Does Spinosa's Plan End the Memphis Moratorium?

Tomorrow is the vote on the Memphis data center moratorium – here’s what we know.

The xAI files

Every essay in this series is pinned to a question on the board at rachelandthecity.com/the-xai-files.

On Tuesday, the Memphis City Council is set to take its final votes on three data center bills. The first one is the moratorium, Ordinance 5982. I’ve already written about it – it puts city permits for new data centers on pause, but it doesn’t set any rules for water, air or noise.

The other two are the ones with real rules in them. One’s from Councilman Philip Spinosa, who runs the council’s planning and zoning committee – that’s Ordinance 5985. The other one’s from Councilman Jeff Warren – that’s Ordinance 5986. The council put off all three on October 6th.

Everything here comes from the papers the City posted for the vote, as of October 19th.

Spinosa’s bill says right in its title that it would “replace a blanket data-center moratorium.” So if his passes tomorrow, does the moratorium end?

It doesn’t. And the way it’s written, Spinosa’s plan doesn’t kick in at all until four other things exist – and none of them are in the City’s packet.

The City posted the papers for Tuesday on October 16th. Spinosa’s and Warren’s are word for word the same as last time.

Spinosa’s still says “DRAFT – PENDING LEGAL AND COUNCIL REVIEW” across the top of the first page. And the spot for its number is still blank.

The new version of the moratorium isn’t in the packet at all. On October 6th, Councilwoman Michalyn Easter-Thomas moved to stretch it from 12 months to 18 – but with no new text, there’s no way to check it.

Spinosa’s plan sorts data centers by how much power they need. It covers any data center that needs 10 megawatts (MW) or more. There are three sizes – 10 to 25 MW, 25 to 50 MW, and 50 MW and up – and there’s no top limit.

It counts every kind of power, even turbines and batteries on the site. So making your own power doesn’t make you look smaller on paper.

The two bigger sizes get a water rule. After a start-up period of up to 90 days, they can’t use drinking water to cool their machines. But the council could give one a waiver for up to three years, by a two-thirds vote, if it meets a list of conditions. They also can’t cool with a new well into the Memphis Sand aquifer – the water Memphis drinks – unless they get every permit and two-thirds of the council votes yes after a public hearing.

Then there’s the money.

A PILOT is a deal where a company makes a payment instead of paying its property taxes. Under Spinosa’s plan, any deal the City OKs would still have to pay the City the full tax on the computer gear. So basically, there’s no discount on the servers. EDGE is the agency that approves PILOTs here – and EDGE says it hasn’t given xAI one, which its own incentives list backs up. So this part wouldn’t change anything for xAI today.

If one of the bigger ones gets something from the City – like a PILOT, public land or a grant – it would also pay at least half a percent of what it spends on gear, software and power. That money goes into a fund for things like water, internet lines and job training.

The plan would also set up a City-backed site for data centers. It would be run through EDGE – the city and county’s economic development agency – or another City-County group. EDGE would have 45 days to shortlist sites and 75 days to try to lock one down.

That’s the same EDGE that leased 636 acres of public land at Pidgeon to xAI’s company, CTC, in 2025 – with an option to buy it down the road for about $23.6 million, and no appraisal, by EDGE’s own answer. Under Spinosa’s plan, a deal like that would come with strings. A big data center would have to sign a development agreement first, the council would have to vote on it after the terms are made public, and the company would owe that half-percent payment. But the plan only looks forward – it says a deal that’s already signed can’t be reopened just because the council changes its mind.

EDGE is also on the invite list for the council’s October 26th hearing on community benefits.

Now go to Section 23. It says the plan only “becomes operative” – which basically means it only kicks in – when four things happen.

First, the City has to set up something called a Master Delivery Compact, and name a person to keep it on track. Second, the City’s planning office has to post its checklist for applications. Third, MLGW has to have its rules for very big customers in place, or an approved stand-in. And fourth, the council’s lawyer has to sign off on the date and the legal steps.

The plan does give the Mayor five business days after it passes to start on that first one. But none of those four things are in the City’s packet. The plan also mentions other papers that aren’t in the packet either, like something called an Action Plan.

Spinosa’s plan only ends the moratorium once all four are done. That part of the plan is even titled “NO GAP” – the idea is that the second his rules kick in, the moratorium goes away, so there’s never a time with neither one.

So a yes vote on 5985 is a yes to a plan. Passing it alone wouldn’t switch it on – and the packet doesn’t show that any of the four pieces are in place.

That “no gap” promise has a problem, though – the moratorium has its own end date.

In the version the City posted for October 6th, the moratorium ends after 12 months. It could end sooner if the council votes to end it – or passes permanent rules, but only after the community meetings the moratorium calls for. Nothing in Spinosa’s plan changes that clock.

So say the moratorium passes. If those four pieces aren’t ready when its time is up, that could leave a gap – unless the council lines up the dates or stretches the moratorium.

Spinosa’s plan does mention a 60-day backup for the biggest data centers, for if the no-gap part can’t legally work – but it’s spelled out in that Action Plan, which isn’t in the packet.

And if the moratorium fails tomorrow, Spinosa’s plan won’t have anything to replace. It would still be stuck waiting on its four pieces.

At the council’s October 8th work session, Spinosa said “on my ordinance, there’s a moratorium that was indefinite.” He also said he wants to “make my ordinance expire on December 31, 2026.” But the version posted for Tuesday doesn’t have a moratorium of its own, and there’s no December 31st date in it. If that change is coming, a council member would have to propose it during the meeting.

Warren’s plan says it takes effect “upon passage,” under the City’s charter and state law. So it doesn’t have Spinosa’s four-step switch.

It rewrites the city’s zoning rulebook for data centers. A “Large Data Center” is one that needs 20 MW or more, or is built to get there within 10 years.

New data centers would have to use closed-loop cooling – the kind that keeps reusing the same water over and over. Cooling towers that work by letting water evaporate would be banned for everyday cooling.

They couldn’t cool with city drinking water day to day, except for a few things – like the first fill, emergencies, or any other use the City OKs.

Nobody could drill a new private well mainly to cool a data center. And a company couldn’t get around the rules by splitting one campus into separate buildings, companies or permits.

On power, a new data center would have to match 60% of what it uses with clean power when it opens – and 100% after 10 years. “Matched” is the plan’s word, so the site itself doesn’t have to run on solar. And a fossil-fuel generator – like gas or diesel – couldn’t be its main everyday power.

Data centers that are already running can keep going – but within 12 months, they’d have to report on their water, cooling, power and generators. Any cooling gear they replace would have to meet the new cooling rules. And if one grows its power use by 20% or more, it gets checked like a brand-new big one. Every data center would also have to sign off once a year that it’s following the rules. And “Knowingly submitting false information” – lying on purpose – would break city law.

The hole from the September version is still there – it never says how much water counts as a “Major Water Withdrawal.” It also still says the council “enacted” the moratorium, which hasn’t happened. The plan was written like the moratorium had already passed.

None of these papers names xAI, Colossus or any address.

Warren’s would already reach data centers that are already running – with those reports, the yearly sign-off and the cooling rule when gear gets replaced. Spinosa’s covers new data centers, plus any part of a build-out that isn’t already locked in under TN law. That includes new turbines or batteries that aren’t just for emergencies.

So which other rules would reach xAI depends on what it builds or changes next – and whether that’s already locked in. Neither answer is in these papers.

Tomorrow, Spinosa’s comes up first, then Warren’s, then the moratorium. Any of them can be changed during the meeting, put off again or voted down.

And the one that’s supposed to replace the moratorium is going up for its final vote with “DRAFT” still printed across the top.

If you like facts-first info on all this, consider leaving a tip on Venmo or PayPal – this stuff takes a lot of time to put together. And check out everything I’ve written with citations and receipts at the xAI Files.

Does Spinosa’s Plan End the Memphis Moratorium?

The xAI files

Sources

The xAI files

Sources

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