North Texas Data Center Growth Outpacing Local Infrastructure and Policy Readiness, Survey Finds

August 27, 2026 (Arlington, TEXAS) – Local governments in North Texas recognize the opportunity created by rapid data center growth, but many say their communities are not yet equipped to manage the infrastructure demands, environmental impacts and policy challenges that come with it, according to a new regional survey from the North Central Texas Council of Governments (NCTCOG).

Nearly two-thirds of the 31 cities and counties who responded to the survey reported that their community has either approved a data center within the past 10 years or is actively considering one. At the same time, 78% disagreed or strongly disagreed that their municipality’s existing infrastructure could support data center development without major upgrades.

The findings come as North Texas and the broader Texas market experience unprecedented data center growth. Cushman & Wakefield's 2026 Global Data Center Market Comparison ranked Dallas the No. 1 primary data center market in the world for the first time. A separate August report from JLL found Texas had 26 gigawatts of existing and under-construction data center capacity, compared with 13 gigawatts in Virginia, while Northern Virginia remains the world's largest single market by total installed capacity.

Together, the reports underscore the scale and speed of data center development across the Dallas-Fort Worth region and the entire state of Texas. The NCTCOG survey finds that the local governments hosting that growth are asking for stronger infrastructure and clearer rules before it accelerates further.

Growth Is Outpacing Local Readiness

Eighteen of the 31 responding cities and counties across the region have already approved or are actively considering a data center. Yet 78% of respondents disagreed or strongly disagreed that their existing infrastructure in their city or county could support data center development without major upgrades, illustrating a significant gap between the pace of development and local capacity to manage it.

Water and wastewater capacity, electric grid capacity and funding for infrastructure upgrades were among the most frequently cited priorities for communities considering future data center development.

Water Emerges as Top Infrastructure Concern

While power delivery has dominated national discussion surrounding the growth of artificial intelligence and data centers, North Texas governments identified water supply as the system under the greatest strain. 

Water supply was cited by 96% of respondents, followed by the electric grid at 81%. In a separate question, 96% agreed that data centers significantly impact local water resources – while the same share also said energy demands from data centers challenge local or regional grid reliability. 

High water consumption (93%) and energy use (81%) topped the list of environmental concerns most associated with data centers.

Respondents indicated strong support for making sustainability requirements mandatory for data center approvals, along with a need for clearer local policies and evaluation frameworks.

Economic Benefits Remain Uncertain

Local governments recognize the potential economic benefits of data center development, particularly tax revenue and economic diversification. However, the survey found less certainty about whether those benefits will translate into meaningful long-term fiscal value for individual communities.

Only 22% of respondents agreed that data centers provide meaningful long-term tax revenue for their community, while 56% were neutral and 22% disagreed. 

Respondents also raised questions about the role of incentives, the number and quality of jobs created by data centers, and whether long-term fiscal benefits outweigh the infrastructure and other costs associated with development.

Local Policy Has Not Kept Pace with Growth

As data center development accelerates, many local governments report that they lack clear frameworks for evaluating proposals.

Only 16% of respondents said their city or county has clear policies or guidelines for evaluating data center proposals, while 72% disagreed. Asked directly whether the benefits of data centers outweigh the drawbacks, only 4% said yes without qualification, 60% said no, and 36% said it depends on the conditions and safeguards attached to development.

The findings suggest that local governments are not broadly rejecting data center development but are seeking clearer tools and standards to evaluate projects and manage their impacts.

A Path Forward: Guardrails, Not a Slowdown

The survey identified several tools that respondents believe could help communities manage future development.

Ninety-six percent of respondents support making sustainability requirements — such as renewable energy use, water reuse and efficiency standards — mandatory for data center approvals. Development agreements (76%), sustainability requirements (76%) and impact fees (60%) were rated the most effective governance tools available to local governments. 

In open-ended responses, respondents most frequently identified water and wastewater capacity, electric grid capacity, and funding for infrastructure improvements as priorities for cities and counties considering future data center development. 

“North Texas local governments recognize the economic opportunity that data centers can bring, but they also recognize that growth comes with real demands on water, energy and infrastructure,” said Susan Alvarez, Director of Environment and Development at NCTCOG. “What we're hearing is not a call to stop development. It's a call for clear standards, better planning and the tools communities need to make informed decisions. This data gives our region a roadmap for getting the policy framework right while the opportunity is in front of us.”

NCTCOG plans to utilize feedback collected from the survey, along with input collected from related efforts, to develop educational resources for NCTCOG's members as they continue to navigate the changing landscape around data centers.

About the Survey

The survey originated from a Certified Public Manager (CPM) capstone research project by an NCTCOG member and was distributed March 10–31, 2026 to local government representatives through NCTCOG’s Public Works Council, Solid Waste Advisory Committee, Water Resources Council and Regional Integration of Sustainability Efforts (RISE) Coalition. 

The survey received 31 responses from cities and counties across North Central Texas, representing communities ranging from large metropolitan areas to small towns. The survey is intended to capture the perspectives and experiences of participating local governments and is not intended to represent a statistically weighted sample of all local governments in the region.

The full survey results and analysis are available here: Data Center Survey Analysis. 

Media Contact:

Caroline Vandergriff, Public Affairs & Communications Officer

(682) 427-4354

cvandergriff@nctcog.org

About the North Central Texas Council of Governments: 

NCTCOG is a voluntary association of 238 local governments serving a 16-county region centered around Dallas-Fort Worth. Established in 1966, the organization provides regional planning, coordination, and technical expertise in transportation, environmental sustainability, emergency preparedness, public safety, workforce development, and human services for the region's more than 8.9 million residents.