Henrico establishes $60M trust fund to address affordable housing ‘crisis’

In a unique effort to spur the immediate construction of more affordable housing options, Henrico County is establishing a $60-million housing trust fund using unbudgeted economic development revenue from data centers in the county.

County officials made the announcement Thursday morning during a press conference at the county’s western government center.

The trust fund will provide grants to for-profit and nonprofit housing developers who agree to build affordable units to program specifications. As part of the initiative, homeowners will purchase only a dwelling, not the land on which it sits, thereby reducing their mortgage costs. The trust will own the land in perpetuity. The program will be administered primarily by the nonprofit Partnership for Housing Affordability, and money will be available beginning when the county’s new fiscal year begins July 1, Henrico Board of Supervisors Chairman Tyrone Nelson said.

Funds will be available to developers who pledge to meet the specific terms of the program, and in return, the county will waive water and sewer connection fees and building permit fees for those new homes, creating cost reductions to home-buyers that Nelson said could approach 30%. New developments that include affordable lots also will go through an expedited review process, he said.

“We are delivering something transformational,” Nelson said. “The trust will help buy lots in communities throughout Henrico for the purpose of creating homes that will be affordable today, tomorrow and forever.”

PHA officials have not yet determined the specific criteria or parameters for the program, but PHA Executive Director Jovan Burton said they will be doing so soon. The program will apply only to for-sale properties – not to multi-family or rental units, Nelson said, though he added that Henrico likely would provide targeted assistance in those areas before long, too.

The scale of the new fund is significant: the housing trust fund for the entire state of Virginia is only $75 million, Burton said.

“Having a stable, healthy and affordable place to call home is a priority, it’s a foundation for so many things – educational outcomes for students, economic development and prosperity for localities, and wealth accumulation for many generations to come,” he said. “And 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 home-ownership.”

Earlier this year, the PHA adopted a regional housing policy agenda to outline housing priorities for the region’s public and private sectors. Among its goals: to foster an increase in local investments in housing, to strategically deploy land for affordability and to adopt incentives for development.

“Today’s historic announcement by Henrico County does all three of those in a significant manner,” Burton said.

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Henrico officials recognized the scale of the housing issue and wanted to act in a significant way, according to Henrico County Manager John Vithoulkas. Last year, fewer than a third of Henrico’s households could afford the cost of a median home in Henrico ($355,000), Vithoulkas said. During the past four years, the income needed to afford a home in Virginia has increased by 76%, he said.

“Make no mistake, we’re facing a crisis for our community,” Vithoulkas said of the housing crunch and its impact on the county. “We recognize that housing affordability requires a whole community response. And we need everyone – everyone – the government, and the private and nonprofits sectors working together as partners to create a substantial, lasting impact.”

The move is the latest and most significant step the county has taken in an attempt to address the demand for affordable housing. It already provides real estate tax relief through its REAP and RECAP programs for qualifying seniors and disabled citizens and works with organizations like Habitat for Humanity, project:HOMES and the Maggie Walker Land Trust to create affordable housing options for others.

Early last year, as part of the rezoning approval for a 253-acre redevelopment to be known as Arcadia in Varina, developer East West Communities committed to build at least 20 affordable housing units within the development – a first in the county as part of a rezoning case.

And late last year, the county launched its Employee Home Purchase Assistance Program, which offers up to $25,000 per qualifying employee toward downpayment costs on their first home purchase.

But those initiatives alone were not enough to address the growing housing crisis, Vithoulkas implied.

“This is about ownership,” he said of the new trust fund. “It ups the ante in a fiscally responsible way that will make a difference for many of our residents. The American dream of home-ownership is falling out of reach for many. This is unacceptable, unsustainable and quite frankly a threat to our quality of life, our local economy, our kids, seniors, all of our residents.”

Dedicating cash from one singular revenue source to create the trust fund, county officials and Burton said, may make Henrico unique nationally in such an approach. Burton’s team at PHA reviewed the 750 or so housing trust funds that exist nationally (only 72 of which are operated by counties) and could not find any using data center revenue as a sole source.

“This is unique not just here in the state, not just in regions across the country, but in the entire United States,” Burton said.

The announcement comes two days after the county’s board of supervisors approved what likely will become the largest data center complex in the county, a controversial 622-acre development to be known as White Oak Technology Park 2 in Sandston. Henrico currently has 16 data centers – half of which are located in the adjacent White Oak Technology Park in Sandston. The new development eventually could house more than a dozen more, according to plans submitted several months ago by developer Hourigan, though some of the development may become for office space or light-industrial uses.

The money being used to create the fund initially is economic development revenue that had not been included in the county’s budget, Vithoulkas said.

“This is not debt, this is cash,” he said. “This is a market-based approach.”

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