MEMPHIS, Tenn. — Mayor Paul Young pitched City Council members Tuesday on what he called a first-of-its-kind program that will use tax money generated by “artificial intelligence property” to support surrounding neighborhoods.
The proposed ordinance would designate 25% of the property tax revenues generated by two xAI sites — one in Boxtown and one in Whitehaven — to be used for infrastructure improvements within five miles of those sites.
That includes potholes, street repair, home repairs, social services and youth programs, and adding sidewalks, which many of the neighborhoods in these areas lack.
“This ordinance is about bringing dignity back to the community, neighborhoods that have been overlooked for far too long,” Young said, asking council members for their support.
The city is set to receive about $12 million in tax revenue from xAI, Young told WREG last month. The company’s Colossus artificial intelligence supercomputer was brought online last year, and a second site is under construction.
The city plans to launch an online portal over the next few weeks, allowing residents to request projects. A survey asking residents how they think this money should be spent will be sent out Tuesday.
Traditionally, when a company wants to move into a Memphis neighborhood, they ask for a PILOT deal that allows them to defer 75% of their property taxes. Young said this ordinance would flip that on its head.
xAI has not asked for public incentives like tax deals.
“It’s a great start,” Councilwoman Janika White said, “I just want to make sure that it’s not a collection that doesn’t have a purpose, that is not spent intentionally and strategically.”
The ordinance, which was presented Tuesday in a council committee, must go through three readings in full City Council before it would go into effect.
“There are just very, very few cities that have an opportunity like this one,” Councilman Chase Carlisle said.
xAI has faced opposition from some environmental and community groups, particularly for its use of gas-powered turbines as secondary power backups. The Shelby County Health Department recently approved permits for the company to use 15 of those turbines.
The company has also received support for its plan to use treated wastewater to cool its supercomputer, and a nearby electrical power plant and steel mill.
Councilman Edmund Ford Sr. said it was important for the city to make a move on the opportunity presented to Memphis by data centers.
“This may be the best thing that ever happened to Memphis. We may be able to survive where others couldn’t survive. What we are trying to do, everybody wants it,” Ford Sr. said.