Town planning board denies AI/data center rezoning

With a vote and a cheer, the Town of Mountain City's Planning Commission denied a zoning application request to eventually build a modular AI factory/data center at an Oct. 22 meeting. The massive public outcry matched the anti-Bitcoin efforts last year, despite only knowing about the proposed project less than three days prior, after the meeting agenda was released. Property owner James Phipps and BluSky AI requested to change the zoning at 1455 S. Shady St. from M-1 to M-2 to build a modular AI factory/data center. Renderings from the rezoning application submitted Sept. 12 showed a building that would have taken up most of the eight-acre property. Application materials, not released until after the Oct. 22 meeting, show the plans were in place since August for the AI factory/data center. The planning commission faced a standing-room-only crowd inside the town hall that extended out the doors and onto the sidewalk. Despite not being able to hear the meeting, around 40 stood outside on the sidewalk, all in opposition to the project. The meeting started with the 11 public commenters speaking in opposition to the project. Attorney Bill Hart of Butler spoke, pointing out how this application fits the definition of illegal 'spot zoning' among other legal problems with the project. After all the public comments and a presentation by BluSky AI Chief Operating Officer Dan Gay, none of the planning commission members present — Mayor Jerry Jordan, Vice Mayor Celeste Dunn, Karen Cunningham and Richard Walsh — were eager to make the motion to approve the application when asked. After a long pause, Vice Mayor Dunn made a motion to deny the application, seconded by Mayor Jordan. A vote was taken, and the denial was passed unanimously with a big cheer from the crowd; then the meeting adjourned. Alderman candidate Amelia Lopez Saltarelli was there and said, "Starting with the Bitcoin fight, we had many residents voicing their concerns and tonight the community came out in force. I was so proud to see that their voices were heard." The M-2 zoning ordinance allows applications from cryptocurrency and data-mining centers to apply for re-zoning in designated areas in Mountain City. While the community made it clear they don't want data center operations in the town limits, M-2 zoning remains, and other companies can apply to rezone an area of the town again in the future. Currently, Johnson County does not have any protective zoning or limitations on data center type projects, as pointed out by Daniel Campbell, a community planner with the First Tennessee Development District, who provides local planning and municipal advisory services to the Town of Mountain City. Campbell did not recommend the project for the town, but does support building something like it in the county. "My recommendation would be to build in Johnson County outside of the limits of the municipality because Johnson County does not having zoning," Campbell said. "So to restate at this time, our staff will not recommend approval of this project." The crowd that expressed support of Campbell's first statement about not building a data center in town was dismayed to hear his recommendation for such a development in Johnson County. Last year, the Johnson County Commissioners failed to pass the County Powers Act, which could have been a vehicle to introduce anti-Bitcoin/data center ordinances. Mayor Jerry Jordan told the crowd he wants more new businesses in Mountain City. The meeting sparked conversations in the community about what kind of new businesses people need and want in the town and county that benefit local people. While the town planning commission denied the application for M-1 to M-2 rezoning, James Phipps could still take his request to the town council. The Board of Aldermen doesn't usually override the planning commission's recommendations. Neither James Phipps nor the listed representative on the rezoning application for BluSky AI could be reached for comment. The Board of Aldermen meets the first Tuesday of each month at 6:30 p.m. at City Hall. The next meeting is Nov. 3 at 6:30 p.m. Agendas and minutes for the meetings may be found at mountaincitytn.org/government/board_of_aldermen/agendasminutes.php Thomas Sherrill contributed reporting to this story.