Shenandoah Valley Business Journal - July 2019

Volume 20, No. 9, July 31, 2019

Area Lodging Industry Sees Growth

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Building Lots For Sale Renee Whitmore 540-271-2518 | renee@odrva.com 540-433-2106

CrossroadsFarmCommunity.com

Penn Laird, VA

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Inside This Issue The Shenandoah Valley Business Journal is a monthly publication of the Daily News-Record, 231 S. Liberty St., Harrisonburg, VA 22801.

Focus Section: Hospitality ■ Area Hospitality Industry Continues To Expand.... Page 6

Other Business News

Editorial Staff

■ City Poultry Processor Expands........................ Page 4

Publisher: Craig Bartoldson

Contact us By mail: Shenandoah Valley Business Journal P.O. Box 193 Harrisonburg, VA 22803 By email: svbjnews@dnronline.com By fax: 540-433-9112 By phone: 540-574-6281 (news) 540-574-6223 (ads)

Managing Editor: Clarissa Cottrill

Columns

Staff Writers: Ian Munro

■ Investments with Matthew R. Frakes.............. Page 3

On The Cover: Daniel Lin / DN-R Guests check in at the Comfort Inn on Linda Lane.

Contributing Photographers: Daniel Lin

Rockingham Native Ashley Messick Dr. Isaac E.R. Goode Joins Joins Hometown Realty Group Harrisonburg SmileMakers Staff DAYTON — Ashley Messick, a Rockingham County native, has joined Hometown Realty Group, according to a press release.

Messick grew up outside of Bridgewater and graduated from Turner Ashby High School. After high school she became interested in real estate and became a Realtor with LaDawn. She worked with LaDawn’s team for several years before leaving to begin Messick a family, knowing that she would eventually come back to the career that she had grown to love. Her and her husband Josh have always enjoyed working in the real estate field.

Messick can be reached at 540.908.7101 or ashleymessick@hometownrealtygroup. com.

Harrisonburg, Va.

HARRISONBURG — Dr. Isaac E.R. Goode has joined Harrisonburg SmileMakers on East Market Street.

According to a news release, the Virginia Commonwealth University alumni started on June 24. Goode holds a doctorate of dentistry from VCU. Goode is a member of the Virginia Dental Association, American Dental Association and Academy of General Dentistry, where he has begun fulfilling requirements to achieve the status of fellow, an honor only a limited number of dentists accomplish over their careers, the release says.

Auctioneer Doug Michael Joins Heritage Real Estate DAYTON — Auctioneer Doug Michael has

See MOVERS, Page 3

portfolio, the release says.

ODEC has five power generation facilities — three natural gas, one coal HARRISONBURG — Shenandoah Val- and one nuclear, according to its website. ley Electric Cooperative will benefit — Staff Reports from a new solar power agreement between its electricity provider and a renewable energy company.

Harrisonburg Licenses Old Dominion Electric Cooperative and EDF Renewables North America en- Seven Businesses In June tered an agreement to build a 30-megaHARRISONBURG — The Harrisonburg watt portfolio of solar energy projects in Commissioner of the Revenue’s Office ODEC’s service areas in Virginia, Mary- issued seven business permits in June. land and Delaware, according to a press Below is the name of the business, release. That would generate enough followed by its individual or corporate electricity to power 5,000 homes, accord- owner and the address. ing to an SVEC spokesman.

Country Roads Audiology and HearGlen Allen-based ODEC is a nonprofit ing Aid, Country Roads Audiology and member-owned power supply cooper- Hearing Aid Center LLC, 1741 Virginia ative serving 11 distribution coopera- Ave. Ste. C; AJ’s Gentlemen’s Barbershop tives, including Mount Crawford-based LLC, AJ’s Gentlemen’s Barbershop LLC, SVEC. 1431 S. Main St.; Bolt Mobility WashingThe EDF agreement aims to bring so- ton DC, Bolt Mobility Washington DC lar power to ODEC’s member communities and diversify its energy generation See SCENE, Page 3

Solar Project To Benefit Shenandoah Valley Electric Cooperative

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Harrisonburg, Va.

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Tax Reform And Real Estate: What Homeowners Should Know The Tax Cuts and Jobs $750,000. And, Green says, Act of 2017 has many tem- the interest is only deductporary effects on homeown- ible “if it’s used to buy, build, ers and real estate investors. or improve your primary resSo what do they need to idence or one second home.” consider as we If the achead into tax quisition debt season? Tracy was incurred Green, a Planon or before ning and Life If you’re looking to December 15, Events Specreate an income 2017, the loan cialist for Wells amount eligistream in your Fa r g o A d v i ble for deductsors, explains taxable account, ible interest remains the same five key real [real estate as before – up estate–related investment trusts] to $1 million. provisions that could potenKey acmay be a good tially impact tion to conidea. your tax bill for sider: If you’ve tax years 2018 taken out (or n Tracy Green, through 2025. are thinking Wells Fargo Advisors 1. Lower about) a new limits on dehome mortductions for home mortgage gage or home equity line of and home equity loan inter- credit, consult a tax advisor est. For any new mortgage or on how that could affect your home equity debt taken af- tax bill. ter December 15, 2017, tax2. New restrictions on payers who itemize can only using home equity debt deduct interest on the first interest. This is another

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Movers

FROM PAGE 2

joined the Heritage Real Estate Co. in Dayton, according to press materials.

Michael was raised in The Ottobine area of Rockingham County and was Licensed Plumber & Class B Remodeler in the 1980-90s.

A graduate Of Turner Ashby High School and Mendenhall School of Auctioneering, Michael has been doing auctions most of his life.

“Working in homes all my Michael life I wanted to help people find that forever home or investment of their lifetime,” he said. “I have sold homes at auction and wanted to be selling homes as a Realtor.”

Michael became a licensed Realtor as of April 30. He can be reached at Doug@HeritageRealEstateCo.com.

— Staff Reports

Scene

big change: Interest from home equity debt is now deductible only if it’s used to buy, build or improve the property the debt is secured by and falls within the appropriate limits.

Green notes that, previously, taxpayers would use home equity lines of credit to pay off other debts or fund a child’s education – this interest is no longer deductible. Other homeowners would take out a home equity line on their personal residence to purchase or improve a vacation home. “Under the new rules, this would no longer be allowed. The home equity debt would have to be secured by the vacation home itself in order to be deductible,” she says.

Key action to consider: If you have a home equity line or second mortgage, talk to your advisor now to avoid surprises on April 15.

3. Changes to state and FROM PAGE 2

LLC, 820 W. 41st St. (4th Floor) Miami Beach, Fla.; Dulceria Las Palmas, Dulceria Las Palmas LLC, 1765 S. Main St.; Midatlantic Truck Service, Midatlantic Truck Service LLC, 3055 S. Main St.; Mt. Clinton Automotive, Nathaniel Williams, 1091 Mount Clinton Pike; Clear Vision Auto Glass, Karl Rezai, 1621 N. Liberty St.

— Ian Munro

Sentara RMH Office Moves Into ANU Building HARRISONBURG — Sentara RMH Medical Center has moved its business office to 1515 Country Club Road, the

Investments Matthew R. Frakes local tax (SALT) deductions. In addition to limits on home interest deductions, the tax law sets a $10,000 limit on SALT deductions for individuals not businesses.

That said, tax reform also raised the standard deduction to $12,000 for single taxpayers and $24,000 for married couples who file jointly for 2018. With the increased standard deduction and the new limits on mortgage interest and SALT deductions, many taxpayers will find themselves taking

home of American National University, a predominantly online, accredited university.

Sentara RMH has a fiveyear lease for the second floor of the building, said Jenn Downs, director of marketing and communications for Sentara.

The former Sentara business office was located at 532 S. Main St. in Harrisonburg.

Nielsen Builders made some minor modifications, such as a customer window, before the 50-person Sentara staff moved into the space, Downs said.

ANU continues to operate its Harrisonburg campus from the first floor of the building, said Quinton Jackson, the director of education for ANU.

— Ian Munro

the standard deduction instead of itemizing.

Key action to consider: Consult your tax advisor to see if it’s worth itemizing your 2018 tax returns.

4. Changes to how REIT income is taxed. Investors may be able to deduct up to 20% of their real estate investment trust (REIT) income using the “qualified business income” deduction under the new tax law. REIT income is generally taxed as ordinary income so this effectively reduces the tax rate. For some investors, this may

mean holding a REIT in a tax-advantaged retirement account might not be as important.

“If you’re looking to create an income stream in your taxable account, REITs may be a good idea,” Green says.

Key action to consider: If you own or are considering purchasing REITs, talk to your financial advisor about your objectives and evaluate whether they should be held in a taxable or tax-deferred account.

See FRAKES, Page 7

Classifieds work!

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Harrisonburg, Va.

City Poultry Processor Expands

By IAN MUNRO Daily News-Record

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HARRISONBURG — To some, poultry processing is business. To Corwin Heatwole, CEO of Shenandoah Valley Organics and a sixth-generation farmer from Bath County, it’s personal.

“I knew what the problems were. I knew what the farmers needed and what the chickens needed,” he said. “I just had to create a niche product because I was not going to be able to compete with the bigger companies.”

Heatwole opened the facility in Harrisonburg in 2014, processing about 20,000 birds a week at the former Pilgrim’s Pride processing plant.

The business has rapidly grown, including a recent expansion with a new high-speed line and automation.

“Today, we’re running near 200,000 [birds] a week,” Heat-

wole said.

Over the Fourth of July weekend, 80 to 100 workers toiled night and day to have the United States’ first automated giblet remover operating along with the company’s new high-speed line by start of production on July 8.

“The brand is building momentum beyond what our plant had capacity for,” Heatwole said.

The company’s newest brand, Farmer Focus, hit shelves last summer in 300 to 400 stores. Now, Farmer Focus is regularly carried in over 2,700 locations, Heatwole said.

The expansion, with a price tag Heatwole declined to tell, consists of two parts.

One is a new high-speed line, which increases the number of birds per minute from 70 to 140.

The other is the new automated giblet remover, called the Harvest System for Mae-

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stro Plus, from Dutch-owned American company Meyn America LLC. It takes the chickens through several “modules” where the organs are removed, washed and sorted.

Afterwards, the organs are reinserted back into the chicken.

SVO had reached out to Meyn looking to buy a new high-speed line, and in a deal, the company “threw in” the automated line, Heatwole said.

“Meyn developed this technology and tested it in several plants in the Netherlands, and we are the first to have it in the United States,” he said.

The poultry industry in the Netherlands is different than in the United States, with a more centralized layout and fewer workers with more automation in facilities.

Many companies turn to automation for a variety of

See POULTRY, Page 5

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Harrisonburg, Va.

Poultry

FROM PAGE 4

reasons, including labor supply. The poultry industry is constantly looking for new workers, but the difficulty in finding workers was not a driver for this new line, Heatwole said.

In fact, the new automated line will result in no layoffs and no new hires — yet, he said.

“Obviously, the goal will be to fully utilize this equipment with a second shift, but it could be a year or two until we do second shift,” Heatwole said.

The plant has 430 full-time employees on one shift and a small second shift for retail packaging.

With the process going at full speed around the clock, Heatwole said he expects they would need to hire approximately 320 people to fill a second shift.

The real driver was in increased value from the giblets, which can add additional revenue to the company, Heatwole said.

Plus, the new high-speed

line will allow the company to process more poultry over a shorter period of time.

On the previous 70-birdper-minute line, five or six employees hand-harvest organs such as the heart, liver, and gizzards from the birds as they passed.

This resulted in an organ capture rate of about 20%.

The new Meyn equipment not only speeds up the birds per minute to 140, but it also increases the capture rate to 95% with only one person working at a sort table, Heatwole said.

And the market for poultry with organs is a growing sector, he said.

“More people are willing to spend more time cooking at home, which is also more of the more consciously aware consumers who tend to be your organic consumers as well,” Heatwole said.

SVO also takes a different approach to the poultry growing model, Heatwole said.

In traditional poultry in-

dustry models, the animals are the property of the company even as the grower is raising them.

With SVO, the ownership of the chickens is given to the farmers — increasing the risk but decreasing the company’s control of the farmers’ process and increasing payment for the grown poultry.

“We don’t have to tell the farmer how to spend their money, which is huge,” he said.

SVO has seen success with this model, starting with just six farmers and 29 barns to 50 farms and 105 poultry barns, all within about an hour’s drive from the plant.

They even have a waitlist of growers who want to work with them, Heatwole said.

“Now that we’re expanding to this level to touch more farmers’ lives, it’s very exciting, but it’s also humbling at the same time,” Heatwole said.

Contact Ian Munro at 574-6278 or imunro@dnronline.com. Follow Ian on Twitter @IanMunroDNR

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Harrisonburg, Va.

Area Hospitality Industry Continues To Expand Two Hotels Under Construction, Third On The Horizon

By IAN MUNRO Daily News-Record

HARRISONBURG — With two hotels under construction and a third announced, the number of rooms available for visitors in the Friendly City will climb above 2,100.

“About 10 years ago there were three or four hotels built then you go through a period of not much happening,” said Tom Jackson, CEO of Jackson Hotel Management.

Jackson has been working in the hospitality sector in Harrisonburg for over 35 years and in 2017, saw the

beginning of a new series of expansions in the sector.

Hotel Madison and the Shenandoah Valley Conference Center “kind of started a new trend of hotels in Harrisonburg,” he said.

Other industries are doing better, with the conference center being a major draw to businesses and events.

“The cool thing with Hotel Madison opening up with the conference center is we have been seeing a lot more people coming downtown on their breaks between sessions,” said Andrea Dono, the executive director of the Harrisonburg Downtown Renaissance.

The hotel does not offer lunches, so many people turn to the city’s culinary district, she said.

“A lot of businesses that

are in closer proximity do a bit better, but we’ve been trying to get [visitors] to circulate more downtown,” Dono said.

Though affiliated with James Madison University, the hotel is not owned by the university.

“Hotel Madison has hurt the market some because JMU has pushed it some,” Jackson said.

James Madison University is affiliated with the hotel, hosting classes for the school’s hospitality department and sitting on land owned by the educational institution.

“That has hurt some of the market at the other hotels,” Jackson said.

Harrisonburg has 22 hotels with two bed-andbreakfasts and inns with two more hotels under construction and third recently announced, according to Brain Shull, executive director of Harrisonburg Economic Development.

The two hotels under construction are a Best Western, located near the intersection of Neff Avenue and Deyerle Avenue, and a LaQuinta Inn & Suites off of Interstate 81 Exit 243 on Pleasant Valley Road.

A Hyatt Place Hotel has also been announced for construction on Evelyn Byrd Avenue, next to the Courtyard Marriott, according to Shull.

A number of hotels also have changed names in past months, such as the Howard Johnson by Wyndham located at 10 Linda Lane in Harrisonburg that was previously a Motel 6.

Name changes are not done on a whim. Often the contract with hotel chain expires and the owner must find a new contract, Jackson said.

Newly constructed hotels are also different from their

ABOVE: Guests check in at the Comfort Inn on Linda Lane. LEFT: A Comfort Inn and Suites is under construction on Neff Avenue.

Photos by Daniel Lin / DN-R

older counterparts, Jackson said.

Mo de rn ho te ls have “live-in service,” Jackson said, having less meeting space and more focused on the straight-forward rooms, lobby and breakfast services.

But there is a such a thing as too many hotels, Jackson said.

Harrisonburg is going to be “overbuilt,” in a few years, he said, as many flock to build in the city.

“We know the town is growing,” he said. “We know business is good.”

Many hotels are also us-

ing the good economy as a chance to make renovations and upgrade services, Jackson said.

Hotels are also responsible for paying the transient occupancy tax, which is levied to those in lodging in the city for less than 30 days.

Harrisonburg’s transient occupancy tax stands at 7% of the total bill for the stay, according to city code.

In fiscal year 2019, over $3.1 million was raised by the transient occupancy tax in Harrisonburg, according to data from the commissioner of the revenue. This represents an increase of

over $200,000 raised during fiscal year 2018, which also had a 7% rate and totaled just over $2.9 million.

And there are a number of reasons people stay in Harrisonburg.

“There’s a lot of industry people coming in Sunday or Monday, staying for two or three nights,” Jackson said.

During the week, many hotels are populated by construction crews, who are in town to build structures, he said.

And Harrisonburg hotels are also a landing pad

See HOSPITALITY, Page 7

Harrisonburg, Va.

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Key action to consider: If you own rental property and it’s not your primary 5. New rules for rental property in- business, work with your tax advisor to come. There’s a new 20% deduction for determine if or how you may be able to pass-through businesses that could ap- take advantage of this new deduction. ply to some — but not all — Wells Fargo Advisors is taxpayers who earn money not a tax or legal advisor. from rental properties.

There are special risks assoThe IRS hasn’t finalized ciated with an investment in the Section 199A regulareal estate, including credit It’s going to tions yet, Green says, but risk, interest rate fluctuabe open to preliminary information tions and the impact of varinterpretation until ied economic conditions. suggests the 20% deduction will only be allowed for inThis article was written they give us more come from a “trade or busiby/for Wells Fargo Advisors details. ness.” and provided courtesy of For rental property ownMatthew Frakes, Financial n Tracy Green, ers, Green says this may Advisor in Harrisonburg, VA Wells Fargo Advisors, at (540) 801-3211. come down to a “facts and circumstances” test that Investments in securities on rules for rental will assess whether or not and insurance products are: property income the property owner is really NOT FDIC-INSURED/NOT engaged in a trade or busiBANK-GUARANTEED/ ness (rather than simply owning rental MAY LOSE VALUE property).

Wells Fargo Advisors is a trade name Several factors, including what oper- used by Wells Fargo Clearing Services, ational tasks the property owner does LLC, Member SIPC, a registered broand how much time they spend on the ker-dealer and non-bank affiliate of business, will be important. “It’s going Wells Fargo & Company. to be open to interpretation until they © 2018 Wells Fargo Clearing Services, give us more details,” Green says.

LLC. All rights reserved.

Frakes

FROM PAGE 3

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Photos by Daniel Lin / DN-R

A LaQuinta is under construction on Pleasant Valley Road behind the Cracker Barrel.

Hospitality

FROM PAGE 6

for weary drivers looking for a break from I-81, Jackson said.

On top of these types of visitors, there are also the tourists.

“Obviously, this area has a lot to offer, therefore you get lots of people,” Jackson said. “Therefore you get lots of hotels.”

The diversity in hotel prices is also a strength of the city, he said, allowing more visitors to stay and stay for longer.

“The more often they come to visit Obviously, this and the longer that area has a lot to they stay, the more money for local busioffer, therefore you nesses and tax revget lots of people. enues that can be Dono said.

Therefore you get raised,” And more events, lots of hotels. attractions and availability at hon Tom Jackson, tels help to achieve that, she said.

CEO of Jackson “Turning a day Hotel Management long [trip] into a two-day long, to a weekend, to a four-day weekend has always been a goal,” Dono said.

Rockingham County also has a draw to tourists with nearby George Washington National Forest, Skyline Drive and Shenandoah National Park, said Joshua Gooden, economic development and tourism coordinator for Rockingham.

In fact, approximately 30% of Rockingham is taken up by parks under the jurisdiction of the park services, Gooden said.

According to data from 2017, 2,141 jobs in Rockingham County are reliant on tourism.

Tourists are not the only ones who can

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Guest rooms at the Comfort Inn on Linda Lane will be receiving murals of local nature scenes as part of a series of renovations throughout the hotel. enjoy, as attractions and parks increase the quality of life in the area.

“I remember in middle school when [Massanutten] opened the water park,” Gooden said. “It was a big draw not just for visitors, but for residents in the area.”

For example, the Rocktown Beer and Music Festival often draws 4,000 to 5,000 people — a mixture of visitors and residents.

Massanutten Resort does see more visitors around festivals and events, such as in Dayton and Harrisonburg, said Matthias Smith, vice president and general manager of Massanutten Resort.

But it’s hard to establish a peak, Smith said, except for during their own events such as Summer Jam Festival or Snow Moon Fest.

“The more towns and regions partner with hotels to create jointly symbiotic events and programs, the better we all are,” Smith said.

Contact Ian Munro at 574-6278 or imunro@ dnronline.com. Follow Ian on Twitter @IanMunroDNR

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Harrisonburg, Va.