EDA in Focus
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.
SEE RELATED STORY:
Cost of EDA audit skyrockets from $260,000 to $760,000 – and that’s not all
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.
SEE RELATED STORY:
Sheriff, ITFed principal Tran, Donnie Poe named with McDonald in EDA civil suit
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.
SEE RELATED STORY:
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.
SEE RELATED STORY:
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.
SEE RELATED STORY:
Despite safety concerns, Town granted EDA project road exceptions
“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.
SEE RELATED STORY:
Madden requests, Athey empanels special grand jury in EDA case
“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.
SEE RELATED STORY:
Mayor admits: we ‘drank the Kool-Aid’ in apology to former councilwoman
SEE RELATED STORY:
Council confronted over past protectionism of EDA and its chief executive
Crime/Court
47-Year-Old Jennifer McDonald Will Hear 6 to 24 Years in Prison Argued at Her Sentencing Hearing
According to court documents filed in the run up to the April 9 sentencing hearing of former Front Royal-Warren County Economic Development Authority Executive Director Jennifer McDonald a sentencing range of from 6 years to 24 years will be argued between defense and prosecution counsels in Harrisonburg’s 10th Western District of Virginia courthouse this Tuesday. Both sides will present witnesses to bolster their sentencing requests. It might be noted that McDonald is 47 years old.
According to the prosecution’s filing of its Sentencing Memorandum to the court: “The Government recommends a total sentence of 22 years, or 240 months (20 years) for the fraud and money laundering counts, to be followed by 24 months (2 years) for aggravated identity theft, to satisfy the factors enumerated in 18 U.S.C. § 3553(a). The Government further requests the Court order restitution to the EDA in the amount of $3,544,268.60 and enter a forfeiture money judgment in the amount of $5,201,329. The Government further recommends a period of supervised release of three years and that no fine be imposed.”
As to their prison time recommendation federal prosecutors note that: “The United States Sentencing Guidelines, as calculated in McDonald’s Pre-sentence Investigation Report (“PSR”), ECF No. 248, call for a range of imprisonment of 235 (19.7 years) to 293 months (24.5 years), to be followed by a consecutive 24-month (2 year) term of imprisonment for Count 18, Aggravated Identify Theft.”
On Tuesday, April 9, the federal courthouse in Harrisonburg will see the end of the long and winding road of criminal prosecution in the Jennifer McDonald chapter of the 2014-2018 FR-WC EDA “financial scandal”.
The additional two years on the aggravated identity theft charge involves another EDA “financial scandal” figure, ITFederal principal Truc “Curt” Tran. Tran is on the prosecution’s list of sentencing witnesses to testify to damage done to his reputation locally by McDonald’s, citing him as an interested party in a real estate transaction he said he had no knowledge of. It was one of the transactions cited by the prosecution as ways McDonald used, or attempted to use, to move money to her own, or other alleged co-conspirator’s, benefit.
Prosecution Point
In seeking a harsh sentence at the upper end of sentencing guideline recommendations the prosecution writes to the court: “For more than four years, Jennifer McDonald used the bank accounts and credit facilities of the Warren County Economic Development Authority (“EDA”) as her personal piggy bank, diverting public funds to purchase real estate and to pay her personal expenses. She falsified documents to fool the EDA’s Board of Directors, external auditors, and Warren County (“County”) and Front Royal (“Town”) government officials so she could continue and grow her scheme, reaping ever-growing payoffs. She employed elaborate ruses, including pretending to act as Truc Tran, to obscure her blatant theft of taxpayer dollars. Instead of acting for the general good of Warren County, McDonald pilfered the EDA’s bank accounts. In the end, her actions crippled the EDA. Due to Jennifer McDonald, a public agency designed to improve Warren County is now saddled with debt, and it is the taxpayers of Warren County who are now directly paying for her crimes.”
Defense Counterpoint
On the defense side, they question the cited guidelines origins and point to a lifetime of personal, financial, and professional consequences McDonald faces as a result of the 30 specific actions she was convicted of related to the FR-WC EDA financial scandal: “Jennifer McDonald submits this sentencing memorandum in support of her request for a total sentence of 72 months (48 months on Counts 1-13 and 19-34 plus 24 months on Count 18) followed by four years of supervised release. The sentence requested is sufficient but not greater than necessary to achieve the purposes of sentencing set forth in 18 U.S.C. § 3553(a)(2).
“The current guideline range provides no useful advice to the court, as it was not developed based on empirical data or national experience and it fails to satisfy any purpose of sentencing. It recommends a sentencing range that is far greater than necessary to punish Ms. McDonald because she poses an extraordinarily low risk of recidivism and has been destroyed personally, financially, and professionally because of her convictions. The collateral consequences already felt by Ms. McDonald vastly exceed that of an ordinary case and weigh in favor of a sentence of 72 months (6 years).”
Defense counsel, on behalf of their client, further describe McDonald’s roots here and the lifetime consequences of the actions she has been convicted of: “Front Royal is Jennifer McDonald’s hometown. She has lived in Front Royal for her entire life, except for the four years she went to college in North Carolina. Her family’s roots in Front Royal go back generations, and Jennifer has devoted her adult career to working for and on behalf of the people of Front Royal and Warren County. But now she is a pariah in the town she loves because of her offenses.”
Also submitted on McDonald’s behalf is a letter to Judge Elizabeth K. Dillon from a woman describing a 30-year friendship with McDonald that began when the woman moved to the area with her family when a high school junior. “I know that Jennifer is charged with a serious offense, but I would like to give you additional information about her for your consideration,” she begins.
She then traces the personal difficulty of making friends in a tightly knit, small-town community environment at that age, continuing, “However, Jennifer went out of her way to make me feel welcome and that I wasn’t going to spend my last two years as a high schooler friendless. Jennifer has been my friend since then,” she observes, adding, “When my father passed away suddenly, she was the first person I called and she came immediately to help me as I dealt with the sadness and grief. Jennifer is my best friend. Thank you for your consideration,” the woman says in conclusion of another side of defendant Jennifer McDonald not presented as evidence in her criminal trial.
How may Judge Dillon balance what she hears in support of prosecution and defense arguments and witness testimony about community and personal repercussions of the acts Jennifer McDonald was convicted of by a federal court jury on November 1st? Will we find out this Tuesday, April 9. Stay tuned.
After Tuesday, Jennifer McDonald will once again be sporting incarceration clothing. The question remains, for how long for the 47-year-old. An answer at some point between 6 and 24 years is pending according to pre-sentencing defense and prosecution filings.
EDA in Focus
EDA Acknowledges Failure of Attempted 158 Faith Way $350,000 Deed Buy-Back – What Happened?
On the morning of Tuesday, April 2, a press release from Warren County Director of Economic Development Joe Petty announced the failure of the previously announced Economic Development Authority (EDA, FR-WC EDA) acceptance of a deed buy-back offer of $350,000 by Jennifer McDonald and her husband, Samuel North, on their home property at 158 Faith Way. This reporter found that press release somewhat vague on exactly why the buy-back arrangement had failed. Readers will recall from our below-referenced story that the McDonald/North deed buy-back would have likely netted the EDA, and indirectly the County, at least $150,000 more than a resale effort after maintaining the earlier-announced property seizure.
The center of attention in the now-failed attempt to gain maximum profit for the EDA and County through a deed sell-back of the McDonald/North home property. Below, County Director of Economic Development and the County’s chief liaison to their now unilaterally overseen EDA, Joe Petty, addresses EDA budget variables at the March 26 supervisors meeting. Royal Examiner File Photos
The opening paragraph of the April 2 release offered a hint about unmet terms: “On March 22, 2024, the Front Royal-Warren County Economic Development Authority (EDA) Board of Directors held a regularly scheduled meeting during which it approved a settlement offer with Jennifer McDonald and Samuel North regarding property located at 158 Faith Way. McDonald and North had deeded title to the EDA on February 5, 2024, but not vacated, thus requiring ongoing significant and costly EDA and Warren County litigation. As the terms of that offer were not met by McDonald/North, on March 28, 2024, the EDA Board of Directors held a special meeting and voted to rescind its March 22nd resolution and withdraw the offer.”
“Not met” in what way we wondered, and decided to ask EDA Board Chairman Jd Walter. He replied to our emailed inquiry, explaining: “Almost immediately upon EDA approval, their (McDonald/North) counsel advised EDA counsel that they would not be able to meet the payment schedule. Subsequently, North did not withdraw his appeal of the order of possession, which was another term of the settlement offer. As such, the EDA considered the offer not accepted, thus voted to rescind its previous resolution and withdraw the offer.”
The EDA Board of Directors has been busy trying to attain maximum value from, initially, a property seizure, then a deed sell-back to EDA ‘financial scandal’ central figure Jennifer McDonald and her husband Samuel North’s home property. The latest announcement was not good for achieving maximum value, as the couple did not meet deed buy-back conditions.
So, what is the status of the McDonald-North home property at this point? “The EDA is awaiting a hearing in Circuit Court on the North appeal to the order of possession. Until that hearing is concluded, the EDA cannot take physical possession of the property,” Chairman Walter explained.
So, it appears that the EDA is back to taking possession of the property with all its negative financial implications regarding legal fees, liens filed against the property by third parties, an unpaid $250,000 mortgage equal to half the value of the property, not to mention closing costs on any prospective sale.
Well, based on their comments against the deed resale effort at the March 26 supervisors meeting it would seem that at least the five elected members of the Warren County Board of Supervisors are happy — though this reporter remains baffled as to exactly why.
(See LINKED Royal Examiner story: “EDA Plan to return McDonald-North Home Property Deed for $350,000 Cash Raises Ire of Supervisors – But What Do the Numbers say?”)
Below is the full April 2nd Press Release on the canceled Faith Way deed resale effort:
On March 22, 2024, the Front Royal-Warren County Economic Development Authority (EDA) Board of Directors held a regularly scheduled meeting during which it approved a settlement offer with Jennifer McDonald and Samuel North regarding property located at 158 Faith Way. McDonald and North had deeded title to the EDA on February 5, 2024, but not vacated, thus requiring ongoing significant and costly EDA and Warren County litigation. As the terms of that offer were not met by McDonald/North, on March 28, 2024, the EDA Board of Directors held a special meeting and voted to rescind its March 22nd resolution and withdraw the offer.
The proposed settlement terms were for McDonald/North to pay the EDA, by certified check a cash settlement of $350,000.00 and to withdraw North’s appeal of an order of possession of the Faith Way property granted to the EDA on March 6, 2024, by the Warren County Circuit Court. For these terms, the EDA would have deeded the property back to McDonald/North. In such a case, the multiple liens against the property by parties outside of the EDA would have remained the responsibility of McDonald/North, and not been a deduction from the proceeds to the EDA if the EDA sold the property.
As noted, the EDA received an order of possession for the 158 Faith Way property on March 6th. However, because North has appealed that decision the EDA cannot yet take physical possession of the property in order to sell it for fair market value. Upon sale of the property, the EDA will be required to satisfy the multiple liens against the property and cover closing costs.
The EDA takes very seriously the perspectives of the community as it relates to matters associated with McDonald and her actions as former Executive Director of the EDA. The EDA Board’s decision of March 22nd made sound financial sense. It was not accepted. The EDA wants to make clear because of their serious, negative impacts on the community, McDonald/North are not entitled to the positive consideration of being allowed to stay in their home when their size-able debt to the EDA, County and community remains unpaid.
The next regular monthly EDA Board meeting will be held on Friday, April 26, 2024, at 8:00 AM, at the Warren County Government Center.
EDA in Focus
In-Town Business Owners Urged to Respond to Coming Town Business Development Board Survey
At its regular meeting of Monday, April 1, the Front Royal Economic Development Authority (FREDA), also now operating under the title Front Royal’s Business Development Board (BDB), continued to fine tune what Town Director of Community Development and Tourism “Lizi” Lewis called on March 18 the “working, living draft” of a survey of existing in-town businesses. Central to that fine tuning process was stressing the importance of encouraging the largest possible return rate of the survey designed to give the BDB/FREDA board a working outline of the best path forward in assisting existing businesses within the town limits to maximize their potential profitability and business models.
And reaching them with an understanding that a response to the survey is in their best interest was stressed Monday. That is because the content of that collective response will help Front Royal’s Business Development Board establish its priorities in making recommendations to the Town’s elected officials and involved departments on infrastructure and other priorities designed to make the Town as business friendly to the specific needs of existing businesses as it can be.
The Town’s Business Development Board and staff study wall projections for the draft of the Existing Business Survey. Royal Examiner Photos Roger Bianchini
And to that end the bulk of the noon meeting was propelled by Lewis’s presentation of her most recent draft of the survey drawn up in the wake of the March 18 meeting discussion and input from FREDA board members. As readers may recall, strategies developed two weeks earlier included not annoying busy business owners with too lengthy of a questionnaire requiring a great deal of detail, as well as utilizing the community’s two existing Rotary clubs and the Chamber of Commerce to reach the broadest possible number of existing business owners.
So, maintaining a balance in seeking both the above-referenced “quantitative” response, as well as the additional more detailed “qualitative” replies from those willing to spend a little more time — 20 minutes was estimated as an average response time to the existing draft — was a driving force in Monday’s discussion. And Lewis listened as Business Development Board members suggested combining some questions, dropping or relocating others. And Lewis explained that there would be additional space available for expanded responses for those desiring to elaborate on various responses on their existing business model or desired changes or fixes to existing Town infrastructure or workforce availability.
Town Director of Community Development and Tourism Lizi Lewis, standing, fields questions on optimum wording and number of questions to be included in the crucial coming Existing Businesses Survey.
Asked if the survey would be distributed by email, Lewis responded that it would be distributed multiple ways. A target time-frame of mid-April was cited for a final board-approved draft to be sent out to the existing in-town business community.
On one front related to existing or future business development, under “Old Business” regarding workforce development and employee recruitment, Lewis reported that a date of April 18 had been confirmed for the board’s visit to Laurel Ridge Community College in Middletown. However, due to Spring Break the board’s visit to the Blue Ridge Technical Center here in town has yet to be nailed down. April 15 had been targeted for that Blue Ridge Tech Center visit during discussion on March 18.
Near the meeting’s end, Town Manager Joe Waltz told the board that one result of the town council’s recent “Retreat” was establishment of a revenue stream for BDB/FREDA operations as a main priority of council.
The noon meeting adjourned at 1:28 p.m.
EDA in Focus
EDA Plan to Return McDonald-North Home Property Deed for $350,000 Cash Raises Ire of Supervisors – But What Do the Numbers Say?
At its work session of Tuesday, March 26, the Warren County Board of Supervisors was temporarily distracted from the flood of numbers it has been pondering related to finalizing a Fiscal Year-2025 County budget, by another number — $350,000. That is the amount of money the now unilaterally County-overseen, if still legally named quasi-governmental independent entity Front Royal-Warren County Economic Development Authority (EDA, FR-WC EDA), announced the previous Friday it would accept in cash or certified check from former EDA Executive Director Jennifer McDonald and her husband Samuel North to return the deed of ownership of their home property at 158 Faith Way to them.
The WC Board of Supervisors March 26 work session opened with some staff budget variable reports. Here Child Services Act Coordinator Jessica Amankrah, at podium, with support from Finance Director Alisa Scott, reviews changes in numbers of impacted children in the mandated county program that will impact service costs. But the conversation shortly turned to a controversial McDonald/North home property deed resale initiative by the EDA. Royal Examiner Photos Roger Bianchini – 158 Faith Way Photo Online
The EDA’s recent move on acquiring deed to the property was announced February 9. It is driven as part of the effort to recover more of the estimated $6.5 million in EDA assets testimony at her criminal trial in federal court in the Autumn of last year indicated McDonald is believed to have moved to her own personal benefit as part of the EDA “financial scandal” occurring under her executive directorship of the FR-WC EDA between 2014 and 2018. As noted by staff at Tuesday’s work session, McDonald has given the EDA an estimated $1.3 million in real estate in a voluntary settlement agreement near the beginning of the EDA’s civil litigation process several years ago, leaving a referenced $9-million liability at about $7.5 million still to be recovered.
McDonald faces sentencing on 30 criminal convictions related to the unauthorized movement of EDA assets under false pretenses on April 9 in the Harrisonburg federal courthouse. Our most recent information is that McDonald and North continue to reside in the Faith Way property with a challenge of the EDA seizure of the property having been filed. The EDA contracted local attorney Nate Adams to represent the EDA regarding property rights to the Faith Way residential property.
EDA perspective
Initial information sought from the EDA board in the wake of the post-closed session announcement on Friday, March 22, indicated that the deed resale was considered the most financially productive path forward for the EDA and County to gain a maximum return on investment when all cost and value aspects of the Faith Way property are laid on the table. Those numbers as we understood are an assessed value of approximately $500,000; however, with an existing mortgage of about $250,000 to be paid off. Add legal fees projected at $30,000 to fight already filed legal actions against the property, and a potential 5% sales commission we calculate at $25,000 on the property’s full assessed value, and it would appear the EDA would be looking at a return in the neighborhood of $200,000, if not less, to follow through on the initial deed seizure and EDA-facilitated resale effort.
2
The EDA Board of Directors at its Feb. 9 meeting when the McDonald-North home property deed seizure initiative was announced. But on March 22, after appearing to discover financial variables that could shave as much as $305,000 off the assessed value of $500,000, the EDA changed course, agreeing to a deed resale to McDonald-North at a cash price of $350,000. Not so fast, the supervisors said Tuesday, March 26, in unanimously seeking to stop the transaction.
But perhaps the county’s elected officials are working with a different set of numbers, or have confused some of the myriad departmental and outside agency budget request numbers they have been dealing with for several months now with the dynamics of the EDA deed return effort. County Administrator Ed Daley noted at Tuesday’s work session that it was the board’s 19th budget-season work session as Fiscal Year-2025 approaches on July 1. The work session discussion of the Faith Way property matter begins with the chairman’s introduction at the 49:48 mark of the linked County video.
County Supervisors perspective
It is a very interesting and collectively negative reaction by the supervisors as to what the EDA appears to believe will give the EDA and the County, which is helping the EDA keep its financial head above water in the aftermath of the “EDA financial scandal”, the best bang for their buck.
“That came as quite a surprise to all of us on the board of supervisors. And to say the least, none of was very happy about it,” Board Chairman Cheryl Cullers said in introducing the late-added topic of the Faith Way deed return to the work session agenda, adding, “So, I’ve been working with staff today in conversations and I’m optimistic that we have derailed that sale because that is not something this board of supervisors wanted. It is not our intention to give somebody who stole from the people of this community back, and for a lower price than what that property is worth.”
After her introductory remarks, Cullers handed off to her colleagues, each of whom added their discontent to the planned deed resale to McDonald and North beginning with Supervisor John Stanmeyer at the 52:00 video mark.
We contacted County Administrator Ed Daley about what financial information the board was working from in that previous day’s discussion. “I don’t think price was the issue for the board,” Daley replied, suggesting a call to Chairman Cullers for elaboration on her perception of the driving force for the board’s opposition to the re-sale of the deed to McDonald and her husband.
County Administrator Ed Daley suggested maximum supervisor contact with EDA board members to express their desire to stop North-McDonald deed resale initiative. Later Daley suggested to this reporter that a favorable price outcome may not have been the prime factor in the supervisors opposition. He suggested a call to board Chair Cullers to establish an alternate issue with the proposed transaction. However, the board chairman wasn’t responding to our inquiries. But from various supervisor work session comments perhaps that the property isn’t drawing the remaining estimated $7.5-million McDonald debt to the now County-overseen EDA is the problem.
This reporter emailed Board Chairman Cullers late Wednesday afternoon with questions related to her comments at the Tuesday work session, the above-cited numbers as we understand the EDA reasons for moving toward the cash-for-deed return, and Daley’s observations that factors other than money could be involved in the supervisors collective stated desire to derail the EDA initiative. However, as of publication Cullers had not responded to the emailed questions, nor responded to a phone message left mid-afternoon Thursday.
Not hearing back from the chairman, we returned to the linked work session video at the 52-minute mark where John Stanmeyer began the other members comments on the EDA’s plan to recoup $350,000 cash in exchange for the property’s ownership as the best path forward to claim maximum attainable value from that property.
“I’ll just say I was surprised and disappointed too hear about this. And it’s hopefully not too late to have it stopped. We definitely don’t want to let her off the hook on this,” Stanmeyer said in support of the chairman’s opening remarks.
Next up was “Jay” Butler (52:19 video mark). “I feel the same way. Until Jennifer McDonald has paid restitution to the county and to the community, you know, I do not support anything that would be in favor of her at this point, especially in the sale of this property,” Butler chimed in, adding, “It came as a surprise to me, and I definitely would have said ‘No’.”
Richard Jamieson (52:58) continued with the consensus appraisal against netting $350,000 in return for the property. “Again, I’ll reiterate that I would absolutely not support this. This is a person who was convicted of crimes of embezzling money from the community,” Jamieson said, verifying a $9-million judgement against McDonald with the county administrator when various factors, perhaps including accumulated interest and conspiracy on the movement of EDA assets to her personal benefit, are included, with about $1.3 to $1.5 million in real estate thus far returned.
“So, she owes seven-and-a-half-million dollars, yet somebody thinks it’s an OK idea to sell her house back to her that we took away from her, for $350,000. If she even has $350,000 it should be ours … It’s flabbergasting to me. I completely disagree with it. And my request to Chairman Cullers was to reel it back in, no matter what,” Jamieson said of blocking the EDA deed resale initiative.
And finally it was Vicky Cook’s turn to wrap up this supervisors consensus (54:08). “Wow, I support everyone of my fellow colleagues on this board of all their statements. And I was surprised as well when I heard about the transaction. I agree with Mr. Jamieson in regard with the $9-million settlement, which was a cherry deal when considering how much we are still paying on that debt right now … and I hope we can stop the transaction, and bring the money back to the taxpayers of Warren County,” Cook concluded.
Then acknowledged by the chair (54:49), County Administrator Daley suggested each supervisor convey their perspective on the proposed transaction to as many members of the EDA Board of Directors as possible. Perhaps during such direct between-board communications the supervisors will elaborate on how they believe holding on to the Faith Way property for resale, particularly if the attached mortgage and other forecast expense numbers cited above are accurate, will help the EDA get closer to recovering the $7.5-million still owed by McDonald to it and the County.
About those budget numbers
In other work session agenda items county staff explained various budget numbers, reasons for changes, and ongoing variables that could further impact their numbers moving forward toward final budget approvals. Those items as listed in the agenda packet amended that day to include B, D, and E were:
5:00 PM March 26, 2024 – WC Board of Supervisors Work Session
- Discussion – Child Services Act (CSA) Budget (1:10 video mark, CSA Coordinator Jessica Amankrah)
- Discussion – Repeal of Erosion and Sediment Control Regulations (20:33 video, Building Official David Beahm)
- Discussion – EDA Owned Property at 158 Faith Way (introduced by chair at 49:48, with Mr. Santmeyers beginning other board member comments at 52:00)
- Discussion – EDA Budget (55:21, County Director of Economic Development Joe Petty)
Following the Faith Way home property discussion, County Director of Economic Development Joe Petty addressed the EDA’s evolving budget proposal to the County. Despite his close work with the FR-WC EDA he was not asked about reasons for the EDA’s change of course on seizure of the North-McDonald property.
- Discussion – Updated Board of Supervisors 2024 Priorities (1:08:41, Deputy County Administrator Jane Meadows)
- Discussion – FY 2024-2025 County Budget (1:10:02, County Administrator Ed Daley; discussion of consensus on advertising a tax rate for public hearing begins at 1:46:52)
- Adjournment – The work session convened at 5 p.m. adjourned at 6:55 p.m.
EDA in Focus
County EDA Non-Suits Civil Litigations Against Town of Front Royal Among Other Post-Closed Session Actions
The Front Royal-Warren County EDA (EDA) held its monthly meeting on Friday, March 22, 2024, at 8 a.m. Six board members and legal counsel were present, and Rob MacDougall and Bruce Townshend participated remotely.
The County-overseen EDA gets down to business, including with some remote hookups of the legal council and two members, one pictured here, Friday morning, March 22.
The regular meeting began with Committee and Board Reports. The Asset Committee provided an update that settlement on Stephens Industrial Park-Lot 6 is underway. The County Director of Economic Development, Joe Petty, reported on the ongoing County Fiscal Year-2025 budget meetings, recent appointments with small business loan applicants, and an increase in business prospect inquiries for Front Royal and Warren County. As part of “New Business,” the Board approved a motion to authorize the current Chair, Jd Walter, as the registered name on the EDA’s PO Box.
The Board concluded the meeting with a closed session to discuss the potential disposition of real property to business prospects and legal consultation on active litigation. Following the closed session, the Board approved a confidential settlement agreement; a resolution to take a voluntary non-suit as to each of the lawsuits filed by the EDA against the Town of Front Royal; a motion to accept $350,000 from Jennifer McDonald and Samuel North to convey title to 158 Faith Way; and a motion to engage with Timberlake-Smith to serve an EDA’s general counsel beginning May 1, 2024.
Elaboration on these actions will be posted when and if any further information becomes available.
The next monthly Board meeting will be held on Friday, April 26, 2024, at 8 a.m., at the Warren County Government Center.
(From a release by the FR-WC EDA and Warren County Director of Economic Development)
EDA in Focus
FREDA Board Continues to Fine Tune its Economic Development Processes as Operational Status Approaches
At a work session on its newly implemented every two week meeting schedule the Front Royal Economic Development Authority (FREDA), now also doing business as the Town of Front Royal’s Business Development Board (BDB), gathered with Town Manager Joe Waltz and Director of Community Development and Tourism “Lizi” Lewis and other staff to review evolving processes as it edges toward fully operational status. As reported of its meeting of March 4: “The FREDA board and staff continue to fine tune a path forward as they and the town’s elected officials move closer to having assets in place to allow it to actively pursue its recently finalized mission and vision statements.”
And with the Front Royal Town Council having also recently approved a Memorandum of Understanding (MOU) regarding funding of FREDA/BDB that Mission: “To provide leadership necessary for Front Royal to optimize economic opportunity and community improvement” and Vision: “To sustain and grow a healthy economy that provides opportunity and protects the characteristics that make Front Royal a unique community” appear to be on a rapidly approaching horizon.
Frank Stankiewicz, far left end of table in green, makes a point to his BDB/FREDA board colleagues as discussion of development of an Existing Business Survey that won’t put off a high level of response, but allow additional detail to be included if so-desired by respondents.
And so at 12:30 p.m. Monday afternoon, March 18, the Town of Front Royal Business Development Board, down one member Aiden Miller, with above mentioned staff and Administrative Assistant Hillary Wilfong and IT Director Charles Hutchings rounding out the work session’s meeting roster, faced a five-pronged “Goal Setting Discussion”. The five sub-categories being A: Infrastructure (Downtown Parking and Traffic Studies), B: Existing Business (Survey Questions), C: New Business (Identify Target Sectors), D: Workforce Development (planned Site Tours of Blue Ridge Tech Center and Laurel Ridge Community College), and E: Asset Development (Inventory of Assets).
The importance of keeping infrastructure regarding traffic flow, ease of access to business locations, and parking needs updated to changing circumstances was cited. Potential fixes on Route 55 East into town from Linden, particularly from Leach Run Parkway to its intersection with Commerce Avenue drew the board’s attention before moving into subsection “B” Existing Business and a survey Lewis had drafted based on previous board discussion.
“This is a start, this is a working, living draft,” Lewis told the board of a page-and-a-half “Draft Business Survey” handed out for review by the board. And this Existing Business survey drew the board’s attention for about 20 minutes of the nearly hour-long discussion that saw the work session adjourn at 1:29 p.m.
Director of Community Development and Tourism ‘Lizi’ Lewis presented her working ‘Existing Business Survey’ draft to the BDB/FREDA board for feedback and suggestions. Town Manager Joe Waltz provided backup on some questions as the board draws closer to operational status.
Not intimidating busy business owners with too lengthy of a questionnaire requiring a great deal of detail was debated. A solution seemed to be suggested by offering briefly answerable questions with additional space for “Comments” in specific areas for those who might want to offer that additional detail, without requiring such detail from all responders. Lewis acknowledged trying to achieve a balance between a “quantitative” response from a broader range of existing business owners, with a “qualitative” response from those willing to provide additional detail on certain topics.
Among those topics were employee recruitment and the local employee pool; infrastructure improvements to what is currently available that might help their existing business to operate more efficiently; “Community Engagement” as in participating in special business friendly events, sponsorship of youth sports, and Chamber of Commerce membership; and even how local business owners spent their downtime. Were options available locally that kept them here for their downtime, or did they prefer to leave the area to relax. And if so, what kind of new business additions might alter that tendency to leave the area for relaxation.
A suggestion was made to hand out the finalized Existing Business Survey at local Rotary meetings as a means to seek that qualitative/quantitative answer balance.
David Gedney, far side of table, explores variables on the BDB/FREDA boards 5-pronged ‘Goal Setting’ work session discussion, as Frank Stankiewicz, left mostly obscuring Chairman Rick Novak at head of table, and Tom Eshelman listen.
As for “Asset Development” securing a comprehensive inventory of available existing commercial spaces within the town limits was broached. Related to the “Existing Business Survey” finding out if those businesses owned the properties they are in, or rent their physical space, was suggested as a link between those sub-sections.
Towards the meeting’s end plans for visits to two area “Workforce Development” instructional institutions were discussed, the Warren County Public Schools-connected 9th thru 12th grade Blue Ridge Technical Center in Front Royal; and Middletown’s Laurel Ridge Community College. With the community college visitation options being tighter it was tackled first. A visit the morning of Thursday, April 18, from 9 to 11 a.m. was chosen as the most accessible for the most board members and staff. A tentative date of Monday, April 15, in the afternoon was selected without a definitive time frame pending verification with the Blue Ridge Tech Center staff on their availability that day.
The next regular FREDA/BDB meeting was scheduled for noon on Monday, April 1.
Thank You to our Local Business Participants:
