When Emma Swainston decided as a teenager to pursue a career in teaching, she came to grips with the likely reality that homeownership would be out of reach. “I feel like you have to get a leg up from somewhere else, whether through family members or a career that makes a lot more money than the teachers do,” she says.

But in September, Swainston, 26, closed on a new two-bedroom home 15 minutes away from the public high school where she teaches math in Henrico County, Virginia. She was able to do so thanks to a new affordable housing trust fund in the county that knocked down the price of the house to about $180,000; $92,000 below its market value. And the program’s funding came from a unique source: data center revenue. 

“I don’t love data centers. But if they’re going to exist and there’s money coming from them, I would much rather it go into helping programs like this,” she says. 

Virginia is the data center capital of the world. Many residents across the state are angry about rising electricity bills they may cause, the noise and pollution they emit, and the massive tax breaks their owners receive to build them. 

But in Henrico County, which sits just outside the state capital of Richmond, the impact looks different. Local officials have rebuffed proposals for new data centers while turning the tax revenue from existing ones into a $60 million affordable housing program. Over the past two years, the fund, which also works with developers to expedite the building process, has awarded money toward the construction of 383 affordable units. So far, 30 buyers, including Swainston, have closed on newly-built homes, averaging $80,000 in assistance apiece — enough to make homeownership a reality for many who were previously priced out.

Henrico county’s innovative approach to building homes comes as housing remains a key issue for Congressional lawmakers: on Thursday, the Senate passed a sweeping piece of housing legislation by a large bipartisan margin. Now awaiting its fate in the House, the 21st Century ROAD to Housing Act seeks to increase housing supply, thereby lowering costs for American buyers. 

Virginia's program is the first known example in the country to specifically use data center revenue for an affordable housing trust fund. If it succeeds, it could serve as a template for how to turn a highly-controversial industry into a community benefit. Lawmakers in Lansing, Michigan are considering a similar model. And one of the Henrico program’s champions is Virginia Senator Mark Warner, who hopes that the initiative can be replicated across the nation. 

“I thought it was very creative to take something that's controversial and say to the populace: ‘We're going to have these data centers, but you're going to be able to see something tangible come out of it,’ Warner tells TIME. “It’s an exciting model.” 

The trust fund’s origins

In 2024, as the AI arms race heated up, a developer came to Henrico requesting to rezone land adjacent to the White Oak Technology Park into a data center for the company QTS. The proposal drew concerns from community members over environmental impacts and hyperindustrialization. 

In response, Tyrone Nelson, a pastor and the supervisor of Varina District inside the county, led his colleagues in demanding the data center address the community’s concerns while also giving back. “The only way we were going to consider the rezoning was if portions of the revenue go toward seeding back into the community,” he says. 

And the number one issue facing Henrico County, the supervisors contended, was housing. A 2024 study found that only one-third of Americans can realistically afford to purchase a median-priced home. And the Partnership for Housing Affordability recently found that in Virginia, the median home price has increased by 46% from 2020 to 2025. 

So Henrico County decided that the tax revenue from the data center would kickstart a new affordable housing project, starting with $60 million—which is almost as much as the housing trust fund for the entire state of Virginia. (Most states have housing trust funds that give money to affordable housing projects.) John Vithoulkas, the Henrico County Manager, says the target homebuyer for this program was the “missing middle”: teachers, nurses, or factory workers who earn slightly less than the median income, but who aren’t serviced by traditional affordable housing programs.

That group includes teachers like Swainston. “The jobs that are very essential but don't get paid a lot—those people are kind of out of luck,” she says.  

Splitting the $60 million

The program is administered by the regional organization Partnership for Housing Affordability. A review committee composed of PHA and county staff reviews grant applications from third-party builders who seek to use the pot’s funds for affordable units within their larger developments. Roughly $32 million has been awarded to third-party developers thus far, according to Jovan Burton, PHA’s executive director. At the outset, in July 2024, the fund was projected to last five years. 

“We're not even two full years into it, and I think that's indicative of the significant interest as this being a successful carrot and incentive,” Burton tells TIME, adding that builders are keenly interested because they also receive building, permit, water, and sewer fee waivers, along with expedited plan reviews in some cases.

Warner says that this feature of the trust––which allows developers to circumvent a slew of county charges––is a lost source of income for Henrico, but acknowledges the program’s many other benefits, despite the sacrificed fees. “It's rare for a local jurisdiction to give up a source of revenue to get a project done,” Warner says about the county’s lost income.  

To get the most out of deals, the committee considers three main factors when reviewing applications, Burton says. The first is the ratio of affordable to non-affordable units in a proposed development. “If a builder is putting forth a, let's say, 250-unit development, but they're applying for only five units: that's not going to be an application that scores very well,” he says. 

The second consideration is how the development will impact the community. Buildings that target low-income groups are scored higher, rather than those “just really trying to hit the ceiling of our income restrictions, which is 120% of the area median income,” Burton says. Finally, the review committee will look to maximize their per-unit investment for a potential build. 

Activists argue that data centers bring a slew of potential negative externalities to areas that aren’t captured in their direct impact. In contrast, Burton says that the incentives of the Henrico trust fund bring alternative benefits to its community. Projections from Mangum Economics, a Virginia-based firm, shared with TIME showed that if the fund were able to procure 750 affordable units, it would result in the creation of 1,700 jobs; $6.3 million in local tax revenue; $125 million in associated local wages; and $300 million in local economic output.

“There's all these added benefits beyond just the units,” Burton says.

Most of the units have a contract clause to keep them affordable for ten years, to prevent flippers from taking advantage of the deal. But after a decade, the original buyer can sell the house for market value—an incentive designed to “push the needle on generational wealth,” says Vithoulkas. 

Swainston moved into her home in September. She received support both from the trust fund and a separate down payment assistance program. Now, when she gets home from school, she bakes sourdough bread in her new kitchen or walks to a nearby park. “It’s idyllic, really,” she says. “I never would have dreamed of it. The only way I ever would have been able to buy a home is through a program like this.” 

Keeping data centers at bay

But the success of the trust fund does not mean that Henrico administrators want to rush into building more data centers. Many county leaders remain wary of data centers’ potential harms and their community’s opposition to them. Henrico residents recently rallied to oppose a proposed data center in an adjacent county. 

Some data centers have sparked environmental concerns. In Memphis, researchers found that average concentrations of nitrogen dioxide increased after xAI set up gas turbines to power a data center in 2024, posing health risks to nearby communities.

Most data centers don’t want to pay taxes at all, and have won huge tax breaks from counties. The nonprofit watchdog Good Jobs First found that Virginia forwent $1.6 billion in sales and tax revenues due to data center exemptions. 

Last year, Henrico County imposed a series of requirements for new data center projects, including their distance from residential neighborhoods, sound maximums, and water usage limits. In February, the Henrico Board of Zoning Appeals rejected a data center company’s attempt to build a center in the Varina district. “We are letting the industry know: Look, we are good,” Vithoulkas says. “We have as many as we can possibly sustain.” 

Cari Tretina, the executive director of the Henrico Economic Development Authority, says it’s important that the county doesn’t become overreliant on one industry. The county has seen tech boom-and-bust cycles before: In the mid-90s, Henrico invested $44 million in building out White Oak Technology Park to attract the booming semiconductor industry — only for the facility to close in 2009 as manufacturing moved overseas. “If and when data centers shrink, you need to make sure you create flexibility: that you’re thinking about strong industrial centers, not just a data center,” she says. 

Zooming out

The Henrico County Affordable Housing Trust Fund combines aspects from several movements gaining traction across the country. The fund has worked closely with the Maggie Walker Community Land Trust, a nonprofit which has bought the land underneath many of the units in order to ensure the homes remain affordable in perpetuity. Community land trusts are proliferating, with advocates arguing they offer a better path to low-income housing, in which everyone involved has a stake in building lasting communities. Meanwhile, the “abundance” movement calls on Democrats to cut red tape to build housing. 

So it’s perhaps unsurprising that state and national leaders are taking notice of this local effort. Last year, gubernatorial candidate Abigail Spanberger used Parkside Townes—the housing development where Swainston lives, which was fueled by the trust fund—as a backdrop to announce her affordable housing plan as governor. (She won the office in November.) Warner says that he’s been “urging” the Urban Institute and other housing think-tanks to learn from the project, helping stoke the visibility of Henrico’s model to lawmakers in the capital. 

Meanwhile, other counties have teamed up with data center operators to fuel other industries. For example, in New Jersey, AI company CoreWeave is building multiple data centers while serving as a founding partner of the NJ AI Hub along with Princeton University. 

As the cost of housing continues to rise, however, Warner understands this is but one solution to a larger affordability crisis. “I would love to say there's going to be a single silver bullet. There's not, because even with this program … housing costs have gone up,” he says.

Within PHA, there are no plans in motion to extend the fund, although Burton hopes that the demonstrated benefits of Henrico’s program––providing affordable housing while also stimulating the economy––will incentivize the replication of Henrico’s program. 

“It behooves the county to continue to make investments like this,” he says. “It's really driving home the point that housing is economic development, that housing can be an engine for communities.”