Developer proposing $1B data center, office park in Eastern Henrico

A Richmond developer is proposing a data center and advanced manufacturing light industrial complex on one of Henrico’s most appealing undeveloped sites, a 622-acre tract of land where it believes the concept will attract more than $1 billion in private investments.

Hourigan, a construction and development firm, filed initial rezoning plans with Henrico County last month, seeking to build the VAH Data Center Campus on prime real estate in Sandston, at the southeastern intersection of I-295 and I-64, along East Williamsburg Road at Technology Boulevard. The proposal, which would rezone the land from agricultural to light industrial usage, is scheduled to be heard by the Henrico Planning Commission Jan. 11, though a deferral to the commission’s February meeting is possible. The county’s board of supervisors holds ultimate rezoning authority and would need to approve the concept before it could take shape.

The new proposal generally involves the same footprint on which Atlantic Crossing LLC proposed a 530-acre industrial development two years ago. The planning commission recommended those plans for approval, but after deferring the case twice before it could be heard by the county’s board of supervisors, Atlantic Crossing withdrew it in July 2022.

In the months since, the company has acquired about 90 additional acres adjacent to the original acreage, including about 59 acres adjacent to I-295 between Williamsburg Road and Old Williamsburg Road and about 17 acres at the far southeastern corner of the site.

Hourigan now is spearheading the new proposal, whose “VAH” moniker stands for the three entities involved with it: Vienna Finance, Inc., Atlantic Crossing and Hourigan. The proposed site includes about 258 acres south of Williamsburg Road and 364 north of it. The 12 properties involved currently are owned by three groups: members of the Harmon family (about 223 acres), Atlantic Crossing LLC (about 223 acres) and Vienna Finance Inc. (about 174 acres).

The Harmon Tract long has been viewed as a key feather in the economic development cap of the county, in part because of its location at the intersection of two major interstates. The site was envisioned as the future home of the State Fair of Virginia more than two decades ago but in the years since has been viewed as a better fit for a large-scale economic development site. Dick Keller, a consultant hired by Henrico County in 2001 to study the area, at the time called it “one of the best sites in the East Coast, frankly.”

Hourigan’s initial filing with Henrico County doesn’t provide a clear sense of how the developer envisions the site taking shape, indicating only that uses could include data centers, manufacturing and production, office space, accessory uses (such as utilities, electrical substations and switch stations) and other uses permitted in the M-1 light industrial zoning district, pending approval of a provisional use or conditional use permit from the county.

But in Oct. 23 testimony before the State Corporation Commission about Dominion Energy’s plans for two new electric transmission lines that would serve the area, Hourigan Senior Managing Director of Development Brian Jenkins made it clear that his company has received strong interest from potential data center and advanced manufacturing users. He testified that the company expects the development to be built in “multiple phases over time.”

Proffers (or voluntary proposals) made by Hourigan as part of its Nov. 16 case filing with the county indicated that any buildings constructed on the site would be set back at least 100 feet from the outer boundary lines of the property. Construction that occurs within 500 feet of any existing single family home would be limited to the hours between 7 a.m. and 7 p.m., or dusk (whichever is earlier), except in emergencies or unusual circumstances.

Henrico’s 2026 Comprehensive Plan envisions the area as a mix of open space and commercial usage. But Henrico planners are nearing the end of a three-year process to update that plan and create by next spring a 2045 plan, which is likely to project more light industrial and manufacturing uses like those already in place at the neighboring White Oak Technology Park, which is home to the QTS Data Center and the Meta Henrico Data Center.

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Data centers facing more scrutiny

The VAH proposal comes at a time when data centers in Virginia are beginning to face more scrutiny from some environmental groups, who are concerned about their energy and water usage and the state’s relatively loose regulatory oversight standards. Virginia is home to about 300 data centers – the most in any one location on Earth – primarily in Northern Virginia.

Governments like the facilities because they provide significant tax revenue (about $10.3 million in Henrico last year alone, and upwards of $600 million in Loudoun County, which has the most data centers in the state), typically without requiring new investments in roads, schools or other public services, since most centers employ a relatively small number of people.

Henrico officials have been aggressively targeting data centers users since 2017, when the county slashed its business personal property tax rate for data centers from $3.50 to $0.40 per $100 of assessed value as a way to help attract them.

And the county has a particularly unique pitch to offer potential data center operators: the presence within the QTS Data Center of the Richmond NAP (Network Access Point), a direct connection to subsea cables that can transmit data at lightning speeds across oceans to other continents. It is the only spot in the world in which four subsea cables, terrestrial networks, and data center management meet, which makes it particularly appealing to potential users.

At about 1.3 million square feet in size, QTS is one of the largest data centers in the world, and one of its neighbors is the Meta Henrico Data Center, which opened in 2020 and could total about 2.5 million square feet once future expansion efforts are complete. Combined, the two companies hold about 675 additional acres of land on their sites that could house expansions.

But environmental groups are concerned by the massive amounts of energy and water that the facilities require and by the potential threats they believe some pose to air quality. On Dec. 1, more than 20 environmental advocacy groups statewide announced the formation of the Virginia Data Center Reform Coalition, which believes the state government needs to require more transparency in land-use decisions and impose more standards on data center developments.

In a statement, the organization said that the data center industry has “failed to prioritize community concerns” by proposing data centers in inappropriate locations, installing thousands of large diesel generators that could harm air quality and prompting “massive energy infrastructure upgrades paid for by ratepayers.”

“The Virginia Data Center Reform Coalition is asking Virginia’s state government to step in — to require more transparency around land use decisions affecting the lives of Virginians and around energy and water usage that carries significant implications for both local communities and the rest of the Commonwealth,” organization officials said in a press release. “The coalition is asking the state to require that data center developers mitigate the negative environmental impacts of this industry and to shift the cost of new transmission lines and power generation onto the industry players, rather than on the backs of Virginia’s ratepayers.”

In Virginia, about 21% of Dominion’s load comes from data centers.

Said Julie Bolthouse, director of land use of The Piedmont Environmental Council: “Virginia has the largest data center market in the world, yet our regulatory oversight is behind other large markets in Europe and Asia that have also experienced data center demand exceeding available resources.”

In response questions about potential data center development from a Henrico citizen last year, county officials indicated in a written response that “there are few industries that care more about sustainability and community impacts than the data center industry. . . The data center industry has been the clear leader in impacting the growth of renewable energy in Virginia. It is true that they are large power users, but they are committed, in words and aggressive actions, to 100% renewable energy.”

The county’s response also indicated that many data center operators are changing their technologies so that cooling the centers can occur with less energy.

“The quality of the data centers that are choosing to operate in Henrico is the best there is,” it indicated. “They invest in research in new technologies to reduce consumption of water, power, and limit environmental impacts.”

In 2021, data centers added about $13.5 billion to Virginia's economy and contributed more than 86,000 direct, indirect and induced jobs to the state's workforce, according to a study by PwC.

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Transmission line project tied to data centers?

Increased power demands in the White Oak Technology Park region prompted Dominion Energy to begin the process several years ago of planning to construct new electric transmission lines through the region, in part to meet existing demand from business and residential customers, and in part to prepare for future demand in the area (including he likelihood of more data center users). The new double-circuit 230 kilovolt lines would connect the White Oak substation along Technology Boulevard with an existing transmission line that runs along a northwest-to-southeast path adjacent to the Henrico-New Kent line.

Dominion officials have said that the lines are necessary in order to relieve what they have termed “identified violations of North American Electric Reliability Corporation Reliability Standards” within the White Oak Load Area, which generally includes the 2,278-acre White Oak Technology Park and nearby properties. They’re also proposing to expand the existing White Oak Substation and perform work at the Chickahominy and Elmont substations as well.

Dominion formally applied in June to the Virginia State Corporation Commission for the right to construct the lines. The company initially considered two possible routes for the lines: one along the southeastern part of the region 4.19 miles in length that would cross over White Oak Road, and the other about 3.24 miles in length that would travel a more direct path adjacent to Elko Middle School.

Each, though, prompted some concerns from nearby property owners, so Dominion created a third option, which would travel a northern route 4.69 miles in length, crossing through the proposed VAH Data Center site and over I-64, then heading east behind the Bradley Acres subdivision. Hourigan’s Jenkins testified before the SCC that that route would be his company’s preferred option, in part since it would provide direct access to the planned site.

In addition to being the longest route, the third option also would be the most expensive – potentially as much as $46 million, according to Dominion Energy. The caveat, though, is that the first and second options also would require construction of additional spur lines to connect to the VAH Data Center campus, at unknown costs, while the third option would not.

The third option also would disrupt the fewest residences (16), compared with 30 and 24 for the first and second options, respectively. It would cross through 22 separate parcels of land, requiring nearly 58 acres of right of way acquisition from private property owners. Most of that acreage (about 43 acres) is forest land, according to an SCC report, and would need to be cleared to make way for the lines.

Dominion wants the new lines to be operational by late April 2026.

“The Proposed [third] Route appears to avoid or reasonably minimize impact on existing residences, scenic assets, historic districts, and the environment,” SCC staff members wrote in a report.

Members of the Henrico Conservation Action Network, an environmentally focused volunteer-based nonprofit, are concerned about the potential for more data centers and new transmission lines. (The group held a webinar to discuss some of those concerns last month.)

“While it may seem a lucrative economic development achievement, without strong policy guardrails in place this industry’s negative impacts are likely to overwhelm any perceived economic benefits,” the organization wrote in a recent statement.

HCAN officials want the county to hold “open and substantive discussions of the full extent of current and future [data center] plans, before making decisions,” according to their statement. They also are asking Henrico to update its planning processes and tools to ensure that any potential negative impacts of the centers can be addressed in advance.

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Next steps

In his testimony to the SCC, Jenkins of Hourigan indicated that locating the transmission lines through the VAH site would be critical for its planned timeline to materialize.

If it were to take a different path, the VAH Data Center project could be “diminished or postponed,” he said. “A continuous and reliable power supply is essential to operations like those envisioned for the VAH Data Center Campus, and is the single most important site-selection criterion that data center owners, microchip manufacturers, and investors in those businesses look for when considering potential locations for their facilities.”

Because the other paths also would require spur lines, the process would be slower.

“[D]elays of this kind could potentially diminish the currently very strong level of interest that business owners and investors have and are showing in the VAH Data Center Campus properties,” Jenkins testified.

In testimony, an official from QTS also asked the SCC to approve the lines.

But some local residents have argued that the new lines primarily will serve corporate users and therefore should be funded by them, too.

“I see from this filing that ratepayers for Dominion would shoulder nearly $45 million in costs, all to benefit a single industry,” Henrico resident Beth Kreydatus wrote in comments to the SCC. “These costs, if the SCC approves Dominion's request here, would end up on ratepayers' bills (mine included) in the form of riders and add ons. “If transmission lines and substations are being requested by a single user, that single user should shoulder the full cost of the new infrastructure.”

Dominion Energy Principal Engineer Mark R. Gill disagreed in testimony before the SCC.

“It is incorrect to say that the only reason this transmission line is ‘needed’ is to serve a data center,” Gill said. “The [electric] load served by the Elko, Portage and White Oak Substations in the WOLA [White Oak Load Area] – including residential and commercial load – risk reliability failures without the project. The project is needed and the benefit will inure to all customers. As such, it is equitable for costs to also be shared.”

In a bizarre twist, one nearby property owner, the Myrtle M. Holland Trust, is opposing the potential path of the transmission lines by arguing that its location would cost trust beneficiary Richard McCoy “hundreds of millions of dollars” by rendering useless a planned 1,000-yard aircraft runway, small firearms training facility and two helicopter pads he is constructing on property owned by the trust on Meadow Road. The proposed lines would travel across the property.

In testimony last month, Donald Andrews (a trustee for the trust) said that a training facility for active-duty paratroopers and airborne special forces would take shape on the site but offered no evidence to support the lofty financial claims he had made. Neither the helicopter pads nor the runway yet hold permits from the Federal Aviation Administration or the Virginia Department of Aviation, he said, because they aren’t yet complete.