A Byrd Newspapers Publication
Volume 16, No. 7, May 31, 2016
Renovations Are Trending
Spotlight
on:
Home ent m e v o r Imp Page 8
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SHENANDOAH VALLEY BUSINESS JOURNAL
Tuesday, May 31, 2016
Inside This Issue The Shenandoah Valley Business Journal is a monthly publication of Rockingham Publishing Company, Inc., 231 S. Liberty St., Harrisonburg, VA 22801.
Editorial Staff
Focus Section: Home Improvement ■ Home Renovations On An Upswing...............Page 8
Other Business News ■ CEO Honored With Young Retailer Award...........Page 11
Editor and General Manager: Peter S. Yates
■ Local Ledger..................................................Page 12
Managing Editor: Jerry Blair
■ Investments by Matthew Frakes.....................Page 3 ■ Real Estate with Tim Reamer..........................Page 4
Contributing Photographers: Austin Bachand
HARRISONBURG — Del. Tony Wilt, R-Broadway, was honored by the Virginia, Maryland and Delaware Association of Electric Cooperatives as a Distinguished Friends of Electric Cooperatives. The award, presented in Charlottesville at the association’s quarterly meeting, recognizes lawmakers and other public servants “who have strongly supported the best interests of electric cooperative member-owners,” according to a news release. Wilt was cited for consistently considering the concerns of electric cooperatives and their members before casting votes. He helped pass a 2012 bill requiring cable companies to negotiate in good faith to obtain pole attachments for cable lines, improving the cost-sharing of utility pole maintenance.
Contact us By mail: Shenandoah Valley Business Journal P.O. Box 193 Harrisonburg, VA 22803 By email: svbjnews@dnronline.com By fax: 433-9112 By phone: 574-6267 (news) 574-6229 (ads)
Columns
Staff Writers: Vic Bradshaw, Shelby Mertens
Electric Cooperatives Honor Wilt
Harrisonburg, Va.
■ Business Law with Jared Burden.....................Page 6
Last year, he backed a co-op requested amendment regarding electric utilities’ net-metering programs. The VMDAEC is a trade association for 15 consumer-owned, nonprofit electric distribution cooperatives in the three states. It is headquartered in Glen Allen. — Vic Bradshaw
Farm Credit Hires JMU Grad HARRISONBURG — Farm Credit of the Virginias has hired Bleighton Owsley as a customer service representative in its Harrisonburg office. A Myrtle Beach, S.C,, native, Owsley earned a bachelor’s degree in Spanish at James Madison University. He previously worked in investment operations, wealth See MOVERS, Page 12
First National Corp. Boosts First-Quarter Earnings HARRISONBURG — First National Corp. (OTC: FXNC), the parent company of First Bank, announced strong first-quarter results. The bank holding company headquartered in Strasburg netted $1.1 million, or 22 cents per share, in the period that ended March 31. That easily topped the $813,000, or 17 cents per share, earned in the first quarter of 2015 and the $215,000, or 4 cents per share, net profit recorded in the previous quarter. In a news release, Scott Harvard, First National’s president and CEO, said the 35 percent year-over-year earnings increase was mostly attributable to “loan growth, lower expenses and a full quarter with no outstanding preferred stock.” Net interest income rose to $5.7 mil-
On The Cover: Austin Bachand / DN-R John Mullenex of Mullenex Flooring in Harrisonburg installs flooring in a home on May 19.
lion from $4.6 million in the first quarter of 2015. Interest on securities paced the growth, climbing to $888,000 from $422,000 in the previous first quarter. First National’s return on equity increased to 9.39 percent. During the same period in 2015, its return on equity was 3.67 percent. Net loans posted year-over-year growth of 15 percent, increasing to $448.6 million from $391.7 million. First Bank has 17 retail bank branches in Central Virginia and the Shenandoah Valley, including Elkton, Mount Jackson and Woodstock. It also operates a mortgage division, First Bank Wealth Management and First Bank Financial Services Inc. — Vic Bradshaw See SCENE, Page 7
Harrisonburg, Va.
SHENANDOAH VALLEY BUSINESS JOURNAL
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Avoid Wasteful Spending By Gift Recipients G
iving financial gifts to children or grandchildren can help reduce your estate taxes. However, if you are concerned about wasteful spending by the recipients, there are several options that allow you to exercise some control over how the is money used.
How Much Can You Give? Federal law permits unlimited tax-free annual exclusion gifts of up to $14,000 per recipient ($28,000 if married), without the donor having to file a federal gift tax return. If you make a gift to any person in excess of the annual exclusion amount, you will be required to file a federal gift tax return. However, if your gift exceeds the $14,000 annual gifting amount or $28,000 jointly (husband and wife), the excess amount will reduce your lifetime gift and estate tax exemption — currently $5.45 million per individual ($10.9 million per married couple) — and you will need to file
a gift tax return (Form 709), but will not have to pay any gift tax. The gift will simply reduce the amount of your lifetime exemption amount. Taxes may not be owed in this instance, but you will be required to file a gift tax return. Your generosity and good fortune potentially places a significant amount of money into the hands of children and grandchildren — adult as well as minors — who may be unprepared to manage a windfall. Here are some suggestions that may allay your concerns:
Lead By Example When making gifts to adult children, discuss your feelings with them in advance. Suggest that they put the money to good use, such as paying down debt, starting a college fund for their own children, investing a portion or donating some or all to a charity of their choice. Avoid handing a check to an adult child who you believe may squander the money.
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Instead, offer to contribute to big-ticket items, such as a new car or a mortgage down payment, or require them to attend a financial education course to learn about budgeting, savings, credit scores and other topics which could help them become fiscally responsible adults.
form Transfers to Minors Act or Uniform Gifts to Minors Act custodial accounts may be appropriate choices. With UTMA/UGMAs accounts, the minor owns the funds received as a gift, but the donor may serve as custodian and has complete control of the account until the minor reaches the age of majority (generally 18 or 21 depending on
Custodial Accounts, Trusts If the gift recipient is a young child, Uni-
See SPENDING, Page 7
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SHENANDOAH VALLEY BUSINESS JOURNAL
Harrisonburg, Va.
The Tragedies And Student Housing H
e was respected among his peers, well read, and filled with high thoughts encouraged by the philosophy he studied. He was honest, kind, and patriotic. In short, he was a good man but he also was a man who killed his friend. On the steps of the Senate that had functioned as the governing body of Rome for hundreds of years without the need for a king lay the body of a man who had claimed rights to that position of power. It was Brutus’ family that had assassinated the last man to serve as king four centuries earlier and it was Brutus who successfully conspired to kill his friend, and emperor, Julius Caesar. But, Shakespeare’s Julius Caesar isn’t really about the title character or his death. Like many other of Shakespeare’s 12 tragedies, it is about the flaws of men and governments. More specifically, it is about the fatal flaw that simultaneously permits them to reach their fullest potential while cultivating their
Real Estate Tim Reamer
deadliest sin leading to their downfall when taken to the extreme. As for Brutus — with all of his noble traits and learnedness — his great fault was assuming it was his obligation to be interfering with things that he did not fully understand. Simply put, a tragic flaw can sometimes lead to the very thing it was intended to prevent. And in this regard it is one of the rea-
sons Julius Caesar came to mind as I was thinking of student housing. It is often said the Harrisonburg metro has an overabundance of student housing. I would like to suggest we don’t have nearly enough student housing or market rate apartments. At the very least, there isn’t enough to reach the often-cited objectives of preventing either from contributing to sprawl or keeping older projects from falling
into a state of disrepair. I believe the solution to both issues, and several others ranging from transportation to public services demand, is very simple: zone more land for high-density housing as a by-right use. As it stands, the amount of land zoned for high-density housing development is virtually nonexistent and intentionally so. This type of housing, like other sorts of intensive development, places demands on a community’s infrastructure, and municipalities often feel the best way to control this growth is to limit the supply. Another term for this is artificial scarcity. Remember this term, because it plays a key part in our story. Meanwhile, the demand from student-housing developers in the market is extremely high as they seek to deliver the layouts and amenities their consumers (students and parents of students) desire and for See TRAGEDIES, Page 5
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SHENANDOAH VALLEY BUSINESS JOURNAL
Harrisonburg, Va.
Student Housing Not A Public Pleaser Tragedies
FROM PAGE 4
which they are willing to pay. Without question, student-housing developers have successfully rezoned some land for new complexes. Aspen Heights is the most recent example of a finished product and a couple others are under consideration. While they’re not always popular with the general public (even though they are relatively low-cost sources of tax revenue), these new units have proven to be appealing to students and illustrated by the fact that students have overwhelmingly shifted to them. As a result, owners of older units have been forced to reduce prices to continue to attract students to an inferior product. With reduced rents, the amount of capital available for repairs and refurbishment is limited. This older product, which quite often is extremely well located, doesn’t justify additional investment and sometimes falls into a state of disrepair. This type of blight is exactly what the governing bodies feared.
So often the response is, “Why should we zone for more high-density housing when we have student-housing falling down in our community?” Perhaps the fatal flaw in that question is that it is only for of the lack of high-density residential zoning, the creation of this artificial scarcity, that we have units in a state of disrepair. The effort to suppress supply has created an environment in which older student housing fills the gaps in the market beyond its original intent. Sometimes it’s the student that can’t afford the higher rents offered at the newest developments and other times it’s a small family or lower income individual. In any case, it fills a need but also serves to put a floor on where rents bottom out. In effect, artificial scarcity has resulted in reverse rent control, which serves as further disincentive for investment creating the potential for perpetual blight in many cases in the current environment. Even with below market rates, the rents collected are generally high enough to prevent redevelopment. As an example,
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assume there is a 100-unit complex on 9 acres generating only $400 per month per unit on average. This equals $480,000 of revenue collected annually. For the sake of simplicity, let’s assume operating expenses are slightly higher than normal and are 40 percent of total revenue collected leaving a net operating income of $288,000. Assuming a generous cap rate of 9.5 percent creates a value just north of $3 million or $336,000 per acre. If this math didn’t make one bit of sense to you, just know this price is nearly double the market rate for high-density residential land before demolition of the building and site work are taken into consideration. In short, the rents in place would never permit a valuation that supports demolition and redevelopment in the locations often best suited for student housing development. In other words, it is my position that inhibiting competition through artificial scarcity has led to the very thing it was intended to prevent. A different approach to high-density housing development may not only result in more choices for consumers of these products, but the increased supply would also eliminate the
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high rent floor. Without these artificially inflated rents or occupancy rates, blighted properties would be forced to more accurately reflect their actual value in the market allowing redevelopment to take place as the market demands it in the locations that make the most sense. Let me finish by saying this is simply a theory and not a statement of fact. I don’t wish to share the same tragic flaw as Brutus and certainly don’t intend to die in a bloody battle for this belief. Admittedly, there are many aspects of the student housing discussion to which I am not privy and have no desire to be meddling in. That said, I do think this notion is grounded firmly in basic economic principle and hope that it will be accepted as it was intended, which is nothing more than a contribution for further conversation. Tim Reamer provides commercial real estate brokerage and consulting services with Cottonwood Commercial and specializes in retail representation, investment property (multifamily | commercial | NNN), and development projects. Learn more at www.timreamer.com.
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SHENANDOAH VALLEY BUSINESS JOURNAL
Harrisonburg, Va.
Would You Pay More To Have Someone Pick Up Your Shirts? I
used to think of the independent contractor as a person with a special skill. If I were hiring one, it would be because that person could do things I couldn’t do and do them more quickly and better. I’d vet qualifications, make a deal on the economics, assure we’re all on the same page on the intended result, and set them free to do their magic. In my mind’s eye, I see a graphic artist who’s handy with a logo, a person with a tool belt and a too-new-looking truck who builds your wall of bookshelves, or an accountant. Someone who knows how to do something I don’t know how to do. (Which is a lot.) I would have been comfortable betting you lunch that if you asked 10 independent contractors who were doing contract work by choice what they valued the most, they’d say “freedom.” Freedom, pure and simple. Free agents will tell you that it’s a wonderful thing to be really good at what you do and have all the leeway in the world to decide when you do it, how to do it, who to do it with — all of it. It’s the excitement of being an entrepreneur. All of this seems very far away from the driver’s seat of an Uber vehicle. Who’s in the driver seat? An independent contractor, according to Uber. Recently, the company agreed to pay at least $84 million to settle two class-action lawsuits to avoid what it perceives as a cataclysmic hit to its business model: the recharacterization of its drivers as employees. Drivers, yes, can choose when they work and for whom they work, even a direct competitor. But they must pay their own expenses and perform their job in strict conformance to branding-driven standards. If it had to take its 385,000 drivers into the fold as employees, Uber would have to pay the approximately 30 percent higher labor costs that come along with the status of employee. Reimbursement of business expenses, federal and state tax withholding, the employer share of Social Security and Medicare, unemployment insurance, workers
Business Law Jared Burden
compensation premiums, the need to ad- cases part-time employees (to avoid having here to anti-discrimination laws, mini- to pay the full freight of being an employmum wage and overtime, liability for the er). Pitches to venture funds and acceleranegligent acts of their drivers, health care tors shifted to include assertions like, “We and other benefits — all of it. Avoiding this result was a core insight are not Uber.” But now the settlement. It may mean of the mobile platform business model piothat the on-demand inneered by Uber way back dustry model is here to in 2009 and copied by inThe absolute stay for a while. numerable “on-demand” The absolute venture companies, such as Inventure capital capital funding frenzy stacart, Lyft, Postmates, funding frenzy that that has launched these the defunct Homejoy has launched companies allowed them and SpoonRocket, and [ride-sharing] to hone their deft brandmany, many others ing, refine their proprithat have deployed concompanies allowed etary algorithms, and, tracted labor to do the them to hone their let’s face it, project very things their app-loving, deft branding, refine compelling services deep time-crunched, conveinto the urban markettheir proprietary nience-seeking customplace. The hook is deep ers want done (house algorithms, and, into the mouth of urban cleaning, food preparalet’s face it, project culture. (If the settletion and delivery, shopvery compelling ment works for Uber, it ping for necessities, pickcame fairly cheaply: the ing up dry cleaning, etc.). services deep settlement averaged out Uber hit a bump in its into the urban to about $218 per drivroad last summer when marketplace. er, according to simple a California administramath.) tive judge ruled that one What we have now, of its drivers was, in fact, an employee. according to one economist, is a nation (esThe ruling scared the bejeezus out of pecially in the microcosms of larger cities) the entire industry. Articles were written that is divided in two: On one side are the about the death of the on-demand econo- people with money but no time, and on the my. Platform-based app companies that other side are the people with time but no weren’t committed to the labor model as money. deeply as Uber switched all or part of their In the Uber-type company, workers labor force to employees, albeit in some with time but no money are commoditized.
“
They submit to an industry that is built on what one observer called “the efficient allocation of human beings.” This is a far cry from the happy warrior with the toolbox, a truck full of gizmos and a head full of hard-won knowledge. He was a person you hired because he had mastered his craft. A craft that you couldn’t just decide to do one day and enter the marketplace performing at the same level as anyone else. In many ways, a low barrier of entry into a way to earn a living is a great thing. Upon making an application and, maybe, passing a background check, you can enter an industry that is really onto something. You can seamlessly and effortlessly be in a place where you can deploy a sophisticated brand to a demographic craving solutions for their crunch of time and their desire to simplify. But what is lost when an entire industry segment that is so shiny and slick is enabled by a business model that demands so little of people? It may just be as simple as the Great Recession came along at the perfect time for these companies. They were able to take advantage of a possibility that a person with a graduate degree might come to think that cleaning a large home for $25 plus a tip was an expression of freedom. The CEO of a venture-funded online health care plan clearinghouse, which benefits from a world full of people working as independent contractors and not employees, celebrated this in a recent LinkedIn article: Because of the on-demand economy, a new kind of freelancing has become possible that doesn’t require you to spend years to acquire skills and reputation. The individual reputation that was built by the sole proprietor in the 1980s has been supplanted by the reputation of a consumer platform. It may be no big deal that some of the shiniest companies in the world, delivering undisputedly cool services that address very real needs, are dependent on thousands of individual decisions to give up the See PAY, Page 7
Harrisonburg, Va.
Worker Becomes Employee When Told What To Do Pay
FROM PAGE 6
quest for a personal reputation and special skills. But when a worker has made that decision in the past, when they’ve gone to work for a company that tells them how to do their job, it’s generally been as an employee. Maybe all it would take would be for us to pay a bit more to skip having to go to the dry cleaner or avoid having to drive home tipsy. Has anyone thought of that? Disclaimer: This article is for informational purposes only and does not constitute legal advice. Jared Burden practices general business, commercial real estate and intellectual property law in Virginia and D.C., based from a Harrisonburg office. He also works as outside corporate general counsel to companies through his OPENgc service offering.
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You Choose Transfer Time With A Trust Financial Group contribution of $70,000 to a 529 plan in Spending Sees A Loss the first year of a five-year period (or FROM PAGE 3
the state), at which point the custodian is $140,000 per married couple). required under the law to Keep in mind that if turn the assets over to the you choose that option, “For those former minor. you’ll have to avoid giving For those desiring some the recipient any additiondesiring some lasting control over the al annual exclusion gifts lasting control gifted money, a trust may during the remainder of over the gifted be the better choice. Unthe five-year period. money, a trust like custodial accounts, These are just a few may be the money held in a trust is suggestions for making not required to be transthoughtful, satisfying gifts better choice. ferred to the beneficiary at to children. Contact me for ... [M]oney held a specific age. You choose help assessing your overall in a trust is not the timing and distribuestate and exploring addirequired to be tion schedule, for example tional gifting and financial transferred to a lump sum at age 21, or education options. periodic payments over a Article written by the beneficiary set number of years. Wealth Management at a specific If you prefer that the Systems Inc., providage.” money be used to fund loned courtesy of Matthew ger term financial goals, R. Frakes, The Frakes offer to fund an individual Group at Morgan Stanretirement account or open a 529 college ley, in Harrisonburg. Call 438-7909 savings plan. Under the special five-year or visit online, www.morganstanleyfa. election rule, you can make a lump-sum com/thefrakesgroup.
Scene
FROM PAGE 2
Summit Financial Group’s Earnings Down In First Quarter HARRISONBURG — Summit Financial Group (NASDAQ: SMMF) reported in late April that its first-quarter earnings dipped compared to the same period last year. The company’s profit for the quarter was $4.06 million, or 38 cents per diluted share. That represented a 5.2 percent decrease, or 7.3 decrease per diluted share, when compared to the $4.29 million, or 41 cents per share, it earned in the first three months of 2015. In their earnings news release, Summit officials attributed the decline to increased personnel costs, other additional noninterest expenses and a reduction in insurance commissions revenue. Headquartered in Moorefield, W.Va., Summit operates 15 See SCENE, Page 15
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SHENANDOAH VALLEY BUSINESS JOURNAL
Harrisonburg, Va.
Home Renovations On An Upswing Homeowners Adding Rooms To Properties By VIC BRADSHAW Daily News-Record
HARRISONBURG — When the housing bubble burst, the spigot didn’t just turn off on new construction. Homeowners across America largely scaled back on remodeling their abodes, too. But as the economy and home sales have improved locally, so has interest in home improvement projects. In fact, some construction-industry leaders say many area residents who in the past might have changed homes periodically are opting to renovate, not relocate. “We’re doing a lot more renovations since the downturn in the economy,” said Bryan Nesselrodt, president of Bryan A. Nesselrodt Construction Inc., who estimated that remodels and additions account for about 25 percent of the company’s work now. “We’re still seeing a lot of people who are more apt to renovate what We’re doing a lot they have more renovations or add on to what have since the downturn instead of in the economy. trying to buy a new home. “When the Bryan Nesselrodt, economy was Bryan A. Nesselrodt good, we did Construction Inc. almost zero renovations. There wasn’t as much out there, and new construction was making so much money.” Though his company did mostly new construction leading up to the recession, Nesselrodt said the mix quickly shifted to between 60 and 75 percent remodels during the downturn. Their customers during that time either had the cash required for the improvements or enough collateral to get the loan amount they needed. Whether it’s adding rooms or just a deck, or updating a bathroom or kitchen, many homeowners apparently are seeing value in altering their living space. According to the National Association
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Austin Bachand / DN-R
Sustainable Solutions field manager Denton Riggleman of Dayton cuts a wall between two windows while renovating a Harrisonburg home on May 19. of Home Builders, residential remodel activity was projected to increase 1.1 percent in 2016 and another 1.9 percent in 2017. J.M. Snell, president of the Homebuilders Association of Virginia, said many builders shifted to renovation work to survive when new construction ground to a halt in the late 2000s. Remodels slowed during the downturn because many homeowners couldn’t borrow money to pay for improvements, but that segment of the industry began to rebound about six years ago and remains on the rise. “In 2008, access to funds almost completely dried up, and it stayed that way in 2009 and into 2010,” said Snell, executive vice president of Valley Renovators, which despite its name does mostly new
construction now. “But since 2011, remodeling has become a pretty strong piece of the construction industry.”
Different Trends The addition, remodeling and basement-finishing work Nesselrodt Construction is doing now tends to be more for leisure purposes than living quarters, Nesselrodt said. His customers are adding family rooms, entertainment rooms with large sound systems, or places to entertain guests. That, however, isn’t the case for Sustainable Solutions. Though kitchen upgrades remain strong for his company, President Neal Lewis said open space is driving most of its home-renovation business.
“We’re doing a lot of wall removal. People are wanting to go to more open floor plans and not have compartmentalized homes,” he said. “That’s the big thing we see in most all of our renovations, removing some sort of wall to open up space.” Owner Jill McGlaughlin, however, said the trend her company is seeing is different. Instead of the kitchen being the focus for many of its customers, more Classic Kitchen & Bath clients are updating their bathrooms. “Someone joked that it used to be the room that you didn’t want anyone to see,” she said, “but now you want to show it off.” One reason for the switch to bathroom See RENOVATIONS, Page 9
SHENANDOAH VALLEY BUSINESS JOURNAL
Harrisonburg, Va.
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Television Shows Could Be A Factor Renovations
FROM PAGE 8
remodels is demographics. McGlaughlin said many baby boomers are having their bathtubs removed and installing walk-in showers so they can remain in their homes longer. Other Classic Kitchen & Bath customers are having master suites built, with showers with multiple heads, body sprays or steam features. “People are not going on extravagant trips, and master suites are luxuries they enjoy when they’re on vacation,” said McGlaughlin, whose company also does cabinets, closets, laundry room and mud rooms. “I don’t know if the home shows on television are driving it, but people are wanting a more luxurious bath environment.” Student-housing construction helped her company weather the downturn, as did the cabinet line it had just introduced. She said customers tended to contract smaller jobs as the economy improved, but spending
picked up last year as people decided to treat themselves to the upgrades they wanted.
TV Factor Remodeling work was vital to Sustainable Solutions when veteran builders Lewis and Danny Rohrer teamed to form the company in 2009, Lewis said. The downturn was in full swing, and new construction work was scarce. “In the midst of this recession, the folks who had money were happy and ready to engage in projects,” said Lewis, whose company also does commercial renovation and new construction. “When we first started, almost 100 percent of our work was home remodeling.” He estimated that about 60 percent of Sustainable Solutions’ busiAustin Bachand / DN-R ness now is from clients renovating Jon Mullenex of Mullenex Flooring in Harrisonburg cuts flooring for a home renovation on May 19. their homes. “[P]eople are wanting a more luxurious bath environment,” said Jill McGlaughlin, owner of Classic See RENOVATIONS, Page 10 Kitchen & Bath.
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SHENANDOAH VALLEY BUSINESS JOURNAL
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Harrisonburg, Va.
Renovators Are ‘Not Stuck Doing The Same Thing’ Renovations
FROM PAGE 9
The company, which has a staff of 14, focuses on demolition, construction preparation and carpentry work and owns and operates Mossy Creek Cabinet Co. in Bridgewater, Lewis said. Its plumbing, mechanical, electrical, drywall, painting and some of its masonry are done by trade partners it uses regularly. Sustainable Solutions, he said, has placed an emphasis on the aging-in-place niche. It has a designer on staff as well as someone with occupational therapy experience, and Rohrer is an aging-inplace specialist. Nesselrodt, whose company employs 14 carpenters and does light commercial renovations as well as new construction, said his workers like doing remodeling work because of the challenges it sometimes poses. “They’re not stuck doing the same thing every day,” he said. “In renovation you see things, discover things hidden behind walls. It’s a challenge.” Sales growth over the last couple of years has been good for his company, Nesselrodt said. As profit margins have risen, he’s been able to reinstate benefits such as 401(k) plans, give raises, and upgrade vehicles and equipment. Lewis and McGlaughlin both said they think the popular home-renovation television shows are affecting the business. The programs, McGlaughlin said, of-
Austin Bachand / DN-R
Neal Lewis, a partner at Sustainable Solutions, measures a window for a home renovation on May 19.
ten confirm that upgrades are a good investment. The shows and the array of information available on the Internet are major reasons remodelers are working with a more informed client base, said Lewis, a change he sees as positive because it cre-
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ates a good starting point. “People generally show up with at least some idea of what they think they want, the products sort of vetted, and they show up with ideas from Pinterest or Houzz or Porch or any of these websites you can go on and see things,” he
said. “We’re dealing with folks who have a lot more information when they come to the table than even when we first started this business.” Contact Vic Bradshaw at 574-6279 or vbradshaw@dnronline.com
Harrisonburg, Va.
SHENANDOAH VALLEY BUSINESS JOURNAL
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CEO Honored With Young Retailer Award By SHELBY MERTENS Byrd Newspapers
TIMBERVILLE — In eight years, Christian Herrick went from sweeping the floors of Randy’s Do It Best Hardware store to becoming the family-run business’ CEO. Herrick, 33, has been named a Young Retailer of the Year by the North American Retail Hardware Association. The nonprofit association awarded the honor to eight other nominees from the U.S. and Canada. The annual award is given to successful industry retailers 35 years and younger who meet certain criteria in the fields of “professional activities, community involvement and hardware industry education and extracurricular activities,” a press release from the NRHA stated. “The Young Retailer of the Year program continues to gain prestige in the retailing industry. Manufacturers, retailers and wholesalers all anticipate the selec-
tion and celebration of the extraordinary accomplishments of the honorees,” stated Bill Lee, president and CEO of NRHA, based in Indianapolis. “To be selected as a Young Retailer of the Year is a high honor, one that Christian Herrick has earned through his passion for hardware and commitment to his community.” Owners Randy Andes and his wife, Shirley, opened Randy’s Do It Best in Timberville in 2001. Randy’s is part of a buying cooperative, Do It Best Corp., which has almost 4,000 member-owners. Herrick was picked as the company’s nominee for the award. Herrick said he held many different jobs as a teenager, and although he was interested in pursuing construction management, he wasn’t sure where he wanted to take his career. He decided to take a part-time job at Randy’s in 2008 as a floor sweeper. His wife, Rachel, who is also the See CEO, Page 13
Nikki Fox / DN-R
Christian Herrick, CEO of Randy’s Do It Best Hardware in Timberville, speaks with a customer over on May 11.
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Tuesday, May 31, 2016
Farm Credit In Va., W.Va., Md. Movers
FROM PAGE 2
management and as a teller for a St. Louis branch of a national commercial bank. Farm Credit of the Virginias is a cooperative that provides financing for more than 10,000 farmers, agribusinesses and rural homeowners in parts of Virginia, West Virginia and Maryland. — Vic Bradshaw
Nielsen Builders Hires Harrison To Lead TiltCon Division HARRISONBURG — Nielsen Builders Inc. has hired Jonathan Harrison to manage its TiltCon Division and expand the company’s involvement in tilt-up construction. The Harrisonburg resident earned a bachelor’s degree in civil engineering and a master’s degree in business administration from James Madison University. Harrison has more Harrison than 20 years of industry experience in North Carolina and Virginia, including the Harrisonburg area. He’s worked in construction estimating, project management and operations. — Vic Bradshaw
Two Everence Employees Honored HARRISONBURG — Beryl Jantzi and Jacqueline Painter, who work out of the Harrisonburg office of Everence, recently were presented awards at the Everence National Convention in Harrisburg, Pa., according to a news release. Jantzi, the office’s director of stewardship education, received the President’s Stewardship Award, which recognizes an Everence employee who embodies a life of stewardship and is engaged in his church, community and the world. He has trained financial coaches who will help church members with financial issues and helped See MOVERS, Page 14
Harrisonburg, Va.
Local Ledger Central Valley Area Home Sales Median Price Harrisonburg Rockingham Shenandoah Page Augusta Staunton Waynesboro
April 2016
April 2015
Pct. Change
$145,000 $210,000 $162,450 $111,500 N/A N/A N/A
$145,000 $199,000 $185,000 $180,000 N/A N/A N/A
0.00% 5.53% -12.19% -38.06% N/A N/A N/A
Days On Market Harrisonburg Rockingham Shenandoah Page Augusta Staunton Waynesboro
April 2016
April 2015
Pct. Change
40 114 166 183 N/A N/A N/A
63 82 142 278 N/A N/A N/A
-36.51% 39.02% 16.90% -34.17% N/A N/A N/A
Units Sold Harrisonburg Rockingham Shenandoah Page Augusta Staunton Waynesboro
April 2016
April 2015
Pct. Change
31 69 58 14 N/A N/A N/A
29 64 35 7 N/A N/A N/A
6.90% 7.81% 65.71% 100.00% N/A N/A N/A
Sources: Funkhouser Real Estate Group; Real Estate Business Intelligence
Building Permits* March 2016
Harrisonburg Rockingham Page Augusta
Permits Issued
10 24 4 19
Estimated Cost
$1.46M $5.46M $710,000 $3.95M
Source: censtats.census.gov/bldg/bldgprmt.shtml *Permits are for residential construction only, single- and multifamily buildings, as recorded by the U.S. Census Bureau.
Unemployment Harrisonburg Rockingham Shenandoah Page Augusta Staunton Waynesboro
March 2016
February 2015
March 2015
4.8% 3.8 4.0 6.8 3.9 4.1 4.2
4.6% 3.7 4.1 7.7 3.9 4.2 4.3
5.5% 4.5 4.7 8.1 4.5 4.8 5.3
Source: Virginia Employment Commission
Labor Force Harrisonburg Rockingham Shenandoah Page Augusta Staunton Waynesboro
March 2016
February 2015
March 2015
23,855 39,453 21,178 11,329 35,799 11,770 9,856
23,942 39,687 21,106 11,343 35,704 11,729 9,817
24,362 40,701 21,265 11,581 37,142 12,131 10,184
Source: Virginia Employment Commission
Retail Sales (in millions) March 2016
Harrisonburg Rockingham Shenandoah Page Augusta Staunton Waynesboro
$114.2 $60.3 $37.3 $15.7 $49.1 $35.0 $50.9
Source: Weldon Cooper Center for Economic and Policy Studies
Harrisonburg, Va.
SHENANDOAH VALLEY BUSINESS JOURNAL
Big Part In Opening Bridgewater Store CEO
FROM PAGE 11
Andeses’ daughter, was pregnant with their second child, and both were taking a break from schooling. “I wasn’t even a salesperson,” he said. “I was beneath that. I didn’t do anything other than sweep floors and do a little inventory.” But Herrick worked his way up and became a salesman a few months later. “I just started helping customers little by little and started taking on more responsibilities and found that I really enjoyed it,” he said. Herrick soon found that he was a natural leader. “As a salesperson, I saw things that needed to be done, and other employees just started coming to me with questions or problems that needed to be solved, so it kind of naturally evolved into a management position for me even though I wasn’t a manager at the time,” Herrick said. He then became a manager-in-training at the Timberville store. During
those two years, Herrick was instrumental in the opening of Randy’s second location in Bridgewater, and he became the store manager once it opened in 2011. The NRHA says the Bridgewater store saw a 20 percent increase in sales after its first year in business. Under Herrick’s leadership, the Timberville store was also expanded, adding 6,000 square feet to make the store a total 14,000 square feet. Herrick became vice president of retail operations for the business, a role he held for another two years. He was promoted to CEO earlier this year. “I was really passionate about [hardware], which I think is what led to my progression so quickly,” he said. And when Herrick learned that a Wal-Mart was going to open across the street from the Timberville store, he took action. Through a retail management certification program at Butler University, in partnership with the NRHA, he undertook a class project designed to help his business prosper in the wake of a new big-box retailer in the neighborhood.
“The largest retailer in the world coming into a town of this size is going to have a big impact on anybody in town, especially us being right across the street,” he said. Herrick based his plans on how other small businesses have survived the surge of giant retail chains. “Our biggest deal is to really set ourselves apart from Wal-Mart, to be as different as we can be,” he said. “We felt before that we were different from them, but we weren’t communicating that clearly ... with ourselves and with the community.” Herrick’s first plan was to take out any product that could be purchased at its new rival. “We started bringing in stuff that screamed American-made or high quality,” he said. The staff began to wear uniforms and trained its sales team to focus on delivering personable customer service. Herrick also shifted its advertising to emphasize American-made products. “The success of the project is a big part of why I got the award,” Herrick said. The Wal-Mart is expected to open this summer, and Herrick said his store
Tuesday, May 31, 2016
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is ready. Randy’s also gives back to the community by benefiting local nonprofits like Meals on Wheels and the Harrisonburg and Rockingham Thermal Shelter, which is one of the selection categories for the NRHA honor. Randy Andes said he is proud of Herrick’s work and was thrilled when he got the news that Herrick was named a Young Retailer of the Year. “He worked very hard at it,” Andes said. “He wanted to do the best job he could . … He kept taking things to the next step up. I was very proud and very excited for him, not only as an employee, but as a son-in-law as well.” Herrick attended the NRHA’s award ceremony in Las Vegas on May 3 to receive his plaque. “I’m not one to look for recognition or awards regularly, but this is an award that I had desired for several years,” he said. “I felt honored and humbled that they had chosen me, so I’m gratified that all my work was recognized. And not just my work, but our whole team.” Contact Shelby Mertens at 574-6274 or smertens@dnronline.com
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SHENANDOAH VALLEY BUSINESS JOURNAL
Tuesday, May 31, 2016
City Office On Mount Clinton Pike Movers
FROM PAGE 12
Everence obtain a Lilly Endowment grant to provide financial assistance and education for pastors. Painter, a financial adviser, received the New Advisor of the Year Award for her performance in 2015. She managed the Everence Federal Credit Union branch in Harrisonburg before becoming an adviser.
Everence is a member-owned cooperative based in Goshen, Ind., and affiliated with the Mennonite Church USA. It offers banking, insurance and financial services, including financial planning, with an eye toward community benefits and stewardship. Its Harrisonburg office is at 841 Mount Clinton Pike, Suite A. — Vic Bradshaw
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Harrisonburg, Va.
Distracted-Driving Game A Winner For Kendall Law Firm
Mendez Makes President’s Club
HARRISONBURG — The “Reckless Racer” online educational game contracted by Kendall Law Firm recently was honored at the 22nd annual Communicator Awards, according to a press release. The personal-injury firm, headquartered in Charlottesville with an office in Harrisonburg, hired Raleigh, N.C., online legal marketing consultant Consultwebs to create the game. It was honored with an Interactive Award in the “Gaming or Gaming-Related” subcategory. “Reckless Racer” allows users to test their skills on a virtual road course while facing multiple distractions. Its goal is to educate drivers about the dangers of distracted driving. The game can be played at kendalllawfirm.net/reckless-racer/. More than 6,000 entries were submitted to the contest, held by the Academy of Interactive and Visual Arts to honor excellence among communication professionals.
HARRISONBURG — BB&T Insurance Services for the fifth time has recognized Tom Mendez as a member of its President’s Club. The annual designation honors top insurance professionals working for BB&T, the nation’s fifth-largest retail insurance broker. He was cited at a reception in Pinehurst, N.C. Mendez, a Harrisonburg resident who works out of BB&T Insurance’s office in the city, is a vice president and commercial insurance executive for Mendez the company. He helps businesses, nonprofit organizations and educational institutions in Virginia and 20 other states with risk management and insurance brokerages services. During his 34-year career, he has earned the Chartered Life Underwriter and Certified Insurance Counselor designations.
— Vic Bradshaw
— Vic Bradshaw
Harrisonburg, Va.
Net Interest Income Grew 2.2 Percent Scene
FROM PAGE 7
bank branches, including on Neff Avenue and South Main Street in Harrisonburg, and two Summit Insurance Services offices. Net interest income grew 2.2 percent, to $11.8 million, when compared to the first quarter of 2015. However, 18.1 percent declines were reported in both insurance commissions ($924,000 in the quarter) and securities gains ($393,000). Noninterest income was $2.8 million, down 10.6 percent compared to $3.1 million in the first quarter of 2015, while noninterest expense climbed 4.3 percent to $8.6 million. Return on average equity for the period was 11.1 percent, down from 12.79 percent a year earlier. — Vic Bradshaw
United Bankshares Earnings Rise Slightly In First Quarter HARRISONBURG — United Bankshares Inc. (NASDAQ: UBSI) announced in late April that its first-quarter earnings edged up slightly this year. The parent company of United Bank posted net earnings of $34.7 million in the period versus $34.6 million in the first quarter of 2015, according to a news release. Earnings were 50 cents per diluted share for both periods. United also topped its performance of the fourth quarter of 2015, when it netted
SHENANDOAH VALLEY BUSINESS JOURNAL $33.5 million, or 48 cents per share. However, before-tax earnings increased $2.7 million, or 5 percent, to $52.6 million. United’s annualized return on average assets was 1.13 percent, and its annualized return on average equity reached 8.06 percent. Those figures bested the 2015 peer-group results reported by the Federal Reserve but were below its first quarter of 2015 performance of 1.16 percent and 8.38 percent, respectively. Based in Washington, D.C., and Charleston, W.Va., United Bank counts branches in Harrisonburg, Bridgewater, Broadway, Elkton, Weyers Cave, Woodstock and Strasburg among its 129 retail locations in Virginia, West Virginia, Washington, Maryland, Ohio and Pennsylvania.
Tuesday, May 31, 2016
period in 2015, a decline attributed to the costs associated with its November 2015 issuance of subordinated debt. The Luray-based parent company of Blue Ridge Bank netted $524,000, or 37 cents per common share, in the quarter that ended March 31 compared to $555,000, or 43 cents per common share, for the first three months of 2015. Annualized return on average assets slipped to 0.81 percent from 0.95 percent, while return on average equity fell to 8.11 percent from 9.49 percent. Assets have grown 11.2 percent to
$272.2 million over the last year, highlighted by increases of $20.7 million, or 10.9 percent, in deposits and $19.1 million, or 10.1 percent, in loans held for investments. Blue Ridge’s board of directors declared a dividend of 11.75 cents per share for the quarter, up from 11.5 cents a share the previous year. The company operates offices in Harrisonburg, McGaheysville, Luray, Shenandoah and Charlottesville. — Vic Bradshaw
— Vic Bradshaw
As Expected, Blue Ridge Bankshares Earnings Slip HARRISONBURG — Blue Ridge Bankshares’ (OTCQB: BRBS) first-quarter earnings dipped compared to the same
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Tuesday, May 31, 2016
SHENANDOAH VALLEY BUSINESS JOURNAL
Harrisonburg, Va.