xAI Is Staying - What Should Memphis Fight For?

So, about last night…

The xAI files

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

I got up extra early to say something a lot of people might not like, but facts are facts.

Memphis is like a knucklehead sibling – you know it doesn’t have its shit together, but you’ll still defend it if anyone other than you talks shit about it. Well, I have some things to say.

Memphis government has been a mess my entire life. We can’t even run our own school system. And I get it – poverty is a cycle, and if you want kids to learn, you need to solve some of their home problems first, but schools aren’t set up to solve home problems. So the city has to get its shit together first – and Memphis hasn’t had its shit together for a long, long time. If you know the history of Memphis, this goes all the way back to the first time the National Guard was sent here in 1968 and the death of Martin Luther King Jr. – the city has really just never recovered.

Not to mention, it seems like every six months a city official is being arrested or is in court – usually on money-related charges. And Memphis can barely balance its budget – this spring the mayor said revenue grew just 1% while costs went up by tens of millions, so the city had to make cuts to make it work. Memphis is also the only major city in Tennessee that’s losing people – and in 2024, Shelby County lost more people than any other county in the country.

So, it makes total sense for a lot of people to always think someone’s on the take, or being paid off, or doesn’t know wtf they’re doing. It makes total sense that people that live here don’t trust their leaders.

Yesterday I watched the committee meeting before the moratorium vote, where the police talked about special events. Councilwoman Jerri Green said that, as she understood it, the city only got about $1,200 for police at the last St. Jude Marathon – a weekend she said raised $17 million.

That’s just one example on a long, long list of things that show – half the time this place has no idea what it’s doing. But put a pin in all of that – I’ll come back to it.

Last night the Memphis City Council took its third and final vote on the data center moratorium – and it failed, 6 to 6. An ordinance needs seven votes to pass, and Councilwoman Yolanda Cooper-Sutton wasn’t there.

Yes (6): Easter-Thomas, Green, Smiley, Spinosa, Walker, Swearengen-Washington.

No (6): Canale, Carlisle, Ford, Logan, Warren, White.

Absent: Cooper-Sutton.

However, the council did pass Councilman Jeff Warren’s data center rules, 7 to 5 – but it was a rewritten version that members said they only got that afternoon. Councilwoman Green said she believes the new version has “a 135-day period instead of an 18-month moratorium.” I haven’t seen that new text yet, so I can’t tell you what those 135 days actually pause – but CBS News reports it halts construction of new data centers for 135 days, alongside the mayor’s 90-day study.

And people are mad – because a lot of people think that the moratorium would stop data centers from being built here or would somehow push xAI out of Memphis. But this is not the case at all.

The moratorium wouldn’t have touched what xAI already has.

As I said last night, people can say they don’t want data centers and they don’t want Elon Musk until they’re blue in the face – all the moratorium could do was keep xAI from building something new right now, but not forever. Nothing in any data center bill the council has posted would close down xAI – period.

And the moratorium didn’t touch data centers that were already running – unless they expanded – or projects that were already in the pipeline when it was introduced in August. And it would’ve ended as soon as the council passed the regulations that should’ve been written last year. And there’s no way it was going to last a year. Nashville wrote its data center rules and passed them in eight weeks. We just spent 9 weeks following a moratorium proposal that didn’t pass.

There are no plans to stop data centers from coming to Memphis – the council just plans to write rules about what they can and can’t do. None of this is my opinion – it’s what the proposals say.

“Why can’t we condemn it and take the land back?”

The council’s own attorney said that’s the only way to get a data center out of a neighborhood. But Tennessee only lets a city take land for a public use it names up front, like roads, utilities, parks or clearing blight. It can’t take the land first and decide what to do with it later.

xAI’s company paid about $265 million just for the land and buildings at its two Memphis sites. That leaves out anything built on Tulane Road since 2025, and it leaves out all the build-outs and the computers inside. The estimated cost of Colossus II is $35 BILLION.

Short of buying it, the only lever any government has over xAI’s data centers is regulation. People who live near it can sue – for damages, or to stop the turbines, like the NAACP is trying to do in Mississippi – but they have to prove their case first.

So, people are now upset over something not passing that never did what they wanted it to in the first place. And the city’s already spending xAI’s tax money – of the $26.6 million it collected this year under its xAI tax-sharing law, about $20 million went into the city’s own funds.

And just this morning I had a commenter say: “I can here the same message given to the Albanian’s . Sorry , nothing you can do here, it’s a done deal. The Albanian’s are still not having it,”

But don’t get any ideas – burning xAI to the ground would put the Memphis Aquifer at risk. This is why I have been doing so much work on the Megapack battery park situation – to make sure that there’s a plan for if those batteries ever did catch fire – because that’s a worst case scenario situation for the region.

Look, xAI is here to stay. So are data centers. And more are on the way – a company called 5C – not xAI – filed for a $575 million data center job on Getwell Road on October 5th.

And when you count all of the data centers we have, Memphis is on the low end compared to cities our size – one directory lists 13 here, against 28 in Nashville and 24 in Louisville.

And here come the boos and the conclusion that I’m pro data center – yada yada yada. No – I’m a pragmatist – and I’m telling you the procedural facts of the matter.

But that doesn’t mean that there is nothing that can be done or people don’t need to be held responsible for what happened or how it happened.

I believe wholeheartedly that the mayor and city officials know way more about how xAI got here and were involved way more than they’re saying. I can’t prove all of it yet – but mark my words – more city officials signed NDAs on this project than we know about.

We already know MLGW’s president – who’s appointed by the mayor – signed one in May 2024. The Chamber invited eight City employees, including the city’s chief operating officer, to a “highly confidential” meeting on March 28th, 2024, that the Commercial Appeal reported was about xAI. And the Chamber sent xAI’s NDA to six people at Memphis Police, including the chief, weeks before xAI was announced. They knew xAI was coming, and they kept it under wraps.

There is no denying that the city needs the money – so I believe that they helped facilitate it more than they are admitting. Instead, they’ve decided they’re just gonna weather the storm, because they believe the end justifies the means.

And the city council absolutely deserves criticism too – but not because they’ve been paid off or they’re in anyone’s back pocket – it should be for waiting this long, and for waiting till tensions got this high before acting on any of this. As of yesterday, the zoning code still didn’t even define a data center – and the council’s own attorney says anything that changes the code has to go through the Land Use Control Board first. They’re just now getting around to addressing this.

In 2024, some council members said they found out xAI was coming the same way the rest of us did. Councilwoman Rhonda Logan told MLGW’s president that July, “we heard about it in the news.”

Well – if that had happened to me – the first thing I would’ve done is make sure that when a company pulled a permit for a data center, it had to call it one, and the code had rules for it. But they didn’t do that. So now Memphis doesn’t have ONE xAI data center – it has THREE – two running, and a third going up right next to Colossus 2 that the city’s permit still lists as an “Office.” And Colossus 2’s other building, MACROHARDER, sits just across the state line in Southaven – with another one already approved down there.

Yes – the city council dropped the fucking ball in all of this. That fact is indisputable.

And a lot went on behind the scenes that still hasn’t come to light. The story has been that xAI never got a PILOT – that’s a deal where a company pays a set amount instead of its property taxes – so EDGE, the city and county’s economic development agency, wasn’t involved. Well, in the last few weeks I found out EDGE was absolutely involved and still is – it’s on the lease for the 636 acres xAI’s company rents in Pidgeon Industrial Park. And I found $24 million on EDGE’s 2025 books, listed as “unearned revenue,” with no note in the audit saying who paid it or what it’s for. But that’s another essay.

“So what are we supposed to do? Just lay down and stop fighting?”

No – my argument, which a lot of people can’t seem to grasp, is that we’re fighting for the wrong things. A moratorium is meaningless. It was never supposed to be forever – it was always going to end when the rules were written. Even the council’s own attorney told them state law says a moratorium has to be “reasonable in time.”

So Memphis – THIS IS THE TIME – to tell the city what you want the RULES to be. But first, here’s what they did pass last night:

Warren’s rules are the big one. The version posted on October 6th would make new data centers reuse the same water to cool their machines – no city drinking water and no new wells for routine cooling – and run on more and more clean power, with gas generators for backup only. Data centers that are already running could keep going, but they’d have to report their water and power use and follow the new rules before they expand. That’s not exactly what passed, though – members said the rewrite combined Warren’s bill with Councilwoman Rhonda Logan’s.

Two zoning bills also passed their second vote, 12 to 0, with no debate. As posted, Logan’s doesn’t regulate anything by itself – it gives the city’s planning staff 45 days to come back with maps and 90 days to write the actual zoning rules. The other one, from Warren and four other members, is supposed to change the zoning code for data centers – and its text wasn’t in what the City posted for either vote. Both have one more vote to go.

Warren also got a first vote on a nonprofit that would take in and hand out data center community money – and it needs the state’s OK before it can do anything.

Here’s what their plans are missing.

There needs to be a full and complete air study, because every one so far has a hole in it. The City’s own sampling back in June 2025 only ran two days, and it didn’t even test for ozone or fine particles. The University of Memphis found no big change – from satellites, with no ground readings and no health data.

Community groups ran sensors for one winter, which the Health Department won’t use. xAI’s own consultant did the permit models, and they left out the temporary turbines that were actually running. And the Health Department’s new monitor in Riverview only measures ozone and carbon monoxide – that’s the monitor the city pointed to yesterday when it cut air monitoring out of the community money.

Memphis should also borrow rules from cities that already figured some of this out. We need rules about how far away data centers should have to be from houses – and a noise study before and after they’re built. Warren’s bill, as posted, doesn’t have a single rule about distance from homes or noise – and the moratorium’s study list that mentioned them died last night.

And Memphis should flat out ban city officials from signing a developer’s NDA, and make any big request for power go to the MLGW board and the council in public.

And here’s the big one: There needs to be a full recounting of every step of the process when it came to xAI setting up shop in Memphis, with every entity listed – so we can see where new guardrails need to go, or something like this will happen again.

And we need to FOLLOW THE MONEY.

The city needs to set up a website with full transparency on the money these data centers bring in and where it goes. xAI has been here for over two years, and so far all I’ve heard about is an advisory board making suggestions and a plan to spend a measly $3 million to help the community – and that plan only cleared a committee yesterday, 14 months after the council passed its xAI tax-sharing law. Councilwoman Pearl Walker said two weeks ago that $10.3 million was sitting there waiting on a vote, and I don’t think any of it has been spent yet.

This is where that pin comes back.

We need oversight of that money shared by a community board of some kind, with full transparency – and we need it from people who know what they’re doing – not just people that live in the area. Memphis does not have a good track record when it comes to managing money – they don’t deserve to be trusted with this money either.

Look, I know this is all super hard, but this city needs to get its ass in gear – none of this should be taking this long. I also know it’s hard to push forward when so many people involved aren’t educated on the subject. It’s like there’s a monster trying to break down your door, and while you’re trying to find a weapon and something to brace the door with, other people are just screaming at it and praying it goes away.

It’s not going away. That doesn’t mean you can’t do anything about it – it means you’ve got to work with what you’ve got.

A lot of people’s takeaway from last night will be – look at all the hundreds of people who went to the city council meeting to fight for the moratorium, they must know what they’re talking about. But the night before the vote, Action News 5 reported hundreds of electricians waiting for hours outside the electricians’ union hall in Midtown, hoping to get hired at data centers here – and some of them came all the way from Idaho and Virginia.

So – while the protesters and activists might be the loudest voices – they don’t speak for everyone. We have to stop asking for things that don’t exist – and start demanding things that do.

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.

xAI Is Staying – What Should Memphis Fight For?

The xAI files

Sources

The xAI files

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