And that’s not all – the mysterious EDA workforce housing transaction

Artist’s rendition of workforce housing apartment building – pending the EDA’s 2017 purchase of the land the number of planned 12-unit buildings was reduced from three to two to be initially constructed – today there are still none there. Royal Examiner File Photos/Roger Bianchini

As noted in our story on approval of a half-million-dollar increase (to $760,000) in County funding of the financial investigation (forensic audit) and consequent litigation resulting from that investigation of FR-WC Economic Development Authority finances

during the executive leadership of Jennifer McDonald, the specter of institutional wrongdoing and a lack of municipal oversight to prevent it permeated the April 2nd meeting of the Warren County Board of Supervisors.

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Not long after County Board Chairman Dan Murray’s pre-meeting call for a collective effort to return “peace and tranquility” to the community it continued when two of three public comments speakers addressed the EDA situation. Cheryl Cullers, who said she would be running as an independent to replace the retiring Linda Glavis as South River District supervisor, called for the creation of a “fraud-waste-abuse hotline”.

Independent South River supervisor candidate Cheryl Cullers

“The residents are angry and they want to get to the bottom of what happened to the EDA. They also want to stop this from ever happening again … There is a healing process that must begin now,” Cullers told the county board she seeks to become a part of.

Then Kristie Sours Atwood, who told this reporter she is also pondering a run for South River supervisor, rose to call the EDA audit “a farce – there are so many holes in it,” she said of her exploration into what is known, though according to EDA officials no one outside the EDA Board of Directors has physically seen a draft of the still-evolving report.

Atwood, who has filed suit against the County over alleged conflicts related to building inspection department approvals and review of what she contends was flawed construction of her home by a local builder, asked that no payments be made to the Aikens group and its various legal entities until the final EDA audit report is released.

Perhaps a South River supervisor candidate, Kristie Atwood

Four-and-a-half months ago on November 28, 2018, the Aikens group became owner of the 3.5-acre workforce housing parcel at the end of Royal Lane off the Route 55 East entrance into Front Royal. The much-ballyhooed as of 2015 EDA workforce housing project is cited in the EDA civil litigation as one of several projects from which funds are alleged to have been embezzled.

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Workforce Housing WHAT?!?

“They’ve got a lot of skin the game,” Atwood said of Aikens Group – actually not that much according to a November 28, 2018 Deed of Sale from the EDA to the Cornerstone LLC branch of the Aikens group. The price of that transfer of ownership from the EDA to the Aikens Group was ten dollars.

If not as good as the one dollar deal given to Truc “Curt” Tran and his ITFederal LLC for 30 commercial acres at the Royal Phoenix Business Park site, it was still a pretty good one considering that in April 2017 the EDA board agreed to pay $445,000 for the 3.5-acre parcel initially presented as a late 2014 gift to the EDA for community development.

During a conversation with the media in the EDA parking lot on Dec. 20, 2018, ‘Curt’ Tran expressed distress that Jennifer McDonald’s job performance was under critical scrutiny. McDonald resigned that day. Tran and his company are among eight defendants named with McDonald in an EDA lawsuit seeking recovery of over $17.6 million in EDA assets. An EDA loan of $10 million to Tran apparently pushed by retired Congressman Robert Goodlatte, R-6, is among those assets being sought.

Asked if the EDA purchased the property for $445,000, why it would sell it to the Aikens Group for $10, a loss of $444,990 by our calculations, Dan Whitten noted he had been conflicted out of the transaction in his duel County-EDA attorney roles.

EDA Board Chairman Gray Blanton, who signed the November 28, 2018, Deed of Sale to the Cornerstone LLC branch of the Aikens group, did not respond to a phone message question about the purchase and sale. EDA officials have been advised not to discuss matters related to the civil litigation filed on their behalf. And as noted above, the workforce housing project is on the lawsuit list of projects from which money is alleged to have been embezzled.

The workforce housing projects dates to late 2014 when a Deed of Gift was arranged to the EDA from local realtors Walter and Jeanette Campbell for their 3.5-acre parcel at the end of Royal Lane off the John Marshall Highway/Route 55 East entrance into Front Royal. As later explained by EDA Executive Director Jennifer McDonald, who is the Campbell’s niece, the couple would receive a federally-generated tax credit for the undeveloped property in exchange for the land gifted to the EDA for economic development.

As that Deed of Gift situation unraveled in 2017, at one point McDonald asserted that the Aikens Group had been involved in the workforce property transfer from near the beginning, agreeing to a purchase from the original owners at the price on the Campbells Deed of Gift to the EDA. As for the absence of any mention of Aikens’ involvement prior to 2017, McDonald alleged that the regional developer did not want its name tied to the project publicly due to competitive advantage issues.

A shot down Royal Lane toward its dead end at the boundary of the EDA’s workforce housing parcel – despite a reported EDA expenditure of $500,000 on engineering, prep work and permitting, five years down the road the property looks pretty much the same.

During a November 2016 Front Royal Town Council discussion of special exceptions requested by the EDA for the workforce housing project to be built on a dead-end street, Town Planning Director Jeremy Camp referenced a funding stream through the “Home Consortium” that the Northern Shenandoah Valley Regional Commission managed. Faced with questions from Councilwoman Bébhinn Egger about a $445,000 price attached to the Deed of Gift, the town planning director suggested further clarification from McDonald who was present at the 2016 council meeting.

Pressed by Egger for reasons the $445,000 price – the property was then assessed at $310,000 – appeared on the Campbell’s Deed of Gift to the EDA, McDonald explained that the former owners got a tax credit based on the price listed on the Deed of Gift.

“That’s the amount of our Home Fund. It’s not actual money we ever had our hands on; that’s Home Funds that go directly from the DHUD to the property owner, so it’s never money that we see,” McDonald said of the EDA and the price listed on the Deed of Gift. Royal Examiner’s research at the time indicated that the federal tax credits were based on a third of the value of the involved property, thus apparently explaining the need for a price on a Deed of Gift.

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Jennifer McDonald and Bébhinn Egger often butted heads over assertions made about EDA projects by the EDA executive director. Until Town Finance Director B.J. Wilson’s spring 2018 discovery of a history of annual debt service overpayments by the Town to the EDA, Egger had been the only elected town official to question the often fluid and secretive dynamics of EDA projects under McDonald’s executive leadership.

At the time Royal Examiner research into that funding stream indicated it was regionally-administered money, by the Northern Shenandoah Valley Regional Commission, originating in a federal Department of Housing and Urban Development (HUD or DHUD) program.

Despite council approval of the requested zoning permit exceptions, the project floundered with no apparent site work being done. In 2017 McDonald pointed to delays in town and DEQ permitting as reasons for delays.

Following an April 28, 2017, EDA board closed session it was announced that a failure to meet a previously undisclosed developmental deadline related to the Campbell’s tax credit eligibility would negate the deed of gift. McDonald elaborated that the deadline was part of confidential agreement between the Campbells and the EDA on the exchange of the property. In the wake of the unmet deadline the EDA’s options were to deed the land back to the Campbells or purchase it.

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Missing appraisal raises workforce housing questions

Asked about the decision to purchase following the meeting, McDonald said the EDA had already spent a half-million dollars in preparatory work, including site planning, engineering, town and state DEQ permitting fees, so the board decision was that it would be best to proceed with the transaction as a purchase, rather than abandon the project and site at this point.

“We’re frugal,” then EDA board Chair Patty Wines commented.

As Executive Director Jennifer McDonald watches, then-EDA Vice-Chair Greg Drescher reads an April 2017 motion to pursue a $445,000 purchase of the 3-1/2 acre workforce housing parcel the EDA had allegedly done $500,000 of engineering, permitting and site work on.

In reaction to that change in the workforce housing dynamic adding over $440,000 to the EDA’s cost of the project, one town official reacted angrily at a subsequent May 2017 council meeting.

“I feel extremely manipulated, not only as a councilman, but also as a town citizen. We were told by Jennifer at our public meeting in November that the $445,000 price was from an appraisal. That was false. I even pointed out that the assessed value was much, much lower,” Councilwoman Egger began.

“We were told that we had to abandon all logical planning practices to build on THIS particular lot, because the land was being donated. That is now also false,” Egger said of the April 2017 explanation of the new dynamic requiring an EDA purchase of the workforce housing property.

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“Are we supposed to believe that the EDA is so incompetent that they can’t meet a deadline two and a half years later? I don’t believe that for one second,” Egger told her colleagues, adding, “Why is the agreement between the EDA and the Campbells confidential? … Why is the EDA continually hiding behind confidential agreements and permitting processes?”

As Bébhinn Egger and Eugene Tewalt listen, former colleague Bret Hrbek speaks. Hrbek was one especially critical of Egger’s questioning of EDA projects, once claiming those questions threatened to run ITFederal and its principal ‘Curt’ Tran away from the sweetheart deal he had on EDA land and financial resources. Tewalt was among Egger’s former colleagues to recently apologize for not listening to the councilwoman in 2016-17. Now retired from politics, Hrbek remains publicly silent on the evolving EDA and ITFederal legal situations.

Egger then concluded with an observation that seems particularly timely in the spring of 2019 as the community awaits the next legal filings to drop following a now $760,000 forensic audit of EDA finances over the past decade.

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“It gives me little hope for the future of our town, knowing that the council blindly went along with approving this project, even though the numbers didn’t add up; it will create a planning nightmare, and the information provided to us was lacking. The EDA can pass the buck all they’d like, but those of us with our eyes open see this for what it is: another botched project where none of the numbers make sense, all of the pertinent information is confidential, and the council and public are given false information which is never retracted and never apologized for.”

If not the community, Egger, now Bébhinn Rowland of Maryland, received May 25, 2019 apologies from Mayor Hollis Tharpe and Councilmen Eugene Tewalt and Jacob Meza for their roles in minimizing Egger’s questions and council’s collective unwillingness to explore the myriad issues about EDA processes presented by their colleague at the time.

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