Tewalt approaches EDA about fate of Afton Inn and compromise on FRPD interest dispute

Ed Daley reaches across the table and thanks Mayor Tewalt for his report. Director Gray Blanton said, “That was the best report from the Town we’ve ever had.” Photo and video by Mark Williams, Royal Examiner.

Front Royal Mayor Eugene Tewalt showed up unexpectedly at a December 27th Special Meeting of the Front Royal-Warren County Economic Development Authority with a message of resolution and legal compromise. The resolution involves the status and fate of the languishing Afton Inn redevelopment project; the legal compromise surrounds the dispute over whether the Town was ever promised in a legally binding way a New Market Tax Credit Program-fueled 1.5% interest rate on the loan payback for construction of the Front Royal Police Department. The EDA initially paid 3.75% interest on principal before refinancing to 3% after about nine payments.

Tewalt was questioned about FRPD financing dynamics the mayor described that would not allow separation of the undisputed principal amount of $8.4 million the Town currently owes the EDA on the FRPD project, from the disputed interest rate. Tewalt indicated the bond issue to allow the Town to repay the EDA must include a set interest rate.

The mayor suggested the two sides work out a compromise that would head off the necessity of taking the legal dispute to court for a judge to decide. However, Tewalt made it clear that while bringing on olive branch forward, he could not speak to council’s intent on compromise and numbers as he had yet to sit down with the full council to discuss their collective intention regarding what has evolved into a highly contentious legal stance against the EDA.

That combative legal stance evolved from an initially-filed (June 21) $3 million civil action against the EDA described by the town attorney at the time as cautionary to protect the Town against any unknown statute of limitations timeframes that might be involved, into an “up to $15 million” amended suit filed July 12. As the Town upped the ante on its still unspecified claims against the EDA, it withdrew from a joint Town-County-EDA Reform Committee effort then Interim Mayor Matt Tederick had initially spearheaded. That was followed by a Town legislative initiative to have State Codes amended to allow it to become the only municipality in Virginia to be a founding party in two concurrent EDA’s. That would occur if the Town remains a party to the EDA it co-founded in the late 1960’s with Warren County as its attorney has recommended to protect access to EDA assets, while being allowed to independently create its own EDA.

Tewalt thanked EDA Board Chairman Ed Daley and Vice-Chairman Jeff Browne for participating in a recent (Dec. 17) meeting with him and Vice-Mayor Bill Sealock as he broached the necessity of resolving the Afton Inn situation. That situation since March 26 when the EDA civil litigation was filed, is a halt to the redevelopment project of the 2 East Main Street group. Past discussion has indicated that halt is due, at least in part, to financial uncertainties surrounding the EDA as current Afton owner as it tries to weave its way through the financial maze of its $21.3 million financial scandal revolving around the tenure of former executive director Jennifer McDonald.

Tewalt broached the possibility of an EDA return of the Afton Inn property back to the Town if the third-party redevelopment project is abandoned. He said the Town Council could then decide the fate of the building and property by working with other East Main Street business owners toward an alternate solution, which he noted could simply be demolition.

The Afton Inn today, a deteriorating and increasingly dangerous eyesore. Photo by Roger Bianchini, Royal Examiner.

The Town has roped off the sidewalk around East Main and Crescent Streets surrounding the 151-year-old brick shell due to falling debris from window moldings. The mayor also noted the roof cupola is listing at about a 10-degree angle. He said the Town had anticipated “winterization” bids to come in between $5,000 and $10,000 but that they had come in at $13,000 or higher.
Following a closed session after Tewalt’s departure the EDA board unanimously approved a motion authorizing an expenditure of $2,500 for an engineering study of winterization of the building. Vice-Chair Browne made the motion, which was seconded by Greg Harold.

Also unanimously approved following the closed session on a motion by Browne, seconded by Tom Patteson, was approval of an extension agreement with First Bank & Trust on the EDA’s Line of Credit. And earlier during its open meeting the board approved, also without dissent, the revised Baldwin Grazing Lease on one of its properties. That motion was made by Jorie Martin, seconded by Gray Blanton.

Following the closed session Board Chairman Daley also suggested the EDA set a hard date of January 31st to complete the internal accounting of its 2018 finances. That project is currently being conducted by retired County Finance Director Carolyn Stimmel and Heather Tweedy of the accounting firm of Hottel-Willis.

“So, by January 31 we’ll get ourselves to the starting line,” Daley observed. The reference was to getting all the in-house review of transactions identified as suspicious in the Cherry Bekaert Report analyzed and adjusted as necessary to present an accurate financial picture of the EDA’s assets and liabilities to the auditing company Yount-Hyde-Barbour that will perform the actual audit of the EDA’s 2018 finances.

Watch the EDA Board of Directors meeting on this exclusive Royal Examiner video: