DINT 108 - Va County Taps Data Centers for $60M Housing Trust Fund
Henrico County, Va. dedicates its data center revenue to affordable residential housing of its citizens. But, renters appear to be without options in this relief program.
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Data Centers to Fund Residential Renaissance in One Virginia County
Henrico County commissioners look to the data center industry to address their largest problem, affordable housing
All data center revenue for the county will go into an affordable housing trust fund, say county government leaders.
The fund starts with a $60 million seed fueled by recent data center rezoning and development in the county.
The trust fund only bankrolls residential home building, not rental properties.
Virginia has no state-wide accessory dwelling unit law promoting rentals of tiny houses or guest houses on residential properties
Counties in Virginia developed a long history of justifying their obeisance to the not-so-slow creep of data center development in the state.
My favorite was Compass Data Centers’ promise to revamp a school once dedicated to educating the children of the formerly enslaved in Manassas County, home to countless unmarked graves and remains of the enslaved, native Americans, and Civil War soldiers.
Check out our coverage of this issue here:
Now, though, it seems Henrico County, Va., is positing a novel justification for rezoning land to expand the footprint of data centers in the region: affordable housing.
Yesterday, Virginia’s Henrico County Board of Commissioners announced a trust that would fund the purchase of residential lots, substantially lowering the cost of home ownership for county residents.
The source of funding for this venture? Revenue from data centers. The initial seed for the trust fund will be $60 million and it will be available starting July 1 of this year.
Like many places, it’s getting tougher to afford buying a home
Across the U.S. housing costs continue to skyrocket, not the least of all in Virginia where:
rents have increased 25% since 2017 according to research by the Pew Charitable Trust, and
one in every four renters spend more than 50% their income on rent.
Renters left out in the cold
Data centers continue to paper the state, with northern Virginia touting 843 acres of data center campuses alone. Will the land for Henrico County’s program expand housing fast enough to make a dent in the economy for all residents?
After all, the program makes residential housing affordable for homeowners. Those unable to buy a home still face the supply shortage-induced rent eating up half their income.
Virginia localities that added less than 1% to their housing stock from 2017 to 2022 have mostly seen rents rise faster than have those in the rest of the state. (Pew Charitable Trust)
Restrictive zoning keeps barriers to home ownership alive
The Pew study highlights a key issue in Virginia’s housing issue in connection to data centers, restrictive zoning. While data center developers get approval for project expansion seemingly at will, zoning for condos and apartment buildings, and townhouses face restrictions.
Virginia currently has no state-wide legislation permitting accessory dwelling units (ADUs), which allow homeowners to rent out a detached building on their plot of residential land. (Think tiny homes and guest houses.) States facing increased homelessness such as California, New York, Florida, and Oregon, have embraced ADUs as a way to augment rental inventory.
Virginia’s senate passed ADU-friendly bill SB 304 to the the state’s representative body but it’s been pushed into the 2025 session. This may be thanks in part to the Virginia Association of Counties’ opposition to the proposed legislation. According to VaCo, the state-wide law would remove county sovereignty over the ADU issue, forcing some counties into a cookie-cutter format that may change their communities in unwanted ways.
Anti-ADU efforts threaten data center-funded affordable housing program
While Henrico County’s trust fund appears to be a bright spot in a dismal housing climate, without the passage of SB 304 to open up renter access to expanded residential housing inventory, the fund may not have the desired effect.
Framers of the fund tout expedited permitting of water, sewer, and overall building of residential housing. Could these funds be used by real estate investors and those looking to build and sell at inflated prices? There’s no word on any efforts to quell such tactics.
We’ll continue to review this developing issue. With Virginia being the world-wide center of data center growth, what happens in this state could affect other data center-friendly locations in the U.S. such as Georgia, Iowa, and Ohio.
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