Sheila Johnson's Salamander Hospitality issued what appeared to be a stark ultimatum at the March 8 regular meeting of the Town Council: add a minimum of 40 to 48 new rooms to the currently proposed 120-room Salamander Inn or risk bringing all movement on the development to a halt. Citing cost increases of nearly 40%, "way above what reasonable estimates would have been two years ago," Salamander's Prem Devadas asserted that any rational financial analysis made the project "truly unfeasible in its current development state."

Salamander's new demands raised immediate concern about both the future of the 340-acre Salamander property, annexed to Middleburg as part of a 2005 "Memorandum of Understanding" and the $5 million sewer treatment plant Salamander promised to build as part of that agreement.

In a March 16 letter addressed to Mayor Betsy Davis and the Town Council, Devadas promised that, in return for approval of the extra rooms, Salamander would provide a "binding commitment" to the Town that will "assure construction of the new [sewer] plant on the current schedule, regardless of when the Resort is begun or completed."

Five Council Members Briefed in Advance

Prior to his appearance before Council on March 8, Salamander's Devadas met privately, one-on-one, with at least five of the Town's council members.

"The reason I wanted to meet with everyone privately, before we spoke about it publicly," he said, "was because when I say under current conditions the project is not feasible, it means that we seriously have to think about not moving forward and building the resort."

"Even though it is unpleasant," he continued, "... I'd rather have the discussion [now] than to show up one day and say we're not going to build it. And that's where we're at."

Profit Motive?

The project was never "conceived by Sheila Johnson as being a big money-making opportunity," Devadas continued, "and we were very fortunate that she chose to look at it that way. ... to allow us to do a true 5-star resort ... something that would be very special and something befitting Middleburg."

Unfortunately, and to the distress of all concerned, Devadas told the Council, new analyses, completed within the last four weeks, have concluded that the project has "gone from being a marginal investment at best, to being something nobody in their right mind would do."

"While Sheila Johnson has the wherewithal to do what she wants to do, nobody can advise her that this would be a SMART thing to do," he said.

Efforts to Find Alternatives?

After receiving the bad news from her financial analysts, "Sheila challenged the entire team to find a way" to make it work, Devadas told the Council, and after considering all the alternatives, the "only thing that I know can make this a feasible project is to be able to drive more income by increasing the number of rooms."

Happily, due to the project's original 5-star design, rooms could be added efficiently in 8-room increments, with no increase required in the size of other "grand" spaces, such as the lobby, ballroom, dining rooms, or meeting facilities.

Indeed, the only significant impact, according to Salamander, would be the traffic generated by the transient occupants of those 40 to 48 extra rooms. Even at 100% occupancy, Devadas said, he was convinced that a new traffic study would show the impact to be minimal.

High Cost of Delay

Salamander and the Town have been working together to facilitate a late-spring 2009 opening for the smaller inn envisioned in the 2005 Memorandum of Understanding... and that inn had already grown from 58 rooms to 120.

As of March 8, both Salamander and the Town were still proceeding on the old schedule, Devadas noted, "... but while we're doing that, we're spending money. I think we do want to try to determine as quickly as possible whether this is something we want to try to do or not." In response to a question by Eura Lewis, Devadas noted that he remembered assuring the council, some two years ago, that 120 rooms would really be sufficient to make the Inn viable, and that he would not be back at some later date asking for more.

At that time Salamander had allowed for a 20% increase in costs over time, which seemed more than adequate. When asked if 168 rooms would be his "final" request, "That's what I would formally come to the council and ask for."

Questions from Council

No doubt because of Devadas's earlier, one-on-one meetings with council members, few questions were asked following Devadas's public comments.

Eura Lewis, a supporter of the original Memorandum of Understanding, pointedly asked Devadas if this were the last new request the Council could expect. Devadas replied only that his formal request to Council would, indeed, ask for only 168 rooms.