stormwater management
  • Reduced impact on city services
  • +$10M increase in tax revenue generated annually for the city and school district
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Point of Interest #3

Highlander Residential Site

Highlander is already zoned and approved for over 500 homes on this site. Water for all of these homes has been contracted for with Crystal Clear SUD.

  • Residential use is not ideal when located next to heavy industrial zoning or a large power plant.
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Point of Interest #4

County Data Center

The County does not have any of the zoning, permitting or environmental requirements of the City. A data center located in the County does not have to comply with impervious cover restrictions, tree ordinances, water quality, light ordinances or noise ordinances. And they don't pay any City taxes. ERCOT will only approve one of the data centers currently in the queue - the choice is whether it will be a County data center with no regulations and no taxes paid, or a City data center with all of the regulations and the taxes.

  • -$8M annually in tax revenue
  • Would fall under the county jurisdiction rather than the city
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Located Directly Adjacent to

Heavy Industrial Zoning

Data Center

vs

Residential

50% Less Water Use Than 500+ Homes A More Sustainable Alternative to High-Density Single Family Residential

Enhanced Water Quality* Cleaner Runoff, Less Impact on Local Waterways

Enhanced Stormwater Management* Reducing Flood Risk, Protecting York Creek

Reduced Impact On City Services Compared To 500+ New Homes Less Traffic, Fewer Police and Fire Calls

$10M+ Annual Tax Revenue Providing Much-Needed Funds to Support City and School District Budgets

* Exceeds San Marcos development code

Site Plan Comparison

Data Center

Residential