A new EDA? Town Council approves resolution seeking state’s blessing

FRONT ROYAL — The Front Royal Town Council on Monday unanimously passed a resolution seeking a change in the Code of Virginia that would allow the Town to create its own Economic Development Authority (EDA) if it sees fit to do so.

Specifically, the Town’s newly approved resolution requests that the Virginia General Assembly amend a portion of the State Code to allow just Front Royal, VA, to establish a new EDA that’s “separate and independent” from the existing Front Royal-Warren County EDA, which is embroiled in a multi-million-dollar financial scandal.

“Upon deliberate and studied consideration,” the Town Council “finds that it is to the benefit and betterment of all the inhabitants of the Commonwealth of Virginia, and in particular to the inhabitants of the Town of Front Royal,” that the Town be able to form a Front Royal EDA so that it “can forge its own path forward in the future, unencumbered by the tremendous financial, legal, and reputational burdens currently encumbering the Existing EDA,” according to the resolution.

“First and foremost,” explained Councilman Jacob Meza after motioning to adopt the resolution, “what we are doing is approving a resolution to request the ability to establish our own EDA if we so desire to do so. Photos and video by Mark Williams, Royal Examiner.

“Here’s the thing,” Meza continued. “Our current EDA — which you could make the easy argument is ineffective — is going to be really difficult to operate through… at least in the next coming year and possibly years.”

Because of that fact, Meza said the Town Council wanted to be sure to submit its approved resolution prior to the start of the General Assembly’s legislative work that begins in January, “essentially hedging our bets that if our EDA becomes ineffective as a joint Town-County operation, then the Town has the ability to establish its own EDA so that we can continue moving forward on Town projects, especially related to property acquisitions and developments.”

If Front Royal were to miss submitting its request now, then the Town would have to wait to submit it in July 2021, said Meza.

“We wanted to get the ball rolling on this so that we have the option and the ability to continue if needed,” he added.

Councilman Gary Gillispie echoed those sentiments on Monday night.

“Please keep in mind, just because we are asking the General Assembly to authorize Front Royal to have an EDA, it does not necessarily mean that we’re going to launch into it,” Gillispie read from a prepared statement. “Once authorized, we can commence the process to determine if it’s in the best interests of the community.”

To avoid a potential legal hurdle, the Town Council seeks the State Code change without withdrawing from its current legal interest in the existing EDA.

“It appears to the Town that as long as there are outstanding and unpaid Existing EDA bonds and indebtedness, the Town cannot even rescind it ordinance co-creating the Existing EDA all, in which case the Town would not even be able to create a separate Town EDA which could fund Town EDA facilities either inside the Town’s corporate boundaries,” the resolution states.

In fact, the current EDA is saddled with outstanding and unpaid bonds and other indebtedness for private and public facilities, including hospitals and schools, states the resolution, which also pointed out that “apparently the Existing EDA likely will become insolvent sometime in the year 2020.”

“In my opinion, the current EDA is insolvent,” Councilman Gillispie read from his prepared statement. “I don’t see a way to get it back to solvency.”

The Town Council’s resolution also acknowledges, among other items, that if the Town did rescind its ordinance for co-creating the existing EDA, then it would waive its rights to share in one-half of any of the funds and properties held by the existing EDA at the time it was dissolved.

Such action “might well be construed as wastage of Town assets by Town Council, and thereby construed as legal misfeasance on the part of Town officials, which would be unacceptable to the Town,” the resolution.

The Town Council in its resolution also wasn’t shy about laying out reasons for why it wants to form its own EDA.

For instance, the six-page document outlines “the legal and financial troubles” of the existing EDA’s former executive director Jennifer McDonald, who “has been creditably accused and has been indicted in excess of 30 felony charges in connection with criminal charges related to alleged misappropriation of Existing EDA and Town funds.”

Additionally, the resolution says that McDonald — who isn’t named in the document but only referred to as the ‘former executive director’ — “has been civilly sued in the Circuit Court of Warren County, Virginia, by the Existing EDA for over $21 million in damages in relation to said alleged misappropriation of said funds.”

The resolution also makes it clear that the “Town, Town Council, Town officials and Town employees had no role whatsoever in the former executive director’s actions,” and is civilly suing the existing EDA and McDonald in Warren County Circuit Court for $15 million in damages.

The resolution also says that the “brand” of the current EDA “has been so badly damaged as to make it very difficult, if not impossible, for the Existing EDA to attract new commerce and industry
into the Town.”

And the Town charges that “there is an inherent conflict of interest” on the part of existing EDA officials and employees who appear to favor attracting new commerce and industry “to benefit the County as opposed to the Town.”

For these and other reasons, the Town Council proposed a change to Virginia Code 15.2-4905 (Powers of authority section) that would grant the Front Royal Town Council the power to create its own industrial development authority (IDA).

“The purpose of an EDA or IDA is to bring economic development to a community where it is authorized,” Gillispie read. “It is also important to give existing businesses support to help them compete and stay profitable.”

Front Royal needs good-paying jobs, the councilman added, and there are several business parks within the Town limits that also need development.

“We just need someone who can market our Town and be able to go to Richmond or wherever it’s needed to get this accomplished,” said Gillispie, who added, if the General Assembly accepts the Town’s request and amends State Code, then Town Council members will work diligently to put safeguards in place that ensure such financial fraud never happens again.

Following Meza’s motion on adoption of the resolution, with a second from Councilman Chris Holloway, the members of the Front Royal Town Council, including Vice Mayor William Sealock and Councilmen Gillispie and Letasha Thompson, all voted yes to approve it.

Watch the Town Council meeting on this Royal Examiner video: