xAI Is Buying a Mississippi Neighborhood, One Lawsuit Waiver at a Time

Realtors working for Elon Musk's xAI have told Southaven, Mississippi residents the company aims to buy 418 homes in the Colonial Hills neighborhood, according to a recording of a conversation heard by the Guardian. Eighteen homeowners have already agreed to sell. The offers carry one contractual condition: the sellers must agree not to join a lawsuit over noise from the gas turbines powering xAI's datacenters.

The buyout could swallow almost the entire neighborhood on Southaven's western flank. MZX, the xAI subsidiary operating the site, stated in a letter handed to Colonial Hills residents that it "requires property for its business purposes" and is prepared to purchase nearby houses on those terms. xAI did not respond to questions about the numbers or its plans for the neighborhood. The company denies all claims in the noise lawsuit and has previously said it intends to be a good neighbor.

The homes, according to the realtor and the local mayor, will house xAI staff. Since July 2024, xAI has built three vast datacenters — Colossus I, Colossus II and Macrohardrr — across the Memphis and Southaven conurbation straddling the Tennessee-Mississippi border. xAI was folded into the SpaceX entity in February.

Why are residents suing?

The power plant at issue is a former Duke Energy site housing 69 temporary gas turbines, which began operating without permits in August last year. In June, three locals filed a lawsuit complaining of "near-constant noise, vibrations and other nuisance-level harms."

Jason Haley, one of the plaintiffs, has owned his home half a mile from the turbines for 20 years. "There's a high-pitched hum and then another sound like an airplane over your house," he said. "It's been so torturous I can't sleep, I just leave the house or turn on some music until I fall asleep completely exhausted. It drives you insane. You also lose hope because you're being ignored or dismissed. There's no escape."

Elizabeth Rose, a piano teacher who lives about two miles from the site, described the sound in similar terms. "It sounds like an airplane engine but it's continuous, it's incredibly loud," she said. "I've been woken up at 2am by it, I've been woken up at 3am by it. I sometimes have to just get away from it because it makes me so angry."

Rose said she now believes the buyout will expand to the whole neighborhood. "It will become Elon Musk's little playground, basically. Elonville," she said.

How big is the money involved?

The average house price in the area is about $180,000, making the entire buyout a comparatively small outlay relative to Musk's ambition of building the world's largest cluster of AI supercomputers. Musk, the world's richest person and a major Republican donor, has spent around half a billion dollars helping elect Republicans over the last two election cycles. He currently spends up to four nights a week in an Airstream trailer in the Memphis area overseeing the datacenter build-out that supports the Grok chatbot.

"We're seeing the fastest growth I've ever seen in my life for Grok bot," Musk said during a SpaceX earnings call this month. "I've never seen anything grow this fast."

President Donald Trump shares Musk's enthusiasm for datacenters and has said anyone who opposes such development will become "backwards and poor." Mississippi Governor Tate Reeves, a Republican, has argued that curbs on datacenters amount to "surrendering the future of technology to China." Haley said that framing — implying critics do not love America — helped drive him to file suit and post videos of himself monitoring noise levels.

"Our governor saying I don't love America because I don't like being tortured by noise? That is just asinine and ignorant," Haley said. "We've got to hold people accountable when they are harming other people, I don't care who you voted for, who you pray for or who your favorite team is."

What about the air pollution?

The stakes extend beyond noise. The US Environmental Protection Agency has determined that dozens of temporary, truck-sized gas turbines have been running at the xAI premises without permits required by federal law. The EPA has said enforcing those permit requirements is a matter for the state.

No on-site air pollution monitoring has been conducted, but the Southern Environmental Law Center estimated that toxic emissions from the turbines — which are typically highly polluting — have caused $44 million in annual health costs. In April, environmental groups and the NAACP sued in federal court to stop use of the turbines. The US Department of Justice unsuccessfully tried to block the lawsuit by arguing xAI technology has been used to wage war on Iran and is therefore required for national security reasons.

Gavin Foust, a paramedic who grew up in western Southaven, said his elderly neighbors agreed to sell after planning to spend the rest of their lives in their house. "They want to get out of Dodge now because they don't want to be bothered by these turbines," he said. He refuses the offer himself because of the no-sue requirement.

"My hearing was damaged when I was in the army but I can still hear this thing, it's like a jet engine," Foust said. "Why would you put it in a city? Why push people out? It's reckless and shameful."

Foust added that neighborhood residents suffer from conditions exacerbated by the turbines' output. "A lot of people in this neighborhood suffer from conditions exacerbated by all the nitrogen oxide, formaldehyde and other garbage put out by these turbines," he said. "For kids with asthma or elderly people with COPD [chronic obstructive pulmonary disease] it's a mess all round."

Is the buyout working?

Yes. Since 9 October, DeSoto county records show MZX has bought five neighborhood homes. Foust predicts more will follow.

In July, xAI agreed with state regulators to convert the power plant into a newer, permanent gas-fired facility by next summer, which should reduce the noise from the temporary turbines. xAI has also varied its power output and built sound-dampening walls, saying "we care deeply about being good neighbors." Opponents remain wary, citing the company's repeated unpermitted use of gas turbines and separate potential fines for storm water violations.

"I've had hopes all along that haven't come through," Haley said. "The same company said it wasn't polluting the air. I'm still hopeful but I'm not confident."

What does the city say?

Mayor Darren Musselwhite backs the development. He oversaw a land swap deal with xAI that produced a new police and firefighter training center for the city, and he credits the datacenters with new jobs and opportunity.

"This development will produce unprecedented tax revenue for DeSoto county taxpayers that will enhance the quality of life for all," Musselwhite said.

Of the property purchases, the mayor said: "The buyout is not intended to be a company city at this point. This has never been mentioned to me. The buyout has multiple purposes which are to provide homes for some employees and a goodwill gesture from a good corporate citizen for those who perceive the industrial development near them as a negative."

Musselwhite called dealing with the noise a "top priority" but said city monitors have not detected a breach of the local noise ordinance limit of 70 decibels. Critics point to evidence that persistent noise of 50 decibels or more — levels recorded near the plant — may be linked to adverse health impacts.

Haley acknowledged the opposition is not universal. Some locals welcome the influx of cash into one of the poorest states in the union, and local businesses have seen a surge in activity. For him, the fight has drawn the community together and made him question how AI is being "pushed down everyone's throat." He is now registered to vote.

Rose said her roommate would accept three or four times the value of their home. She would not. "I wouldn't take the offer if it was up to me, just to make things difficult for Elon," she said. "I hate AI, I never understood why it was invented. I refuse to use it because I know touching it will cause that plant to crank up."

With 18 sellers signed and the permanent plant due by next summer, the test for Southaven is whether a company town by another name takes shape — and whether the residents who stay can make the noise stop.