--- title: "Texas halted all data center permits: what it means for your renovation budget" description: "Gov. Abbott froze data center permitting on September 21 pending grid and water audits. The bigger number for landlords is construction inputs, up 8.9% year over year, with steel and copper up far more." date: 2026-09-23 updated: 2026-09-23 author: "Proppely Research Desk" kind: NEWS_BRIEF tags: ["policy", "construction", "economy", "maintenance", "multifamily", "texas"] reading_minutes: 5 word_count: 1094 canonical: "https://www.proppely.com/insights/texas-data-center-permit-halt-construction-costs-landlords" html: "https://www.proppely.com/insights/texas-data-center-permit-halt-construction-costs-landlords" feed: "https://proppely.com/insights/feed.xml" license: "Free to read and cite with a link to the canonical URL." sources: - title: "Governor Abbott Directs TCEQ To Halt Data Center Permits" url: "https://gov.texas.gov/news/post/governor-abbott-directs-tceq-to-halt-data-center-permits" publisher: "Office of the Texas Governor" published: "2026-09-20" - title: "Gov. Greg Abbott broadens moratorium on data center approvals to include environmental permits" url: "https://www.texastribune.org/2026/09/21/texas-data-center-moratorium-water-energy/" publisher: "The Texas Tribune" published: "2026-09-20" - title: "Hochul Adds New Restrictions to Data Center Development in New York" url: "https://commercialobserver.com/2026/09/hochul-data-center-restriction-raise-act-new-york/" publisher: "Commercial Observer" published: "2026-09-20" - title: "Data Centers Are Making It Harder To Build Everything Else" url: "https://www.bisnow.com/news/national/construction-development/data-centers-construction-costs-inflation" publisher: "Bisnow" published: "2026-09-21" - title: "Construction Input Costs Climb 8.9% Between August 2025 And August 2026" url: "https://www.agc.org/news/2026/09/10/construction-input-costs-climb-89-between-august-2025-and-august-2026-association-survey-finds-war" publisher: "Associated General Contractors of America" published: "2026-09-09" - title: "Gasoline and Diesel Fuel Update" url: "https://www.eia.gov/petroleum/gasdiesel/" publisher: "U.S. Energy Information Administration" published: "2026-09-21" - title: "Electricity Monthly Update: End Use" url: "https://www.eia.gov/electricity/monthly/update/end-use.php" publisher: "U.S. Energy Information Administration" --- # Texas halted all data center permits: what it means for your renovation budget > Gov. Abbott froze data center permitting on September 21 pending grid and water audits. The bigger number for landlords is construction inputs, up 8.9% year over year, with steel and copper up far more. ## Key takeaways - Gov. Abbott directed TCEQ on September 21 to issue no permits sought by data center projects until ERCOT completes its audit; the agency must report on compliance by October 19, 2026. - The directive is a letter to a state agency, not a statute — its conditions, including that projects “result in lower residential electrical bills,” are stated requirements, not enacted law. - Construction input prices rose 8.9% from August 2025 to August 2026 per AGC, with steel mill products up 23.4%, aluminum up 27.3% and copper and brass up 20.9%. - Retail diesel averaged $6.529 a gallon on September 21 against $3.749 a year earlier, per EIA — a cost every truck-based vendor is carrying, and one driven by conflict, not by AI. - New York's July moratorium on new data center developments larger than 50 megawatts is expected to expire in July 2027; reporting requirements Hochul announced September 21 take effect Jan. 1 under the RAISE Act. Texas has ordered a halt to data center permitting. On September 21, Gov. Greg Abbott directed the Texas Commission on Environmental Quality to [halt all permits sought by data centers](https://gov.texas.gov/news/post/governor-abbott-directs-tceq-to-halt-data-center-permits) until the state's grid operator finishes an audit, and said projects must "result in lower residential electrical bills." For rental operators, though, the number that lands hardest is not the permit freeze: it is the [8.9% year-over-year jump](https://www.agc.org/news/2026/09/10/construction-input-costs-climb-89-between-august-2025-and-august-2026-association-survey-finds-war) in construction input costs that the same build-out is helping push into your renovation bids. ## What happened Abbott's directive went to TCEQ Executive Director Kelly Keel as a letter, not an executive order or a statute. It instructs the agency to issue no permits sought by data center projects until the Electric Reliability Council of Texas completes its audit, and states that [no state agency shall move forward with regulatory approvals](https://gov.texas.gov/news/post/governor-abbott-directs-tceq-to-halt-data-center-permits) related to data center development until that information is available to the Public Utility Commission of Texas, ERCOT and the Texas Water Development Board. TCEQ must report back to the governor's office on its compliance by [October 19, 2026](https://gov.texas.gov/news/post/governor-abbott-directs-tceq-to-halt-data-center-permits). The directive also sets out what Abbott says data centers must do: cover all electrical infrastructure costs, result in lower residential electrical bills, complete the ERCOT audit, avoid using water needed by local communities, report their electricity and water usage, and follow setback requirements. Those are conditions stated in the governor's directive to state agencies — not, at this point, statutory requirements passed by the Legislature. Abbott also said he will work with the Legislature next session to eliminate financial incentives for data centers, which is an intention rather than an enacted change. This is an expansion of something already underway. The Texas Tribune reported that Abbott [ordered a moratorium on August 3 on new data centers connecting to the state's electric grid](https://www.texastribune.org/2026/09/21/texas-data-center-moratorium-water-energy/), pending a comprehensive verification and audit, with failing projects to be denied connection. The September action broadens the freeze to environmental permitting; the Tribune reports the order appears to address concerns that "behind the meter" developers, who create their own power generation so they may bypass electric grid approval, would not otherwise be delayed by the ERCOT audit. The Tribune also reported that [as few as 28% of data centers responded](https://www.texastribune.org/2026/09/21/texas-data-center-moratorium-water-energy/) to a state water-use survey. New York moved the same day. Commercial Observer reported that Gov. Kathy Hochul announced [a new round of transparency, safety and incident reporting requirements](https://commercialobserver.com/2026/09/hochul-data-center-restriction-raise-act-new-york/) for data center developers and operators, following a July moratorium on new data center developments [larger than 50 megawatts](https://commercialobserver.com/2026/09/hochul-data-center-restriction-raise-act-new-york/) that is expected to expire in July 2027. Those requirements [take effect January 1](https://commercialobserver.com/2026/09/hochul-data-center-restriction-raise-act-new-york/), when the state's Responsible AI Safety and Education Act goes into full force. ## Why it matters for property managers You are unlikely to build a data center. You are very likely to be buying the same steel, copper and labor they are. The producer price index for inputs to new nonresidential construction rose [8.9% from August 2025 to August 2026](https://www.agc.org/news/2026/09/10/construction-input-costs-climb-89-between-august-2025-and-august-2026-association-survey-finds-war), according to the Associated General Contractors of America. Underneath that average, the line items that show up in a capital plan moved much harder: [steel mill products climbed 23.4%](https://www.agc.org/news/2026/09/10/construction-input-costs-climb-89-between-august-2025-and-august-2026-association-survey-finds-war), [aluminum mill shapes 27.3%](https://www.agc.org/news/2026/09/10/construction-input-costs-climb-89-between-august-2025-and-august-2026-association-survey-finds-war), and [copper and brass mill shapes 20.9%](https://www.agc.org/news/2026/09/10/construction-input-costs-climb-89-between-august-2025-and-august-2026-association-survey-finds-war) year over year. AGC attributes the pressure to conflicts in the Middle East and steep tariffs on key materials, with firms also boosting wages to attract personnel. The data center pull on labor is a separate thread, reported by Bisnow — three separate forces arriving on the same invoice, which is worth keeping straight when you argue a bid. Fuel is its own story and it is not an AI story. Retail on-highway diesel averaged [$6.529 a gallon on September 21, against $3.749 a year earlier](https://www.eia.gov/petroleum/gasdiesel/), per the Energy Information Administration. Every vendor who arrives in a truck — landscaping, hauling, turn crews, snow removal — is carrying that. The labor and lead-time squeeze is the part that does trace to data centers, and it is mostly invisible until it hits your schedule. Bisnow reported a commercial superintendent losing a plumber mid-project to data center wages, and a vendor explaining a delayed order with ["you got bumped"](https://www.bisnow.com/news/national/construction-development/data-centers-construction-costs-inflation) because a data center had taken the stock. One Houston multifamily and retail developer told Bisnow it has held delays to [up to 45 days](https://www.bisnow.com/news/national/construction-development/data-centers-construction-costs-inflation). J.P. Morgan estimates hyperscalers will spend [$700 billion on data centers in 2026](https://www.bisnow.com/news/national/construction-development/data-centers-construction-costs-inflation) alone. Power is the slower-moving line. EIA reported average residential revenue of [18.34 cents per kilowatthour in June 2026, up 5.0% year over year](https://www.eia.gov/electricity/monthly/update/end-use.php). EIA's own end-use page does not attribute that increase to data centers, and neither should you — but Texas conditioning approvals on residential bill impact tells you how seriously one large state is now treating the question. ## What to do this week This is general information, not legal or financial advice. Permitting and utility rules vary by state and locality — confirm anything here with your own counsel or engineer before acting on it. 1. **Re-price any capital job with metal in it.** Roofs, railings, gutters, panels, wire, HVAC. A bid priced a year ago is stale at [23.4% steel](https://www.agc.org/news/2026/09/10/construction-input-costs-climb-89-between-august-2025-and-august-2026-association-survey-finds-war) and [20.9% copper](https://www.agc.org/news/2026/09/10/construction-input-costs-climb-89-between-august-2025-and-august-2026-association-survey-finds-war). 2. **Shorten bid validity and say so out loud.** If a vendor holds a price for 30 days instead of 90, you want to know that at award, not at delivery. 3. **Get lead times in writing before you sign.** The subcontractor practice Bisnow described — [checking stock and price movement during bidding](https://www.bisnow.com/news/national/construction-development/data-centers-construction-costs-inflation) rather than after contracting — works just as well for a property manager ordering equipment. 4. **Budget utilities off your actual tariff, not last year's spend.** Pull the current rate schedule for each property and rebuild the line from the ground up. 5. **Check your service contracts for fuel surcharge language.** With diesel at [$6.529](https://www.eia.gov/petroleum/gasdiesel/), a vague escalation clause is a blank check; a defined index is not. 6. **If you have Texas projects, find out what is in a TCEQ queue.** The freeze runs until the audits are done, and the agency's compliance update is due [October 19](https://gov.texas.gov/news/post/governor-abbott-directs-tceq-to-halt-data-center-permits). ## What we're watching - **The ERCOT and TWDB audits, and TCEQ's [October 19](https://gov.texas.gov/news/post/governor-abbott-directs-tceq-to-halt-data-center-permits) update.** That is the first real signal of how long the Texas freeze lasts. - **Whether the incentive repeal Abbott described actually reaches a bill.** He framed it as next-session work, so nothing is filed yet. - **New York's [50-megawatt moratorium](https://commercialobserver.com/2026/09/hochul-data-center-restriction-raise-act-new-york/) and its expected July 2027 expiry.** - **Whether other states copy the "lower residential electrical bills" condition.** It is an unusual test to attach to a permit, and it travels easily. - **The next construction input print.** A second month of acceleration changes 2027 capital planning, not just this quarter's bids. ## FAQ **Did Texas actually stop approving data centers?** Gov. Abbott directed TCEQ on September 21, 2026 to halt all permits sought by data centers until ERCOT completes its audit, and said no state agency should move forward with related regulatory approvals until that information is available. It is a directive to state agencies rather than a statute, and TCEQ owes the governor's office a compliance update by October 19, 2026. **How much have construction costs gone up in 2026?** The producer price index for inputs to new nonresidential construction rose 8.9% from August 2025 to August 2026, according to AGC. Individual materials moved much more: steel mill products 23.4%, aluminum mill shapes 27.3%, and copper and brass mill shapes 20.9%. **Are data centers raising my property's electric bill?** EIA reported average residential revenue of 18.34 cents per kilowatthour in June 2026, up 5.0% year over year, but its end-use page does not attribute that increase to data centers. Texas is now conditioning data center approvals partly on residential bill impact, which signals regulatory concern rather than a measured cause. **Why is my landscaping or hauling vendor asking for more money?** Retail on-highway diesel averaged $6.529 a gallon on September 21, 2026, compared with $3.749 a year earlier, per EIA. Check whether your service contracts tie surcharges to a published index or leave the amount open. ## Sources 1. [Governor Abbott Directs TCEQ To Halt Data Center Permits](https://gov.texas.gov/news/post/governor-abbott-directs-tceq-to-halt-data-center-permits) — Office of the Texas Governor 2. [Gov. Greg Abbott broadens moratorium on data center approvals to include environmental permits](https://www.texastribune.org/2026/09/21/texas-data-center-moratorium-water-energy/) — The Texas Tribune 3. [Hochul Adds New Restrictions to Data Center Development in New York](https://commercialobserver.com/2026/09/hochul-data-center-restriction-raise-act-new-york/) — Commercial Observer 4. [Data Centers Are Making It Harder To Build Everything Else](https://www.bisnow.com/news/national/construction-development/data-centers-construction-costs-inflation) — Bisnow 5. [Construction Input Costs Climb 8.9% Between August 2025 And August 2026](https://www.agc.org/news/2026/09/10/construction-input-costs-climb-89-between-august-2025-and-august-2026-association-survey-finds-war) — Associated General Contractors of America 6. [Gasoline and Diesel Fuel Update](https://www.eia.gov/petroleum/gasdiesel/) — U.S. Energy Information Administration 7. [Electricity Monthly Update: End Use](https://www.eia.gov/electricity/monthly/update/end-use.php) — U.S. Energy Information Administration --- Published by the Proppely Research Desk. 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