Memphis Failed Boxtown Long Before Elon Musk Came To Town | The Memphis File #2

This is part of The Memphis Files — a ten-essay investigation into how Memphis got sold to xAI. Read the full series at rachelandthecity.com/the-memphis-files.

A data center is coming to your area. Maybe the deal has already been made. Maybe the announcement is two months out, and your mayor doesn’t even know it yet.

Either way, you should know what you’re dealing with, because the conversation about data centers in this country is happening in two places right now, and neither one is useful to a regular person trying to figure out whether the thing being built down the road is going to hurt them.

The first conversation is happening in the press, where data centers get talked about like economic miracles – capital investment, job creation, tax revenue, all of it pitched in the kind of language designed to make a city council vote yes before they’ve even read the lease. The second conversation is happening in panicked Facebook posts, where data centers are described as apocalyptic – draining the water, killing the planet, coming for your power bill. Some of that is true. Some of it is half true. Some of it is wrong in ways that make it harder to fight the parts that are actually dangerous.

So let me walk you through what’s actually happening, using Memphis as the example, because Memphis is the most documented case in the country right now.

But before I do, I have to tell you something about Memphis – because if you’ve only read the headlines from the last two years, you’d think Elon Musk showed up in a clean neighborhood and ruined it, and that is not what happened.

Boxtown – the South Memphis community closest to the xAI data center – was founded in 1863 by formerly enslaved people, who built their houses out of abandoned railroad boxcars on the southern edge of the city.^[1] That’s where the name comes from. By 1975, the neighborhood was so neglected that the city of Memphis was sued in a federal class action lawsuit for failing to provide it with basic services, and the city promised $3.7 million in improvements as part of the settlement.^[2] Four years later, residents were still catching rainwater in barrels because the pipes never came.^[3]

Some homes in Boxtown did not get indoor plumbing until the 1980s.^[3]

By the time xAI showed up, Boxtown was surrounded by an industrial menagerie of polluters – a natural gas power plant, an oil refinery, a steel mill, a coal-tar distillation facility, a medical sterilization plant releasing ethylene oxide which is a known carcinogen, the old Defense Depot, multiple chemical plants, and food processing facilities.^[4] Shelby County has an F rating for air quality from the American Lung Association and is regularly named one of the asthma capitals of the country.^[5] The cancer risk in Boxtown was already four times the national average. Not because of xAI. Before xAI.^[5]

In 2020, Boxtown beat a crude oil pipeline that would have run through the neighborhood. The developers had called the route “the path of least resistance” in the actual planning documents, and KeShaun Pearson – who runs Memphis Community Against Pollution – said at a rally that this is what they call Boxtown, this is what they call Westwood, this is what they’re calling Memphis.^[6] The neighborhood beat the pipeline. The Tennessee state legislature responded by passing a law banning municipalities from blocking oil and gas development.^[4]

I’m telling you all of this because the harms I’m about to walk you through – the real ones, the ones worth knowing about – did not start with the data center. The data center made everything worse, but the conditions that made it possible to drop a supercomputer in a Black neighborhood without a single public hearing existed for a hundred years before Elon Musk knew Memphis was on a map. He didn’t pick this neighborhood randomly. He picked it because the city had spent generations letting industry treat it as a sacrifice zone.

That’s the part that should make you sick.

Now the actual harms.

Start with the air. To run a data center the size of Colossus, you need a staggering amount of electricity – so much that the grid couldn’t handle it on day one – so while xAI was waiting for the Tennessee Valley Authority to approve its long-term power load, it brought in methane gas turbines, each one about the size of a semitrailer. By the time anybody outside the property line had a clear count, there were thirty-five of them, and none of them had air permits.^[7] The Southern Environmental Law Center flew drones with thermal imaging cameras over the site and confirmed thirty-three of the thirty-five were actively running – this is after the Memphis mayor told the public on the record that only fifteen were operating.^[7]

xAI is now likely the largest industrial source of nitrogen oxides in all of Memphis,^[8] and researchers at the University of Tennessee working with TIME found that peak nitrogen dioxide concentrations near the facility went up seventy-nine percent after Colossus came online.^[9] Five days after the second data center came online, a twenty-eight-year-old woman in Boxtown named Alexis Humphreys had her first asthma attack in fifteen years.^[9] I’m coming back to her in essay six.

Then there’s the water story – which most people don’t really seem to understand. The Memphis Sand Aquifer is one of the largest sources of fresh groundwater in North America, and the original fear when xAI showed up was that the data center would drain it. The reality is messier – and a little more interesting – than the panic suggests. Most of Colossus runs on a closed-loop cooling system that recycles the same water over and over, which is genuinely smart engineering and the kind of thing that makes the “they’re draining the aquifer” headline misleading. The catch is the outer loop, the cooling towers, which evaporate about three million gallons a day and need to be topped up from somewhere.^[10]

From day one that “somewhere” was supposed to be recycled wastewater from the city’s T.E. Maxson plant right next door, piped through an eighty million dollar greywater facility xAI promised to build.^[11] The plant broke ground in October 2025 with a ceremonial shovel and a press release, and then this past April, construction was paused with no written timeline for restarting.^[12] Musk himself posted on X that they needed to focus on Colossus 2 first (that’s xAI’s second data center in Whitehaven – with its power plant in Mississippi).^[12] The CEO of MLGW – the utility that asked xAI to build the plant in the first place – said he found out the project was on hold from the news.^[13] More on who’s holding the bag on that promise and what “committed” actually means when there’s no signed timeline.

While xAI waits, Colossus is pulling about 1.3 million gallons a day from the same aquifer the greywater plant was supposed to protect.^[10]

Then there’s the noise, which doesn’t register as a real problem until you live next to it. Data center cooling systems run constantly. The generators hum. Residents near Colossus have reported they can’t sleep with their windows open anymore. Now to be fair – I’ve stayed in T.O. Fuller Park in my RV – which is just a few miles from the data center – and it’s closer than most of the neighborhoods – and I have not heard anything. But – maybe I just wasn’t there at the right times.

Then there’s the power bill, which is the part that hits every household in a city with a data center even if you live miles from the thing. Data centers consume so much electricity that they shift the cost structure of the entire grid, and somebody has to pay for the upgrades. Anthropic – the second AI company that just signed on to use Colossus – publicly committed to covering 100% of consumer electricity price increases caused by its data centers, with an actual mechanism and dollar figure behind it.^[14] xAI signed a vaguer White House pledge in March 2026 along with six other tech companies.^[15] No specific number. No mechanism. No enforcement. Just another press release. I’ll go into deeper detail about this later in the series.

Finally, there’s the jobs lie, which is the thing every chamber of commerce in the country uses to sell a data center to a city council. xAI promised Memphis up to five hundred high-paying jobs. An audit of publicly visible LinkedIn profiles by Oligarch Watch found ninety-nine people who appear to actually work at the Memphis facility, more than half of them hired from outside the region – and the CTC Property pension filing only shows forty-four participants.^[16]

xAI’s own Memphis social media account claims they have nearly three thousand employees. But when you read the post they explain that number includes “electricians to engineers, cooks to construction,” which is the giveaway – they’re counting construction workers building the buildings, subcontractors maintaining the systems, food service staff, and everyone in the regional footprint that touches xAI in any way. State Senator Brent Taylor went on the record claiming xAI employs eleven hundred independent contractors “in perpetuity.”^[16] There is no documentation behind that number either. The structural truth about data centers is that they need a lot of bodies during construction and almost nobody once the building is up. Ninety-nine is the number of permanent xAI employees you can verify. Three thousand is the number that includes the guys laying cable through next March.

Anyone who tells you a data center will create thousands of permanent jobs is either lying to your face or doesn’t understand what a data center actually is. Essay eight tears that promise apart.

So that’s the list. Air, water, noise, power bill, jobs. Five real things to worry about, and every single one of them has the same thing in common – every one of them could have been prevented if the city had insisted on getting things in writing before the deal closed.

And here’s the move that made all of this possible. xAI didn’t take any tax incentives. None.

They could have applied for the standard PILOT abatement Memphis offers companies that relocate here – up to 75% off property taxes for fifteen years, worth roughly ten million dollars – and they walked away from it.^[17] Because by skipping the tax break, xAI also skipped the EDGE board vote, the city council review, and the public hearing that every other relocation deal in Memphis has to go through.^[18] They paid full taxes, and they got zero oversight. The chamber called it a win for the city. What it actually was, was the thing that kept every elected official you could have voted out of the room before the decision got made.

Imagine a different version of this story. The chamber says we’re excited about xAI. The city says great, before you announce anything we want a binding community benefits agreement – we want air permits filed before the turbines arrive, with public comment periods and pollution controls required as a condition of operation. We want the greywater plant on a written construction timeline with milestone penalties, meaning if the plant isn’t online by a specific date the data center pays a fine for every gallon of municipal water it uses. We want a noise ordinance with measurable thresholds. We want ratepayer protection language in the utility agreement with an actual number attached, not a press release. We want hiring quotas with enforcement teeth – meaning binding numbers in the utility agreement, in the land lease, in the construction permits, in every piece of paper the company has to sign to operate. If you don’t hire the local workers you promised, you lose the permit. You lose the utility connection. You lose the right to expand.

That’s the part that should outrage you. Not the turbines. Not the water. Not the noise. The fact that nobody at the table was looking out for the people who would have to live with the consequences.

Being mad at Elon Musk for this is like being mad at the weather. He’s going to do what he does. Billionaires maximize their wealth. Companies cut corners when nobody is making them stop. That’s the most predictable part of this whole story. The unpredictable part – the part that actually decides whether your neighborhood survives a company like xAI showing up – is whether the people you elected and the people you fund are standing between the company and the community, or holding the door open for them.

In Memphis, they held the door. Ted Townsend at the chamber chose his bonus. Doug McGowen at MLGW chose the tax revenue line on a spreadsheet. Mayor Paul Young chose the press conference. None of them chose the people in Boxtown.

Boxtown was already sick before xAI got there. The data center made it worse. But the people who let it happen, the ones who could have demanded protections and chose not to, are the ones who actually owe this neighborhood an answer.

Up next, I’m going to tell you how they tried to gaslight an entire neighborhood with a mailer.

#2: Memphis Failed Boxtown Long Before Elon Musk Came To Town

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