Harrisonburg's New Luxe Downtown Hotel
By Christopher Clymer Kurtz
Nothing kills a deal like time, the saying goes. But not all the time.
When Harrisonburg Downtown Renaissance (HDR) came into being 15 years ago, “you could shoot a cannon down Main Street and not kill anybody,” Board president Andy Perrine remembers. The question then wasn’t “What’s going on downtown?” he said, but “Is there anything going on downtown?”
While from its start HDR wished for a hotel, other successes superseded it: downtown housing units have quadrupled and eateries have tripled, HDR says. Created to establish the downtown district as the economic and social hub of Harrisonburg, HDR’s primary aim now is to keep up the momentum.
But this year, that early hotel hope became an elegantly sleek reality, poised between James Madison University and downtown on the corner of Main Street and Martin Luther King Jr. Way: the 230-room Hotel Madison and its 21,000-square-feet Shenandoah Valley Conference Center opened in the spring.
It’s a monument to how the City of Harrisonburg and its promoters, James Madison University and its foundation, and a private Maryland developer worked together for years in what Perrine called a “public-public-private partnership” before breaking ground in 2016.
Just talk for a short while – on the phone, at that – with developer Paul Gladd, and you get the sense that he’s indefatigably confident and perfectly reasonable. Two decades after graduating from JMU, Gladd founded the Gaithersburg, Maryland, lodging industry and real estate consulting firm dpM Partners, where he is principal and co-owner.
Gladd also maintained ties to the Shenandoah Valley. He owns a farm in the rural Fulks Run area north of Harrisonburg, and he served on the board of the American Shakespeare Center in Staunton 2007-2013.
He also has part ownership of the Stonewall Jackson Hotel in Staunton (the product of another public-private partnership), where he said he learned from a general manager about JMU’s burgeoning hospitality program.
“Obviously the hospitality program would be much better off if it had a relationship with a hotel,” Gladd thought, and started inquiring. He met HDR’s then-executive director Eddie Bumbaugh (now the director of public relations for Hotel Madison) and Perrine.
In late 2011, Perrine, who is also the associate vice president at JMU’s Office of University Communications and Marketing, helped convene a meeting between Gladd, JMU’s senior vice president for administration and finance and an ex officio Foundation trustee Charles King, and JMU’s then-president Linwood Rose.
Rose and King, Perrine said, “have got tremendous acumen,” and their connectedness was “handy”: Rose would retire six months later and become the JMU Foundation’s vice president for strategic planning – a position he held until earlier this year – and King has continued in his roles.
And along the way, in 2016, Gladd joined the advisory council for JMU’s Hart School of Hospitality, Sport and Recreation Management, which will benefit from learning and internship opportunities at Hotel Madison.
JMU had already been developing its own plans for a hotel on campus, and coming into that December meeting, Perrine recalls that Rose’s and King’s body language suggested they “were probably not inclined to say yes” to Gladd.
But Gladd is a “very skilled financial thinker” and had a “showpiece” in mind, Perrine said – and that meeting led to more meetings, where Gladd and JMU senior leadership eventually “cooked up” what Perrine called “a brand-new kind of deal” to collaborate with the city on the hotel idea.
“It was a puzzle,” Perrine said, with a lot of details to work through that made subsequent negotiations at times “bumpy.”
Each “cook in the kitchen” had their own ideas, Gladd recalled. JMU originally wanted a hotel to be on the other side of campus, where it would be visible from I-81, but that wouldn’t have met the city’s downtown revitalization goals. And while the city had “strong interest” in the connected conference center to bring people downtown, it was reluctant to front the needed millions of dollars to build one.
As the process extended, Gladd’s private lenders needed revisiting to maintain terms and commitments.
“It was almost like a Rubik’s Cube,” Gladd said. “If you got it to work on one side with one party you could have created a challenge for one of your remaining parties.” But when an issue seemed insurmountable, he said, everyone would come together again and brainstorm a solution.
“Harrisonburg doesn’t mind really rolling up its sleeves,” Perrine said. “People were unwilling to just let it fall apart.”
In the end, dpM Partners and its investors fronted close to $37 million for the hotel, and the JMU Foundation loaned $11.5 million for the conference center, to be repaid with the tax revenue from the hotel and conference center, both of which are owned by dpM and are on land leased from JMU.
“The entrepreneurial part of this is actually structuring something that meets the goals of multiple parties,” Gladd said. “You have to think creatively, you have to think in a sensitive way, you have to have really good communication, you have to be transparent, you have to have creativity with enthusiasm, to do it for that duration.”
No, really – it does seem like everyone’s coming out of this a winner: dpM has another hospitality build in its portfolio. JMU now has a base for hospitality training. The city has a conference center to attract new people to town (and more land to tax, now that it’s off JMU’s not-for-profit acreage). The city boasts a chic hotel with access to JMU and downtown.
And local businesses have a new customer base. For example, the then-anticipated hotel was a factor for the nearby Pale Fire Brewing Co.’s Tim Brady when he opened up shop in the historic downtown Ice House complex in 2015. After all, it “makes Pale Fire the closest walking destination for the hotel guests,” he said, “and we have a tight spot to house touring musicians.”
That “tight spot” is set up to please just about every kind of patron, said Gladd. Millennials looking for experiences will like the communal tables and pod seating in the main lobby for socializing and eating; baby boomers will like the amenities, room sizes, and covered walkway to 300 leased parking spaces in JMU’s adjacent parking garage.
Harrisonburg Economic Development Director Brian Shull said that at the outset of the project he was “curious if we could pull all the pieces together,” but he “knew the potential was tremendous.” At a single meeting earlier this year he heard of three different statewide groups considering meeting there.
It will likely take a bit more than a decade to pay off the city’s loan for the conference center, he thinks—but after that the city will get the tax revenue for itself. In the meantime, it gets to keep the taxes generated by people attracted to town by the hotel or conference center who end up patronizing additional restaurants and other hotels.
The project’s success also has established an energy for what Gladd called a “living partnership” among the collaborative parties. Just because the hotel and conference center are now open, he said, “doesn’t mean that that can be turned off.”
And Perrine? As downtown’s vibrancy continues to lure people to its restaurants, events and attractions, and with the new United express service at Shenandoah Valley Regional Airport, and now the sleek downtown Hotel Madison, he sees the beginnings of Harrisonburg becoming a “real hub for activity.”
Will it? Time’s telling.