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The economic impact of Northrop Grumman's new Waynesboro factory will be felt on both sides of Afton Mountain

Northrop Grumman, a titan of the U.S. defense industry, is building a new factory in Waynesboro that promises to bring hundreds of high-salary jobs to the area. But on which side of Afton Mountain those residents will choose to live is not predetermined.

The Falls Church-based company announced its plans for a new $200 million advanced electronics and testing facility in Waynesboro in November and broke ground on the 63-acre facility in February. Northrop Grumman has promised the plant will employ more than 300 engineers and manufacturers with an average annual salary of $94,000.

Waynesboro has long been a refuge for Charlottesville workers: Many choose to work in Charlottesville, where jobs pay more, and live in Waynesboro, where things cost less. The 30-mile commute over Afton Mountain to and from Charlottesville in the east and Waynesboro in the west has become just another part of the daily grind.

But Waynesboro may not have the housing stock or caliber to satisfy all of Northrop Grumman’s well-paid employees. Waynesboro is a smaller city — with 22,550 residents, it is half the size of Charlottesville — and its houses are significantly cheaper — its median house price at $226,700 is roughly 55% less than the average Charlottesville residence.

It is very likely that many Northrop Grumman employees will choose to work in Waynesboro and live in Charlottesville, or close to it, effectively shifting the commuter balance on Afton Mountain.

Experts go so far as to say the new factory could disrupt the regional housing market, and cause prices to rise even higher in Charlottesville and the surrounding counties in Central Virginia, already one of the most expensive places to buy property in the commonwealth.

It will be another four years before all of the jobs are filled at Northrop Grumman’s new plant, but there is already anticipation, dread and anxiety on both sides of the mountain about what those new workers, those new residents, will mean for the two markets.

In the valley

Based on engineering salaries, Waynesboro-area Realtor Bill Hausrath of Westhills Ltd. Realtors, said Northrop Grumman employees will likely target housing in the $400,000-500,000 range. A supply of which Waynesboro is lacking.

The available housing stock in Waynesboro, surrounding Augusta County and the nearby city of Staunton is about a fifth of a normal market. December listings in the three localities were just over 200 properties. Realtors say a healthy housing market in the three localities would have 1,000 new and older residences on the market.

Waynesboro has a growing supply of townhouses off Hopeman Parkway. Those properties are affordable for first-time buyers, but are likely not suitable for Northrop Grumman’s engineers.

The current housing market’s volatility is also worth noting, said Jay Langston, the executive director of the Shenandoah Valley Partnership, an economic development and marketing organization that serves 12 cities and counties in the valley that helped bring Northrop Grumman to Waynesboro.

“Housing is a big concern,” he said.

Rick Kane, the broker-owner of Westhills Ltd. Realtors in the Fishersville community west of Waynesboro, said improved senior housing is one of the keys to providing housing for Northrop Grumman workers.

“We need to cater to the 55-and-older community,” Kane said. “So when they leave and go into these homes, they will sell homes.”

But senior housing is just one facet of a complicated housing picture, according to Kane.

For the necessary senior housing, there may need to be changes in local zoning to accommodate greater density, Kane said. And there is likely to be pressure because of the influx of higher-paying jobs to increase the cost of housing, both for renting and buying.

“They can afford more so people can charge more,” he said.

And while new construction is anticipated, that is not an overnight process. Beyond the regulatory hoops from the Virginia Department of Transportation and the Virginia Department of Environmental Quality that developers will have to clear, new roads will be needed.

“More housing units means more roads and more infrastructure,” said Kane.

While the Waynesboro market may not have the inventory to support all of Northrop Grumman’s new employees, there are several other options in the Shenandoah Valley in a higher price range that would be suitable for the cohort.

In the city of Staunton as well as Augusta and Nelson counties, roughly 1,700 houses were sold last year with an average price of $310,000, according to the president of the Charlottesville Area Association of Realtors, Anne Burroughs. She said there are a few offerings, particularly in Staunton, that might be attractive to Northrop Grumman’s newcomers. However, as more individuals purchase the more expensive homes available, the median price of houses in the Staunton area will naturally increase.

But, she said it’s important to note that though the defense contractor plans to hire 300 employees, that does not directly correlate to 300 new households, as some could potentially work remotely or may already own property in the area.

“Some of that influx will be absorbed,” said Burroughs. “Seventy-five people aren’t going to create a crisis, just make the market a little bit more competitive.”

Over the mountain

Given Waynesboro’s housing market may not satisfy the demands of homebuyers looking to purchase in the $400,000-500,000 range, many may look to the Charlottesville area on the other side of the mountain.

While Charlottesville proper is not lacking in expensive properties, some might not be willing to accomodate the price tag or the distance.

“My hunch is that with that salary a lot of people will be willing to pay more for the house they want in Waynesboro,” Hamilton Lombard, a demographics researcher at the University of Virginia’s Weldon Cooper Center, told The Daily Progress. “Many people would still opt to live in Waynesboro, they might have to pay more than usual there, but still not as much as Charlottesville.”

In 2022, the median household income in Waynesboro was just over $52,000 while property values were around $226,700. Over the mountain in Charlottesville, the median household income was $67,000 with median property values sitting at $398,400.

Though $94,000 is a sizable paycheck, Northrop Grumman’s future Waynesboro employees may want to live in a place where they get more bang for their buck than the city of Charlottesville.

“We already have the most expensive housing market in Virginia, more expensive than Northern Virginia because people earn less, so it’ll add more pressure,” said Lombard. “It’s sad to say, but that said, $94,000 in Charlottesville is still below the median. So, it’ll get some additional pressure, but given it’s already so expensive, it’s going to be less pressure than in Waynesboro.”

Now, western Albemarle County is a different story, said Burroughs. While the commute from Charlottesville to Waynesboro can take up to an hour at times, the drive from western Albemarle is half an hour or less — far more ideal.

Around 450 homes were sold in the western Albemarle County school district last year, with a median price of $725,000, which could be exactly what some Northrop Grumman employees are looking for.

But, again, any rise in homebuyer demand is going to increase home prices.

“The inventory in western Albemarle can absorb the influx to a certain degree, but it would lead to higher prices,” said Burroughs. “If there’s an increase in demand, but supply remains the same, it will lead to higher prices.”

For the past decade, but especially in the past couple of years, Charlottesville workers have been opting to live farther west in Albemarle, Nelson and Augusta counties. If Northrop Grumman’s employees also opt to avoid the city of Charlottesville, and instead settle down in the counties between the two cities, their arrival could dramatically drive up prices in the places that had long been the more affordable options.

“High-paying and additional supportive jobs created out there could cause housing prices to rise,” Lombard said. “Those counties will become less of a relief valve and put more pressure on the housing market in Charlottesville.”

This could potentially force homeowners to expand the periphery of the “suburbs” of Charlottesville. Individuals may think twice before accepting a Charlottesville-based job considering the closest place they could afford may be in Lynchburg or Harrisonburg, said Lombard.

Burroughs came to the same conclusion, referring to the “drive until you qualify” concept. She drew parallels between what Lombard described and dropping a rock into still water as the ripples spread out.

“Northrop Grumman is about to throw a pretty big pebble in the pond,” said Burroughs.

Somewhere in between

It may have some adverse effects on the housing market in Central Virginia next door, but experts such as Lombard agree that the impact of Northrop Grumman’s new plant is a positive development for the city of Waynesboro.

Northrop Grumman was direct about what it needed when the company contacted Waynesboro and Shenandoah Valley economic development officials in 2022.

Langston, himself, was contacted by a site selector for the industry.

“The consultant said they wanted at least 60 acres, and they wanted something that was viable long term,” Langston said.

Langston told the site selector, “There is one property that comes to mind.”

That 63-acre property, behind the Waynesboro Town Center, was the location chosen.

Waynesboro Economic Development and Tourism Director Greg Hitchin said Northrop Grumman “did not divulge where else they were looking.” He said the keys to finalizing any deal hinge on providing a site with correct zoning, transportation and utilities. Financial incentives also must be included.

But it is known that Waynesboro was not the only location under consideration. Langston confirmed that the defense contractor also expressed interest in UVa’s North Fork Discovery Park north of Charlottesville in Albemarle County, a business park a mere 7 miles from Northrop Grumman’s offices on Seminole Trail near Charlottesville city limits.

The site ultimately chosen in Waynesboro is just off exit 94 of Interstate 64. The land contains water and sewer, and is zoned for industry.

Hitchin had encouraged the rezoning of the property to industrial four years ago to the former owner, Richard Spurzem, the owner of Neighborhood Properties of Charlottesville. Spurzem agreed.

“I went to the property owner and said, ‘We see this as industrial land.’ We proactively moved to make it light industrial,” he said. The city of Waynesboro also obtained a GO Virginia grant for preliminary engineering to make the site ready for use.

The negotiations and final agreement with Northrop Grumman took 15 months, a process that Hitchin said required a total team effort of city departments including public works, fire rescue and community development. Incentives provided to seal the agreement included $8.5 million in reimbursement of local taxes the company would pay Waynesboro over the first 10 years of operation. The commonwealth of Virginia, which became involved in the project later in the process, is also providing an $8.5 million grant from the Commonwealth’s Opportunity Fund.

Northrop Grumman must achieve performance agreements to receive both funding sources.

“Having a large multinational company select your city provides some credibility,” Hitchin said.

Langston said Northrop Grumman’s location broadens the economic offerings in the Shenandoah Valley.

“I think Northrop Grumman opens up a new sector in manufacturing for the Valley,” Langston said. The traditional industries for the area have been dominated by the food and beverage sectors, according to Langston. Hershey Chocolate and McKee Baking have major operations in the Augusta County community of Stuarts Draft, and beermaker Coors has a manufacturing facility in nearby Rockingham County.

Langston said while the jobs created will offer a big boost for Waynesboro, workers could migrate from neighboring counties and cities.

“The nature of this project creates opportunities in Albemarle County, Nelson County and Charlottesville,” he said.

While Virginia is also providing worker training under its talent accelerator program, Langston could see a cadre of area colleges and universities assisting with training.

“Northrop Grumman will look at the existing population and reach out to the University of Virginia, James Madison University and Virginia Tech and build those skills,” he said.

Blue Ridge Community College President John Downey said during the company’s groundbreaking last month that he expected the college to help train Northrop Grumman workers through the manufacturing and electronics technology programs at his school.

A number of the future employees may wind up coming from the eastern side of the mountain from UVa’s School of Engineering. Whether they will choose to continue living in Charlottesville or Albemarle is, at present, unknown.

All might not be lost for homeowners who have their hearts set on Charlottesville, as Lombard said there is hope that the housing issue will improve down the road. The responsibility would fall on local municipalities to rethink some of the strict building regulations put in place following the housing boom in the early 2000s.

“There was so much growth that governments wanted to get it under control, but now they’re realizing they might have made it too hard,” said Lombard. “Situations like this might have people coming back to think how to balance it without a mindless sprawl but one that would increase and improve the housing supply.”

Source: www.dailyprogress.com

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