Municipal Water and Sewer Capacity for Data Center Sites: Treatment Plants, Extensions and Will-Serve Letters

“Is there water?” is really several questions. A municipal system is a chain of assets, and a data center needs headroom at each one. On the supply side that means the water source and the right to use it, the water treatment plant, storage tanks and pump stations, the transmission mains that carry treated water across the service area, and the local main and meter at the site. On the return side it means the service lateral, the gravity sewers and lift stations, and the wastewater treatment plant with its own discharge permit. A plant with spare capacity on paper does not help if the sewer between the site and the plant is already full.

Water rights and supply agreements are covered in our guide to water rights and groundwater, and discharge quality and pretreatment in our guide to wastewater and cooling water discharge. This guide is about the physical and contractual capacity of the city or district system itself.

Cooling choice drives the size of the ask. An evaporative design consumes water and sends blowdown to the sewer, while a closed-loop or air-cooled design asks for far less of both. Evaporative demand also peaks on the hottest days, which is when municipal systems already see their maximum-day demand. Our guides to data center water requirements and closed-loop and waterless cooling cover the engineering trade-offs.

Utilities talk about capacity in a few distinct numbers, and the difference between them is where many site screens go wrong. The figure in a press release is usually permitted or design capacity. The figure that matters for a new customer is what remains after existing peak demand and capacity already promised to approved projects.

State rules can tell you how close a plant is to its limits. Texas is a clear example. Under the TCEQ’s 75/90 rule, when a wastewater plant reaches 75% of its permitted daily flow for three consecutive months, the permittee must begin engineering and financial planning for expansion, and at 90% for three consecutive months the expansion must be under construction.⁵⁶ A plant already in that window is unlikely to accept a large new discharge without a schedule for new capacity. Other states have their own planning triggers, so ask the utility where its plants stand against them.

Fire flow is a separate test that catches large buildings by surprise. The International Fire Code’s Appendix B sets required fire flow by construction type and floor area, with table values reaching 8,000 gallons per minute and durations of up to four hours.⁹ Sprinklered buildings can qualify for large reductions; an ICC Building Safety Journal article describes a 75% reduction that brings an 8,000 gpm requirement down to 2,000 gpm.¹⁰ Local amendments apply, so confirm the figure with the fire marshal and a hydrant flow test.

Developers, lenders and landowners usually start with a will-serve letter, a short statement from the utility that service is available or could be made available. Treat it as a screening document. The City of El Centro, California, has described a data center developer’s request for a conditional will-serve letter as “a standard, informational tool” and said the letter “does not constitute a commitment to provide water or approval of a project,” with any service still subject to studies, applications, environmental review and public approval.³

In November 2025, Haines City, Florida, issued a utility concurrence letter for a proposed data center. The city manager later said the city did not have sufficient permitted water capacity to serve that demand, and that the letter responded only to a preliminary inquiry and was not a development, site plan or zoning approval.⁴ Our guide to utility will-serve letters covers the letter itself in more depth, including the electric side.

A stronger signal is a written service or development agreement that names a daily volume, a peak rate, the improvements required, who pays, and the dates by which service will be available. Ask for the utility’s current capacity figures, its committed capacity, and its master plan or capital improvement plan, and read the letter against them.

Recent public examples show the range of outcomes, from developer-funded expansions to pauses:

• Goodyear, Arizona: the city lacked wastewater capacity for Microsoft’s growing campus. Under an amended development agreement approved in March 2023, Microsoft agreed to pay $36 million toward an estimated $90 million expansion of the 157th Avenue plant, in place of its wastewater impact fees, in return for 1.2 MGD of capacity at full build-out. Until then it could send up to 500,000 gallons per day through an existing line, and it posted $5 million in financial assurance for a new sewer line.² Microsoft also agreed that later buildings on the site would be air-cooled.¹
• Shreveport, Louisiana: December 2025 council documents estimated a proposed data center would use 7.5 million gallons of potable water per day. The utility director said the system had the capacity, and the services agreement required the developer to design and build the water and wastewater improvements needed to deliver it.¹¹
• Lima, Ohio: the city council voted 6–2 to sell city water to a data center in American Township that expects to use 5 MGD, with a maximum of 10 MGD; the developer is to invest in water infrastructure and contribute to expanding city capacity.¹²
• Gallup, New Mexico: in April 2026 the council voted 4–1 to delay an agreement to deliver nearly 110 million gallons of wastewater a year to a proposed 330-acre data center, in a city that treats about 2.3 MGD.¹³
• Tucson, Arizona: after the Project Blue debate, the council in 2025 adopted rules requiring council approval and public application materials for new customers using at least 7.48 million gallons a month.⁷
• Ypsilanti, Michigan: the local utility authority approved a one-year moratorium on approving water and wastewater service for data centers.⁸

The pattern is consistent: when the request is large relative to the system, the utility attaches conditions, and the developer pays for capacity it would otherwise wait years for. Where the community is uneasy, the request may move to a public vote or be paused, which our guide to data center moratoriums covers.

If the site is not on an adequate main or sewer, someone has to extend one. Most utility codes put the cost of extensions on the developer, built to utility standards and then dedicated to the utility. Where the utility’s master plan calls for a larger pipe than the project needs, many utilities reimburse the oversizing. Loudoun Water in Virginia, for example, reimburses the difference in material cost between the diameter installed and the diameter needed to serve the development, and does not reimburse lines that serve the developer’s own adjacent property.¹⁴ Reimbursement rights are often time-limited; Pleasanton, California’s code caps such agreements at seven years.¹⁵

On top of construction, expect one-time capacity charges. Hendersonville, North Carolina, describes its system development fees as a one-time charge to new customers, or existing customers needing more capacity, to recover the cost of capacity in supply, treatment, effluent disposal and transmission mains.¹⁶ For a high-volume user these fees can be large, and some agreements trade them for direct funding of a plant expansion, as in Goodyear.² Our guides to impact fees and connection fees and development agreements cover how they are calculated and negotiated.

A useful early screen can be done in a few weeks with public documents and one conversation with the utility. Before contacting the utility, have an estimate of average and peak daily water use, peak-hour flow, sewer discharge and fire flow for the cooling design you expect. Then work through the chain:

1. 01Identify the provider: city, county, special district or private utility, and whether the parcel is inside its service area.
2. 02Get the plant numbers: permitted capacity, current average and maximum-day flows, and capacity already committed to approved projects, for both water and wastewater.
3. 03Check the pipes: size and distance of the nearest adequate main and sewer, lift station capacity, and any known collection system limits.
4. 04Ask for fire flow: a hydrant flow test near the site, and the fire marshal’s required flow for the planned building.
5. 05Read the rules: extension and oversizing policy, capacity fees, large-user ordinances and any moratoriums.
6. 06Get it in writing: a will-serve letter early, then a service agreement with volumes, improvements, costs and dates.

A low-water cooling design can turn a “fail” on sewer into a manageable item, which is why the cooling decision and the utility conversation should happen together. If you want a second look at the infrastructure behind a parcel, you can get a site reviewed.