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The city of Austin is nearing decision time on its upcoming fiscal budget. The first draft called for cuts to public health programs, parks and other services. The City Council has spent weeks shaping the version that’ll soon be approved.
Proponents of data centers say they can be a boon to the areas they’re built in. But in Abilene, their presence has spurred a housing crisis. More from our series The Data Center Next Door.
There’s rumors of a second National Hockey League franchise coming to Texas. Austin’s been mentioned as a landing spot, but how real is that talk?
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The full transcript of this episode of Austin Signal is available on the KUT & KUTX Studio website. The transcript is also available as subtitles or captions on some podcast apps.
Jerry Quijano [00:00:08] The City of Austin is nearing decision time on its upcoming fiscal budget. The first draft called for cuts to public health programs, parks, and plenty other services. City Council has spent weeks shaping the version that will soon be approved. We’ve got the latest from City Hall. And Texas is home to more than 300 data centers. And proponents say these centers can be a boon to the areas they’re built in. But in one Texas city, their presence has spurred a housing crisis. More from our series, The Data Center Next Door. That’s coming up on today’s show.
KUT Announcer: Laurie Gallardo [00:00:36] The Austin Signal is a production of KUT News, hosted by Jerry Quijano.
Jerry Quijano [00:00:41] Plus, there’s rumors of a second National Hockey League franchise coming to Texas. Austin has been mentioned as a landing spot, but how real is that talk? Well, we’re going to tell you more about the details. That’s coming up next. It’s right here on Austin Signal. Howdy out there. This is Austin Signal. I’m your host, Jerry Quijano. It is Wednesday, August 12th. Thank you for tuning in. The vote on Austin City budget is just around the corner. Public comment on the proposed budget is closed and the city has several things to consider before ratifying that upcoming budget. For more, we are talking with Luz Moreno Lozano. She is KUT City Hall reporter. Welcome back to the show, Luz. Thanks, Jerry. Okay, so City Council has been debating for weeks on what it can fund and what it cannot fund and how they’re going to do that. Tell us, remind us of some of the priorities that they’re taking up.
Luz Moreno-Lozano [00:01:40] Yeah, I think some of the biggest ones that we’ve heard over the last couple of weeks is housing and homelessness. I think, you know, the council is pretty focused on how we’re going to address this affordability issue. And so being able to provide housing options for people either in low income, in low-income stability or instability, or who are living unhoused as a top priority. And then I’ve also heard a lot of support for just programs that benefit kids. Family programs that keep families fed, you know those kinds of things that are kind of helping some of our most vulnerable community members.
Jerry Quijano [00:02:13] Absolutely okay they are the council’s also considering significant cuts to city programs and services uh… What are some of those that they’re considering
Luz Moreno-Lozano [00:02:21] So we don’t have a good picture of some of the social service contracts, which is the biggest cut that we’re seeing. But they did make some other funding cuts. We saw some cuts to spay and neuter program funding, some parks and recreation summer program, pool operating costs that will kind of draw down. I know that they are cutting some city grant programs. And how they are refilling some vacant positions will also kind of. Help with those cuts. And so they’re looking at like what positions have been vacant for a while and how can we cut those and re rework the organization.
Jerry Quijano [00:02:59] Okay, so this has been a long process, I believe that the proposed budget was announced back in April. One thing that has happened over the course of that time, there was an audit that came out. How has that audit affected these negotiations, these proceedings?
Luz Moreno-Lozano [00:03:12] Right. So this audit found that nonprofits, some nonprofits that are working with the city were underperforming and they just weren’t consistently meeting the services and promised services that they had said that they would provide to the community.
Jerry Quijano [00:03:25] Yeah, and those contracts.
Luz Moreno-Lozano [00:03:26] And so I think what this audit kind of brought to light is that the city doesn’t have a good sense of like which programs are doing really well, which ones are like overlapping and struggling and therefore like we’re kind of like there’s a bunch of several programs that are providing this service and therefore maybe it doesn’t make sense to have one. So that has prompted the city council to take a deeper dive. So they will take a look at like which of these programs is really necessary and take, yeah, like. If they’re going to fund some of these programs, which ones are most important and how are they helping people?
Jerry Quijano [00:04:02] Yeah, amid the consideration of all the cuts, the city also learned that they would be getting an extra nearly $5 million in additional property tax revenue. How has that impacted things?
Luz Moreno-Lozano [00:04:12] Well, I think the city council wants to put most of that into a one-time funding for some of these social service contracts. They haven’t named which of them are gonna be. I think once we kind of take a deeper dive into what that looks like, they’ll decide, maybe they’re gonna give some to housing, they’ll give some to homelessness services programs that feed children, I think were some of the things I heard. Um, but yeah, I think that this, this four points of a million dollars is basically like, we’re going to give a one-time funding to, to social service contracts and what that, what those contracts are is still to be determined.
Jerry Quijano [00:04:44] You’ve spent a lot of time at City Hall over the course of this budget discussion. And obviously there are a lot of priorities that each city council member will have and the mayor, city manager. What are some of the priorities that you heard from citizens here in Austin?
Luz Moreno-Lozano [00:04:56] Yeah, you know, I was there this morning. We’ve heard a lot from community members, especially from nonprofit organizations that provide essential services to people. Some of them were like Asian-American community programs, some of them are housing programs, some of em were like rental assistance programs. You know, some of these programs that the city does pay for, does help us like a large amount of people. So I heard a a lot about that. We heard a about parks. You know, people. Love parks. And so how can the city better fund some of these parks needs, whether it’s like maintaining trails or, you know, opening new parks in some of these undeveloped spaces that the city has bought but hasn’t purchased yet. But yeah, I think the main thing that I’ve heard is that people want programs that benefit those working class, low income, basically families and children in need. And like, How can we prioritize some of those needs over some of- the other council priorities.
Jerry Quijano [00:05:57] Okay, just about 10 seconds here. How soon might this vote take place?
Luz Moreno-Lozano [00:06:01] Well, we could see something as early as today. It could also go until Friday. I’ve seen it go both ways. Since public comment is over, we could get something later tonight.
Jerry Quijano [00:06:10] All right, well, we will keep you updated on the latest right here on Austin Signal. Thanks to Luz Moreno Lozano. She is KUT City Hall reporter. Always great to talk with you, Luz.
Luz Moreno-Lozano [00:06:18] Thanks for having me.
Jerry Quijano [00:06:27] Well, football games here at the University of Texas at Austin are coming back next month. We just found out this week that the Spurs will be coming back to town in October. And soon there could be professional hockey here in the Austin area. Well, here to tell us more is Justin Sayers. He is a senior staff writer for the Austin Business Journal. Welcome back to the show, Justin. Yeah, thank you so much for having me. So I have been hearing about the possibility that Texas could get another NHL team in addition to the Dallas Stars. And both Austin and Houston seem to be in the running. How certain are we that this new Texas team is gonna happen in the first place? Is NHL expansion pretty much a done deal?
Justin Sayers [00:07:05] Yeah, I mean it seems at least from the top level there’s interest in that. There’s been speculation for several years and then there was this surprise announcement a couple months ago that they had signed a term sheet with the Friedkin family in Pursuit Sports to bring a team to the Lone Star State. Everyone has assumed it’s, you know, Houston or bust, but I think a lot of people here locally are pushing back on that narrative and the fact those discussions are starting as we reported, they signed an office lease. Like, they are saying that we are being given a fair shake and Austin isn’t just a stalking whore.
Jerry Quijano [00:07:40] Okay, that’s good to know. That’s certainly something that I was considering, you know, because I grew up in San Antonio, and so for a while we hosted the Saints, and eventually the Saints never went anywhere, and we even hosted the Raiders for a little bit, and there was speculation maybe the Raider’s would come to San Antonio. It always felt like we were the bridesmaid, not the bride. And so you mentioned Houston, we’re definitely going to talk about them, but let’s talk about Austin’s qualifications. Is there an appetite for hockey here in Austin?
Justin Sayers [00:08:06] Yeah, I think there is an appetite for anything. You know, we are an event town. We have events like ACL and we have events like South by Southwest. There’s some sports, you know, Austin FC and some minor league teams and women’s professional sports has gotten a lot bigger here. So people like to go out, they like to do things. And at the same time, like the NHL has really targeted those types of markets. Austin, there are at least a half dozen markets that are actually smaller than Austin that have NHL teams right now. So there actually might be some synergies there like a Vegas where they went a few years ago or Winnipeg that they put a team in that’s significantly smaller or Buffalo where there’s only an NFL team to compete with. So, there is definitely interest here. There is a little bit of a hockey culture already and I think people would welcome them with open arms.
Jerry Quijano [00:09:01] Well, as you recently reported, there are some signs that Austin seems to be ramping up its efforts to court this potential team. What leads you to believe that?
Justin Sayers [00:09:09] Yeah, again, what we had reported is that conversations are starting. We reported that Visit Austin, their CEO, had talked with the Pursuit Sports Group. We’ve heard conversations with other public officials and other big wigs around town. So they’re at least starting those conversations. They were described as ground zero, very early conversations. On top of that, they have signed an office lease. To house members of the staff that will be here full-time or mostly full- time. And we’ve heard that that includes the CEO of Pursuit Sports. So what that leads us to believe is, again, that they’re at least taking a long look at Austin. They’re going to be here and talking to people and running all the data and all those fun things before they make that final decision, which I think is a little more than people expected at the start.
Jerry Quijano [00:10:03] Well, on the other side of that competition or the seeming competition is Houston. How do they stack up? Somebody might not be familiar with the professional teams Houston does have. How does Houston stack up as a sports city compared to Austin?
Justin Sayers [00:10:17] So yeah, the people that we talk to, the experts that we talked to, a lot of this comes down to business decisions and things like corporate sponsorships and population base and TV market and what money you can get from that. When you look at all those boxes, Houston is still pretty far ahead of us. They are just a bigger city. They have a more diversified economy. They have better built out hospitality structure is what some experts said to us. That being said, the NHL again has this history of going to markets that they see in the future. 10 to 15 years from now, Austin might surpass Houston in a lot of that regard. It is a possibility that they make this decision based on a future play rather than a right now play. And if that is the case, Austin is definitely gonna be in that conversation.
Jerry Quijano [00:11:09] We’ve been speaking with Justin Sayers. He is senior staff writer for the Austin Business Journal. Justin, thank you for your time. Yeah, thank so much for having me. And a quick headline for your Wednesday. Austin Fire Chief Joel G. Baker is retiring at the end of the month. The city announced the departure on Tuesday, and either the city or the fire department declined to give a reason for Baker’s departure. There’s more about the acting fire chief who is stepping up in his place. That is over at KUT.org and on the KUT app. We have more Austin Signal for you. That is coming up after this break. Thank you for being here with us. This is Austin Signal, welcome back. One of the major selling points for data centers looking to build here in central Texas has been what they can add to the economy. A huge influx of cash for local businesses from the workers brought in to build them. More tax revenue for local governments. But what can a data center do for the economy in the community where it’s built? KUT’s Kaylee Hunt, Katie McAfee, and Lee Walden traveled far from Austin for latest installment of our series, The Data Center Next Door. To a Texas town where one of the country’s biggest data centers is being built.
Kailey Hunt [00:12:30] Heading northwest out of Austin, Highway Flyover smelts into long stretches of two-lane roads. A steady flow of traffic slows to a trickle of scattered cars, mostly pickup trucks. We’re headed to Abilene. It’s a mid-sized city with rural areas, and it’s a beautiful city with a rich
Katy McAfee [00:12:44] college town vibes. We’re here to meet Lexi Smith. She and her family live just outside the city.
Lexi Smith [00:12:51] This is our land. We own right here, we own that shed and that tank all down there. The family has a lot going on.
Kailey Hunt [00:13:00] They sell fireworks. Lexi is a teacher. Her husband is an accountant. He also co-owns an electrical company. And they sell turf, which is piled up on their lawn. The Smiths happily make extra money and find fun ways to spend it. Her husband has taken up pickleball.
Lexi Smith [00:13:15] Number one pickleball player, Natalie.
Kailey Hunt [00:13:16] They even paved a pickleball court at their house. Smith offers to drive us around their property and the neighborhood. Settling into her car, she tells us being out here was the goal. This is always the plan.
Lexi Smith [00:13:27] Was to build by family and then once we were able to we designed our house and got the land and this was the forever plan. But now she says the neighborhood has changed. I can mark things by fireworks season. Two or three fireworks seasons ago right before everything started it was completely normal.
Kailey Hunt [00:13:52] Two years ago, construction started on the property across the street from the Smiths. Bulldozers, excavators eat through the landscape, shoveling large piles of red dirt. The site looks like a huge sandbox. A haze of dust and construction noise wafts towards the Smith’s property. Lexi says the construction has made traffic worse. That their home value has tanked. That their view, which used to be rolling hills covered in trees and farmland, has been completely transformed. We have…
Lexi Smith [00:14:20] No night sky anymore we used to go my sons we’d like to lay on the pickleball court and like look up and see no that’s gone there’s there’s no stars there’s like three stars
Katy McAfee [00:14:32] blotting out the stars for Lexi Smith and her boys? A giant data center complex called Stargate. This is the site of Project Stargate, the new half a trillion dollar Stargate data center.
Trump [00:14:44] Stargate. So put that name down in your books, because I think you’re going to hear a lot about it.
Kailey Hunt [00:14:49] The project was pitched to Abilene by some of the biggest names in artificial intelligence, Oracle and OpenAI. It’s not just some ordinary data center, it’s not even an ordinary hyperscale data center.
Katy McAfee [00:15:01] There’s eight data centers total. Some of them are already up and running. The whole project is supposed to be finished next year. It’s set to be one of the biggest AI facilities in the world.
Kailey Hunt [00:15:11] Developers say it will give the US a comfortable lead in the AI arms race against China. Plus, it’ll create thousands of jobs. And Abilene, as the flagship city of the project, will see the biggest economic returns. But first, the city of Abilane.
Katy McAfee [00:15:25] The city would have to give them a big tax break.
Council Member #1 [00:15:28] Thank you, Mayor and Council. Before you now is an amended and restated tax abatement agreement with Lansing.
Kailey Hunt [00:15:34] Abilene City Council voted on the deal in June 2024. They offered Stargate an 85% tax break for 10 years. It passed unanimously.
Council Member #2 [00:15:43] Motion carries. And this city council meeting, Abilene, Texas is adjourned.
Kailey Hunt [00:15:48] The council had a straightforward argument for the deal. They’d get millions in property tax revenue even with the tax break. Plus more sales tax from the thousands of people moving to Abilene to build the data centers.
Katy McAfee [00:16:00] The newcomers would stimulate Abilene’s economy, eating at neighborhood restaurants and shopping at local businesses.
Kailey Hunt [00:16:06] It’s been over a year and a half since they made the deal and leaders in Abilene say it’s already paying off. One of my favorite ways to describe Abilane is we’re mid-sized and mighty. This is Misty Mayo with the group Develop Abiline, the local economic development corporation. This is from a promotional video she did with the mayor pitching the tax benefits of the data center. I think
Misty Mayo [00:16:28] about great-grandchildren, it will mean future prosperity for everyone.
Katy McAfee [00:16:34] She says the money will help improve infrastructure in Abilene, it’ll help local businesses, it’ll even help out the school system.
Misty Mayo [00:16:40] You have students now that have new equipment, students that are going to be able to be educated in new facilities. But will they?
Jordan Ziemer [00:16:52] I wish it was based in reality, but that unfortunately is not true.
Kailey Hunt [00:16:57] That’s Jordan Ziemer with Abilene ISD. He says he’s fielded a lot of questions recently about whether Stargate will improve the public school system.
Jordan Ziemer [00:17:06] The truth is, higher taxable property values caused by Stargate or not do not equal new revenue for Abilene ISD.
Katy McAfee [00:17:14] Zeemer says any new revenue the district gets will likely be sent back to the state under Texas’s Robin Hood rule. We asked for interviews with Misty Mayo and the mayor of Abilene. Neither made themselves available. But we did talk to Julia Robin from Oracle, one of the companies behind Stargate. She says beyond-
Kailey Hunt [00:17:31] the tax revenue, the project is already having a big economic effect on Adelaide.
Julia Robin [00:17:35] We see catering businesses, we see local restaurants, we see gas stations, we see hotels booked at capacity.
Kailey Hunt [00:17:45] So we headed out to downtown Abilene to talk to folks there. Do they think Stargate is driving up business? Yeah, I would say no.
Katy McAfee [00:17:54] That’s Arlene Castleman. She owns 7 in 1 books. Her store is actually briefly featured in Misty Mayo’s promotional video.
Kailey Hunt [00:18:01] Video Castleman says downtown Abilene has gotten busier in the past decade but she doesn’t think data centers have anything to do with it
Arlene Castleman [00:18:08] I think development downtown started a long time ago. There were a couple of restaurants that first decided to be brave and open down here. And once they were there, boutiques started opening and that was a long way, long time before the data centers.
Kailey Hunt [00:18:26] We walk down Abilene’s main drag. The whole downtown is a few blocks of red brick buildings. Most of them are only two stories high. Some of the businesses are lined with cute little string lights. It’s midday on a Tuesday. It’s hot. There’s not that many people out. We see a big paramount marquee hanging above the local theater. Hey. Hey, I’m a reporter for KUT. We ask an employee in the lobby if they’ve seen sales go up since the data center came to town.
Worker #1 [00:18:52] There’s definitely more going on down here in this general area. I don’t know if that’s necessarily translated into an uptick in numbers.
Kailey Hunt [00:19:00] Across the street, the people working at Bogey’s Deli say the same thing.
Speaker 16 [00:19:05] As far as what we’ve seen, we have had a few individuals in from the data centers, but it hasn’t been a huge impact for us.
Katy McAfee [00:19:14] But around the block, a brewery called Grain Theory has seen a sizable jump in business. Bartender Regan VanderWeele says she gets nosy when new people walk in.
Regan Vanderwheel [00:19:23] And then I further ask, I’m like, what are you doing? And they’re like, oh, I am here for the data center. So I’ve definitely seen a big, a pretty big intake of customers in coming from out of town, then also because of the data centers specifically.
Kailey Hunt [00:19:36] Employees at other restaurants say this too. A waiter at Cork and Peg told us a group of men in suits from the data centers come in almost every day. So some places are seeing growth because of Stargate.
Katy McAfee [00:19:48] Others can’t say for sure. If you look at the sales tax collections, they’re up 30% from 2024 to 2025. But even if the influx of employees coming to…
Kailey Hunt [00:19:57] We’re giving local businesses a boost. It’s also causing some problems
Diana Luna [00:20:01] If Elon Musk steps on the city bus, the GDP of that city bus goes up. It doesn’t change anybody’s life on that city, but it’s still a city bus.
Kailey Hunt [00:20:09] This is Diana Luna. She’s a local political organizer running to represent Abilene in the Texas House. We met her at a coffee shop downtown.
Diana Luna [00:20:17] That is essentially what’s happened here. Yes, the GDP in Abilene has gone up because a billion dollar corporation moved in at Abilane. But they haven’t done.
Katy McAfee [00:20:24] Anything for the citizens of Abilene. Luna told us she’s especially worried about a growing housing crisis in Abilane. More and more workers are coming to the area to help build the Stargate facility.
Diana Luna [00:20:34] We have three universities and one large Air Force base here. So this exacerbating what’s already a housing shortage in this area.
Kailey Hunt [00:20:44] Luna says this shortage has made rent go up, a lot. The average rent in Abilene is almost $2,600 a month, according to Zillow.
Katy McAfee [00:20:53] Up nearly 50% since last year. It’s cheaper on average to rent in Austin right now than it is in Abilene. That’s left lots of folks suddenly struggling to make rent. Steve Rogers is one of those people. Rogers says he uses an alias out of fear of losing his job for speaking out against Stargate. There’s a reason why he chose that name.
Steve Rogers [00:21:12] Yeah, because I think this is what Captain America would be doing, you know?
Kailey Hunt [00:21:15] Rogers works in energy construction. He says he’s making the most money he’s ever made, but he’s still struggling to pay the bills.
Steve Rogers [00:21:23] We don’t have anything left for savings. I’m in school and I work full time.
Katy McAfee [00:21:26] Roger says the whole thing has put renters like him on edge.
Steve Rogers [00:21:29] We’ve taken a fix and a lot of stuff ourselves. I’ve already had one landlord not renew on me to turn it into a $7,000 a month Airbnb.
Kailey Hunt [00:21:38] Other people simply can’t afford a place in Abilene at all. Luna says the city is seeing a surge in people experiencing homelessness.
Michael Prado [00:21:46] So these are all apartments. These are the family ones. They have two rooms.
Kailey Hunt [00:21:53] This is Michael Prado, but people call him Big Mike.
Katy McAfee [00:21:56] He’s giving us a tour of Hope Haven, one of the city’s homeless shelters. It’s got about a dozen apartments. They each have a window, a twin-sized bed, a few communal shelves for everyone’s stuff.
Michael Prado [00:22:07] That we’ve got in more families. I never had kids in here. It’s been a long time. I had to ask for car seats, transport earlier this year. I ain’t had this many kids ever.
Kailey Hunt [00:22:19] Big Mike says more and more families have been reaching out in need of a safe place to stay. Some had been priced out of their homes.
Katy McAfee [00:22:26] Others have been evicted. Big Mike says the city’s high rent prices have also made it harder to move these families back into permanent housing.
Kailey Hunt [00:22:34] He says, it used to take just over a month to find someone at the shelter or permanent housing. Now it can take up to six months. And it’s not just families who are struggling.
Michael Prado [00:22:43] And getting all the calls of data center workers, like looking for somewhere to stay. Now, or the ones that get fired. A handful of calls that I came out here, I was working at the data center and I got fired, and now I’m stuck.
Katy McAfee [00:22:58] Big Mike doesn’t blame city officials for the housing crisis like other residents do, and he’s not even sure it’s the data center’s fault, but it’s starting to take an emotional toll.
Michael Prado [00:23:08] Do I hate the data center? No, no, I’m not a hater. I hate that we’re getting the calls, that people are getting evicted. I hate at least signing, they can’t afford the 2,600 hike on their ramp. I hate when single moms are calling. I hate two single moms and their kids are reaching out crying. Like, what am I gonna do? That’s what I don’t like.
Kailey Hunt [00:23:36] Julia Robin from Oracle says the company is acutely aware of the housing crisis unfolding in Abilene. She says Oracle has a team finding housing for people who work at Stargate. But she also says this is at least partly inevitable.
Julia Robin [00:23:49] So I think there is some just like natural dynamics that occur with economic development in a particular area that is a byproduct of other benefits that are seen.
Katy McAfee [00:23:59] The city of Abilene
Kailey Hunt [00:24:01] was sold on what Stargate could do for them. They haven’t seen the full economic potential of the data center yet. Stargate is still being built, and the city could see millions more when it’s finished. When those tax dollars do come in, the city can use them to build housing, parks, fix the roads.
Katy McAfee [00:24:17] But some residents worry they’ve gotten the short end of the stick.
Lexi Smith [00:24:20] There’s no amount of money worth it, none. You could get 100%, I can’t tell you enough, there’s no dollar sign worth it.
Katy McAfee [00:24:31] Lexi Smith again.
Kailey Hunt [00:24:32] She says she does want to see Abilene grow.
Katy McAfee [00:24:35] But her family is the one that’s actually had to face the reality of data center construction, the air pollution, and the torn up roads.
Lexi Smith [00:24:43] It was like a extremely bitter thing in my heart that I was like everyday raging angry that this could happen and that we worked so hard to put a life out here for our family and you know this kind of stuff happens and you just don’t have any control. So who does have control?
Katy McAfee [00:25:07] Over where a data center goes. What are the rules? And how is Texas rethinking that?
Kailey Hunt [00:25:12] That’s next week in the data center next door. I’m Katie McAfee. I’m Lee Walden. And I’m Kaylee Hunt in Abilene.
Singer [00:25:20] You can’t spell Abilene without AI What once was yours is now date of mind I can’t move back with the rent so high No, you can’t spill Abilène without AI
Jerry Quijano [00:25:39] You can find all the stories from this data center series at kut.org slash data centers. Well, that’s it from us today here on Austin Signal. We’re gonna be back at the same time tomorrow. We’ll talk to you then, have a great day.
This transcript was transcribed by AI, and lightly edited by a human. Accuracy may vary. This text may be revised in the future.
