Vithoulkas: Henrico to take more ‘cautious approach’ in spending, focus on redevelopment

Henrico County will be taking a more “cautious approach” in spending amid growing uncertainty in the national economy, said County Manager John Vitoulkas at a Sept. 25 town hall for local businesses at the Hermitage ACE Center.

During the next year to 18 months, the county will be more conservative when it comes to incremental spending “across the board,” but will still continue to invest in improving infrastructure and new construction, said Vithoulkas. 

“Regarding some of the trends in the national economy, we're also seeing [that] or we have worries about [that]. Within the next 12 to 18 months, you'll see the county taking a little bit more of a cautious approach as far as incremental spending,” he said. “Capital infrastructure, you're going to see us continue to do that, because I've always been a big believer in maintaining all of our infrastructure and also making sure that we don't get far behind.”

Henrico businesses have been more optimistic about the local economy than the national economy, said Diana McMahon, the vice president of Richmond-based business organization InUnison. In surveys conducted throughout this year, businesses reported fears about fluctuating national policies and tariffs, as well as concerns around rising costs.

“By August, we hear concerns really start to compound,” McMahon said. “Costs remain the foundation of pressure. Policy and regulatory uncertainty is rising, especially around tariffs and the whiplash that happens with them going into effect and falling back.”

In 2024, a survey of 181 Metro Richmond businesses (about 26% of which are located in Henrico) by InUnison found that those companies had a combined $432 million in revenue. This May, about 52% of the businesses reported growth in revenue, while 27% reported a decline and 15% saw no change. About 82% of the businesses surveyed employ 25 or fewer people.

For many businesses, “optimism and caution seems to coexist right now,” said McMahon, with business leaders “holding their breath” to see what happens during the final part of the year.

In Fiscal Year 2024-25, Henrico County collected more than $150 million more in tax revenues than it had budgeted – an “extremely positive” figure considering the county’s worries about economic indicators at the national level and new federal policies, Vithoulkas said. The county also received a quadruple-AAA municipal bond-rating status this year, making it one of only three localities in the nation to have that designation.

“[O]ur economic development is going to look different than it did 10, 15, 20 years ago. [E]conomic development is really going to be more about redevelopment
and how we can be creative.”
– Henrico County Manager John Vithoulkas

Redevelopment over new development

Rather than make more investments in new data center development – a big revenue driver for other Virginia localities such as Loudoun County – Vithoulkas said Henrico wants to move toward “redevelopment.” With the majority of Western Henrico already developed, the county is looking for areas that could be spruced up or rebuilt, he said. 

“Going forward, our economic development is going to look different than it did 10, 15, 20 years ago,” Vithoulkas said. “Henrico County, portions of here are built out. So economic development is really going to be more about redevelopment and how we can be creative.”

In 2023, the county created the new Henrico Sports and Events Center by redeveloping part of the Virginia Center Commons, an old mall that had fallen into “bad shape” before being purchased by the county, Vithoulkas said. Henrico also helped redevelop parts of the old Regency Mall, which is now used by Henrico Schools for a new adult education center.

“We don’t have big swaths of land,” said Henrico Economic Development Authority Managing Director Ebonie Atkins. “We need to think about the smaller areas, the redevelopments, the Regencys, the Virginia Center Commons, the Sandstons – all of those places that have opportunities to look different, to better support the community, to better support businesses.”

Using tax revenue from locally-based data centers, Henrico also created a $60 million Affordable Housing Trust Fund last year that aims to create 150 new affordable housing units out of the 800 new homes Henrico typically sees every year. Only one in three Henrico residents can actually afford to purchase a home in the county, Vithoulkas said, with local housing prices nearly doubling over the past 10 years.

While data center revenue can be “intoxicating,” Henrico aims to strike a balance in revenue streams to avoid building too much of a dependency, said Vithoulkas, and look at creative ways to tackle local issues such as housing affordability.

“I mean, look at Loudoun County, and you start putting that money into your general fund, you build a dependency on it,” he said. “Technology moves so much, so fast. Why not use that money in a different, special way?”

Henrico County also has the potential to earn a quadruple-AAA bond-rating for its utility system with the upcoming sale of $125 million in water and sewer bonds, Vithoulkas said. Henrico would be the first locality in the nation to have a quad-AAA rating for utilities.

Liana Hardy is the Citizen’s government and education reporter. Support her work and articles like this one by making a contribution to the Citizen.