Town Council’s Referral of WCEDA Viability to the Attorney General Passes Unanimously Without Discussion

Transacting a light agenda on the evening of Monday, November 25, beginning at 7 p.m. in the Warren County Government Center at 220 North Commerce Avenue, the Front Royal Town Council voted unanimously to direct the Town Attorney “to refer the matter of the viability of the Industrial Development Authority of the Town of Front Royal and the County of Warren, Virginia, a political subdivision of the Commonwealth of Virginia, to the Office of the Attorney General of Virginia for consideration.” The item was summarized as follows: “With the recent loan defaults, insolvency, and continuing noncompliance with the Industrial Development and Revenue Bond Act by the Industrial Development Authority of the Town of Front Royal and the County of Warren, Virginia (WCEDA), Town Council questions the viability of WCEDA, a political subdivision of the Commonwealth of Virginia, and seeks the assistance of the Office of the Attorney General of Virginia.”

Front Royal Town Council sits in anticipation of a regular meeting on the evening of Monday, November 25. Royal Examiner Photo Credits: Brenden McHugh.

Often known as the Economic Development Authority (EDA), now commonly referred to as the Warren County EDA (WCEDA), the stated purpose of this political subdivision of the Virginia Commonwealth, in the language of the Industrial Development and Revenue Bond Act, quoted in a September 23 resolution of the Town Council calling for the EDA’s dissolution, is as follows: “acquire, own, lease, and dispose of properties and make loans to the end that such authorities may be able to promote industry and develop trade by inducing manufacturing, industrial, governmental, nonprofit, and commercial enterprises, and institutions of higher education to locate in or remain in the Commonwealth.”

Isabella and Dominic Giovinazzo receive gift certificates and certificates of appreciation from Mayor Lori Cockrell after leading the gathering in the pledge of allegiance.

After a corruption scandal in which EDA Executive Director Jennifer McDonald was convicted of embezzling EDA funds for personal use, the EDA found itself on a path to where it is now in a state of insolvency, unable to wrap up its debts. Being able to supply the funds for its expenses is a key requirement of the Act, under which the EDA, created jointly by Town and County, was established in 1967. To provide an annual audit of its finances to the governing body of the locality is also a requirement. According to the resolution calling for the EDA’s dissolution, the Town has not received a copy of such an audit since 2019.

Town Council recognizes Holly Rhodenhizer (fourth from L) for service on the Board of Architectural Review (BAR).

At the same time, according to WCEDA Chairman Robert MacDougall in a phone interview on Tuesday morning, the Town has not been in touch with his governmental body for a year. He and his fellow directors are eager to enter negotiations and solve problems with the Town concerning the WCEDA, but he expressed that they are largely in the dark about the Town’s strategy. The impression of the Royal Examiner, taking the past twenty-four hours into consideration, is that except for what the EDA directors learn after the fact when meetings like the one on Tuesday night have been transacted and in the absence of discussion in which the mayor could provide a rationale, the EDA is left without knowledge of its impending fate.

After making a presentation to the council, Chief of Police Brian Whited (fourth from right) honors and stands beside former Captain Zachary King who is now Major King.

Asked what he thought of the concept of a “receiver in equity” put forward in the dissolution resolution, whereby a higher court would dissolve the EDA and appoint a third party to receive the EDA assets in the case that the EDA cannot retire its debts, MacDougall said he and his fellow directors are not opposed to a third-party solution, whatever that might mean. But by referring the viability question to the attorney general, the town attorney would not necessarily be recommending dissolution and the appointment of a receiver. The attorney general would be at liberty to make such a judgment, but not necessarily because the town attorney explicitly recommended that course of action. Thus, the appearance of the dissolution resolution in July and again in September, highlighting the desire of the town council, leaves many unanswered questions.

For example, why does the July iteration of the resolution differ in several key respects from the September iteration that was passed? In the July iteration, the County is named as a de facto receiver of assets along with the banks. In the September iteration, that reference is truncated to merely include the banks. The removal of the County from that equation is peculiar insofar as the Town asserts in the resolution its continuing claim to EDA assets, even considering history in which, in 2012, the Town gave up operational oversight of the EDA through appointment of directors and removed itself from any obligation to fund it. One wonders how the events of 2012 comport with 1991, when Town and County agreed that in the case of dissolution, assets would be divided equally, and in the case that the EDA ever has assets surpassing its needs, those assets would also be divided equally.

Both iterations of the resolution are available online in the agenda packets for meetings of the town council on July 22 and September 23. What is even more peculiar is that the EDA, which can only dissolve itself, unless a higher authority like the attorney general mandates it, is being called upon by the resolution to dissolve even in the case that its debts are retired. This is pursuant to a section of Virginia code that posits a situation in which the purpose of the authority has been realized; this is hardly such a case. Moreover, would the receiver in equity, positing the second of the two dissolution scenarios, resolve the assets in a manner that honors the 1991 equal division agreement? And how does the Town’s absence these past twelve years from operational oversight and funding of the EDA’s operational budget change or affect that original agreement? These are ostensibly questions to which Robert MacDougall deserves an answer.

Is dissolution really the only foreseeable option? Does a receiver in equity necessarily negate the continued existence of the WCEDA? More questions. Perhaps questions that only the attorney general will be able or willing to answer. The WCEDA has hardly delivered its non serviam, despite whatever faults it may display as it struggles to survive. To say wrap it up and dissolve or, in the absence of your ability to wrap it up, be dissolved by a higher authority who will relieve you of your assets seems tantamount to saying shoot yourself or be shot. Anybody with the nerve to consider himself a person of integrity can only say with confessional poetess Anne Sexton: “I have ridden in your cart, driver, waved my nude arms at villages going by, learning the last bright routes, survivor where your flames still bite my thigh and my ribs crack where your wheels wind. A woman like that is not ashamed to die. I have been her kind.