LEGAL & REGULATORY RISK FINDING

TriTexas Logistics Park
Data Center Exemption

San Marcos became the first city in Texas to ban data centers citywide in June 2026. A vested-rights clause in the TriTexas (formerly SMART Terminal / Axis Logistics Park) development agreement may mean the ban doesn't apply here.

Important disclaimer: This page presents a legal analysis based on the plain text of the recorded development agreement and city ordinance. It is not legal advice, and it is not a claim that a data center has been proposed, approved, or is under construction at this site. It explains why community researchers believe the property may be exempt from the city's new ban.

Overview: A Citywide Ban With a Built-In Exception

On June 16, 2026, the San Marcos City Council voted 4-3 to pass Ordinance 2026-08(b), making San Marcos the first city in Texas to define and prohibit data centers in every zoning district citywide - a response to community concern over the water and energy demands of AI-driven data center development.

But the TriTexas Logistics Park site (formerly SMART Terminal, then Axis Logistics Park) - roughly 2,017 acres along FM 1984 near Martindale, Reedville, and Maxwell - is governed by a Development Agreement signed years before the ban. That agreement explicitly lists Data Center as a Permitted Use (Exhibit D, item 45), and Texas law generally protects a project's permitted uses from being overridden by a city ordinance passed after the project was already vested.

The core legal argument: Because the development agreement constitutes a vested-rights permit under Texas Local Government Code Chapter 245 - and controls over subsequent city ordinances per its own terms - the owner/developer would have a strong legal argument that traditional data centers remain permitted on this property notwithstanding the new ordinance.

In the News

This analysis was first reported publicly by the Caldwell-Hays Examiner, a local nonprofit news outlet covering Caldwell and Hays counties:

"EXCLUSIVE: Loophole will Allow TriTexas to Build Data Center in San Marcos Despite City's First-in-the-State Ban, Advocates Say"

"The massive property near Martindale, Reedville and Maxwell - first called SMART Terminal, then AXIS, and now TriTexas - will be able to erect a destructive AI-driven facility even though San Marcos forbids them, neighbors warn..." - Caldwell-Hays Examiner

The article quotes CASA's own legal analysis directly: "because the development agreement constitutes a vested-rights permit under Texas Local Government Code Chapter 245 and controls over subsequent city ordinances, the owner/developer would have a strong legal argument that traditional data centers remain permitted on this property notwithstanding the new ordinance."

Why the Development Agreement May Override the Ban

Two provisions of the First Amended & Restated Development Agreement (executed January 17, 2023) are central to this argument:

Section 3 states: "Notwithstanding any restrictions, rights or privileges under applicable laws or the City's Development Code and other ordinances, the Permitted Uses shall be allowed on the Property and the Prohibited Uses are expressly prohibited on the Property."

Section 1.04.A states: "In the event of a conflict between this Agreement and the SMDC or the City's Codes and Ordinances, this Agreement shall control." The agreement's initial term runs 45 years from January 2023, with options extending it through 2083.

Chapter 245, in plain terms: Texas Local Government Code Chapter 245 generally requires cities to evaluate a development application under the rules in effect when the original application was first filed - not rules adopted later. Because this project's permitted-use list (including data centers) predates the June 2026 ban, the city may be legally barred from applying the new ban to this property.

See the full permitted/prohibited uses list on Permitted & Prohibited Uses (Exhibit D).

What's Still Unresolved

Cryptocurrency mining: The city's updated data center definition (San Marcos Development Code §5.1.7.10, effective 2025) explicitly includes cryptocurrency mining, while the development agreement's own custom data center definition does not. Whether crypto-mining facilities specifically would be covered by the same vested-rights protection is legally ambiguous.

Backup diesel generators: Most real-world data centers rely on bulk on-site diesel storage for backup power. That runs into two of the agreement's own Prohibited Uses - "manufacturing or storage of hazardous materials or explosives" and "refining or retail sale or bulk storage of fuel, liquified petroleum and flammable liquids" - neither of which carves out an exception for generator fuel tanks. A developer could argue generator tanks are an accessory use incidental to the permitted Data Center use, but the agreement's absolute prohibited-use language makes that a contestable argument, not a clear one.

Legal challenges to the ban itself: Separately from this site-specific question, at least one Texas state senator has publicly said San Marcos's citywide data center ban is likely to face a legal challenge over whether the city has the authority to enact it at all. That is a distinct issue from the vested-rights argument above, but it underscores that the legal landscape here is unsettled and evolving.

Why This Matters for the Community

Data centers - particularly AI-driven facilities - draw enormous amounts of water for cooling and electricity for power, concerns that directly motivated San Marcos's citywide ban in the first place. If this property is legally exempt from that ban, a data center could be built here regardless of the will expressed by the City Council's vote, on a site already approved for heavy industrial use with impact fees frozen at 2019 rates.

This is exactly the kind of use-specific, document-level question that residents, reporters, and city officials need accurate information about - which is the reason this page exists.

Sources

  1. Ordinance 2026-08(b): City of San Marcos Development Code overhaul, second reading, passed 4-3 on June 16, 2026. Legistar record.
  2. First Amended & Restated SMART Terminal Development Agreement: Executed January 17, 2023. Sections 1.04.A, 3; Exhibit D, item 45. Res. 2023-20R / PDA-22-07.
  3. Texas Local Government Code, Chapter 245 (Statutory Vested Rights).
  4. Caldwell-Hays Examiner: "EXCLUSIVE: Loophole will Allow TriTexas to Build Data Center in San Marcos Despite City's First-in-the-State Ban, Advocates Say." Facebook post.
  5. CASA legal analysis: Original research and analysis by Citizens Against TriTexas, cross-referenced in the Caldwell-Hays Examiner coverage above. See also Permitted & Prohibited Uses.