After year-and-a-half gap, town council catches up on EDA activity, in and out of town

In restarting a public dialogue between the existing Economic Development Authority and the Front Royal municipal government on February 8, EDA Board of Directors Chairman Jeff Brown reminded town officials of his observation to them on that last occasion 18 months earlier while the Town was still involved in a three-pronged effort with the EDA and Warren County to investigate and correct what allowed the now $24-million-dollar-plus EDA financial scandal to fester and develop over a several-year period.

Noting he had also been the one to give that report, Browne revisited it: “I said there was a catastrophic failure of oversight by the EDA, County, and Town with plenty of blame to go around*. I haven’t changed my view on that,” he said in opening.

After a positive exchange with new Town Manager Steven Hicks, EDA Board Chairman Jeff Browne reintroduced the Front Royal Town Council to the dynamics and current status of the EDA as it continues to conduct business in and out of town. Royal Examiner Photos Roger Bianchini

“There was massive embezzlement, bad investments, poorly written agreements, and a dangerous system of overly centralized check writing and bookkeeping. It all set up for a perfect storm,” Browne echoed from his 2019 report to council, pointing to “insufficient checks and balances, lots of misplaced trust and weak verifications” – concluding, “You had a right to be concerned then.

But that was 18 months ago as the new EDA Board of Directors, with County, and initially, for a short time Town, assistance were already involved in dismantling, replacing, and rectifying the EDA structure as the financial scandal evolved under criminal and civil court scrutiny.

Of the direction since then, Browne pointed to installation of the very checks and balances previously missing, including County-mandated third-party bookkeeping, and “multiple eyes on all transactions”. He said the refurbished EDA Board had developed what he termed “a guns and butter strategy” that freed the new EDA staff – Executive Director Doug Parsons and Administrative Assistant Gretchen Henderson – to pursue economic development initiatives (butter), while the new EDA Board of Directors oversaw the legal and peripheral issues (guns).

File photo of an EDA Board meeting prior to departure of Gray Blanton, upper right, and Ed Daley, center-left, the latter to an ‘interim’ stint as WC Administrator from which he hopes to return to the EDA Board of Directors.

However, that year-and-a-half of “Guns and Butter” was a strategy the Town Council missed involvement with, choosing rather what one might term a “Lawyers, Guns and Money” strategy as so poetically described on our Opinion page recently by Fred Schwartz. The lawyers, guns (metaphorically of course) and money to a great degree were pointed directly at the EDA over the objection of then Mayor Gene Tewalt, who unsuccessfully recommended a policy of cooperation and rebuilding with the EDA and County, as opposed to a litigious one supported by council and pushed forward through the office of the former interim mayor and interim town manager.

Browne proceeded into detail on the EDA’s current holdings, in and out of the town limits, and explanations on the EDA’s attempt to divest itself of properties it “never should have been involved in” by the new board’s estimation.

Shot of the Stokes Mart building and adjacent apartments at 514-516 E. Main, one of the properties the new EDA has moved to divest itself of ownership of.

He also pointed to over a million dollars thus far recovered in insurance and settlements with involved parties in the EDA’s civil litigation.

He pointed to the recent recruitment of drone manufacturer Silent Falcon to the county; as well as the potential landing of an eastern regional medical marijuana manufacturer/distributor in Parallel LLC, that could bring a major commercial tax revenue source, along with hundreds of jobs to the county and town, not to mention the purchase of Baugh Drive warehouse the EDA hopes to divest itself of ownership of as soon as possible.

The sprawling warehouse at 426 Baugh Dr. currently has three short-term lease tenants, with a fourth in the wings, as well as at least one potential buyer on the horizon, as the new EDA works to clean up the real estate management situation it inherited.

The EDA Board Chairman pointed to a drive west for business relocation into the Valley that he said the EDA and County are working to take advantage of, utilizing advantages like the Interstate Highway system crossroads and Inland Port that are located here. Of working together to achieve the maximum result of that effort, Browne observed, “We either hang together or we hang separately”. As to the advantages of working together economically, Browne pointed to the pending sale of McKay Springs parcels that are jointly owned by the EDA, County and Town.

In response to queries, he admitted the EDA was currently financially insolvent due to repercussions of the financial scandal, and was being financially supported by the County at this time. However, some council members seemed surprised to learn that Warren County had not absorbed the EDA into its departmental structure, which could present a roadblock to the Town actively reengaging its continued membership in the half-century-plus old joint Town-County EDA. While the Town is currently advertising for applicants to a unilateral Town EDA Board of Directors, an EDA it would be totally responsible for the financial support of, the County has kept the EDA’s quasi-governmental, independent status open as a door by which the Town could reenter into active membership with the existing EDA.

While confrontational at times, the EDA board chairman’s exchanges with council and the mayor appears to have achieved dividends as illustrated by the late week move towards sale of the Afton Inn, below, for redevelopment. Above, Gary Gillespie during his Q&A with Browne.

And while some council grilling of Browne on details, particularly with pre-prepared written notes, took the tone of hostile cross-examination, the end result of Browne’s report and Q and A with council appeared, four days later, to be positive, as illustrated with the EDA’s Friday move toward the completion of the sale of the Afton Inn for redevelopment without a Town challenge on the title to the property.

See the entire EDA presentation and back and forth with town officials in this video.

Footnote: As Royal Examiner has previously reported, while the Town has attempted to distance itself from any portion of “blame” for the EDA financial scandal due to its agreement to no longer have EDA board appointment authority after the County took over full EDA operational funding nearly a decade ago, it was heavily involved with in-town EDA operations throughout the financial-scandal timeframe. In fact, it was the town council that authorized a $10-million-dollar “bridge loan” to the EDA to help facilitate the bank loan for the ITFederal construction project at the Royal Phoenix Business Park at the former Avtex site. That $10-million loan said to have been acquired “under false pretenses” in the EDA civil litigation, is the largest single item in the EDA’s civil suit seeking the return of over $24 million in allegedly misdirected or embezzled EDA, County, or Town assets. In seeking the “bridge loan” then EDA Executive Director Jennifer McDonald told town officials that without that show of “community support” in fronting that $10 million for the ITFederal project in town, the bank was hedging on approval of the loan to ITFederal through the EDA. That was likely because, as Royal Examiner has also previously reported, other than the $2-million value of the 30-acre Avtex property parcel gifted to it for a dollar by the EDA in 2016, ITFederal listed assets of only about $20,000 in its loan application.