‘The foundation is pretty solid’: Henrico’s housing trust fund wraps first year with homes sold, more on the way

The first batch of townhomes at The Crossings at Mulberry, a 160-home development by StyleCraft Homes that’s to include 25 housing trust fund homes. (File photo courtesy StyleCraft)

One year in, Henrico’s multimillion-dollar investment to help improve housing affordability in the county is beginning to pay off.

Henrico’s Affordable Housing Trust Fund program, launched last July with a $60 million cash contribution from the county, has finished out its initial year with its first homes sold and dozens more in the pipeline or under construction.

The program has allocated over $8 million of those funds – through $90,000-per-unit grants to developers – to designate 93 homes in five communities across the county as affordable to first-time homebuyers making 80-120% of the area median income, which in Henrico is just under $80,000 a year for a one-person household and over $113,000 for a four-person household.

Price points for homes provided through the program have ranged from $185,000 for a two-bedroom condo in the Sandston area to $350,000 for a four-bedroom townhome in Tuckahoe.

The five communities with homes included in the program are located across the county. (Image courtesy Partnership for Housing Affordability)

Henrico’s goal is to produce 750 new homes that are affordable to first-time buyers at as low as 60% AMI over the program’s first five years, using the $60 million in unbudgeted tax revenues that were generated specifically from data centers in the county. Participating developers benefit from incentives such as expedited plan reviews and waived permit and utility connection fees, in addition to the grants.

With $8.3 million in funding allocated so far and nearly 100 homes designated in its first 12 months, the program is on its way toward meeting that initial five-year goal, said Jovan Burton, executive director of Partnership for Housing Affordability, the local nonprofit Henrico selected to administer and promote the program.

Jovan Burton

“It has exceeded all of our expectations. I couldn’t be more pleased with where things stand after year one, knowing that a year ago this program was an idea,” Burton said. “I think we’ll only go up from here and continue to ascend with more closings, more units awarded and more builders who are participating, both from a for-profit and nonprofit standpoint.”

Participants so far have all been for-profit developers that are using the program for multifamily housing units in particular.

First to sign up were Mungo Homes, which designated seven townhomes in its 24-unit Discovery Ridge development at Gayton Road and Lauderdale Drive in western Henrico, and HHHunt Homes, which earmarked 25 townhomes in its 123-unit Parkside Townes near Sandston through a sales arrangement with area housing nonprofit Maggie Walker Community Land Trust.

Also participating are StyleCraft Homes, which is likewise lowering the prices of 25 townhomes in its 165-unit Crossings at Mulberry at Chamberlayne and Azalea avenues; Center Creek Homes, which has earmarked all of the 20 units it’s planning for its Pemberton Row townhomes on Quioccasin Road; and Ryan Homes, which is designating 16 condominiums in the first phase of its 484-unit Landmark Condos near Sandston.

Varina Supervisor Tyrone Nelson, center, shakes hands with developer Doug Godsey after cutting the ribbon on the first phase of Landmark, a massive development near Sandston that’s to include 16 condos priced through the trust fund. (BizSense file photo)

Burton said the response from the for-profit sector has shown not only the need for the program but also a desire from area builders to break into a bigger buyer pool.

“Every single development thus far that has been awarded through this program has been from a for-profit builder, and I think that just speaks volumes to how this is truly a program designed to respond in an effective way to a market gap right now for first-time homebuyers in Henrico County,” Burton said.

“It’s been as perfect of a marriage as you can get for a complicated issue like this between the public sector, in this case the local government investing boldly, and then the private market responding fairly effectively.”

The market gap for first-time buyers has been widening in recent years as home prices in the region have continued to increase amid a competitive housing market and higher interest rates for mortgages.

When the program launched last year, the median sale price for a single-family detached home in Henrico was $390,000, while the annual income needed to buy a home in the county with a 10% down payment was nearly $115,000 – at least double the starting salaries for many Henrico employees.

According to the partnership, the percentage of homes sold in Henrico below $400,000 dropped from 78% in 2020 to 50% last year, while home sales below $300,000 dropped from 56% to 21%. Burton said the program is allowing both builders and buyers to buck those trends.

“The builders are the ones that are painstakingly working to get these deals done and trying to find who the appropriate buyer pool will be. It’s been tougher and tougher to do that over the years, so this has been one way to alleviate some pressure over those price points,” he said.

Developers can use the program in two ways. In HHHunt’s case, it’s selling the 25 home lots at Parkside Townes to Maggie Walker Community Land Trust, which will sell the homes to qualified buyers while retaining ownership of the land to ensure that the lots remain affordable in perpetuity, in keeping with the nonprofit’s land trust model.

The townhomes at Mungo Homes’ Discovery Ridge community. (Photo courtesy Henrico County)

With the other approach, such as at Discovery Ridge, buyers of Mungo Homes’ seven lower-priced units are required to keep the homes as their primary residence for at least 10 years, after which they can sell them with no price restrictions and retain full equity. The three-bedroom, 2,000-square-foot homes at Discovery Ridge are priced at $318,000 through the program, compared to a market price of $460,000 for the other units.

Tim Parent, Mungo Homes’ Richmond market president and chairman of Henrico’s Housing Advisory Committee, said the program has played out smoothly at Discovery Ridge, where the first of the housing trust fund’s homes were sold.

“The process that Henrico and PHA have set up to make this accessible and to make it easy for builders and developers is so smooth,” Parent said. “There’s plenty of forms to fill out, but everyone involved makes the process so easy and allows these new buyers to really enjoy the benefits of this, and then also build long-term equity.”

While the program is creating lower-priced homes that are more within reach for first-time homebuyers, Parent said it also allows builders to reach certain buyers – including teachers, first-responders and Henrico employees – that they otherwise couldn’t due to construction costs and other market forces.

Tim Parent

“We love this because, one, we get to help people that would never have been able to look at a product like this in this area…and for a builder or developer, it allows us to reach a demographic that we wouldn’t be able to meet, someone with an income level that couldn’t afford it otherwise,” he said.

“Now we can open up our business to a larger clientele and larger demographic where it’s okay if you don’t make the money that the normal buyer would need to have to be able to afford it. We can use the program and get them in the program to where they can still do it and still be in this amazing area, and the houses that they’re purchasing are no different than the other ones.”

As of this month, six homes have been sold through the program and a seventh is under contract and scheduled for closing. Buyer households have averaged 3.5 people and about $110,000 in total income, falling into the 110% AMI category for Henrico.

A third of buyers so far have been county employees, and most were previously renters in the county. Shelby Carney, special projects director for PHA, noted that county renters moving to homeownership are not only staying in Henrico but also freeing up rental units in the process.

Of the 93 homes in the program’s pipeline so far, the bulk of those are slated to come online next year and listed for sale. Carney said PHA has worked with the Richmond Association of Realtors to migrate the program’s website with the Central Virginia Regional Multiple Listing Service, allowing agents access to the program’s AMI calculator and to target listings that match buyers’ income levels.

Listings for homes provided through the trust fund include language conveying that the property is a participant in the program and priced below the market rate for first-time, income-eligible buyers.

Shelby Carney

“It clearly communicates to real estate agents that are representing buyers about the income restrictions, directs them to the program website to ensure that they meet the other qualifications for first-time homebuyer status…and then it just gets more coverage and eyes on those properties for agents that maybe aren’t aware of the program,” Carney said.

While tax revenue from data centers is fueling the program, Henrico’s position toward data centers has changed since the program’s launch, in the form of increased restrictions aimed at reining in their growth. Burton said those changes have no effect on the housing trust fund, which was launched with available funds from data centers already in operation in the county.

“One of the things the county was clear about from the beginning was the $60 million was a life-to-date appropriation, so that doesn’t change,” Burton said. “The changes that the county has made pertaining to the data center industry (are) for future data centers that are coming into the county, so it’s separate from the $60 million that Henrico already had from existing data center facilities in the county.”

With its first year under its belt and the first results of the program coming online, Burton said he expects the housing trust fund to continue to grow as more developers buy in and commit more homes. Maggie Walker Community Land Trust is currently finalizing a proposal for single-family detached homes in Varina through the program, Carney added.

“The builders, they get it. The economic impact and the return for the county is there, and then obviously the real win is for families who get a chance to own a home in the community that they want to and where they work,” Burton said. “Now that we have a year under our belt, it’s become a much easier sell. It’s not even a sell anymore; it’s really a conversation. It’s people reaching out to us.

“I think the more that this becomes normalized, the better a program like this can be and the more impact it can have,” he said. “I think the foundation is pretty solid, and it’s just a matter of building from there.”

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