Memphis council members proposing data center moratorium

(The Center Square) – Three Memphis City Council members are proposing a temporary halt to data center development. J.B. Smiley Jr., Yolanda Cooper-Sutton and Council Chairwoman Jana Swearengen-Washington are sponsoring the resolution that proposes more study about the effects of data centers on water, utilities and surrounding neighborhoods. "We cannot make decisions that impact our neighborhoods, infrastructure and future without making sure the people who will be impacted are informed, included, and given a meaningful opportunity to be heard," Smiley said in a social media post. "Growth is important. Transparency and accountability are too." The City Council will consider the ordinance on Tuesday. At the same meeting, council members will discuss spending $3.3 million in tax revenue from a data center already in the city. xAI's Colossus did not receive tax breaks from the city or state; instead, it is investing 25% of the tax revenue it generates into communities within 5 miles of the site, according to an agreement reached by Memphis leaders in 2025. The money collected in fiscal year 2026 is proposed for nine different projects, according to the council's agenda. The largest amount of money, $1.4 million, will go toward home repair assistance and other issues related to housing stability. The proposed plan allocates $500,000 to pay workers to clean up the neighborhood. Opponents of xAI said previously they were concerned about air quality. The plan sets aside $100,000 for environmental monitoring. Moratoriums or bans on data center construction are being passed by local governments across the state, from tiny St. Joseph with a population of less than 1,000 to Tennessee's largest city, Nashville. The Knox County Commission and the Knoxville City Council recently approved one-year moratoriums. The Metropolitan Government of Nashville and Davidson County's temporary pause of data centers is facing a legal challenge. DCB Nashville, a subsidiary of DC BLOX, is challenging the council's opposition to its data center near the Nashville Zoo in federal court. The council not only passed a temporary moratorium that halted DCB Nashville's project but also agreed to seize the data center land from the company through eminent domain. Some concerns about data centers are overblown, said Debbie Jennings, senior policy manager with the nonpartisan National Taxpayers Union, in an interview with The Center Square. Data centers provide additional tax revenue to a community and sometimes sign agreements for community projects, she said. "Moratoriums not only pause development but it also pauses any negotiation that you could make with individual developers," Jennings said. "You're shutting yourself out from those discussions on any specific benefits you want to get for your taxpayers such as property tax revenue and great infrastructure upgrades."