Memphis Mayor Paul Young presented a proposal to use $3.28 million in FY2026 revenue from a data center property tax for community investments. The funding stems from xAI’s Colossus I data center in Southwest Memphis, which is the first facility included in the Community Benefit Ordinance investment plan.

The Community Benefit Ordinance, passed by the Memphis City Council in 2025, directs 25% of data center tax revenue to communities within a five-mile radius of data centers. This tax is projected to generate $100 million for the city. The ordinance requires funds to be spent on public buildings, facilities, infrastructure, equipment, and economic development projects within the designated zone.

The proposal covers the community near Colossus I on Paul R. Lowery Road. A nearly yearlong study was previously conducted for the 38109 zip code, including 250 participants, 75% of whom were from the affected communities. Study participants identified home repairs and weatherization projects as the most pressing need, followed by public safety and crime prevention, with road repairs and infrastructure investments ranked third.

The proposal allocates $1.4 million for home repairs for homeowners in the zone. Many of the 11,000 homes within the boundary were built before 1960, and the median family income in the zone is approximately $37,500. Eligible applicants can receive loans of up to $30,000 for home repairs.

“It is structured as a zero-interest loan fully forgiven after five years of continued residence,” Deputy Chief of Staff Renee Sekander said. She added, “So they are not taking on new debt, they are actually building equity by staying in their homes.”

The proposal allocates $400,000 for community cleanup, including litter removal, beautification, public space maintenance, and illegal dumping mitigation. The cleanup plan requires 85% of the funds 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,” Sekander said.

The proposal allocates $400,000 in grants for public safety initiatives, including crime prevention, youth mentoring, after-school programs, workforce development, mental health services, and food assistance. These grants will be administered through the existing Safer Communities program and 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,” she said.

Additional allocations include $330,000 to board up or demolish vacant properties and $334,000 for illegal dumping cleanup. The proposal allocates $100,000 for environmental education, $75,000 for Memphis City Beautiful cleanup, $100,000 for environmental testing and reporting, and $20,000 for cooling device distribution. The ordinance requires a minimum of 1% of funds to go toward environmental education.

“You all know there is an ordinance that requires a minimum of 1% go towards environmental education,” she said. “We are recommending roughly three times that based on what we are hearing from the community.”

Young explained the timing of the presentation. “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,” Young said.

Revenues for FY2027 begin arriving in October. “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,” he said.

This investment follows a 12-month public review process that included 14 community town halls and over 200 written public comments before the City Council approved the ordinance in May 2025. The proposal aligns with prior city efforts, including 32 public infrastructure projects funded through the Community Development Block Grant program in the same zip code between 2020 and 2024. The Safer Communities program, launched as a pilot in 2023 with a $250,000 budget, provides the administrative framework for the public safety grants.