Staunton Crossing – Looking askance

Staunton’s cross(ing) is hard to bear

(Reading time: 6 minutes)

We’re now more than three weeks into the 90-day timetable Tim Davey gave Staunton City Council for updating the Staunton Crossing master plan, and so far there’s been no word on how or when this process will begin, or how the city’s residents will be included. That’s a problem, and more so if the city is seriously thinking of trying to land a data center.

For those who missed my earlier write-up on the subject, Davey, director of economic development for the Timmons Group, addressed the city council April 9 to acknowledge that “a long time” had passed since Timmons designed Staunton Crossing. Despite that lengthy hiatus, during which data centers have exploded in number, size and recognized adverse environmental impacts, Davey argued they should remain in the recruiting mix, if only because of the tax revenue one or more such centers would generate for the city.

Along the way, Davey also mentioned, almost parenthetically, that a data center might need its own on-site electrical plant, which these days is the industry response to widespread uproar over the higher electricity rates such centers cause. That would be a new and seemingly significant change to the Crossing’s master plan, especially since the industry’s default option in such cases has been gas-fired generators, which add to local noise and air pollution. Then again, Davey did mention the possibility of a “small” nuclear reactor. Either way, it seems that Staunton’s residents might have some thoughts on the subject.

Davey was equally blithe—and seemingly misleading—in his response to concerns about how much of the city’s water supply would be consumed by a data center. Those concerns have at least two sources. One is the city’s fragile, century-old system of feeder mains that increasingly is prone to catastrophic breaks and which already can’t account for 28% of the water pumped into it. The second is an increasingly erratic climate of precipitation extremes that includes periods of severe drought. The city doesn’t have the $50 million or so needed to beef up its water system, and it has no idea or plan for how to obtain it. And despite some recent showers, all of Virginia has been in a drought since last fall described as the most extreme in two decades.

But not to worry, Davey counseled—there’s always the possibility of recruiting a data center that uses a closed-loop cooling system, thereby limiting water demand. Note the tenuous nature of that “possibility.” Although closed-loop systems are indeed possible, most data centers don’t use them because they’re more complicated, involve higher upfront costs and typically require up to 40% more electricity to operate their additional pumps and heat exchangers, effectively swapping water and electricity burdens.

More to the point, it’s questionable just how much water is conserved by closed-loop systems. A closed-loop system simply means that the water used to cool the processors that comprise the bulk of all data centers—and which, incidentally, run at average temperatures of more than 188 degrees Fahrenheit—runs through a closed loop that passes through a heat exchanger. The other half of the heat exchanger is not a closed loop. The water in this outer loop absorbs the heat from the closed loop before passing through a water-cooling tower, in which it evaporates and thereby releases its heat into the atmosphere. Cooling towers require a constant water flow to work, each day releasing hundreds of thousands of gallons into thin air.

That’s obviously a concern when long-term water availability is a question mark. But a similar concern can be raised by pharmaceuticals, which Davey threw out as a new, possible recruitment target for the industrial park. To be fair, it was just a passing mention, so seemingly off-the-cuff that it provoked little follow-up from council members. It’s worth noting, however, that pharmaceutical manufacturing also is a thirsty business—so much so that the industry acknowledges it faces “major challenges in terms of water consumption with potential impacts on the environment and sustainability.”

That’s not to say that the possibility of a pharmaceutical manufacturer setting up shop in Staunton Crossing should be discarded. It is, however, a reminder that there are no silver bullets and that any industry will bring drawbacks as well as advantages. The trick is to publicly and honestly identify assets and liabilities alike, without minimizing costs or overstating benefits, so that everyone is given an opportunity to weigh trade-offs and draw his or her own conclusions about what is or isn’t acceptable. Thus far, at least, that seems not to have happened with Staunton Crossing—or not in nearly a decade, at any rate.

It’s also worth noting that the past decade has seen the development and even explosion of industries that scarcely existed when the Staunton Crossing masterplan was being drawn up—industries that Davey did not mention and that council members didn’t raise, but which should at least be in the mix of any “update” review. One obvious industry group sure to gain momentum in the years ahead, for example, is anything to do with renewable energy: photovoltaic panels, storage batteries, even electric vehicles of various sizes and applications if Staunton Crossing is large enough for their assembly plant. This sector includes newly developed perovskite-silicon cells that achieve 34% efficiency, solar paint, solar windows and thin-film solar panels—all technologies still in their early days, with lots of development potential ahead, unlike the data center boom that even Davey says is nearing an end.

Another industry group that has been ignored—and one that could have additional benefits for our affordable housing-starved area—is manufactured housing, with a particular focus on factory-built or prefab housing. Unlike data centers, which move electrons rather than physical products, a manufactured housing plant could take advantage of Staunton Crossing’s accessibility to rail and highway transportation networks, one of the industrial park’s presumed selling points. Moreover, off-site modular housing construction, like renewable energy products, is an industry of the future, with the U.S. playing catch-up to countries like Sweden, where prefabrication accounts for 84% of the residential market. The Netherlands (20%) and Japan (15%) likewise have a significant share of their homes built this way, compared to just 5% in the U.S.

There may be, on closer examination, convincing reasons why neither renewable energy nor factory-built housing (nor an unknown number of other industries one might think of) is a suitable match for Staunton Crossing. It may also be that they are desirable industries to recruit, but that finding and wooing them will take more work than simply opening the doors to the data centers that are sprouting up everywhere in Virginia like mushrooms after an (increasingly rare) soaking rain. But that’s why a three-month “refresh” of the Staunton Crossing master plan, off to a slow start at that, doesn’t seem like a sincere effort as much as a rush job toward a foregone conclusion.

Data center FOMO with a side of nuke

(Reading time: 7 minutes)

What’s going on with Staunton Crossing?

Fifteen years and tens of millions of dollars after it was first conceived, the 300-acre industrial park at the corner of I-80 and U.S. 250 has finally achieved Tier 4 status, which signifies it is ready to do business. Which raises the question: what now?

What kinds of businesses should be recruited for Staunton Crossing, and how will the city measure the project’s overall success? Should Staunton put more emphasis on job creation—or on increasing its tax base? How much disruption to its infrastructure and social fabric can the city tolerate, and what’s a fair trade-off for the jobs and tax dollars that result?

These and other issues were raised last week at a regular city council meeting in a rapid-fire presentation by Tim Davey, a professional engineer and director of economic development for the Timmons Group, which had created Staunton Crossing’s master plan by late 2018. “In the marketing world, six years is a long time,” he conceded Thursday, explaining why the plan should be updated. Seven-plus years is an even longer time, but Davey was not one to get bogged down in details, rushing through his remarks as if by doing so he could somehow turn back the clock. Along the way, he managed to toss a couple of hand grenades.

The most obvious casualty of time’s passage has been the master plan’s inclusion of a data center, an industry that was all the rage last decade but which has since lost much of its luster, and which dominated much of last week’s discussion. Just how much of a data center was being contemplated in 2018 is hard to tell from the documents produced at the time. Maps of the site allocated 831,250 square feet to a data center that Timmons projected would be built in the fifth year—which is to say, before now. Elsewhere, however, in a chart that includes water and sewer consumption, the data center was inexplicably reduced to 375,000 square feet, shrinking its hefty water needs below those of a light manufacturing plant. And water, as the master plan noted, is key: “Nothing else matters more than water.”

The intervening years have had other implications for the master plan, which includes a modest level of retail but a significant amount of office space among its target end-users—two categories, as pointed out by Mayor Michele Edwards, that have seen significant post-Covid shifts in demand. Such changes, in turn, affect bottom-line calculations about how many jobs and how many tax dollars Staunton Crossing might generate. Office space, for example, requires relatively little taxable capital investment but generates a lot of jobs when compared with light manufacturing, which requires more taxable spending on equipment and facilities but hires fewer people. Back when the master plan was first assembled, the outlook was for “3,000 quality jobs,” apparently considered a sufficiently high return on the many millions of state tax dollars lavished on the site in the name of job creation. But whether that’s still in the cards remains to be seen.

Data centers completely flip the calculus. Once such a center is built, typically by a transient workforce, its employee headcount is measured in dozens rather than hundreds. A data center’s potential boost to the city’s tax base, on the other hand, is enormous, thanks to its capital-intensive nature. In one sense, then, Staunton’s financial interests are at cross-purposes with Virginia’s, since state-funded land development allocated to a data center essentially transfers state capital to the city’s coffers—a nice offset for Staunton taxpayers, if not so great for the Staunton workforce.

A questionable transfer of tax dollars aside, data centers over the past decade have evolved in public perception from a relatively benign, low-impact and “clean” form of industry into power-guzzling, water-sucking vampires that can be noisy neighbors and a threat to local air quality, thanks to their reliance on diesel- and gas-fired emergency generators. With residential electricity rates climbing and water scarcity exacerbated by such developments, progressive Democrats are pushing a national moratorium on the construction of data centers nationally. A growing number of municipalities are following suit on a local level.

Despite all that, however, Tim Davey clearly believes that data centers should stay in the mix for Staunton Crossing—and not just a data center, but possibly an on-site electric plant to supply its energy needs, up to and including a “small” nuclear reactor.* Data centers and their associated energy sources are “things that people are asking about, and I’m not advocating for it, I’m just telling you that it’s just one of those things that people are asking about and you need to have an answer for that,” he counseled.

City councillor Corrie Park pushed back on such assertions, citing all the drawbacks associated with data centers and the resistance she has encountered from city residents on the subject. It would be “inefficient of us” to pursue a data center at this time because Staunton residents “won’t go for it,” she contended, a waste of time better spent going after more acceptable land uses. Davey, on the other hand, wasn’t having any of it, suggesting various work-arounds for some of the objections, offering for example that some data centers are using closed-loop cooling systems to reduce water consumption. And, of course, there was that whole nuke thing to avoid distorting local energy costs.

But the bottom line for Davey seemed to be . . . the bottom line. The Virginia boom in data centers will have run its course in another five years, he predicted, so it would be in Staunton’s best interests not to miss the gravy train. “I pose the question to my clients, do you want to be the only jurisdiction in Virginia without one, and the tax revenue that could come from it?” he asked the city council, leaning into fear-of-missing-out anxieties. “If the answer is yes, then that’s great—but the tax revenue is pretty impressive.”

What happens next is not clear. Davey’s presentation ended with several recommendations, starting with development of “a diverse, internal marketing team” and creation of “a target marketing portfolio,” which presumably would revisit the kinds of industries the city would try to recruit for Staunton Crossing. Yet the overall package smacks of a rush job staffed by insiders. There is no suggestion that public input would be sought—even for so weighty a subject as the desirability of having a “small nuke” within city limits—and the whole business plan refresh could be done within just 90 days, Davey assured the council.

Doubts about data centers aside, other questions about Staunton Crossing abound. For example, a key question raised by Davey on behalf of Staunton Crossing prospects is, “Where will my employees live?” To that, Davey replied, “I believe you guys are in a very good, healthy position to answer that,” which may come as news to the recently created Staunton Housing Commission and various local groups grappling with the inadequate supply of affordable housing—and all the more so if Staunton Crossing delivers on its promise of 3,000 new jobs. That’s a lot of fresh housing demand!

It’s also worth noting that whatever goes into Staunton Crossing, whether light manufacturing plants or a data center or both, will put additional demands on a water and sewer infrastructure that is already under stress. It’s ironic, therefore, that Davey’s presentation was immediately followed by a request to increase utility rates by 5% to 7% to pay for long overdue water and sewer improvements and maintenance. The increased amount, everyone agreed, will raise only a fraction of what’s actually needed.

There were no comments made at the public hearing on the rate increase, which was then approved.

*Once you’ve picked your jaw up off the floor and want to get the full context of the casual reference to nuclear reactors, you can find Davey’s comments here, starting at around the 54-minute mark. It should go without saying that any onsite power plant, nuclear or otherwise, would need additional coolant water.

Rethinking Staunton Crossing

(Reading time: 4 minutes)

Much of tomorrow’s (April 9) Staunton city council meeting, which starts at 7 p.m., will be focused on next year’s budget and proposed increases in utility fees, neither of which is insignificant. But an even weightier matter, because of its long-term repercussions, will be taken up by council members at their work session preceding the regular meeting, when they will be presented with a long overdue “business plan update” for Staunton Crossing. What’s unclear is whether the “update” will include a reexamination of what should be built on this rather expensive chunk of real estate.

For the uninitiated, Staunton Crossing is a 300-acre site at the intersection of I-81 and U.S. 250 that is readily identified by its million-gallon water storage tank, perched on a concrete pillar abutting the interstate. The city purchased this acreage back in 2009 and spent nearly a decade figuring out what to do with it. A comprehensive design was finally prepared by the end of 2018, and millions of dollars have been spent before and since to pave the way for . . . well, that’s the question. Because while this project inched along, the rest of the world was hurtling into a once unimaginable future.

Case in point: one of the four core businesses envisioned for Staunton Crossing was, and is, a data center of the sort that has exploded across the country generally, and in Virginia most notably—indeed, the state now leads the nation with 579 such centers. As originally designed, Staunton Crossing’s data center would total more than 800,000 square feet, far exceeding the square footage occupied by offices (375,000), retail (162,300) or advanced manufacturing (a paltry 13,000 square feet). Various alternative options were also advanced, but in all of them the data center component remained unchanged—and, apparently, unchallenged.

There are several problems with this, not so much because of bad planning but because what seemed reasonable in 2018 is at least questionable today. Less than a million square feet of data center space might have seemed ambitious eight years ago, but today it’s quite a bit on the small side. The proliferation of data centers, primarily in northern Virginia but in other parts of the state as well, not only makes the Staunton site unremarkable but puts the city at a disadvantage for an industry that tends toward clustering. Most significantly, the metastasizing and increased size of these centers has highlighted just how environmentally taxing and destructive they are, driving up electricity and water consumption—and rates—while threatening air quality with their reliance on fossil fuel generators for back-up power.

The precarious state of Staunton’s water supply has been widely chronicled, due both to the aging-out of its supply infrastructure and because of our repeated drought alerts. Local electricity rates, meanwhile, have started climbing after years of being noticeably below those of other states, with Dominion Energy’s overall prices growing 11.6% over the past year and the generation portion of its bill increasing 16.8% over the same period, largely due to rising demand from all those energy-sucking data crunchers. Over the next year, Dominion ratepayers can expect to see another rate hike of around $11 a month.

There are, in other words, so many red flags popping up around the data center explosion that state lawmakers are mulling a slew of proposed regulatory and legislative constraints, raising the possibility that they will make Virginia an increasingly unattractive option for the industry. The feeling in Staunton should be mutual, but whether tomorrow’s business plan update will go in that direction remains to be seen. One line in the power-point presentation prepared by the Timmons Group is suggestive: on the “Current Trends” slide, item 4 is “AI Site Elimination vs Site Selection.” My vote would be for the first half of that equation.

One final note, sparked by that same slide. No. 6 on the list of current trends is the perennial question, “Where will my employees live?” Ironically, the original discussion of what should go into Staunton Crossing included the possibility of workforce housing—a possibility that was inexplicably dropped, with no known record of the thinking behind the exclusion. Eight years later, that looks remarkably short-sighted.

Staunton Crossing dissonance

(Reading time: 4 minutes)

When it comes to its plans for Staunton Crossing, the city is being less than forthright. Coy, even.

Making this evident was session six of Staunton Citizen University, held last week and focused on all things economic. That, of course, meant paying special attention to Staunton Crossing, the hugely ambitious but largely vacant crown jewel in the city’s efforts to gin up economic development. With its roots dating back to 2009, when the Staunton Economic Development Authority (EDA) shelled out $15 million in a land swap with Western State Hospital, Staunton Crossing now represents an investment of roughly twice that amount. The number of jobs attributed to Staunton Crossing over the past 16 years? Perhaps 200—and some unknown number of those aren’t new to Staunton, since they merely involved a move from one city location to another.

At its best, then, the money sunk into Staunton Crossing currently works out to a per-job cost of approximately $150,000. That’s hardly a bargain, and even less so considering that most of those jobs are on the low end of the wage scale: desk clerks and housekeepers at two hotels, food servers and salesclerks at a handful of fast-food franchises and retail outlets. But to be fair, the Crossing still has another 275 empty acres just waiting for someone to move in. And city officials say that could mean more than 3,000 additional jobs coming to Staunton, resulting in an enormous shift in any cost-benefit analysis, so perhaps it’s still early days when it comes to doing the math.

But that’s where the coyness comes in. What new businesses is the city trying to recruit, and at what additional cost?

Among the six types of industries advertised on Staunton Crossing’s internet pitch is “logistics and transportation,” which sounds an awful lot like a warehouse distribution center. That’s low-hanging fruit, one might imagine, given the Crossing’s touted “easy access to the East Coast and Midwest” because of interstate and railroad proximity. But apparently it’s also forbidden fruit, at least for now. Asked when a large tenant for the Crossing might be recruited, economic development director Amanda DiMeo responded that a warehouse operation could have been landed “yesterday” if that’s all the city was after. Clearly, there’s hope that there are bigger fish to fry.

Which brings us to the second questionable industry on the Crossing wish list: Data Centers & IT. When it comes to recruiting this latest “must have” industry, the EDA marketing push goes all out in playing the environmental hazards card without any apparent irony. Staunton Crossing, declares its website, “is a prime location for data centers due to its low risk of natural disasters. The area is not prone to earthquakes, hurricanes, or severe weather events, which can disrupt data center operations. This provides peace of mind to organizations that rely on the secure and continuous operation of their data centers.”

And that’s not all! Staunton Crossing has an irresistible supply of low-cost and reliable electrical service, according to its website. It has state-of-the-art fiber internet infrastructure. It has “a large pool of highly educated and experienced IT professionals,” which might be expected to raise quizzical eyebrows among the relatively sparse IT workforce currently in the city. But notably lacking in this recitation of virtues is any mention of the copious amounts of water that data centers require, although the website does give assurances elsewhere that the city can provide 2 million gallons a day.

And that’s a problem.

Two million gallons a day represents the entire output of one of the city’s two major water sources, drawn from the headwaters of the North River in the George Washington National Forest. The possibility of such an outsized claim on a critical natural resource, in an age of global warming and greater weather instability, including droughts, has not gone down well with community residents with a less boosterish outlook. There have been rumbles of discontent—which may explain a curious comment about the matter by Rodney Rhodes, the city’s director of community development.

Speaking immediately following DiMeo’s presentation, Rhodes led off with the observation that Staunton’s zoning ordinance does not permit data centers. Any attempt to bring in such a center therefore would require that the zoning code be amended—and that, he assured the class, would be “a hard slog.” Not impossible, of course. But hard, so nothing to get excited about.

Nothing to see here!

And yet, why would Staunton keep chasing after a substantial capital investment that its own rules do not permit? Does the question answer itself? A substantial capital investment of the sort represented by a data center wouldn’t provide much in terms of permanent employment, but it would add handsomely to the tax base. And given the many millions already spent on the Crossing with remarkably little return to date, the promise of a big chunk of tax revenue might be expected to transform a hard slog into a greased done-deal.

As I said: coy.

Let’s not send water into the cloud

(Reading time: 7 minutes)

Sometimes it’s hard to grasp just how quickly the world is changing, and how slow we can be in adjusting. Perhaps that’s not a big deal on a personal level. Tell people you don’t use a cell phone or go on social media and they’ll just think you’re quirky, or old. But being out of step becomes a really huge deal when it involves spending millions of dollars and making decisions that will have a ripple effect for decades.

Case in point: that ambitious effort to attract investment dollars, currently marked by a towering column just 350 feet off I-81, known as Staunton Crossing. By this time next summer the concrete pillar will be crowned by a ginormous billboard advertising the city, painted onto a 1-million-gallon water storage tank that will be 70 feet in diameter and, at its top, 240 feet above the ridge on which it sits. A critical structural failure would make one helluva splash on the highway below.

The aesthetics of such boosterism come down to a matter of taste and judgment, but there should be less subjectivity regarding the water tank itself, which together with its ancillary plumbing carries a hefty $10 million price tag. Who knew a cistern in the sky could be so expensive? For context, $10 million is enough to replace approximately one-fourth of the 13 miles of pipeline that supply Staunton with its drinking water—including, ironically, the water that will fill the new tank. Replacing the pipeline is becoming a critical issue because it’s more than a century old, but where the city will obtain $41.5 million to do the job, or an additional $8 million to drill backup wells, is anybody’s guess.

Meanwhile, although there are plausible reasons to build a new water storage tank on the east end of the city, the primary impetus for this massive venture is Staunton Crossing itself. And, more specifically, a desire by city officials to include a so-called “data center” on its freshly primed real estate. Why the scare quotes around “data centers”? Because the label, while conveying a cutting-edge sense of cleanliness and efficiency, obscures the fact that these contemporary data factories are voracious consumers of power and water, more accurately described as resource vampires.

Offices and manufacturing plants—the development’s other proposed tenants—also need water and electricity, of course, but data centers really need them. The master plan for Staunton Crossing calls for 375,000 square feet of data center space, projected to require 187,500 gallons of water a day. That compares to more than twice as much proposed square footage for manufacturing, which would require only 12% more water—or a proposed 605,000 square feet of office space, using a mere 60,000 gallons a day. (Moreover, most of the data center water evaporates, which means less is available for recycling—good for the sewer system, but not so good for water conservation.)

The planners who conceived this project knew all that, of course, which is why their top infrastructure priority was water. “Prospects need to know that pressure and capacity are adequate for their needs,” they wrote. “Nothing else matters more than water, particularly in the area of manufacturing and data center pursuits.” Ergo, the water tower, enabling the city to assure business prospects that it can deliver 2 million gallons a day, as well as 4.2 megawatts of power.

But that was six years ago, and as noted at the top of this column, the world is moving ever more quickly. What seemed like a reasonable concept in 2019 has become increasingly outdated, as computer users from the smallest to the largest increasingly turn to “the cloud”—an ethereal marketing term for data centers—for their data storage needs. More recently, the post-Covid ascendance of energy-hungry artificial intelligence (AI) has blown up all previous forecasts of national power consumption.

Based on their projections for Staunton Crossing, the planners were envisioning a 10-megawatt data center, which at that time was an average size for the centers that were sprouting up in northern Virginia. But the reason why Ashburn, for example, today has 133 data centers is because these smaller centers need to cluster around a high-speed network infrastructure to reduce latency, a critical aspect of a seemingly seamless “cloud.” On this side of the Blue Ridge, on the other hand, we still have areas without decent internet service, never mind the kind of fiber connections that would enable cloud computing.

AI’s massive energy needs, meanwhile, require hyperscale centers measured in the hundreds of megawatts. One such center currently in development in Culpeper, for example, will have 1.4 million square feet providing initial support for 216 megawatts of critical load, eventually expandable to 432 megawatts. That’s clearly a whole new ball game, in which Staunton Crossing can’t compete.

These limitations suggest that the Crossing’s quixotic pursuit of a data center won’t get out of the starting gate, too small for a hyperscale center but too isolated to plug into the cloud network. Indeed, it’s worth noting that while much of the marketing strategy behind Staunton Crossing has been to emphasize its proximity to two interstate highways, a railroad and Virginia’s inland port in Winchester, absolutely none of it addresses virtual connectivity. So: nothing to worry about, right? Unless, of course, it’s to fret about the time and money wasted on ill-fated marketing efforts, or on building a possibly over-engineered water tank.

Still, there’s always the danger that these sorts of projects take on a life of their own, lurching onward long after someone should have cut off their heads. And putting a data center in Staunton, while of debatable value in 2019, makes even less sense today. Although we’ve had a relatively wet spring and early summer, Staunton had repeated drought warnings and advisories the previous several years, underscoring the city’s vulnerability to water shortages in an age of ever more extreme climate change. Meanwhile, the 4.2-megawatts of electricity that Staunton Crossing currently promises won’t begin to address the energy needs of a data center (or a serious manufacturing plant, for that matter), which means Dominion Power will be expected to build a new transmission line—with construction costs distributed among current users.

What would Staunton get in return? Once a data center is up and running, relatively little. Local employment, as measured by vehicle trips per day, would be a scant 375, as laid out in the master plan—compared to more than 5,000 a day for a manufacturing plant, and 6,400 to 11,000 a day for office workers. More vehicle trips, more local employment. The other potentially significant upside could be the tax revenue generated by such a capital-intensive project, were it not for the fact that taxing data centers has become a race to the bottom. Or as Staunton Crossing’s planners advised the city, slashing taxes for data centers would signal the industry “that it is specifically desired in Staunton.” Maybe that’s a signal we shouldn’t want to send.

At the very least, it would be prudent for the city to revisit the Staunton Crossing master plan and determine if changing circumstances have rendered some of it obsolete. Ditch the idea of having a data center. Perhaps revisit the idea of incorporating housing into the plan, a concept that was part of the original planning but then inexplicably dropped, and one that subsequently has become more urgent. Safeguard a precarious water supply.

We’d still be left with one of the state’s biggest billboards, so it won’t have been a total loss. (Sorry, Lady Bird.)

We have to know what we don’t know

(Reading time: 8 minutes)

One of the underlying issues pervading all aspects of the affordable housing discussion we’ve been having locally is the lack of reliable, timely data. There’s a lot we don’t know, and much of what we think we know is flawed.

There is, for example, the recently released regional housing study, which not only lacks a lot of needed information but is burdened by a significant load of outdated and incomplete statistics. The problem this poses is a false sense of authority. Statistics just look so damn definitive. They’re precise and official looking, and they do such a nice job of reducing complexity into the numeric equivalent of a soundbite that it’s hard to put them aside. They brook no argument—even when they send you off on a wild goose chase.

But the regional housing study is far from unique. A couple of more recent pronouncements about the housing situation illustrate how apparently authoritative sources can paint a picture that on closer examination is at least questionable. Yet because such statements fit so well into a broader understanding of our circumstances, they get adopted and repeated and eventually blend into the background narrative without a challenge. They become accepted wisdom, shutting down further discussion.

Consider, for instance, the question of how much government regulations add to the price of a newly built home. Developers may have to pay for environmental impact or traffic studies, as well as zoning, impact, utility hook-up and other fees, and have the additional costs of complying with OSHA regs and specific design standards. Builders must comply with building codes and architectural design standards, as well as foot the bill for permit or inspection fees. Could relaxing or amending some of this regulatory burden allow for cheaper housing to be built?

To ask the question is to answer it: of course it would. What that doesn’t tell us is how much of a cost-saving is possible, and whether that reduction would be significant enough to prompt the construction of more affordable housing. Are regulatory costs so high that they are a major disincentive for more housing development? Or are they relatively minor, in the overall scheme of things, and therefore unlikely to produce more than marginal gains if cut back, possibly at the price of lower quality?

We don’t actually know. All the meetings and conversations locally about “solving” the housing shortage have been remarkably unbalanced, in the sense that the people sitting around the table overwhelmingly are from the demand side of the housing equation. The supply side—developers, builders, lenders, underwriters, property managers—has been remarkably rare.

So when attendees at a recent SAW housing group meeting heard that $92,000 of a new home’s price tag is attributable to regulatory costs, it might have seemed that a significant information void had been filled. Moreover, given that this statistic was generated by the National Association of Home Builders (NAHB), it certainly sounded authoritative. And the implications are seemingly huge: with a new home in the SAW region going on the market for upwards of $326,000, as much as 28% of a new home’s selling price might be trimmed solely by government fiddling with the various requirements it imposes on builders and developers.

A closer look at that NAHB calculation, however, suggests otherwise. The actual regulatory cost calculated by the association was $93,870, of which it attributed $41,330 to developer’s regulatory costs and $52,540 to regulation during construction. The study was conducted four years ago. The developers’ costs were based on a survey sent nationwide to 2,071 NAHB members—with a scant 57 providing “complete and useable responses.” The association provides no information about which markets were represented in the responses, nor how widely they were distributed. The $41,330 number, in other words, is a wild-ass guess that has little to no relevance to the SAW region in 2025, despite its apparent precision.

Meanwhile, the survey based its conclusions about builders’ costs on 280 “complete and useable responses,” which sounds better than the developers’ stats but with no indication of whether this was a higher rate of return, since the NAHB doesn’t say how many builders were polled. And, again, the study provides no information about which markets were represented or what kinds of homes the builders were erecting. Nearly half of the increased costs those builders attributed to regulations were due to “changes to building codes over the past 10 years,” so there’s no applicability to localities with few or no changes to their building codes over that period. In addition, a substantial chunk of increased regulatory costs was attributed to “architectural design standards motivated by aesthetics, or possibly even, in some cases, a desire to price less affluent residents out of particular neighborhoods.” Is that relevant to the SAW region?

In short, the applicability of this extremely limited “study” to any particular housing market is less than zero— “less than” because using a misleading statistic can create a false sense of comprehension. But with the NAHB distilling a complex issue into a seemingly authoritative data point, there’s the temptation to think there’s no need to research the issue any further. The regulatory cost burden on new housing construction? Asked and answered.

A different kind of false certainty based on an apparently authoritative source was seen at the Staunton city council’s March 13 work session, at which the planning staff was asked what role developers play in terms of the city’s housing strategy. As just indicated, an accurate answer would have been “little to none.” The staff response, however, was to assert that “most of the land for larger developments has already been purchased, so they are looking at more of the low hanging fruit of the single lots and other smaller cottage-type developments.”

That answer not only was unresponsive, but highly questionable. Even a cursory look at a map of Staunton will disclose an abundance of undeveloped and open land, especially in the city’s northern reaches. The city’s 2018 comprehensive plan, currently being updated, noted that of Staunton’s 12,800 acres, nearly 3,000 acres was vacant land zoned for residential use. Some of that land undoubtedly has been developed in the past seven years, and a significant chunk of it is undevelopable because of steep terrain or flooding hazards, but even with that there’s clearly a lot of room within city limits for more housing.

But land availability isn’t subject merely to physical constraints. Land use ultimately is subject to political choices, notably over zoning. Those 3,000 vacant acres are apportioned among four zoning classifications, with the lowest-density classification claiming nearly a third of the total. Medium-density zoning, meanwhile, had 415 vacant acres, while high-density zoning weighed in with 325.8 vacant acres—all more than enough, one would presume, for at least some significant housing developments. But if that’s not enough, how much more housing could be built through upzoning? Is that something that should be at least examined, without a prior dismissal of the possibility?

Other political choices are reflected in the city’s decision to set aside considerable acreage for an ag-forestal district, “intended to support the growth of active farm, forestal, nursey and related enterprise.” Given Staunton’s location within a heavily agricultural county, it’s not unreasonable to ask whether preserving still more farmland within the city’s boundaries is the most appropriate use of such property, especially if doing so penalizes development of sufficient affordable housing. How many hundreds of acres of the ag-forestal district could be carved out for other uses while still preserving its most attractive natural features, such as the Bells Lane corridor?

Then there are the decisions that went into designing Staunton Crossing, the city’s premier economic development effort. Early on, planners for the project contemplated housing as part of its development mix, presumably in recognition of the need for new businesses to have adequate housing for their employees. But then, for reasons never made explicit, the housing idea got dropped, even as plans for an AI data center shrugged aside criticism that such centers provide only modest employment gains—the ostensible rationale for building Staunton Crossing in the first place. Meanwhile, in the seven or so years since those choices were made, new data centers have grown exponentially in size and become omnivorous consumers of water and electricity, raising the question of how well suited such an industrial application is for a region that has had frequent drought scares. Should that part of the project be reexamined to assess its suitability for housing?

None of this is to say that the city should be upzoning any particular area, that the ag-forestal district should be trimmed or rezoned entirely, or that Staunton Crossing should stop trying to recruit data center providers. But it does point to the fact that these and other land-use decisions are inherently political, made at a specific time for reasons that may change or become obsolete, and that new priorities—such as the growing need for affordable housing—may take on greater importance. To dismiss a question about new housing developments by saying, in effect, that there’s no room for big projects is therefore untrue. It also is needlessly self-limiting, forestalling fresh thinking that could open new possibilities.