xAI is offering a controversial exit from Southaven’s noise fight. Real estate agents have gone door to door in Colonial Hills, Mississippi, offering to buy homes for xAI or its subsidiary MZX, provided owners agree not to join a lawsuit over noise from a nearby power plant and data center.
The plan could absorb almost the entire neighborhood on Southaven’s western flank. One realtor told a resident that the target is 418 homes, while a recording described 18 homeowners as already agreeing to sell.
The company has not answered questions about those figures or its plans for Colonial Hills. The homes, the realtor and Southaven’s mayor say the properties would house xAI staff, as the company expands its AI operations across the Memphis, Tennessee, and Southaven, Mississippi, area.
A buyout tied to the lawsuit
The offer does not simply involve real estate. MZX’s letter to households says the company denies all allegations but requires property for its business purposes, and that it will purchase Southaven real estate in exchange for a release of claims connected to the lawsuit.
Owners who accept must sign a real estate contract and execute a separate release agreement at closing. That agreement would cover possible claims related to the Southaven Plant, including claims connected to the Haley action, and would prevent owners from recovering damages or other relief through the lawsuit.
It would also prevent them from bringing claims on their own behalf. A tidy legal solution, if your definition of tidy includes buying the witnesses out of the room.
Three residents filed the lawsuit, accusing xAI’s massive data center and gas-fired turbines of producing “near-constant noise” and vibrations. xAI denies all claims in the noise lawsuit and has said it intends to be a good neighbor.
People who rent in the area say they are already being forced out after landlords agree to sell. Renters have received 60 days’ notice, turning the proposed buyout into a wider housing disruption before the neighborhood has even been purchased.
AI expansion meets local resistance
Elizabeth Rose, whose home sits two miles from the xAI site, described the sound as “an airplane engine” that is continuous and incredibly loud. She said she has been woken at 2am and 3am, and sometimes has to leave because the noise makes her angry.
Rose said the power plant began its low-level growl in August last year. “All of a sudden there was a plant there,” she said, adding that she now feels xAI is trying to expand the buyout across the neighborhood.
“It will become Elon Musk’s little playground, basically. Elonville,” Rose said.
Since July 2024, xAI has constructed three vast data centers in the Memphis and Southaven conurbation: Colossus I, Colossus II and Macrohardrr. The region sprawls across Tennessee’s border with Mississippi, and the company has built two sprawling Colossus facilities in Memphis, brought Macrohardrr and its accompanying power plant to Southaven, and has two other sites under construction in Memphis and the surrounding region.
The Southaven plant uses methane gas turbines, including 69 temporary turbines at a former Duke Energy site. The setup has prompted legal action from the NAACP and other organizations over alleged pollution, with the NAACP accusing the company of operating dozens of unpermitted methane gas turbines.
A federal judge rejected the Trump administration’s attempt to dismiss that lawsuit on Monday, after a federal judge blocked the effort earlier this month. SpaceXAI has also reported up to $6.1 million in possible civil penalties for environmental law violations and more than $220 million in claims for unpaid work at the Memphis and Southaven sites.
Musk is spending up to four nights a week in an Airstream trailer in the Memphis area while personally overseeing the build-out. The goal is to develop the Grok AI chatbot, whose growth Musk described during a SpaceX earnings call this month as “the fastest growth I’ve ever seen in my life.” He added, “I’ve never seen anything grow this fast.”
That expansion comes with political backing. Mississippi’s governor touted a plan to invest more than $20 billion in the area earlier this year, while Donald Trump said opponents of such development would become “backwards and poor.” Market-value offers in a neighborhood where the average house costs about $180,000 are a comparatively small expense beside Musk’s vision of the world’s largest AI supercomputer cluster.
Memphis residents are not treating that vision as a blank check. Last week, Memphis City Council rejected a one-year moratorium on new AI data center development, then passed a substitute ordinance that pauses construction for 135 days.
The rejected moratorium would have given the city time to create permanent zoning and development rules, disclosure requirements for applicants, and studies of air quality, electrical infrastructure, water protection and noise. It would not have stopped existing data center operations.
The 135-day ordinance is intended to complement Memphis Mayor Paul Young’s executive order establishing a 90-day study of data center impacts. Many attendees appeared shocked and confused during Tuesday’s meeting, and some remained afterward to sing, chant and voice their frustration.
The meeting followed protests that ended the Oct. 6 meeting early. KeShaun Pearson, executive director of the Memphis Community Against Pollution, said residents believe local officials and data center operators have failed to provide transparency.
“It’s as if the people who have been elected to protect us and to stand up to corporations and be that representative have just completely abdicated that responsibility, and left us to fend for ourselves,” Pearson said.
Pearson and his brother, Tennessee Rep. Justin Pearson, were barred from city council meetings after the protests, but a federal judge lifted the ban before Tuesday’s vote. The two have sued the city council over that ban.
A Pew Research Center survey found that over half of Americans are uncomfortable with a new data center operating in their area. Southaven’s proposed buyouts show why: the argument over AI infrastructure is no longer about distant server racks. It is about whether a neighborhood remains a neighborhood—or becomes a corporate buffer zone.
Based on
- ‘Elonville’: US residents say Musk’s xAI offered to buy homes if they don’t sue over datacenter noise — theguardian.com
- xAI is buying out homeowners who promise not to sue over data center noise | The Verge — theverge.com
- Memphis fails to pass 1-year data center moratorium, instead opting for a shorter-term ban – CBS News — cbsnews.com
- How tech became the villain of the US midterms | US midterm elections 2026 | The Guardian — theguardian.com
