Shenandoah Valley Business Journal

A Byrd Newspapers Publication

Volume 15, No. 7, May 26, 2015

New Apartment Complexes On The Rise

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SHENANDOAH VALLEY BUSINESS JOURNAL

Tuesday, May 26, 2015

BUSINESS JOURNAL Inside This Issue Shenandoah Valley

The Shenandoah Valley Business Journal is a monthly publication of Rockingham Publishing Company, Inc., 231 S. Liberty St., Harrisonburg, VA 22801.

Focus Section: Agribusiness ■ The Business of Agribusiness . . . . . . . . . . . . . . . . .Page 6

Other Business News

Editorial Staff

Harrisonburg, Va.

Contact us By mail: Shenandoah Valley Business Journal P.O. Box 193 Harrisonburg, VA 22803

By email:

■ Apple Processor Expansion To Add 160 Jobs . . . .Page 3

svbjnews@dnronline.com

By fax:

Editor and General Manager: Peter S. Yates

433-9112

Columns ■ Movers and Shakers . . . . . . . . . . . . . . . . . . . . . . . . Page 2

By phone:

Managing Editor: Jerry Blair

■ Valley Business Scene . . . . . . . . . . . . . . . . . . . . . . Page 2

574-6281 (news) 574-6229 (ads)

Staff writer: Vic Bradshaw

■ Investments by Gannon Irons . . . . . . . . . . . . . . . . Page 5

■ News To Me by Philip B. DuBose . . . . . . . . . . . . Page 4

■ Investments by Matthew R. Frakes . . . . . . . . . . . . Page 5

Contributing photographers: Daniel Lin

Harman Construction Announces Staff Additions HARRISONBURG — Harman Construction Inc. recently announced the addition Dustin Harper Harper as senior project manager and Tamera McKibben as a staff accountant.

Harper, a Harrisonburg native, returns home from Pennsylvania with a business management degree from Messiah College and extensive experience working for a top-three, national contractor, according to the a press release form the company.

McKibben, who graduated from Mary Washington College and obtained a mas-

■ Investments by Adam Miller . . . . . . . . . . . . . . . . . Page 9 ■ Real Estate by Tim Reamer . . . . . . . . . . . . . . . . . Page 11

ter’s from Eastern Mennonite Seminary, has worked in accounting positions throughout her career, according to the press release. She also has served in various roles in churches and is the pianist for Olivet PresbyteMcKibben rian Church in Staunton.

She is a native of the Shenandoah Valley and resides in Waynesboro with her husband, according to the press release.

Harman Construction is a Harrisonburg-based design-build general contractor.

— Staff Reports See MOVERS, Page 8

On The Cover: Daniel Lin / DN-R

Construction remains underway at The Reserve at Stone Port, although several units were complete and ready to be occupied as of May 15.

Union Bank & Trust To Close Martin’s, Other Locations

First Bank & Trust Co. Reports First Quarter Earnings

HARRISONBURG — Union Bank & Trust announced earlier this year plans to close its branch in the Martin’s grocery store on East Market Street and six other locations around Virginia.

The branch at 2035 E. Market St. will cease operations around Aug. 3, according to Bill Cimino, spokesman for parent company Union Bankshares Corp. Six of the sites targeted for closure are in Martin’s stores.

Cimino indicated that usually four or five people work at the in-stores locations, and efforts will be made to relocate them to other branches in the market. Branches in Martin’s on Richmond Road in Staunton and Tiffany Drive in Waynesboro also are on the closure list.

HARRISONBURG — Abingdon-based First Bancorp Inc., the parent company of First Bank & Trust Co., reported net income of $4.3 million for the first quarter of 2015 compared to $4 million during the same period last year, according to a press release.

The bank’s agricultural lending division has grown to more than $226 million in outstanding loans.

First Bank & Trust is a community bank with office locations in western Virginia and northeast Tennessee.

HARRISONBURG — Union Bankshares Corp. (NASDAQ: UBSH) recently

— Vic Bradshaw

See SCENE, Page 8

— Vic Bradshaw

UBSH Reports Net Earnings

Harrisonburg, Va.

SHENANDOAH VALLEY BUSINESS JOURNAL

Tuesday, May 26, 2015

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Apartments On The Rise Around Friendly City Complexes Springing Up In Harrisonburg, Rockingham County

By VIC BRADSHAW Daily News-Record

HARRISONBURG — Unless you’re a college student, apartment options in Harrisonburg and Rockingham County for years were relegated mostly to city complexes and small developments in nearby towns.

That’s no longer the case.

Off Boyers Road behind the Taylor Springs townhouse development, approximately 70 percent of the 100 units that comprise Taylor Grove apartments are occupied with the rest slated to be finished and occupied by the end of the year.

Just to the west, The Reserve at Stone Port is rising on the outskirts of the mixed-use Stone Port development at the intersection of Port Republic and Stone Springs roads. Some people already call the luxury complex home, and the 168 apartments that are part of the first phase of development for the 396unit development are scheduled to be finished by the end of July.

Slightly northeast, 336 apartments are planned to be part of the residential offerings at Preston Lake, NAI Michael’s mixed-use development being carved out of the countryside off Massanetta Springs Road.

And in downtown Harrisonburg, upper-floor apartments have become a staple of projects to reuse old buildings, such as the Cassco ice property on South Liberty Street.

The wave of new living options is an attempt by various developers to meet consumer demand that turned on a dime when the housing bubble burst. National data reported on rentalhousingjournal.com shows that the change increased both rental demand and rent rates.

Taylor Grove, in fact, exists only because of that change. Its owners had planned to use the land to grow Taylor Springs beyond its 185 townhome units, but they switched part of the project to rentals when home sales nearly stopped.

“We were sitting on inventory and not able to sell it,” said Ted Budd of Taylor Grove LLC, the company behind the complex. “So we went from for-sale properties to rental properties.”

New To County Apartment living has been part of the city’s residential mix for years, and apartment buildings have been built in some of the towns in Rockingham County. But the three complexes planned for what a short time ago was rural land are a relatively new occur-

Daniel Lin / DN-R

Valley Renovators Inc. project manager Brandon Reel (left) of Franklin, W.Va., and assistant project manager Matt Jones of Elkton take measurements May 18 during the plumbing installation of a new unit at Taylor Grove apartments off Boyer Road. rence.

“It’s really only been in the last couple of years that we’ve started to see this interest in apartments in the county,” said county Planning Director Rhonda Cooper, who’s been with the department for 22 years.

The switch, she said, largely is due to increased interest in the development of those unincorporated areas east and southeast of Harrisonburg. The apartments are being built in an Urban Development Area, which is where “more compact” growth should occur.

“It’s part of what would be considered one element of compact development and what makes for a walkable, bikeable community,” Cooper said. “Whenever you are looking to have retail, office and residential in close proximity so people can bicycle and walk, one would expect one of those elements to be apartments.”

While the county has three sizeable apartment complexes in various stages of development, the city doesn’t have any. But that doesn’t mean new apartments haven’t been created recently or won’t be available in the near future, and when they’re downtown the walkable and bikeable feature is built in.

City Planner Adam Fletcher said that although the number of new complexes constructed in Harrison-

burg that were not for college students has been low in recent years, apartments generally are part of the mix when it comes to the redevelopment of downtown buildings. Such mixed-use projects, the most recent example being Matchbox Realty’s Ice House project on South Liberty Street, help raise the number of people living in the city’s core.

“Just about any time someone is talking about renovating a building downtown,” he said, “there’s almost always a component of trying to get residential units on the upper floors.”

‘Mansion’ Living A live-work-play community is what’s planned at Preston Lakes, and it’s what’s under construction at Stone Port. The Cathcart Group is building The Reserve as part of the 105-acre development that includes a grocery store, offices, restaurants and an assisted-living facility.

Todd Dofflemyer, president and CEO of the Charlottesville company, said leasing activity has exceeded

See APARTMENTS, Page 7

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Tuesday, May 26, 2015

SHENANDOAH VALLEY BUSINESS JOURNAL

Harrisonburg, Va.

Leadership Character Pays Big Dividends How Best To Inspire Innovation Leaders drive innovation. Or block it.

A recent survey of business leaders revealed that 94 percent of business leaders consider innovation key to their organizations’ success, but only 14 percent are confident about their organizations’ ability to drive innovation.

An article in the May issue of HR Magazine provides interesting insights into this apparent disconnect.

When business leaders attending workshops at the Center for Creative Leadership are asked how they react to people coming to them with new ideas, their responses are very telling. Many of them express frustration that people “can’t just do what they’re supposed to do,” while other leaders advise such employees to take the afternoon off, in hopes that their ideas will just go away.

In an effort to balance concern for meeting the day-to-day demands business demands while encouraging innovation, managers should not be too quick to toss an idea. In fact, they should model the openness and innovation that they want to see in others. The best way to shift the culture is to reward or promote people who have the courage to bring them new ideas.

‘Wellness’ Programs Ailing Corporate wellness programs are making us “unwell.”

That’s the title and message of an article appearing in the May issue of Harvard Business Review. The researcher being interviewed in the article contends that such programs may not only be ineffective, but in some cases, are counterproductive.

In the case of weight loss programs, most enrollees don’t stick with the program, and those who do lose only a kilogram or so.

Moreover, in some they should set realistic expectations cases, employees who about what they were previously feelhope to achieve from ing good about their such programs. work situations began It’s also important worrying whether to set boundaries as they might lose their to the extent that jobs if they were peremployee wellness ceived as not being atbehaviors will be tractive enough by monitored away from their employer. the workplace, and Making matters that employers look worse is the fact for small changes that, in some cases, that can make a big disgust about somedifference. body’s unhealthy behavior morphed into Leadership Roles broader negativity about the person as a Need Filled co-worker.

Searching for The author asgreat leaders.

That serts that companies — By Philip B. DuBose describes an ongospend money on such Brief summaries from top business ing pursuit of comprograms for a coupublications to help business leaders succeed. panies that are lookple of reasons. ing high and low for First, the prothe right people to grams are aggresstep into leadership sively marketed, given that corporate wellness is a huge in- roles. This problem may take quite a dustry. Second, in a collective sense, peo- while to solve, though, as described in an ple buy into the idea of wellness. In fact, article in the May issue of T+D Magazine. according to some sociologists, in a socieFor one thing, many talented employty that seems to be increasingly secular, ees don’t feel prepared to be successful, wellness tends to fill a void historically and failure would be humiliating. Also, filled by religion. when employees see their leader flounCompanies promote wellness because dering, stressed out, working insane it seems to fit with the idea that a healthy hours, and not really succeeding, why worker is a productive worker. would they want such a job?

Despite such drawbacks, the author The author contends that part of the doesn’t advocate that all companies disproblem is that companies have a history continue such programs. Employers should ask whether they need such a program, and if they decide that they do,

NEWS to

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of placing the wrong people in leadership positions, usually based upon their technical expertise. However, leadership is more about emotional intelligence and less about technical expertise.

In addition, leaders typically struggle with strategic thinking because they are used to putting out fires all day.

To ensure that managers are prepared and excited to accept senior leadership positions, companies must ensure that employees build their business acumen, practice using strategy tools, and develop their strategic thinking skills, thereby not only preparing the employees for leadership roles, but making them feel prepared for those roles.

Companies should then select leaders based upon their emotional intelligence.

The result should be a larger talent pool from which companies can draw, and a higher success rate among those promoted.

Philip B. DuBose is a management professor in the James Madison University College of Business.

SHENANDOAH VALLEY BUSINESS JOURNAL

Harrisonburg, Va.

Investments

Tuesday, May 26, 2015

Investments

Gannon Irons Matthew R. Frakes

Financial Focus: Make Timely Adjustments To Your 529 Plan

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f you have school-age children, you might greet the arrival of June with some relief — for at least a few months, you don’t have to worry about “encouraging” kids to do their homework, study for tests, give you their permission slips for field trips, and so on.

But one day, these obligations will give way to a substantially bigger one — paying for college. If you’ve already begun preparing for that day with a tax-advantaged college-savings vehicle, such as a 529 plan, you’re taking a positive step, because higher education is expensive. But it’s not enough to just set up your 529 plan — you may also need to adjust it over time.

Up until this year, you were only allowed to change the investments in your 529 plan once a year. This caused concern among some investors, who wanted the freedom to change their 529 investments in response to movements in the financial markets.

But late in 2014, President Barack Obama signed into law the Achieving a Better Life Experience act, the key purpose of which was to create tax-free accounts allowing people to save for disability-related expenses. And one provision of the ABLE act also allows 529 plan investors to change their investments twice a year, rather than once.

If you invest in a 529 plan, you might welcome this additional freedom to adjust your investments. Still, keep in mind that a 529 plan is a long-term vehicle that’s not really designed to accommodate frequent “tweaking.” And, as is true with any investment account, such as your IRA and 401(k), you don’t want to over-react to short-term market fluctuations by making radical changes to your investment mix.

Nonetheless, you will almost certainly want to adjust your 529 plan investments somewhat — at least in the long

term. If you’ve opened a 529 plan when your children are young, you have many years until you need to tap into the money — which means your account has more time for growth potential and more time to “smooth out” those periods of market volatility, which will certainly occur.

Consequently, you may be able to afford to invest somewhat more aggressively when your children are young.

However, as your kids near college, you will probably want to revisit the level of risk in your 529 plan. So, during the last couple of years before you need to access your plan, you may want to consider moving some of your investment dollars to more conservative allocations.

By doing so, you’ll cut back on your growth potential, but you’ll also lessen the risk of taking a big hit if you have to start taking withdrawals during a “down” market.

Some 529 plans offer an option that automatically adjusts your investment mix toward a more conservative approach as your children near college age. But you may want to make your own adjustments, possibly with the help of a financial professional, to ensure that your 529 plan accurately reflects your own preferences and risk tolerance.

As you save for your children’s college education, you may find a 529 plan to be a great help. Just be sure to keep a close watch on your plan’s investments as the years go by.

This article was written by Edward Jones for use by Gannon Irons, a financial adviser with Edward Jones in Harrisonburg. To contact him, call 433-4907.

Edward Jones, its employees and financial advisers cannot provide tax or legal advice. You should consult your attorney or qualified tax adviser regarding your situation.

Five Strategies For Tax-Efficient Investing

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ith higher top tax rates now in effect, it may be time to ask yourself: Are you doing everything possible to improve your portfolio’s bottom line through tax-efficient investing?

Here are five tried-and-true strategies to help lower your tax bill while improving your net return.

Tax-Sheltered Accounts To encourage Americans to save for retirement, Uncle Sam offers tax incentives in the form of IRAs, 401(k)s, 403(b)s and other qualified retirement savings plans. These accounts provide the opportunity to defer paying tax on contributions and earnings or to avoid paying taxes altogether on earnings, depending on the type of vehicle you choose.

By contributing as much as possible to these accounts, you can realize significant savings over time.

For instance, contributing $400 per month to a traditional IRA (assuming deductibility rules apply) will save you nearly $22,000 in taxes over 20 years, assuming a 5 percent annual return and 25 percent tax rate.

For 2014, you can contribute up to $5,500 to a traditional or Roth IRA. And if you’re older than 50, you can contribute an extra $1,000.

For employer-sponsored retirement savings vehicles such as 401(k) or 403(b) plans, you can contribute up to $17,500 in 2014 and an additional $5,500 if you’re over 50.

But keep in mind that most withdrawals prior to age 59 ½ from a qualified retirement plan or IRA may be subject to a 10 percent federal penalty in addition to any taxes owed on contributions and accumulated earnings.

Municipal Bonds In today’s low-rate environment, finding yield can be a challenge. Rates on high-quality corporate bonds have hovered at historical lows, and the yield on U.S. Treasuries has not topped 4 percent since 2008.

While municipal bonds, or “munis,” are no exception, they carry one significant advantage: Interest paid by muni bonds is generally exempt from federal and, in some cases, state and local taxes.

Consider this: A municipal bond yielding 4 percent translates to a taxequivalent yield of 5.33 percent, assuming a 25 percent tax rate. In other words, you would need to earn 5.33 percent on a taxable bond to receive the same after-tax yield as a 4 percent municipal bond.

Remember, however, that any capital gains arising from the sale of municipal bonds are still taxable (at capital gains rates), and that income from some municipal bonds may be taxable under alternative minimum tax rules.

Avoid Short-Term Gains Before you sell an investment, check to see when you purchased it.

If it was less than one year ago, any profit will be considered a short-term gain. If it was more than one year ago, the profit will be considered a longterm gain.

That’s important because long-term capital gains are taxed at significantly lower rates than short-term capital gains, especially if you’re in a high tax bracket.

Short-term capital gains are taxed See INVESTING, Page 9

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SHENANDOAH VALLEY BUSINESS JOURNAL

Harrisonburg, Va.

Daniel Lin / DN-R

At the Cathcart Group’s The Reserve at Stone Port, residents may reserve the movie theater located in the development’s clubhouse.

SHENANDOAH VALLEY BUSINESS JOURNAL

Harrisonburg, Va.

Tuesday, May 26, 2015

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Creature Comforts Touted Apartments

FROM PAGE 3

expectations as 25 apartments are occupied and 43 more are pre-leased. Their attached garages are popular, as are the units with loft spaces.

However, he said the biggest selling point is the clubhouse, which helps attract “renters by choice.” Free for use by residents and their guests and available for residents to rent for just $100 a night, it includes a chef ’s kitchen, a 22-seat movie theater, a fitness center, two game rooms, and a pool and hot tub.

“Our approach is to offer amenities that are offered in luxury homes,” Dofflemyer said. “We have the creature “We have the comforts people are accustomed creature comforts to in a home, but when you want to have guests you have people are accustomed to in a the clubhouse. You’re able to spread your wings a bit. home. ... So you’re “So you’re able to have the able to have the space that you have in a manspace that you have sion for the price of renting an in a mansion for the apartment.”

Those amenities, of course, price of renting an come at a price. Rents are highapartment.” er at The Reserve than at other — TODD DOFFLEMYER

See APARTMENTS Page 8

Daniel Lin / DN-R

According to Cathcart Group president and CEO Todd Dofflemyer, one of the largest draws of the Charlottesville company’s 105acre development The Reserve at Stone Port is the creature comforts provided, such as the clubhouse above.

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SHENANDOAH VALLEY BUSINESS JOURNAL

Tuesday, May 26, 2015

Union Earnings Rise Scene

FROM PAGE 2

reported net earnings for the first quarter that more than doubled what it made in the same period in 2014, when costs related to the acquisition of another bank heavily affected its results.

The Richmond-based holding company for Union Bank & Trust reported that it netted $15.7 million in the first three months of the year, 104 percent more than the $7.7 million it earned during the first quarter of 2014. That equated to earnings of 35 cents per share, 119 percent greater than the 16 cents a share earned to start last year.

Union’s $444.5 million purchase of StellarOne Bank closed on Jan. 1, 2014.

The key to the year-over-year increase was an increase of $1.2 million to $15 million in noninterest income and a decrease of $13.5 million to $53.8 million in noninterest expenses. Nearly $13.2 million of the expense decline was related to acquisition and conversion costs.

The bank’s first-quarter results also bested its performance in the fourth quarter of 2014. During that three-month period, the bank’s net income was $14.9 million, or 33 cents per share.

Union Bankshares has 131 retail banking locations as well as brokerage, mortgage and insurance companies in Virginia.

— Vic Bradshaw

Bloomaker Celebrates Greenhouse Expansion WAYNESBORO — Bloomaker USA, maker and world innovator in long-life flower bulbs and indoor garden products, celebrated the official ribbon cutting on its new greenhouses on May 15. The company invested $2 million and will create 98 new full-time and seasonal jobs over the next three years, according to a press release from the company.

Bloomaker anticipates increasing tulip and amaryllis sales to $25 million in the same time period, the release states.

The Virginia Department of Agriculture and Consumer Services partnered with Augusta County to aid Bloomaker in this expansion. The Governor’s Agriculture and Forestry Industries Development Fund provided a $50,000 grant, which Augusta County matched, the release states.

See SCENE, Page 10

Board Members Named Movers

FROM PAGE 2

Seven Named To VMRC Board Of Directors, Foundation Board HARRISONBURG — Seven people were recently selected as new members for the Virginia Mennonite Retirement Community board of directors and the organization’s foundation board.

Jim Hamilton, Carmen Strite Miller, Dr. Wesley Ross, Jim Smucker and Barbara Stoltzfus were chosen to serve on the VMRC board.

The VMRC Foundation board added Jon Sayre Jr. and Stacy Shiflet as members.

VMRC is a nonprofit, continuing care retirement community that offers different living options for people who are 55 or older.

Its foundation raises money to support the community’s mission of providing quality housing and services for older members of the population.

— Vic Bradshaw

BB&T Promotes Batman To Vice President HARRISONBURG — BB&T has promoted Amy Batman to vice president.

Batman is a mortgage loan officer in BB&T’s Mortgage department at 3150 S. Main St. The Harrisonburg native earned a bachelor’s degree in finance from the University of South Carolina.

— Staff Reports

Harrisonburg, Va.

Green Space Used To Attract Renters third floors and are referred to on the development’s website as a “townhouse local complexes: $990 to $1,320 for one- apartment.” bedroom units (35 percent of the apartSeven of the 10 buildings planned for ments developed), $1,275 to $1,530 for the complex are completed and occutwo bedrooms (50 percent), and $1,530 pied, he said, and the eighth is nearly to $1,720 for three-bedroom apartments complete and has been preleased. Work (15 percent). has begun on the ninth building, and Dofflemyer said the onethe 10th is coming soon. bedroom apartments have Consumeraffairs.com cited “I think we’re data from online real estate been more popular than expected, so much so that about there to database zillow.com in an artithey’ve increased monthly cle last September that indisatisfy the rent rates $110 to make the cated that 90 of the 100 largest demand that two-bedroom units more atrental markets in America are should be tractive. less affordable now than becoming in the Cathcart officials must defore the housing bubble burst. next five to cide whether to build out the It reported that some conremaining 228 units in one sumers that might prefer to seven years.” buy a home are having difficulphase or two, he said, with — TED BUDD ty saving money for a down planning for that work likely TAYLOR GROVE LLC payment because they’re havto begin this fall. If leasing ing to spend so much more on activity continues at its current now. rent pace, they might build the rest all The rental market isn’t expected to at once.

“We’ve gotten a very warm reception continue growing at the same rate forfrom the community there,” Dofflemyer ever, though, and Budd said he doesn’t said. “I think we hit the nail on the expect to plan another apartment project unless it targets the affordablehead with the clubhouse.” housing niche.

That’s because housing experts preSize, Green Space dict that the heightened demand for Taylor Grove LLC has taken a different approach with its apartments. Budd apartments will last only five to seven said the focus there is on square footage years before swinging back to for-sale and green space for residents to enjoy. homes.

“Given that point,” he said, “with Old Dominion Realty manages the comwhat we have at Taylor Grove and plex for the owners.

The apartments were built in the what’s being built elsewhere, I think same footprint as the town homes we’re about there to satisfy the demand planned for the area. They feature 660- that should be coming in the next five to square-foot, one-bedroom units on the seven years.” ground floor that rent for $710 and Contact Vic Bradshaw at 574-6279 or 1,420-square-foot, two-story units rentvbradshaw@dnronline.com ing for $975 that cover the second and

Apartments

FROM PAGE 7

see&do To submit an event to our entertainment calendar, email skyline@dnronline.com.

Announcements must be received by noon on Friday for publication in Thursday’s paper.

Harrisonburg, Va.

SHENANDOAH VALLEY BUSINESS JOURNAL

Manage Your Portfolio To Help Control Your Tax Bill

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nvestors need to consider many factors in the process of choosing investments. One at the top of list is an investment’s tax cost. In fact, for some individuals, this issue may be among the more influential factors when selecting investments.

The following are points to consider about the tax efficiency of different investments you may hold in taxable accounts.

Effective Jan. 1, 2013, Congress implemented a new Medicare surtax of 3.8 percent on net investment income. The tax will affect taxpayers with modified adjusted gross income in excess of $200,000 for single individuals and $250,000 for married couples.

The appeal of some of these investments may change depending on whether you are subject to this additional tax.

■ Stocks. If your goal is tax efficiency, consider stocks geared more toward growth with a low dividend yield to reduce your current taxable income. The growth is tax-deferred until you sell the stock.

This ability to defer tax provides some flexibility because you can manage your gains and losses based on when you sell your stock. If you hold the stock for more than one year, the gain will be eligible for a lower long-term capital gain rate as opposed to the ordinary income tax rate.

If you need an income-producing stock, consider one that will pay dividends that qualify for the reduced qualified-dividend rates versus ordinary income rates. The rate for qualified dividends is the applicable capital gains rate.

Bear in mind that dividends are not guaranteed. A company may reduce or eliminate its dividend at any time.

Qualified dividends are paid by U.S. corporations and some foreign corporations. A qualified foreign corporation is one that is incorporated in a U.S. possession, eligible for tax-treaty benefits with the United States or traded on an established U.S. securities market.

Income from preferred instruments qualifies to the extent that it represents an equity instrument rather than a debt

Interest from taxable bonds is included for the tax computation.

Investing in fixed-income securities involves certain risks, such as Adam Miller market risk, if sold prior to maturity instrument. Mutual fund dividends do and credit risk, especially if investing in not qualify unless the dividends passed high yield bonds, which have lower ratthrough are from qualified corporaings and are subject to greater volatilitions, as described above. ty.

It’s important to note that real estate All fixed-income investments may be investment trust dividends do not qualworth less than original cost upon reify for the reduced rate. demption or maturity. Bond prices flucKeep in mind, the return and principal tuate inversely to changes in interest value of an investment in stocks flucturates.

Therefore, a general rise in interates with changes in market conditions. est rates can result in the decline of the Upon redemption, it may be worth more value of your investment. or less than the original investment.

■ Mutual funds. You may be able to ■ Bonds. Municipal bonds, which reduce your taxes by choosing funds that state and local governments issue, pay have historically been managed with low interest that’s exempt from federal income taxes — although some may be turnover and minimal yields. The yield subject to the federal alternative mini- will provide an indication of the amount mum tax. The interest is also often ex- of interest and dividend distributions.

The turnover ratio measures the empt from state taxation if you purchase bonds issued by either the state fund’s trading activity. Funds with in which you reside or a local govern- higher turnover ratios typically distribute more capital gains, which are taxment within that state.

Although the interest income is tax- able to the investor whether they are free, capital gains, if any, are subject to paid out or reinvested. taxes.

To help evaluate the effects of taxes Before purchasing a municipal bond, on mutual fund returns, use Mornyou must consider whether the tax-free ingstar’s Tax Cost Ratio, which repreinterest is a big enough advantage to sents the percentage reduction in an anovercome the potential for higher yield nualized return that results from inthat a taxable government or corporate come taxes. bond may provide. To compare a taxThis can provide an estimate of how free versus a taxable bond, consider the much of your investment return you taxable-equivalent yield. would lose to taxes. This type of planGenerally, a municipal bond with a 4 ning can provide some guidance on the percent yield, for example, would compare to a corporate bond with a 5.3 per- taxability of the annual distribution.

However, the fund manager’s actions cent equivalent yield (assuming you are in the 25 percent income tax bracket will ultimately determine the capital and excluding state tax). gains distributions for the year, which A decision between these two bonds can have significant tax implications. might still favor the tax-free bond beOf course, as with any financial decicause the taxable bond would add to ad- sions, investment considerations should justed gross income and the calcula- take priority over tax issues. tions related to AGI and AMT. In addition, tax-free municipal bond inThis article was written by Wells Fargo terest is not included in investment inAdvisors and provided courtesy of Adam D come for the 3.8 percent Medicare surtax.

Miller, financial adviser in Harrisonburg

Investments

Tuesday, May 26, 2015

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Timing Matters When Selling Off A Profitable Investment Investing

FROM PAGE 5

at ordinary income rates which can be as high as 39.6 percent.

Long-term capital gains are taxed at a maximum rate of 20 percent in 2014.2 Considering those different rates, it can pay to look at the calendar before you sell a profitable investment. Selling just a day or two early could mean that you’ll incur significantly higher taxes.

Make The Most of Losses As most taxpayers know, the IRS lets you use long-term capital losses to offset long-term gains. In any given year, you can minimize your capital gains tax by timing your losses to correspond with gains.

What’s more, you can carry forward unused losses to future years, and use them to offset future gains, subject to certain limitations.

You can also offset up to $3,000 of unused capital losses per year against ordinary income. So before taking a longterm capital loss, consider the timing of gains as well as ordinary income.

Get A Professional’s Perspective Keeping an eye on taxes is a prudent way to try to enhance your investment returns over time. However, tax laws are complex, subject to change and may have implications you haven’t considered.

Article written by Wealth Management Systems Inc., courtesy of Matthew R. Frakes, financial adviser, The Frakes Group at Morgan Stanley in Harrisonburg. Call 540-438-7909 or visit www.morganstanleyfa.com/thefrakesgroup.

BUSINESS JOURNAL Shenandoah Valley

Shenandoah Valley Business Journal monthly columns focus on investments, real estate planning and business-related publications.

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SHENANDOAH VALLEY BUSINESS JOURNAL

Tuesday, May 26, 2015

Scene

Local Ledger

FROM PAGE 8

In total, the grant aided in the expansion of greenhouses and chillers and enabled a gas line extension to serve the Bloomaker facility on U.S. 340 near Waynesboro. Bloomaker also worked with the Virginia Jobs Investment Program to secure funding and services to support the company’s employee training activities.

Bloomaker opened its Augusta County location in 2010, according to the release.

— Staff Reports

Cadence Announces Results For First Quarter 2015 STAUNTON — Cadence Inc. announced unaudited results for first quarter of 2015 including a 37 percent increase in revenue compared to 2014 to $20.7 million. Earnings per share increased 29 percent over prior year to $.81 per share for the quarter, according to the company’s statement.

Earnings before interest, taxes, depreciation and amortization were up 17 percent to $3.7 million. The quarterly results included earnings from the acquisition of Plainfield Precision Holdings locations in Sturgeon Bay, Wisc., Plymouth, Mass., and Santo Domingo, Dominican Republic completed in August 2014.

With the expiration of the R&D tax credit at the end of 2014, Cadence said it is accruing estimated taxes at a rate assuming the current tax laws remain in effect for all of 2015. If the R&D tax credit were to be extended by Congress and reinstated to Jan. 1, 2015, Cadence estimates its earning /share would be $.05/share higher in the first three months of the year.

Cadence is a supplier of products, technologies and services to medical device, life science, automotive and industrial companies worldwide. According to the firm, it employs more than 475 people with headquarters in Staunton, and at other locations that include Cranston, R.I., and Pittsburgh.

— Staff Reports

Unemployment (percentage) Harrisonburg Rockingham County Page County Shenandoah County Augusta County Staunton Waynesboro

March 2015 5.7 4.6 8.4 4.9 4.8 5.1 5.6

Home Sales

Feb. 2015 5.8 4.7 9.2 5.0 4.8 5.2 5.4

March 2014 6.7 4.9 9.5 5.6 5.0 5.5 6.0

Source: Virginia Employment Commission

Labor Force March 2015 Harrisonburg 24,129 Rockingham County 40,859 Page County 11,642 Shenandoah County 21,245 Augusta County 36,700 Staunton 11,888 Waynesboro 10,002

Feb. 2015 24,372 41,058 11,613 21,230 36,684 11,941 10,023

March 2014 24,546 41,510 11,929 21,435 37,472 12,114 10,175

Source: Virginia Employment Commission

Building Permits* March 2015 Permits Estimated Issued Cost

Harrisonburg 1 Rockingham County 38 Page County N/A Augusta County 37

March 2014 Permits Estimated Issued Cost

$340,000 $7.1M N/A $3.8M

7 $2.1M 20 $3.5M 5 $804,651 13 $2.4M

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. The figures do not reflect the actual number of units associated with each permit issued for multifamily construction.

Median Price Harrisonburg Rockingham County Augusta County Staunton Waynesboro Shenandoah County Page County

April 2015 $154,000 $190,750 $165,000 $149,900 $160,450 $185,000 $180,000

April 2014 Pct. Change $165,000 — 6.67 $173,000 10.26 $175,000 — 5.71 $120,010 24.91 $139,200 18.14 $180,000 2.78 $130,000 38.46

Days On Market Harrisonburg Rockingham County Augusta County Staunton Waynesboro Shenandoah County Page County

April 2015 77 82 72 72 58 142 278

April 2014 Pct. Change 70 10.00 106 — 22.64 112 — 35.71 82 — 12.20 152 — 61.84 201 — 29.35 367 — 24.25

Units Sold Harrisonburg Rockingham County Augusta County Staunton Waynesboro Shenandoah County Page County

April 2015 88 192 41 25 30 35 7

April 2014 Pct. Change 92 — 4.35 156 23.08 71 — 42.25 32 — 21.90 44 — 31.82 43 — 18.60 7 0.00

Sources: Funkhouser Real Estate Group; RealEstate Businesss Intelligence

Retail Sales (in millions) Harrisonburg Rockingham County Page County Shenandoah County Augusta County Staunton Waynesboro

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March 2015 $ 104.4 $ 46.9 $ 14.5 $ 33.5 $ 41.1 $ 32.6 $ 45.9 Source: Virginia Department Of Taxation

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SHENANDOAH VALLEY BUSINESS JOURNAL

Tuesday, May 26, 2015

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Key Considerations For Selecting A Business Site Editor’s note: This column first appeared in the June 2013 Shenandoah Valley Business Journal.

I

n theory, selecting a site for your business is a simple proposition. It’s just a matter of identifying the best site at the lowest price.

In essence, it is this simple, but these are goals, not the strategy or tactics that will help realize the objective. A decision made without a plan in place can lead to results based on emotion and convenience, which doesn’t often lead to the intended outcome.

If you have to stick with a choice for a long period of time or spend several hundred thousand dollars, it’s important to employ a systematic approach. Start with the five components outlined below.

It’s Just Pavement, Paint … And Money Often, parking is one of the most overlooked components of site selection. Attention is largely focused on ensuring the building fits the criteria, the location is what you had in mind, and the price fits your budget — it’s easy to overlook some pavement and paint as the decision is being made.

It’s unfortunate that such a simple oversight has the potential to cause so much pain, but a lack of parking can inhibit growth as much as a lack of interior space.

Consider parking spaces the beginning of the sales process and value accordingly.

It doesn’t require citing a study to suggest customers want to park as close as possible, but research has demonstrated that outside of a pedestrian friendly environment, consumers generally only give consideration to parking spaces within 100 feet and those more than 300 feet away might as well be 30,000 feet away.

If you are operating a restaurant, the rule of thumb is 15 to 20 spaces per 1,000 square feet and retail generally requires five spaces per 1,000 square feet.

It’s Not Just A Number Traffic counts are relatively easy to find and even easier to misinterpret. East Market Street has approximately 30,000 vehicles traveling on it every day, Port Republic Road has 24,000 (and growing), and South Main Street has as much as 20,000.

Unfortunately, the best site isn’t always the one with the highest traffic count. Special consideration should be given to the quality of traffic on the road.

Who is it, exactly, that is driving by in those 20,000 to 30,000 vehicles and are they your customers? Where are the trips originating and what is their destination? How

fast are cars traveling past your site? Can they easily get to your site at the time you want them to?

It’s also worth asking if you need high traffic counts, because as you can imagine, they cost more than sites with low traffic counts. Retailers, fast food and fast casual restaurants, gas stations, and pharmacies generally occupy the most heavily trafficked roads, and they are willing to pay a premium for the privilege (think East Market, Port Republic).

Banks, casual dining, and the like occupy roads with slightly lower counts (think University Boulevard). Office users, suppliers, and service providers typically occupy relatively low traffic count sites.

Out Of Sight, Out Of Mind Determining many of the criteria outlined is somewhat subjective. Visibility is not — the site either has it or it doesn’t.

For many businesses, a lack of visibility is comparable to a lack of existence. The key to assessing visibility is defining visibility.

This is generally accomplished by measuring distance and timing.

The greater the distance a building is from the primary road, the less visible it will be. Of course, there is a minor exclusion for major retailers that have built brand awareness with large-scale marketing campaigns, but you’ll generally note that even with all the smaller stores and restaurants surrounding, their façade and freestanding signage is prominently displayed as vehicles enter.

Timing is simply how long the site is visible. Storefronts and signage that can be seen from greater distances and subsequently for a longer period have a greater chance of success.

Take a stopwatch — or smartphone — to your site visit and be careful of sites that set higher or lower than the grade of the road, are blocked by trees, or are extremely bland as they are much easier to overlook.

What Activity, And When?

Have you ever noticed that nearly every Food Lion shopping center has virtually the same tenants? A small restaurant or two, a nail and hair salon, a bank or fast food restaurant out front, and one or two local retailers.

It’s not random. Generally, the activities of one generate traffic for others. You don’t need to locate in a shopping center to benefit from this type of clustering, but you do need to monitor activity levels.

Make multiple site visits at different

times of the day to determine that traffic timing and consumer demographics are beneficial to your business. If you’re operating a retail store open 9 to 5 with only bars neighboring you — it may not be a good fit.

Likewise, a series of empty parking lots surrounding a potential restaurant site is not a great idea. Pharmacies, grocery stores, libraries and restaurants are examples of excellent traffic generators and each one produces high levels at different times.

Just One More Thing Remember Columbo? He was the unassuming and seemingly absentminded detective able to disassemble, reconstruct, and solve murder cases.

The formula for his success was always the same: eliminate assumptions, employ meticulous attention to detail, and stay persistent. The same formula should be applied to reviewing site access.

It is worthwhile to walk around the site with an aerial image and a pen. Document the entrance/exit points, traffic lights, turning access, and flow of traffic on and off site.

Real Estate Tim Reamer If traffic backs up to one of the entrance points, mark it with a red flag since it impedes access to your business. If it stacks to your only entrance, you might consider disqualifying the site.

Pay particular attention to the presence of medians on the primary road. A median without an easy way to cross can effectively cut the traffic count in half — and reduced traffic generally equates to reduced sales.

Tim Reamer provides commercial real estate brokerage and consulting services with Cottonwood Commercial and specializes in national retail representation, investment property and development projects. Learn more at timreamer.com.

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Tuesday, May 26, 2015

SHENANDOAH VALLEY BUSINESS JOURNAL

Harrisonburg, Va.