Officials say data centers can boost local economies. In Abilene, they have spurred a housing crisis

From KUT News:

Lexi Smith and her family have always had a plan. They wanted to buy land that was big enough to build multiple houses. That way she and her husband could raise their boys next door to their grandparents.

“ Our family budgeted and…said yes to less so that we could pay our house off…and then, you know, this kind of stuff happens, and you just don’t have any control,” Smith said.

Smith’s family settled down just outside of Abilene, where, before a few years ago, their only neighbors were other ranches. In 2024, construction on one of the biggest data centers in the world started across the street.

The Stargate Project is one of dozens of data center campuses in Texas that some local, state and federal officials have promised will revitalize local economies. Some officials across Texas, including in the Austin area, say they will create jobs, ease the burden on taxpayers and transform downtowns. But in Abilene — a city with the most expensive data center project in the U.S. — residents and business owners say that hasn’t happened.

The Smiths do a little bit of everything. Her husband is an accountant but also co-owns an electrical company and sells turf for sports fields. She teaches K-12. Together they own and operate a fireworks stand just down the road.

“ I can mark things by fireworks season. Two or three fireworks seasons ago, [things were] completely normal,” Smith said.

Since then, she said the construction project has caused traffic, damaged roads, worsened air and water quality and, for her family, created a worse quality of life.

“ We got taken, we got robbed,” Smith said. “Because when you see what kind of money they’re throwing into it, you’re like, ‘Holy cow.’”

OpenAI, one of the companies behind the project, has said they will invest $500 billion in AI infrastructure over the next four years.

That doesn’t mean much to Smith.

“[Our] house has no more residential value. If we were ever able to sell, it would be purely commercial,” she said.

That’s hard to grapple with after waiting so long and saving so much money to build their home out here. She said she resents the city for ever allowing the data centers to build.

“ There’s no amount of money worth it. None,” Smith said. “I can’t tell you enough, there’s no dollar sign worth it.”

The promise of a better Abilene

Stargate was pitched to Abilene by some of the biggest names in artificial intelligence, including Oracle and Open AI.

Executives said the project would give the United States a comfortable lead in the AI arms race against China. Plus, it would create thousands of jobs. Abilene — as the flagship city of the project — would see the biggest economic returns.

President Trump announced the project during a White House press conference in January 2025.

“Together, these world leading technology giants are announcing the formation of Stargate, so put that name down in your books, because I think you’re going to hear a lot about it in the future,” Trump said.

To incentivize Stargate to continue investing, the Abilene City Council gave Stargate an 85% tax abatement. Even with the tax break, Oracle said Abilene will get an estimated $30 million annually from an area that used to be a field of mesquite trees and from the influx of workers into the city.

The project created 9,000 immediate construction jobs and is expected to create 1,000 long-term jobs once it’s completed, representatives from Oracle said.

More than two years into construction for the project, city leaders say they are starting to see economic gains. In a promotional video for Stargate, Misty Mayo, the CEO of the Development Corporation of Abilene, said the influx of people coming to Abilene to build Stargate is keeping stores full and local businesses flourishing. She also said the property tax revenue is helping revitalize the city’s downtown and public school system.

“New tax revenue funds new roads. New tax revenue makes a new grocery store interested in expanding into your community, because now they can make money,” she said in the video.

KUT News requested interviews with Mayo and Mayor Weldon Hurt. Hurt did not respond to requests for comment, and Mayo’s team said she was unavailable.

Speaking to local business owners on Abilene’s downtown strip, the answer to whether Stargate has stimulated business is mixed.

Regan Vanderweele, an employee at the local brewery Grain Theory, said there has been a noticeable uptick in business since the project kicked off.

“I ask [customers], ‘Like oh, what do you do?’ and they’ll say, ‘I’m here for the data center,’” she said. “So I’ve definitely seen a big intake of customers coming from out of town and because of the data center specifically.”

But many businesses say they haven’t seen an uptick. Employees at downtown Abilene’s local theater, coffee shop, and delicatessen said they aren’t getting more business because of the data center construction projects.

Arlene Kasselman, the owner of Seven and One Books, said she doesn’t deny that downtown Abilene has gotten busier in the past decade. But she doesn’t think data centers are what sparked the growth.

“I think development downtown started a long time ago. I think there were a couple restaurants that first decided to be brave and open down here,” she said. “And once they were there, boutiques started opening, and that was long before the data centers.”

But even if the influx of employees coming to Abilene is giving local businesses a boost, to a lot of folks, it’s not worth it.

Because all of those people coming in are causing another economic impact in Abilene: a housing crisis.

Exacerbating a housing shortage

Diana Luna is a self-described “techie” who is also campaigning to become a Texas state representative.

“I actually thought that as somebody that comes from a technological background that I kind of knew [what] was coming,” she said about Stargate. “But the economic effects for the most vulnerable communities are actually what I did not see coming.”

Most concerning to Luna is the housing crisis that’s unfurling in Abilene. Like many others, she blames Stargate. She’s critical of the promises made by city leaders about the project.

“If we’re supposed to be in this economic boom, where is the money?” Luna said. “Because nobody feels like we’re in an economic boom. Nobody feels that ‘Texas miracle’ here. Everything’s just getting more expensive.”

She said the city was already struggling with housing shortages before Stargate and thousands of workers converged on the city.

“We have three universities and one large Air Force base here,” she said. “So this is exacerbating what’s already a housing shortage in this area.”

Abilene Christian University said in June that more than 100 of its incoming students did not have a place to live for the upcoming fall semester. University officials blamed the city’s rental market, saying properties traditionally leased to students are now being purchased, repurposed or converted into short-term housing. To fill the gap, the university said it plans to reopen a former residence hall that had previously been slated for demolition.

The housing shortage, Luna said, has also caused the city’s rent prices to skyrocket, leaving many residents suddenly struggling to afford rent.

The average rent in Abilene is almost $2,600 a month, according to Zillow. That’s up nearly 50% since last year. On average, it’s cheaper to rent in Austin right now than it is in Abilene.

Steve Rogers, who prefers not to use his real name for fear of losing his job in energy construction, said he and his family are making the most money they have ever made but are still struggling to keep up with the bills.

“We don’t have anything left for savings,” he said. “I’m in school and I work full-time, and it’s just scary.”

Rogers said the whole thing has put renters like him on edge.

“I don’t even like to put in maintenance requests for the house we’re renting because I don’t want the landlord to consider us a burden or something like that so they won’t renew our lease,” Rogers said. “We’ve taken to fixin’ 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.”

A lot of people, Luna said, just simply can’t afford to live in Abilene anymore. Most people move away to another town but some others lack the funds to move. That’s increased housing instability.

Michael Prado is a case manager at Abilene Hope Haven, one of the city’s shelters. He said he’s used to helping individuals experiencing chronic homelessness. But over the last year or so he’s had to pivot, as more and more families have reached out in need of a safe place to stay after being priced out or evicted from their homes.

“We’ve got in more families. I never had kids in here. It’s been a long time,” Prado said. “I had to ask for car seats to transport [kids] earlier this year. I ain’t had this many kids ever.”

Prado, who also works as a housing navigator with the West Texas Homeless Network, said the high rent prices have also made it harder to find and transition these families back into permanent housing. He said it used to take just over a month to find someone at the shelter a place to live. Now, it can take up to six months.

Some of the families being helped by Prado are bound by the U.S Department of Housing and Urban Development’s fair market rent calculation, he said. This calculation is an official estimate of how much money it takes to rent modest, safe housing in an area.

“So [for those families] I couldn’t go over $1,020 a month,” he said. “All bills paid for one bedroom, and really, I can’t find that. I can’t find that. There’s no ‘all bills paid’ no more.”

Prado said he’s also seen an increase in the number of people coming up and knocking on the shelter’s door, asking if he can help them find a place to live. Some of those people, he said, are employed by the data centers.

“I’m getting a lot of calls of data center workers looking for somewhere to stay, you know? Do we know of any apartments available?” he said. “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,’ you know?”

Unlike others, Prado doesn’t blame the city’s officials for the housing crisis — he’s not even sure it’s the data center’s fault. But now that it’s unfolding in real time, he said it’s time to “learn from it” and “address it.”

“Do I hate the data center? No,” Prado said. “I hate that we’re getting the calls, that people are getting evicted. I hate that at lease signing, they can’t afford the $2,600 hike on their rent … I hate when single moms are calling. I hate when two single moms and their kids are reaching out crying. Like, what am I going to do? You know, that’s what I don’t like.”

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