County Judge shares insight into Palomino Reinvestment Zone

(Seguin) — Although a proposed abatement for the CloudBurst data center was rejected by county leaders – officials managed to still enter a renewed discussion surrounding another data center development in Guadalupe County.

The Guadalupe County Commissioners Court on Tuesday voted to expand and amend Palomino Alpha Reinvestment Zone #1 — a designation originally approved in December 2024. The Palomino project is not affiliated with CloudBurst which during the meeting brought forth a request for a tax abatement.

Precinct 1 Commissioner Jackie Ott took the time to explain the amendment – giving residents a better understanding of the action – action that includes expanding the zone’s boundaries and adding a buffer requirement for neighboring landowners.

“This is physically expanding the reinvestment zone can and will provide a buffer between this construction and the public that will improve the noise that may or may not be disturbing to individuals, but this will physically put space between there. It will physically put space between these buildings and people for any other potential concern. This action item is simply allowing you to expand it because you have bought more land to be a better steward to the community for those reasons and we have already voted in 2024 – not myself—but the previous court on this reinvestment zone. So, that is already there no matter what. This is simply an addition to the space for the purposes of the buffer,” said Ott.

The motion passed 3-1, with Ott, Precinct 3 Commissioner Jim Wolverton and Precinct 2 Commissioner Drew Engelke voting in favor. Precinct 2 Commissioner Stephen Germann cast the lone dissenting vote. Guadalupe County Judge Kyle Kutscher abstained.

In his explanation, Kutscher publicly disclosed that his family owns property included in the Palomino project area and said it was in his best interest to refrain from participating in discussion or action of the item.

“Our family property is in Zorn on 123. It’s a little less than 200 acres. It’s adjoining the largest regional substation in LCRA’s service area and that property has been in my family since the 1930s. Our property is not under contract because I’m county judge or because I work at the county but because our property is next to that substation because my parents who own that property were willing to go into contract because they are frustrated with all of the residential development and things that are changing in this community that we grew up in. My dad was a full-time farmer – still has cattle, still farms, still does a lot of that stuff. My parents gave my wife and I 10.1 acres to build a house in 2010 as we were in the ETJ of San Marcos and they were going to require us being in the ETJ to spend a bunch of extra money to replat anything less than five acres just to build a house on our family place. So, again, I understand people’s opinions and what they might see with politicians talking directions all the time,” said Kutscher.

Germann, who originally opposed the data center incentive reiterated concerns about how such projects are rolled out and whether long-term impacts “are fully known.”

Although he abstained from the vote, Kutscher addressed the broader issue of why the county considers projects like data centers at all — including the separate CloudBurst proposal that drew plenty of public debate this past week.

“If I was only looking out for my family and myself, I would find a way to try to have this denied. I don’t think it should be denied. I think there is an overarching benefit to the county and I’m going to explain why. We have been inundated with residential development as one of the fastest growing regions in the state of Texas and in the country for some time now. We are regulated by the state of Texas as a county – as all 254 counties are — that we do not have land use authority like a city does. We do not get to pick and choose what we want to see on a property or what we will or shall approve and what we won’t. When residential plats come in and they are in compliance with state requirements, they are in compliance with our subdivision regulations that we are allowed to approve as a county, we shall approve that and without action, they are automatically approved within 30 days. That is the direction authority and the law that our state elected officials have given to counties across the state so we are forced to approve these residential subdivisions that are overwhelming all of our infrastructure,” said Kutscher.

He says commissioners must evaluate potential economic impacts across the entire county and determine what is in the best interest of all taxpayers, especially when the county is only seeing rapid home growth.

“Here in Guadalupe County, we are stuck in between two metropolitan areas at the mercy of residential development that wants to build on five foot setbacks with 20 foot tiny home lots and we are required without being able to say anything or slow it down or stop it and say, okay, now we need to add more fire stations but we can’t raise your taxes because citizens don’t’ want to pay more taxes, right? We have to add another police unit but don’t raise taxes when you have to buy those $80,000-$100,000 Tahoe’s. I also want my road redone because there’s more traffic on it but don’t raise my taxes,” said Kutscher.

Kutscher emphasized several times to the public that the county must be “resourceful in generating revenue” rather than relying solely on raising property taxes.

“Please don’t take this as sarcasm. I care very much about our county. I sit every single year going through the budget trying to put a puzzle together that doesn’t have all the pieces and then when you look at our community and you go, okay, we can’t control residential development. They are all starter homes that are less than the medium home value which means that when a new home is built and sold for less than $308,000 in Guadalupe county — all of us that are existing property owners or have property that is above that value, have to subsidize every single one of those houses to be able to add additional services. We have sales tax that increases based on all of the use that we participate in – it’s all going up but it’s not going to cover the cost of expansion for going to 89,000 people in 2000 to 200,000 people in 2025 to 350,000 to 400,000 people in 2040,” said Kutscher.

He again stressed how the county has limited authority over private property development. Data center or not, he says the land could be developed into something else –something that residents might still oppose. He says there just has to be a balance in welcoming projects.

“So, we run through all of these scenarios, and we go how can we as a county with limited authority affect change to benefit the masses and the citizens and that’s participating in economic development and specific opportunities. Long before we were all here, take a look at SMI-CMC — the Steel Mill – if we tried to pass a steel mill construction project today, people would lose their mind. Oh my gosh, we are all going to die! I don’t want that around me. That should be up in the Midwest, not in Guadalupe County. That property has been a staple of what this community is and the backbone that we have for so many years and a bunch of what we enjoy today exist because of their involvement and what they’ve done. It’s a different time, I understand that, but I don’t want to discount those projects that came long before that helped people enjoy the things that you have today. If that wasn’t the case, your taxes would be twice as high with only residential development – people having to drive 60 or 80 miles to go find a job that makes 12 bucks- $15 an hour,” said Kutscher.

It is forecasted that Texas will soon lead the nation in the construction and operation of data centers. There are also unofficial mentions that even more companies will be expressing interest in locating their operations in the county in the coming months.