May 20, 2024 - News

Henrico's $60M plan to transform affordable housing

Illustration of a line of suburban houses creating a restart symbol shape

Illustration: Annelise Capossela/Axios

Henrico is creating a multimillion-dollar affordable housing trust fund aimed at making homeownership more accessible for the county's workforce.

Why it matters: The trust will be funded by real estate taxes from the county's data centers. It comes as some localities are attempting to reign the centers in because of the strain they put on electrical grids.

The big picture: Henrico said in an announcement last week it will launch the housing trust fund with $60 million in unbudgeted revenue from its existing data centers, BizSense reports.

  • For comparison, the statewide Virginia Housing Trust Fund has a $75 million annual budget.
  • Henrico now has 16 data centers that generate more $13 million in annual tax revenue.
  • Last week, the county approved zoning for a 622-acre site in Varina that will likely host multiple additional data centers.

Zoom in: The county announced in April it intended to do "something transformational" to address the region's growing housing affordability crisis.

  • The household income needed to afford a home in Virginia has increased by 76% since 2020 to $118,300, Henrico officials said. That's out of line with the incomes of many county workers, like teachers and police officers.
  • The median price of a single-family home in Henrico hit $420,000 last month, a 20% increase over last April, per data from the Richmond Association of Realtors.

What they're saying: "The American dream of homeownership is falling out of reach for many," county manager John Vithoulkas said in a statement.

  • "This is unacceptable, unsustainable and — quite frankly — a threat to our quality of life."

How it works: The trust will offer grants to housing developers who agree to build affordable units beginning July 1.

  • The county will also waive building permit and water and sewer connection fees to reduce the cost to developers who will pass those savings onto homebuyers.
  • Plus, qualifying buyers will buy the structure, not the land underneath it, which the trust will own.
  • All of it should put homes at costs that could be 30% less than current market prices, per the county.
  • The Partnership for Housing Affordability will oversee the homebuying portion of the program and is developing applicant criteria now, Henrico Citizen reports.

Worth noting: Virginia, and Northern Virginia specifically, is home to more than 35% of the world's data centers and has been dubbed the data center capital of the world.

  • The centers, which essentially are buildings filled with computer servers, can be cash-cows for local governments as they need few local services but can contribute million in tax revenue.

Yes, but: They require so much electricity — as much as 50 times more than a normal office building — that some energy providers are turning to fossil-fuel burning sources to keep up, per the Washington Post.

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