Washington’s ‘wine country’

Fast-growing Loudoun has no desire to match Fairfax

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Print this page by Robert Burke

When the recession’s black clouds started gathering two years ago, Keith Maddox was determined that his small construction company in Loudoun County would be a kind of lifeboat for its 21 employees.

The company, Vantage Construction in Sterling, did a lot less work last year than the year before, and the county lost thousands of construction jobs. But Maddox didn’t lay off a single employee, and he’s proud of that. “I’m not saying it was the most profitable decision,” he says. “But we set a goal early on, as we saw this thing coming on two years ago, that we would adjust how we do things and toe the line on costs and just hang on and ride it out together.”

If you have to ride out a recession, then Loudoun County isn’t a bad place to do it. Before the recession, this 521-square-mile county on the western side of the metro Washington region was one of the most dynamic counties in the country, and it still is today. Unemployment is lower here than almost every place else, at 5.4 percent in March, compared with 7.8 percent statewide. The county continues to grow at an astonishing pace, with about 288,000 people now and a projected population of 375,000 by 2020.

Yet Loudoun’s population still is dwarfed by neighboring Fairfax County, which has more than 1 million residents. Loudoun will never catch up, and that suits many people just fine, especially on the county’s less-populated western side. Loudoun has a burgeoning wine industry and has slapped on a new label: “D.C.’s Wine Country.” “We want to show that we have a strong rural county, that we’re the fastest-growing, but we’re still not that big,” says Jeremy Harvey, the county’s director of marketing.

Loudoun is still in the heart of Northern Virginia’s technology corridor, though, and collects some big commercial projects. Lately it’s data centers. Construction is supposed to start later this year on a 150,000-square-foot center near Washington Dulles International Airport. It’s a project of Fairfax-based Hughes and Smith Inc., which last year built an 86,000-square-foot data center at the same site. Plus, California-based Digital Realty Trust, which has seven data centers in Northern Virginia, last year bought 34 acres of land next to its data centers in Ashburn. Its $350 million expansion in Loudoun was the state’s biggest capital investment last year. Also, data center operator Equinix invested $100 million in a data center in the county last year.

Loudoun also is close to getting its second hospital. The Board of Supervisors approved plans by Nashville-based HCA to build a 381,000-square-foot hospital with 164 beds, on a 50-acre tract on U.S. 50 near Sterling. The project will include 100,000 square feet of medical office space and room for an additional 125,000 square feet of construction. The project is expected to open in 2015.

New hospitals usually generate more development around them, and this one will too, says Tracey White, vice president of community and government relations for HCA’s Capital Division.  HealthSouth is opening a 40-bed rehabilitation hospital near the HCA site, and a new hospice facility is planned nearby, she says. The HCA hospital, called the StoneSpring Medical Center, is expected to create 500 jobs and an estimated $3 million annually in tax revenue. Hospitals “definitely are great economic catalysts,” White says.

That would be a welcome development for county coffers. Like every other locality in the state, Loudoun is dealing with lower tax revenues. The county’s 60,000-student school system took a hit and will get $19.3 million less in local funding than it did in the current spending year, which ends June 30. The School Board had sought a $25 million increase in local funding. School employees will get no raises and will get two days of unpaid leave next year, a savings of $4.5 million. About three dozen central office jobs will be eliminated.

Tom Reed, an at-large member of the county’s School Board, grumbles that the county essentially is starving a growing school system. “We’re going to have 3,500 new students next year, and we’re going to be opening two new high schools and an elementary school,” he says. “The cuts we made, I’m not happy with.” In the 10 years he’s been on the board, the school system has doubled in size, he says. “And the amount of traffic out here now tells me it ain’t gonna stop.”

County Administrator Tim Hemstreet, who has been in that post since December, says most of the lost revenue came from decreased real estate values. Plus, the county has a lot of gas-guzzling SUVs whose values plummeted when gas hit $4 a gallon, he says. But gas prices are down under $3, and real estate values have stabilized. “We think we’ve hit the bottom in the residential sector,” he says. “In the commercial sector we’re hoping we hit the bottom [in property value), but we’re not sure.”

Hemstreet says the housing market is showing some life. “We’re seeing an increase in permits being [issued] for more modest home builders, because right now there’s an undersupplied inventory for homes under $400,000,” he says. “That’s only materialized in the last couple of months, but we’re hoping it will continue.”

NewsOne sector that grew all through the recession is the county’s wine business. Bob Rupy, co-owner of the Bluemont Vineyard, worked in Loudoun for years at companies like MCI and America Online. He left AOL in 2004 and started working on the winery. When it opened in August 2007 it was the county’s 15th winery; today there are 22. “We’re finding that there’s a lot of people in Loudoun and Fairfax that are just sort of waking up to ‘Hey, there’s a wine experience right in our back yard,’” he says.

“Year-to-date our visits are up, and our sales are up,” he says. “We’re trying to build out our area here, put in more tables and figure out how to better park people in our parking lot. We want to be able to scale our business and continue to produce more wine and maintain quality that is expected in Loudoun. We don’t want to grow too fast.”

Maybe Bluemont will slow down, but Loudoun’s wine industry is speeding up. Marketing director Jeremy Harvey thinks the county will have 30 wineries by the end of the year.  Its “D.C.’s Wine Country” pitch includes highlighting its “destination restaurants.” The county created that designation three years ago and now has nine restaurants under that title, chosen for quality and uniqueness and also for using locally grown products and selling Loudoun wines. “Culinary tourism is definitely a hot travel segment,” Harvey says. “We knew we had the product.”

The D.C.’s Wine Country label helps in other ways. “Meeting planners like the setting for their events, even if they don’t go to a winery,” he says. Loudoun County might have some modest name recognition but it’s not that effective. “Most people can’t even spell Loudoun, [but] D.C.’s Wine Country not only tells people where we are, but what they can expect.”

NewsMaybe the easy life awaits visitors to Loudoun’s rural side, but it’s still a tough haul for many companies trying to recover from the recession. Maddox of Vantage Construction says the latest downturn is worse than the 2001 recession because building got ahead of demand in the past few years. “A lot of [projects] got delivered and are just not filled up,” he says.

If a couple of big projects come through, Vantage will have a good year. The company does a lot of work for Wal-Mart, as the Arkansas retailer remodels its store exteriors. Maddox says he also has several dozen smaller projects in the pipeline, enough to keep his crews busy. But almost all are renovations or changes inside existing buildings, not new projects from the ground up.

So he’ll keep pushing to find work wherever he can. Maddox has sent crews to jobs far outside of Northern Virginia in the past year, just to keep them working. “Our business is not a fun business right now,” he says. “It’s just an extremely competitive, low-margin market out there. There’s not many good-sized jobs, just lots of small stuff. You just have to fight to keep your head above water.”

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