Is every data center in Memphis like xAI's?

Let’s talk about two data centers in Memphis that aren’t xAI’s – cause there’s a brand new permit on Getwell, and it isn’t Elon’s.

The xAI files

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

It belongs to 5C, the company turning the old Fred’s HQ into a data center. And it’s a big one – the City’s permit record puts the job at $575 million.

Memphis has a lot more data centers than xAI’s – on September 1st, MLGW’s president Doug McGowen told the council MLGW serves 16 of them. The customers he named include AT&T, AutoZone, FedEx, the IRS, Nike, St. Jude and Wright Medical – along with xAI and 5C.

So let’s talk about 5C and St. Jude – cause this is way messier than “all data centers are good” or “all data centers are bad.”

WHAT DID 5C FILE?

5C filed the permit on October 5th – the day before the City Council was supposed to take its final vote on the moratorium. It’s for “5C Data Center Phase IV,” and it covers 504,000 square feet – Action News 5 says that’s about half the building. As of October 6th, the City had it “In Review,” so it wasn’t approved yet.

The City filed it as an “Office.” On October 3rd, I wrote that xAI’s new building on Tulane Road got filed as an “Office” too – cause Memphis’s zoning code doesn’t use the words “data center” one time.

WHO IS 5C?

The owner on the permit is 5C MEM01 LLC – that’s 5C’s Memphis company. Fox13 reported in June that it bought the old Fred’s building for $25 million. 5C started in Montreal in 2023, and the trade site DCD says it’s now part of a company called Hypertec.

5C rents out computer power – Fox13 says its customers are “major technology and artificial intelligence companies.” The permit doesn’t name one – and neither do Fox13, the Daily Memphian or Action News 5.

IT WAS ALREADY A DATA CENTER

Part of that building is already a working data center – MLGW counts 5C as a customer. The City’s records show 5C’s “Phase III” work there this year – including six giant chillers and 32 computer room air handlers, which are basically huge ACs for rooms full of computers.

There’s also a permit for 12 “Emergency Generators,” and the form says the work includes natural gas. They’re backup – they kick on when the power goes out and get tested now and then – while 5C’s everyday power comes from MLGW.

5C has a county air permit, too. EPA’s database calls it a “synthetic minor” – that means it agreed to limits that keep its pollution under the level that needs a major permit – and it shows no violations. That’s a big difference from xAI, which ran gas turbines as its main power at Colossus 1 before the grid caught up.

MLGW SAYS THE POWER IS ALREADY APPROVED

McGowen told the council, “5C is getting an additional 9 megawatts that was already approved there in the old Fred’s headquarters.” So MLGW said yes to that power more than a month before this permit was filed.

5C has also asked for about 50 more megawatts. McGowen said nothing’s been promised yet – and that it won’t “get any traction until after the first of the year.”

And MLGW says it has room – on October 6th, McGowen said MLGW’s peak in 2025 was 3,436 megawatts. Then he said, “With all of my substations together, it’s more than 6,000 megawatts of capacity.”

That’s room on MLGW’s lines – not more power. McGowen said so himself – “We’re not generating energy.” The power comes from TVA.

DOES THE MORATORIUM EVEN REACH IT?

On October 6th, the council voted 7 to 5 to put off the final vote again – this time to October 20th. I’ve got another essay that explains everything that led to that, and honestly, it was kind of an eyeroll.

If it passes, I think it still reaches 5C – and filing early doesn’t change that. The version up for the vote spares filings that were already “vested” – which means legally locked in. But it only counts ones vested before the moratorium was introduced on August 18th – and 5C filed seven weeks later.

Data centers that are already running are exempt – but only if they don’t grow. A $575 million build-out sure looks like growth to me, but that’s the City’s call.

WREG reported that Councilman Jeff Warren said the moratorium won’t benefit the city. In his own words, “Now we have some that could expand, and these regulations could apply to their expansions.” Is 5C part of why? Maybe.

But IMHO, the moratorium’s gonna pass. The council has done a bad job of sharing info – and of knowing how most of this works – so not passing it now would be a major PR fail. They’ll pass it cause they can always repeal it later. Then they just have to write new zoning rules – cause zoning is the main thing they control.

ST. JUDE HAS ONE TOO

St. Jude has a data center – and it’s the opposite of xAI, cause it’s the one place in this city just about everybody loves.

It sits right on St. Jude’s campus. The firm that designed it, Syska Hennessy, says it opened in 2017 at 3.4 megawatts (MW). In plain English – it’s the computers St. Jude’s scientists use to research childhood cancer – and St. Jude says they turn math “that would take weeks or months” into “minutes to hours.”

On August 25th, St. Jude filed to expand it – a $40.9 million job – and the City filed it as an “Office” too. MLGW’s slides from October 6th show St. Jude paying for a $21.2 million upgrade at the Dunlap Street substation. Both versions of the moratorium exempt computers that serve a hospital – so St. Jude’s likely won’t have to wait, though that’s the City’s call.

THERE’S GOOD AND THERE’S HARD

5C is reusing a building that was already standing. It went ahead without the 15-year tax break it asked EDGE for, so it’s on the hook for regular property taxes. And McGowen said “the 5C data center is not consuming a significant amount of water.”

St. Jude’s computers help fight childhood cancer – and St. Jude is paying for its own grid upgrade, which is exactly what people want data centers to do.

But 5C’s tax-break application listed 15 new jobs, and 5C told Action News 5 it’ll bring over 250. I’m guessing 15 are permanent and the rest are for the build.

Honestly, it’s too early to say what kind of neighbor 5C will be – the plans are attached to the permit, but the public version doesn’t show them.

A data center isn’t good or bad just cause it’s a data center. What matters is how big it is, where its power and water come from, who pays for upgrades and how close it is to homes – and right now, the City’s forms can’t even tell a cancer research computer from Colossus.

There’s a third company moving through the City’s permits right now, too. The records show Oppidan with permits for “Oppidan Data Center Phases 2-4” on South Mendenhall Rd – and one was “Ready to Issue” as of October 6th.

So again – this stuff is messy. Writing off every data center over some vague moral rule seems like not really getting it, at least to me.

WHAT WOULD ACTUALLY HELP?

These are the rules I’d push for – and they should scale with size, so a 3 MW research center isn’t treated like a 300 MW AI campus. Some are already in the amended moratorium.

Call it what it is. Put “data center” in the zoning code with size classes, so the City stops filing them as offices. It’s not law yet – Warren’s draft would do it, but it’d only hit existing data centers if they expand.
Show the whole plan up front. Every data center should say who owns it, who the customer is, how much power and water it’ll use and every phase it’s planning. That’s in the amended moratorium – but it isn’t law, and it’s only for new filings.
Don’t run a power plant without a permit. Any generator or turbine used as main power should get its air permit before it turns on. That’s already the law for permanent equipment, and it covers data centers that are already running – 5C has its permit. The fight over xAI was about whether “temporary” turbines counted.
Pay your own way. Data centers should pay up front for the substations and lines they need, so the rest of us don’t. That’s mostly happening for new power – TVA now charges $1.52 million per MW past the first 5, MLGW makes them pay for grid upgrades, and St. Jude is paying for its own substation. But TVA’s charge skips power its board approved before June 1st, 2026 – and that covers all 300 MW at xAI’s Colossus 1.
Don’t cool with drinking water. Big sites should use closed-loop cooling or recycled water, and report their water use every year. That’s in Warren’s draft, but it isn’t law yet – and existing data centers would only have to report their water and switch to closed-loop when they replace equipment.
Enforce noise limits. Measure noise at the nearest home, including the low hum, and fine it when it’s too loud. Noise rules can reach plants that are already running – but look at Southaven. Its law lets industrial sites off the hook if they stay under 70 decibels at the property line – and the part about how to measure noise got repealed in 2007. Now the noise fight there is a class-action lawsuit.
Keep big ones away from homes and schools. Set distances, and make them bigger for bigger sites. That’s on the moratorium’s study list – but it can’t move data centers that are already built.
Get a fire sign-off before big batteries go in. That’s partly happening – the City’s Fire Prevention Bureau reviewed both of xAI’s Megapack permits.
Let neighbors hear first. That means public notice and a hearing before a big one’s approved, plus a public list with yearly numbers on power, water and generator hours. The list is in Warren’s draft and would cover every data center – the notice and hearing would only help with new ones.

SO WHY AM I NEUTRAL ON THE MORATORIUM?

It’s cause a moratorium gives them time to kick the can. On October 6th, one council member tried to stretch it from 12 months to 18. I think they should skip it and just do the work – why do they need 6 months to get a study done?

The new air monitor near Colossus 1 took the Health Dept two years and $411,000 in EPA money to get running. And on October 6th, Councilwoman Walker said $10.3 million in xAI tax money is sitting on the table – it’s set aside for the neighborhoods around the sites, and it’s waiting on a council vote. SO – USE THE MONEY TO SHORE UP THE AIR AND SOUND ISSUES.

Once the water recycling plant is built, the water issue is moot – but that’s another essay, so stay tuned.

The council is set to take up the moratorium again on October 20th.

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.

Is every data center in Memphis like xAI’s?

The xAI files

WHAT DID 5C FILE?

WHO IS 5C?

IT WAS ALREADY A DATA CENTER

MLGW SAYS THE POWER IS ALREADY APPROVED

DOES THE MORATORIUM EVEN REACH IT?

ST. JUDE HAS ONE TOO

THERE’S GOOD AND THERE’S HARD

WHAT WOULD ACTUALLY HELP?

SO WHY AM I NEUTRAL ON THE MORATORIUM?

Sources

The xAI files

WHAT DID 5C FILE?

WHO IS 5C?

IT WAS ALREADY A DATA CENTER

MLGW SAYS THE POWER IS ALREADY APPROVED

DOES THE MORATORIUM EVEN REACH IT?

ST. JUDE HAS ONE TOO

THERE’S GOOD AND THERE’S HARD

WHAT WOULD ACTUALLY HELP?

SO WHY AM I NEUTRAL ON THE MORATORIUM?

Sources

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