Mayor Paul Young presented his proposal for use of $3.28 million in FY2026 revenues gathered from a groundbreaking property tax targeting data centers during the Tuesday, July 21 meeting.
Passed by the Memphis City Council in 2025, the Community Benefit Ordinance tax is expected to generate $100 million for the city. Twenty-five percent will be spent directly on the communities that lie within a five-mile radius of data centers.
The law requires the money to be spent on investments in public buildings, facilities, infrastructure and equipment, as well as economic development projects that fall within the zone. Livability issues are also addressed in the language and money will be available to nonprofits through grants as well.
The ordinance could also serve as a national model as communities grappling with the rise of data centers, which number over 4,000 across the nation.
“There are cities all across the country that are studying what we did to try to figure out how do we maximize the financial impact of these projects in the communities that are most adjacent,” said Young.
SpaceXAI’s Colossus data centers are among the largest in the county. It operates a combined 550,000 Nvidia processing units. Young’s proposal covers the community near Colossus I on Paul R. Lowery Road.
A proposal including the zone near the Colossus II facility in Whitehaven will be addressed in the fall. It will include the tax dollars generated from that facility. Revenues for FY2027 begin arriving in October.
“I held off on presenting this because, as you all know, there was a committee that was established that was studying how to use the dollars from FY2027. So we wanted to make sure there was not confusion,” said Young.
A nearly yearlong study was previously conducted for the 38109 zip code. It provided 10 options to prioritize. Among the 250 participants — 75% from the affected communities — the most pressing need was closest to home.
Repairs to homes and weatherization projects topped the list, followed by public safety and crime prevention. Road repairs and infrastructure investments were a close third. The first item in Young’s proposal reflected the survey response.
His plan offers $1.4 million for repairs to homeowners in the zone. Eligible applicants can receive loans for as much as $30,000. Many of the 11,000 homes within the boundary were built before 1960. However, with a median family income in the zone of around $37,500, critical repairs can often be out of reach.
“It is structured as a zero-interest loan fully forgiven after five years of continued residence,” said deputy chief of staff Renee Sekander. “So they are not taking on new debt, they are actually building equity by staying in their homes.”
Community cleanup is the second priority. Half a million dollars is dedicated to litter removal, beautification, maintenance of public spaces and mitigation of illegal dumping. Unlike the waste, most of the money will remain in the community. The plan calls for 85% to be used on labor within the zip code.
“The rest is going towards program management and administration. This is dignity and it is income that is put directly in the hands of people,” said Sekander
Public safety will be addressed through $400,000 in grants that will address crime prevention youth mentoring, after school programs, workforce development, mental health services support and food assistance.
Instead of “reinventing the wheel,” the “location specific pool” will be taken from the existing Safer Communities program, Sekander said. It will be expanded to include community initiatives. Operations will be housed in the Joint Office of Neighborhood Safety and Engagement.
“There is a very rigorous and established vetting process that each organization that applies for funding will need to go through to make sure that we are accountable to those funds and they have the most tangible impact within the zone,” said Sekander.
Other investments include:
- $330,000 to board up or demolish vacant properties.
- $334,000 for illegal dumping cleanup
- $100,000 to environmental education
- $75,000 for Memphis City Beautiful cleanup
- $100,000 for environmental testing and reporting
- $20,000 for cooling device distribution.
The administration’s proposal also exceeds the amount required by city law to invest in environmental education.
“You all know there is an ordinance that requires a minimum of 1% go towards environmental education,” said Sekander. “We are recommending roughly three times that based on what we are hearing from the community.”
