Shelby County Assessor of Property Javier Bailey Sr. has a simple message for local leaders debating whether to welcome more data centers or halt their expansion: The county can’t afford to ignore the money.
“You either got to slow down spending, or you got to expand the tax base,” Bailey said Wednesday in an interview with the Tri-State Defender. “It’s that elementary.”
As Shelby County grapples with population loss, empty Downtown office buildings and billions in future government spending commitments, Bailey believes the growing artificial intelligence industry offers an opportunity Memphis cannot afford to squander.
That doesn’t mean data centers should get a free pass, he said. It means regulating them, protecting surrounding communities and making sure local governments collect their share of the industry’s economic benefits.
“We can regulate them, right? I’m good with regulation,” Bailey said. “They need to be regulated. Everything else gets regulated. Hospitals are regulated. Restaurants get regulated.”
But his position puts him at odds with advocates calling for a pause on new data centers amid concerns about air pollution, water consumption and electricity demands.
The Shelby County Commission is now exploring a moratorium. Memphis Mayor Paul Young has authorized a study on data centers and their impacts. Memphis City Council approved new data center zoning standards on first reading Oct. 8 and expects a final vote Oct. 20 on a proposed 12-month moratorium.
“I don’t support moratoriums and banning data centers,” he said. “I’m for regulating this activity, but I’m also for capturing their money, their tax dollars. That’s what I was elected to do.”
How Shelby County makes money, explained
Local officials set property tax rates, and Bailey’s office determines property values that form the basis for taxation. And for all the complicated language surrounding assessments and tax rates, Bailey says the underlying math is pretty simple.
“All government operations are financed off taxes and fees,” he explained. “There’s no other revenue worth talking about.”
The tax base shrinks when businesses close and commercial properties lose value, causing tax revenues to decline and potentially leaving homeowners to carry a heavier tax burden, Bailey said.
“These people, the residential sector, have to make up the difference because the cost of government ain’t going down,” he said. “We ain’t firing firefighters and police officers. The potholes still got to be filled. The sewer lines still got to work.”
That doesn’t mean homeowners automatically face higher tax bills when commercial values decline as a result of shuttered businesses. But without new revenue or spending cuts, Bailey warns, local leaders could face difficult choices about tax rates and public services.
“What I’m trying to do is say, ‘Hey, look, let’s do something now before the homeowners are having to cover all of this burden,’” he said. “Because it’s obvious that we’re losing business.”
Why Bailey is sounding the alarm
Bailey’s concern stems from a six-page report, “The State of Shelby County’s Tax Base,” released Sept. 28. The report warns that the county’s commercial property tax base is stagnant and could continue to weaken as businesses close, office buildings lose tenants and residents move away.
The warning comes as local governments contemplate major spending commitments, including a new jail and schools. Other projects, such as a new Regional One Medical Center expected to cost more than $1 billion, have already been announced.
“What brought it to my attention was they were talking about building a hospital, a jail, some new schools,” Bailey said. “I said, ‘OK, we better start looking at whether or not the money’s going to be there because that’s a lot of commitments.”
Although the county’s tax base is relatively strong, he believes the warning signs are unmistakable.
Property values increased nearly 25% between the 2017 and 2021 reappraisals, followed by approximately 34% growth between 2021 and 2025, according to Bailey. He attributed much of the latter increase to the post-pandemic surge in property sales.
Now, he said, his office projects substantially slower growth — roughly 4% — heading toward the next reappraisal in 2029.
Meanwhile, Downtown Memphis has become a troubling symbol of the changing economy with its vacant and underused office buildings, such as 100 North Main, the former Morgan Keegan tower and the Sterick Building, exacerbating the problem.
Memphis has also lost major tourism events and conferences once held Downtown.
The Beale Street Music Festival? Gone.
The once-reliable hotel tax revenue from the COGIC Holy Convocation in November? Not returning.
It all adds up.
“Those economic indicators suggest that the valuations of those properties are going to go down,” Bailey said. “It’ll be 2029 when you really see the effect of all those closed businesses. That’s when it’s going to show up.”
What data centers bring to the region
For Bailey, the economic argument for data centers begins with the Colossus supercomputer facility owned by SpaceXAI at the former Electrolux plant in Southwest Memphis.
“Once they got going, first year out the gate: $16 million to the county, $12 million to the city,” Bailey said. “That’s $28 million worth of tax revenue that came in year one.”
Those figures have not been independently verified. But they demonstrate the potential value of data center investments, he said, particularly the expensive computing equipment that can generate substantial property tax revenue.
“It made up for a lot of losses,” he continued. “But we spend that money as quickly as it comes in.”
Bailey acknowledged data centers fail to create many permanent jobs after initial construction is completed, although he sees a potentially bigger payoff from technology companies and suppliers that could follow.
In December 2024, the Greater Memphis Chamber announced that Nvidia, Dell and Supermicro planned to establish operations in Memphis as part of SpaceXAI’s expansion. Dell subsequently said it had no plans to set up any new local sites, although the company remains part of the technology supply chain serving the region’s growing AI industry.
Attracting more companies — and the jobs that might come with them — is another reason to welcome the industry, Bailey said. More jobs could make Memphis a more attractive place to live. More residents buying homes and spending money with local businesses could, in turn, strengthen the tax base.
But if Memphis makes it too difficult for data centers to operate, Bailey warns, the opportunity and its accompanying tax revenue will go elsewhere.
“They’ll just go a half mile away to DeSoto County,” Bailey said. “Half a mile. You’re still gonna breathe the same air. Tap the same water. Be on the same grid. But without any economic benefit to Memphis or Shelby County.
“Why don’t we regulate it and keep them here?” he said.
A summit — and a larger challenge
Bailey is convening a tax base summit Nov. 18, bringing together city and county officials, business leaders and homeowners to examine data centers and ways to revive or repurpose Downtown office buildings that no longer attract traditional tenants.
He has discussed the county’s tax base report with both mayors and received no disagreement, he said, although he believes its findings surprised them.
Data centers may offer a new source of revenue, but they are unable to solve challenges related to population loss, declining tourism, empty commercial buildings or the difficulty of attracting young professionals and businesses.
When local leaders gather next month for the summit, they must determine ways to make the county more economically competitive while ensuring government can afford the services residents expect, Bailey said.
“We’re bringing them all in one room,” he said, “and we’re going to hold a productive meeting, leaving our egos at the door.”
