Henrico launching $60M housing trust fund with revenue from data centers

Henrico County Manager John Vithoulkas at Thursday’s press conference alongside, from left: Board Chairman Tyrone Nelson, Jovan Burton of Partnership for Housing Affordability, and supervisors Dan Schmitt, Jody Rogish and Misty Whitehead. (Jonathan Spiers photos)

Less than a month after receiving a directive from county supervisors for “something transformational” to address housing affordability, Henrico officials have come up with a plan that leans heavily on a growing source of revenue: data center dollars.

Henrico is contributing $60 million in cash to establish its first housing trust fund, which will be fueled by economic development revenue generated specifically from data centers.

Officials announced the plan in a news conference Thursday, three weeks after supervisors directed staff to do something more than the county already has to address the growing housing affordability gap across the region.

The announcement also came days after the board approved zoning for a 622-acre development site in Varina that’s planned to include multiple data centers. Deliberations about that project informed the plan to dedicate tax revenue from new economic development and data centers specifically, County Manager John Vithoulkas said.

Henrico currently is home to 16 data centers that generate over $13 million in annual tax revenue. Revenue for the trust fund would come from real estate taxes from data centers, which the county has incentivized in recent years with reductions to its data center tax rate.

At the same time, state legislators have voiced concerns about the uptick in data center development across Virginia and directed the Joint Legislative Audit and Review Commission to study the issue. A report from JLARC is expected later this year.

Board Chairman Tyrone Nelson, who represents the Varina District, called data centers one of Henrico’s “major growth industries” in announcing the plan, which he and other speakers described as the first of its kind for addressing housing affordability and homeownership.

Tyrone Nelson at Thursday’s announcement.

“We’re doing something different,” Nelson said. “We may be the only locality in the commonwealth, maybe in the country, dedicating a single revenue source to address a crisis like this in our community.

“This trust will expand and sustain our efforts to provide opportunities for affordable homeownership for working individuals and families. We’re talking about the workers who are essential to making Henrico be such a great and vibrant community to be a part of.”

As of March, 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 remained at least double the starting salaries for many county employees.

According to Virginia Realtors data, the median home price statewide rose from $287,000 in 2020 to over $384,000 in 2024, while mortgage rates in that time effectively doubled, from about 3.5% in 2020 to 6.8% this year. Monthly payments followed suit, and the income needed to afford a home in Virginia increased by 76%, from $67,400 four years ago to $118,300 today.

Higher demand over supply has also increased rents, making it harder for renters to save toward a down payment and build wealth through homeownership. While the plan announced Thursday focuses on homeownership specifically, Nelson said efforts to address rents and affordability in multifamily housing will be coming.

“We’ll enter into that at some point. Today, we start with homeownership,” Nelson said.

Working with Partnership for Housing Affordability, a regional nonprofit, the county will use the trust to provide grants to nonprofits such as the Maggie Walker Community Land Trust (MWCLT) and for-profit developers to offset the costs of residential lots dedicated for income-based housing.

Such an approach was taken with the county’s approval last year of East West Communities’ Arcadia project in Varina, with agreements that at least 20 of the homes in the nearly 800-home project would be built for lower-income households. With those lots being put in the regional land trust, the cost of homeownership is reduced while the land is kept “permanently affordable.”

Henrico’s plan would further keep costs down by waiving water and sewer connection fees and building permit fees, and providing expedited review for any project that includes lots for homes for lower-income residents. By doing so, Nelson said, the county expects that the cost of buying a home in Henrico would be reduced by as much as 30%.

The board intends to make its first appropriation for the trust fund at the start of the fiscal year that begins July 1.

Henrico’s $60 million investment, which doesn’t involve debt or funds from the county’s annual budget, compares to the $75 million that makes up the Virginia Housing Trust Fund for the whole state, said Jovan Burton, executive director of the Partnership for Housing Affordability. Where 80% of the state fund is made up of loans and 20% is grants, Burton noted, Henrico’s is 100% cash.

Jovan Burton of the Partnership for Housing Affordability, which will manage the trust fund with the county.

Of about 750 housing funds in the country, Burton said, “This one is the only one that we could find that is using data center revenue as the sole dedicated source. This is unique not just here in the state but the entire United States.

“Having a stable, healthy and affordable place to call home is a priority. It’s a foundation for so many things,” Burton said, listing as examples student achievement and generational wealth accumulation. “Thanks to Henrico County and their vision and their leadership, we will be able to create many opportunities for families who haven’t had that and unlock the power of homeownership.”

Laura Lafayette, CEO of the Richmond Association of Realtors and immediate past chair of MWCLT, called Henrico’s plan “unprecedented” after the announcement.

“The fact that it’s grant money and not loan money is a game-changer,” she said. “We know that if we’re going to do anything that is to scale in terms of addressing the affordable housing challenge, we need to be in partnership with private developers, and this lays out the incentives and the cash resources for the private developers to join forces with nonprofits and scale the response.”

Noting other efforts to address housing affordability beyond Henrico’s, Lafayette said of the plan, “I would love to see this be replicated regionally.”

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