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Citizen critics of indicted county officials get personal – and impatient

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Board Chairman Murray and County Administrator Stanley flank County Planning Director Taryn Logan after presenting her with a Certificate of Recognition for the County’s work in partnership with the Virginia Farmland Preservation Fund signed by Governor Northam. ‘As one of 16 Virginia localities that invested the time and resources to develop their own Purchase of Development Rights program, we would not have been able to reach this milestone without your help,’ State officials told the County. Royal Examiner Photos/Roger Bianchini. Video by Mark Williams, Royal Examiner.

It was a nearly full house of around 60 citizens, mostly angry and accusatory, that greeted the Warren County Board of Supervisors and staff at the first monthly meeting of October. Despite the 9 a.m. meeting time historically done to accommodate monthly reports including some from out of town officials, citizens upset about the EDA financial scandal were out in force Tuesday, October 1.

They appeared drawn by a late-added agenda item word of which quickly spread through the community. That item was consideration of the hiring of legal counsel at taxpayer expense for the defense of the five supervisors, county administrator and former county/EDA attorney each charged a week earlier, September 24, on three misdemeanor indictments of misfeasance or nonfeasance in the conduct of their public positions.

Those charges allege a lack of due diligent oversight of former EDA Executive Director Jennifer McDonald while the EDA financial fraud investigation was underway the final four months of last year, beginning in mid-September.

With public calls for a mass resignation of the board – though apparently not until they first fire County Administrator Doug Stanley – the thought of the board members, not only staying in office, but also using taxpayer generated County funds for their defense against charges they have already been deemed guilty as charged of in the court of social media and public opinion, is not a happy thought for many.

The consensus among those gathered for Tuesday morning’s meeting was no taxpayer-generated attorneys fees for you, unless maybe if you are acquitted. There was also an unusually large contingent of WCSO deputies, uniformed and plain clothes on the scene.

Seventeen speakers rose in the first round of public comments near the meeting’s beginning to address their various levels of unhappiness at the evolution of what has now been cited in civil litigation discussion as a $21 million embezzlement or misdirection of EDA assets over the past five-plus years. Then in the second, less time-restricted public comments section near the meetings end another 12 people rose, for the most part to continue the criticism of the lapse of oversight for which the supervisors and two staffers are now being criminally prosecuted for.

And about Valley Health
However one speaker, Melanie Salins, returned to her “Birth Local” roots fighting reduced services including the loss of a maternity ward in the new Valley Health hospital under construction off Leach Run Parkway. Sighting past potential conflicts of interest stretching across the Town, County and EDA boards that all approved the EDA issuance of a $60 million construction loan to Valley Health, Salins suggested the supervisors initiate a call among all three municipal and quasi-municipal organizations for Valley Health to volunteer to pay all fees associated with the bond issue to ease the financial pain on the community.

“The deal was created by people who had perceived conflicts of interest with an entity now alleged and charged in criminal and illegal activities. It gives the appearance that Valley Health is benefitting from certain ill-gotten gains. I can’t imagine Valley Health would want to benefit from criminal activity in any way, shape or form … Their agreement to donate these bond fees to you would be an excellent gesture of good will toward our community in the difficult spot we find ourselves in,” Salins suggested.

And Emily?

A final speaker, Steve Cullers, rose to criticize an earlier speaker’s drawing of Board Clerk Emily Mounce into the discussion of reemployment following what is already a volatile November Election campaign.

Steve Cullers rose to board clerk Emily Mounce’s defense after she was included in one speaker’s somewhat personalized negative critique of county governmental operations.

“This is a new low” in the public discourse, Cullers said of refocusing the personally-natured attacks that speaker James Harper had begun on County Administrator Stanley and Shenandoah District Supervisor Tom Sayre, before shifting to criticism of Mounce for her demeanor in the handling of his FOIA requests regarding County and EDA matters.

Yada, yada, yada
And between those volatile public comments sections as the meeting worked through other agenda items, including the Fiscal Year 2018 outside auditor’s report – positive for the County – and authorization for financial consultants to move on a Virginia Resources Authority (VRA) bond refinancing issuance that could save the County $7 million or more in interest payments if current interest rates hold through October 30, the crowd present for other business grew restless.

“How can that be?!?” Jim Bond yelled of the positive audit report being presented by Matthew McLearen of the Robinson, Farmer, Cox Associates firm contracted as the County auditor.
Then as County bond consultant Ted Cole of Davenport & Associates plowed through a rather laborious explanation of the financial variables and parameters involved in moving on the bond reissues several spectators, Paul Gabbert in particular, became frustrated with the time being devoted to multi-million decisions in the public interest, because after all, that was not Mr. Gabbert and many of those present’s interest of the moment.

Paul Gabbert interrupts meeting.

What Gabbert and others appeared not to grasp amidst the numerous bond reissuance variables was that the resolution of support Cole was setting the groundwork for included minimum savings totals and interest rates in effect on October 30 when the VRA refinancing goes out.

However the public complaining about, not only the length time the first of two bond reissue presentations took, but the seemingly dizzying variables on each past construction bond reissue led the board to delay a vote on authorization to proceed with the bond reissue until the October 15 meeting. Cole told the board that “mid-October” was the stated deadline VRS has put on municipal decisions to participate.

So hopefully VRS officials weren’t referring to “almost mid-October”, say October 14 to jump in if the now near historical low interest rates hold for the next month. Be ashamed to lose that equivalent of a penny of county real estate tax revenue annually that might be saved if the refinancing opportunity were lost at the current estimated total saving of over $7 million. As Board Chairman Dan Murray pointed out, each penny of real estate tax revenue generates around $400,000, which is about what projected annual savings are now at, Cole explained.

As a further accommodation to the large crowd present for the attorney fees discussion, the board also moved Cole’s second presentation on refinancing of the RSW Jail construction bond to after the attorney’s fee discussion. Action on approval of the jail bond refinancing was also postponed to October 15.

However additional groans and yelling from the crowd were heard when Carter noted that the board had no supporting documentation on the attorney payment situation and suggested delaying the matter to the December meeting. He noted that most of the defense attorney motions to quash the indictments against their clients would be heard on October 28, so the status of the charges would be clearer at that time.

Carter’s motion to postpone the discussion and a vote for two months was seconded by Linda Glavis. The motion passed by a 3-2 margin, with Sayre and Murray dissenting.
Some speakers suggested paying the requested legal fees only if the defendants are acquitted or the charges were dropped on he motions to quash. Sayre had prefaced discussion by noting he planned to pay his own attorney’s fees.

Carla Sayre, foreground doorway, and James Harper, not a past president of the Doug Stanley Fan Club, following a brief hallway dust up that attracted WCSO deputy attention following Harper’s late meeting jabs at her husband, Shenandoah District Supervisor Tom Sayre.

Some speakers suggested paying the requested legal fees with taxpayer money only if the defendants are acquitted or the charges were dropped on the motions to quash.

EDA charges background
As Royal Examiner has previously reported the misdemeanor indictments handed out to a mix of past and present County and EDA officials on September 24, cites a failure of oversight between September and December of 2018 as allowing a minimum of $309,000 in additional EDA resources to be misdirected or embezzled by the former EDA executive director. McDonald had first come under scrutiny for possible financially fraudulent activities regarding the Town of Front Royal in August 2018.

It was August 23 of last year when McDonald, then EDA/County Attorney Dan Whitten, and then EDA Board Chairman Greg Drescher were confronted by Town staff and auditors over the discovery of over eight years of debt service payments to the EDA which the Town should not have been responsible for. Town summaries of that meeting indicate it may have been the first time the word “fraud” was broached concerning EDA financial affairs.

Drescher resigned as EDA board chairman the following day and Whitten left County employment on September 13 of this year to take the county attorney’s job in Prince George County. Both were among the 14 County and EDA officials charged with a lack of due diligent oversight last week.

The Town has also filed a civil suit against the EDA seeking recovery of as much as $15 million of Town assets it believes were impacted in the EDA financial fraud situation.

Above the supervisors and below a portion of the crowd standing in the moment of silent prayer for community healing that County Board Chair Dan Murray has made a tradition of opening meetings with. Murray let board and staff criticism go other than several occasions when it took on an aggressively personal tone.

And in a late-breaking development that occurred during Tuesday morning’s county board meeting, the Town of Front Royal issued a press release through the Mayor and Council’s Office stating it was withdrawing from joint Town-County-EDA meetings, as well as participation in the joint Reform Committee formed to recommend changes to processes to prevent a recurrence of the EDA financial scandal. They are processes the EDA and County have already begun implementation of.

Watch the public comments and attorney fees discussion in the exclusive Royal Examiner video:

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Legal questions surround Town offer of one-time, recoverable FRPD payment

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Without accepting any responsibility for the nearly $9-million cost of its new police headquarters building, at a hastily called Tuesday evening Special Meeting to accommodate the turn of the fiscal year today, Wednesday, July 1st, the Front Royal Town Council unanimously approved a “Reservation of Rights Agreement” allowing the Town to pay a portion of the first debt service payment of Fiscal Year 2021 on that Town/EDA capital improvement project. The project was completed in October 2018 and the Town has yet to compensate the EDA for any of its costs in financing the project as will be elaborated on below.

Also approved during the eight-minute meeting prior to an adjournment to closed session for personnel matters believed to be the first of two town managers interviews scheduled this week, was an extension past June 30, and alteration to the contract payment terms of Interim Town Manager Matt Tederick. That will be covered in a separate Royal Examiner story.

Councilman Jake Meza says the Town saved about $50,000 by hiring Matt Tederick as a contractor, but as of July 1 that arrangement no longer exists. Royal Examiner photos and video by Mark Williams.

As to the Reservation of Rights Agreement with Warren County, the authorized one-time payment of $10,528.95 covers half of the Front Royal-Warren County Economic Development Authority’s interest-only payment of approximately $21,102 due at the July 1st start of FY-2021.

Contacted Wednesday morning, EDA Executive Director Doug Parson explained the EDA’s loan to facilitate construction of the Town Police headquarters have thus far been interest-only payments based on a 30-day month. That will change on November 1, when the United Bank loan moves to principal and interest payments. Parsons estimated that would take the monthly payments to about $50,000 from the $21,000 interest-only range.

The United Bank’s interest rate on the loan is 3%. However, the town council has taken the legal stance that it should only have to pay a 30-year, 1.5% interest rate it asserts was verbally promised to it by former EDA Executive Director Jennifer McDonald. As previously reported by Royal Examiner, that 1.5% rate was tied to the construction project qualifying for a 30-year New Market Tax Credit Program (NMTC) loan with a nine-year waiver of interest payments. However, the NMTC program loans are for municipal capital improvement projects that create new jobs, which the FRPD project did not.

Councilwoman Lori Athey Cockrell took the opportunity of council’s passage of the agreement facilitating a one-time, half monthly payment on the FRPD debt service as an indicator that the council and its staff are working proactively with the Warren County government to resolve outstanding legal and financial issues surrounding the EDA.

Prominent among those Town-County/EDA issues is what EDA officials have called “an undisputed” $8.4 million Town “moral obligation” debt on principal to the EDA on the police headquarters construction project. With interest, the balance on that debt is $8.8 million, EDA Director Parsons told Royal Examiner Wednesday.

EDA Board of Directors Chairman Ed Daley was present to watch Tuesday’s council action unfold. Asked for a reaction prior to having a chance to read the Reservation of Rights Agreement, Daley said, “Anything that moves it forward is positive.”

However, after a closer read, exactly how far forward Tuesday’s council action takes the Town-County-EDA discussion, remains a question.

$440,000 invoice – $10,500 (recoverable) payment

The opening paragraph of the Reservation of Rights Agreement notes that the Town had received a June 2 invoice “ostensibly setting out all costs incurred by the EDA in constructing and financing the construction of the Town of Front Royal Police Department (‘Costs’), including the costs and expenses associated with the loan from United Bank obtained to finance construction (‘Loan’)” and continues to note those costs and loan “are currently the subject of dispute” in the Town’s civil action against the EDA.

It is a civil action in which the Town’s contracted Damiani & Damiani law firm appears to have mirrored much of the language in the EDA’s initial civil litigation against Jennifer McDonald and 14 civil co-defendants and which seeks essentially all ($20 million-plus) of the $21.3 million the EDA alleges was misdirected by its former executive director and her first group of co-defendants. In April the EDA filed a second civil action, adding nine defendants and “not less than” $4.45 million in recoverable assets to its litigation.

But as to that June 2 invoice from the EDA, an invoice implying a request for payment on a debt, according to numbers in that invoice what the EDA presented to the Town was a bill for slightly over $441,300 spent thus far on the $8.8 million FRPD headquarters construction loan balance.

What the County and EDA got in response was the above-cited agreement facilitating a recoverable $10,529 payment that on a closer examination appears to try and legally tie the County and EDA’s hands in future court proceedings.

Legal ties that bind?

That agreement references ongoing “discussions” between the Town and County “which may result in amending the Town’s claims in the Litigation (against the EDA)”.

Contacted Wednesday, County Administrator Doug Stanley said county staff had not been involved in those discussions. Attempts to reach Board of Supervisors Chairman Walt Mabe, Vice-Chair Cheryl Cullers, and County Attorney Jason Ham for information on the referenced discussions and council proposal were unsuccessful prior to publication.

Reservation of Rights Agreement, Condition 1 states – “The Town denies that it owes any moral or legal obligation to repay the Loan”

So, referencing the “Reservation of Rights Agreement” passed 6-0 by council Monday, it states:

“WHEREAS, to facilitate the discussions, the County has asked the Town to make the disputed July 1, 2020, payment on the Loan and the Town has agreed, subject to the terms and conditions stated herein.” – As noted above, what was agreed to was a payment of $10,528.95, or half of the interest-only payment due for July, under the following conditions:

Condition 1 – “The Town denies that it owes any moral or legal obligation to repay the Loan” followed by Condition 2, noting that its payment is calculated on the unrealized New Market Tax Credit interest rate of 1.5%, rather than the actual 3% bank loan interest rate.

Condition 3 – “The County and the EDA acknowledge that this payment shall not be construed as, considered to be, or argued to be, in any forum, admission for any purpose, including but not limited to of liability of the Town for the Loan or the Costs.

Condition 4 – “The County and the EDA acknowledge that the Town’s payment is for a disputed debt, under a reservation of rights, and the Town reserves the right to continue to deny liability for the Loan or Costs and to recoup this payment should the discussions prove ultimately unsuccessful.

And drum roll, please, Condition 5 – “All parties agree that payment hereunder shall be inadmissible for any purpose except by the Town to recover this payment as damages in the Litigation.”

So, while Councilwoman Cockrell called the agreement a sign of good faith negotiations in the public interest by the Town, adding that news reports the Town is acting other than in good faith concerning the EDA as creating “a false narrative”, is she right?

Perhaps the EDA’s and County’s attorneys would be the best judge of that – hopefully prior to the signing of the “Reservation of Rights Agreement” by County and EDA officials. For at issue appears to be whose rights are being reserved, and in exactly what legal context regarding the Town’s civil litigation against the EDA and any related litigation over the Town’s responsibility to pay for its $9-million police station.

Because according to the document approved unanimously Tuesday night by the Front Royal Town Council, the Town has no “moral or legal” obligation to pay the EDA-undertaken $8.8-million loan that financed the construction of the Front Royal Police headquarters.

Is that something EDA and Warren County officials really want to sign off on in exchange for a one-time, recoverable, half monthly debt service payment?

Let’s see, a total of $20 million or more at stake versus a “recoverable” $10,500 payment – what do you think?

Ed Daley – File Photo.

We asked EDA Board Chairman Daley his opinion on Wednesday after he had a chance to review the Reservation of Rights documents more closely.

“The first the EDA heard of this was last night, which seems odd in that we are asked to sign off on it. But we’ll need to consult with our attorney first,” Daley reasoned.

Of the contention on a lack of Town liability to pay for its police station included in the document, Daley observed, “The EDA was happy to facilitate a project like that. But it was their (the Town’s) contract, their design, we just helped finance it. I think they need to get their financing together and pay for their police station.”

After we read the conditions in the agreement to her over the phone, EDA Attorney Sharon Pandak lauded the opportunity for further communications on Town-EDA/County issues but was skeptical as to a recommendation on the EDA signing off on the Reservation of Rights Agreement as worded.

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Sleeping with the enemy? After long closed session, EDA wonders if it should make 2 year-end reports

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The Front Royal-Warren County Economic Development Authority had an end of the fiscal year report from its committees at the regular monthly meeting on Friday morning, June 26. In addition to the status of its finances, assets, communications with related agencies, and executive committee business, the board elected officers for FY-2021. See the EDA office’s press release describing details of various actions taken regarding those reports in the related story below.

As for its officers, the EDA Board of Directors decided to stay the course for another year. On a motion by Tom Pattison, seconded by Jeff Brown after a check with EDA attorney Sharon Pandak that he could vote as one of the nominees, by a 5-0 vote, Gordon absent and Gray Blanton’s seat vacant, the board re-elected its sitting officers: Ed Daley chairman, Browne vice-chair, Jorie Martin treasurer, and Greg Harold secretary.

It was still a virtually conducted meeting for the EDA, which is fine with the media at 8 a.m. Royal Examiner Photos/Roger Bianchini

But before those reports, officer elections and new business are taken care of, five minutes after convening the 8 a.m. meeting the EDA board moved into closed session to discuss “the disposition of publicly held real property” including the Royal Lane so-called “Workforce Housing” parcel recently reacquired without the necessity of additional litigation, as well as discussion of the EDA’s resurrected small business loan program, and its two-pronged civil litigation.

As you “indoor sports fans” know, the first prong of that litigation is against its former Executive Director Jennifer McDonald and 24 co-defendants alleged to have conspired with her to misdirect, fraudulently obtain and/or embezzle $21.3 million of EDA assets. The second prong is the Town of Front Royal’s suit against the EDA. That suit alleges lost assets of over $20 million as a consequence of the EDA financial scandal. After three-hours-and-20 minutes behind closed doors, the board emerged without action or announcement and moved to the open meeting agenda.

The virtual presence of Sands Anderson civil case lead attorney Cullen Seltzer and his colleague Dan Siegel may have offered a clue as to which topic may have accounted for the largest time slot behind closed doors.

The re-tooled EDA board and staff at work in December 2019. From left at table are Tom Pattison, Chair Ed Daley, Greg Harold, Executive Director Doug Parsons, Vice-Chair Jeff Browne, Gray Blanton, and Jorie Martin, the latter two around the table from Browne. The board continues to morph with the addition of Melissa Gordon replacing Mark Baker and Gray Blanton’s recent departure.

“Without the necessity of additional litigation” – what a novel concept. Wonder if anyone in Town Hall has considered such an idea in lieu of an “all in” rather expensive legal gamble that every asset the EDA recovers is somehow owed to you – despite their lack of work on your behalf for over a decade publicly verbalized as justification to pull away from them toward the creation of a second EDA the Town would have full operational funding responsibility for, as opposed to none with the existing EDA?

The irony of still working for a town government that is claiming that essentially every penny the EDA is out to recover in its civil litigation should come to it directly or indirectly despite the above-referenced public claim by Councilman Gary Gillespie, undisputed by his colleagues, that the EDA hasn’t really worked on the Town’s behalf in 15 years, was apparent as the board discussed a fiscal year-end presentation to its sponsoring municipalities.

Should they present to the Town, as well as the County, Chairman Daley, and his board wonder? There appeared little enthusiasm for a presentation to town officials who have repeatedly rejected EDA offers of “good faith negotiations” to determine exactly what the EDA may owe the Town in misdirected assets. Once again the scheduled interim town manager’s monthly update to the EDA board on Town business was neither presented nor even submitted in writing despite the Town’s maintaining its co-founding EDA connection on a legally advised chance for asset distribution was the EDA to somehow fail, despite state codes that prevent EDA’s from declaring bankruptcy.

The Warren County Courthouse is casting a long shadow over relations between, not only the Town and EDA, but potentially between the Town and County, the latter of which has full operational funding responsibility for the existing EDA due to negotiations on double taxation responsibilities of town citizen. However, many including several council candidates are wondering if it is a necessary legal shadow.

And what might such a presentation to a municipal body that is claiming no oversight responsibility of the EDA despite enabling the largest single item in the EDA’s civil suit, the $10-million ITFederal loan, by issuing a three-month $10-million “bridge loan” at McDonald’s request to convince a bank to make that loan despite serious asset questions about the eventual recipient, sound like?

“Mr. Mayor and Council, the EDA ends the fiscal year with $85,089 in its operational checking account and another $62,936 in its rental income account ($148,025 combined) – BUT we’d have a lot more if the Town would make good on its undisputed $8.4 million principal debt to us on the construction of the new town police headquarters, not to mention the $701 of daily interest on that FRPD project debt, though a disputed portion based on verbal promises of the former EDA executive director, that is accumulating as the civil litigation creeps forward.

Also noted during the financial report of board Treasurer Jorie Martin, was a $64,439 balance in the EDA’s Rural Business Enterprise Loan (RBEL) account and a $307,043 balance in its Intermediary Relending Program (IRP) account.

Chances are some of those loan balances will find their way into the hands of businesses located inside the Front Royal town limits.

EDA’s June 26 meeting action agenda

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EDA’s June 26 meeting action agenda

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The Front Royal/Warren County EDA Board of Directors held their regular monthly board meeting today:

Finance Committee

Finance Chair Jorie Martin reported that the EDA will end the fiscal year with a positive bank balance. Additionally, the FY 2018 and FY 2019 audits and solar panel removal are all proceeding on schedule.

EDA Chair Ed Daley took the opportunity to point out that the EDA has reduced its total loan balance during FY2020 by approximately $2,000,000. Factors that contributed to this success included the EDA completing the sale of three properties-two to a private developer in the town and one to a small business in the county.

Proceeds then went toward other loans which reduced principal amounts. Additionally, the EDA negotiated an interest rate reduction on a line of credit. These decisions translate into savings to the taxpayers.

Small Business Loan program-Mrs. Martin reported considerable improvement in payments and collections in the Rural Business Enterprise Loan (RBEL) program during FY20. In May 2019, only 56% of loan clients were up-to-date on their payments. As of June 2020, 70% of clients were on time. Additionally, as Executive Director Doug Parsons reported, the USDA Small Business Loan committee is currently reviewing applications from two new borrowers. They are vetting these applicants and look forward to supporting these small businesses in the Front Royal and Warren County areas. Finally, the board approved a Pay Agreement with Steve Ontiveros, of Fireball Arcade, for repayment of his RBEL loan.

Other Actions from Finance-The board approved Mrs. Martin’s motion to cancel the EDA insurance policy covering the Avtex property and EDA office building at 400 Kendrick Lane currently held by Stoneburner-Carter Insurance. The motion also approved the EDA to enter into a policy with Grange offered through McGreevy Insurance. The new annual policy provides more in-depth coverage at a lower cost, saving taxpayers approximately $1,000.

Finally, the board approved a motion for Phil Rexrode to complete electrical work on the solar panel removal. He will disconnect the solar panels from the current electrical system and connect the EDA office building back to Town electric.

Asset Management Committee

Chair Greg Harold shared an overview of the committee’s activities and accomplishments during FY20. Highlights included:

Afton Inn-The negotiations and sales agreement of the Afton Inn will be the fourth property sale by the EDA and the third in the Town of Front Royal. Seeing this property in the hands of private development is a real win for the community and will contribute in a major way to the revitalization of East Main St., Front Royal.

The EDA is looking forward to 2 E. Main, LLC realizing their vision for the property.

Royal Lane “Workforce Housing” property-Mr. Harold completed considerable research on this parcel, also located in the Town. The Board of Directors approved his motion to sell the property through a Request for Development Proposal (RFDP) process. That proposal is under attorney review and is projected to be published by mid-July. This is an opportunity to bring to Front Royal the first multi-tenant housing development in 22 years.

Communications Committee

Litigation Update-EDA Vice-Chair and Communications Committee Chair Jeff Browne gave an update on the civil suit EDA v. Jennifer McDonald, et al. and the Town v. EDA suit. The board approved a resolution appointing Mr. Browne as Designated Representative of the EDA for interrogatories and depositions in the suit EDA v. Jennifer McDonald, et al. Mr. Browne will work with EDA counsel from Sands Anderson as the civil case continues through the judicial process.

Existing Business Listening Groups-Mr. Browne is working with the Front Royal Chamber of Commerce on creating business listening groups. Any business leaders, finance professionals, and anyone interested in the local tourism industry is encouraged to participate.

Other EDA Business

Annual Report-EDA Staff and the Board of Directors are preparing an annual report for presentation to the Warren County Board of Supervisors in July. Dr. Daley expressed an interest in presenting this report to the Front Royal Town Council as well.

Annual Officer Elections

The board approved each of the current officers-Chair, Vice-Chair, Treasurer and Secretary-to serve another one-year term.

As of May 2020, the Town of Front Royal owes the EDA $8,444,797.16 for the construction of the Front Royal Police Department headquarters. This loan costs Town taxpayers $703.39 per day in interest expense. In April 2019, the Town Council approved a resolution to issue a bond for permanent financing of the project but has not followed through on its commitment. The EDA welcomes community support in encouraging the Town Council to follow through and secure permanent financing in order to retire the EDA construction debt.

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Still working for the Town – EDA announces sale of 514 E. Main apartments

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Both gone now – the market and adjacent apartment building. Royal Examiner File Photos/Roger Bianchini

In a late-afternoon press release from the office of Executive Director Doug Parsons, the Front Royal-Warren County EDA announced the sale of another in-town parcel. Here is that release in its entirety:

The Front Royal/Warren County Economic Development Authority (FRWCEDA) is pleased to announce the sale of their apartments at 514 East Main Street to East Main Apartments II, LLC, owned by Jim and Dawn Weber of Front Royal. The property sold for $127,500.00 and the proceeds of the sale will pay off one of the FRWCEDA’s loans for the apartments and the old Stokes Market, which also sold recently.

“We’re pleased that Jim and Dawn Weber have purchased this property. They are experienced developers, and we know the property and tenants will be in good hands”, said Doug Parsons, Executive Director, for FRWCEDA.

“These properties weren’t congruent with our economic development mission and goals, and we’re excited to see them return to the private sector to generate more tax revenue while reducing the taxpayer’s debt and future expenses.”

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EDA Asset Committee reviews status of Royal Lane property in open and closed session

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At the open portion of a Front Royal-Warren County Economic Development Authority Asset Committee meeting, Friday morning, June 19, Committee Chairman Greg Harold took his recently altered committee lineup through a review of the recently re-acquired Royal Lane “workforce housing” property.

As readers will recall, the property written off as a $640,000 loss in the EDA’s original civil complaint was inexplicably let go at the end of November 2018 about 11 weeks prior to that March 26, 2019 civil filing at a sale price of ten dollars. Then EDA Board Chairman Gray Blanton later told Royal Examiner that he had only seen the signature page of the deed of sale. And acting EDA attorney Joe Silek Jr. – then EDA/County Attorney Dan Whitten had recused himself from the transaction – told Royal Examiner that the deed had been sent to the Winchester attorneys for the purchaser without a sales price filled in, though he declined to elaborate on how or why that had occurred.

However, the buyer, the Cornerstone LLC branch of regional developer the Aikens Group, returned the property to the EDA earlier this year at a cost of about $26,000. The price was explained as the stated value of in-house legal or other preparatory work done during the Aikens Group purchase and ownership.

The undeveloped, rolling-hilled 3.5-acre parcel at the end of Royal Lane on the town’s southeast side is also at play in the April addition of Century 21 Campbell Realty, and proprietors Walter and Jeannette Campbell as defendants in the EDA’s civil litigation case seeking the return of a total of over $21-million dollars from what has climbed to a total of 24 defendants.

But the property’s legal history wasn’t the topic of Harold’s presentation to his committee. Rather, it was an outline of the property’s originally planned use for development as a 36-unit, three-building “workforce housing” rental apartment complex; its potential versus any competitive properties for such development; and the zoning and permitting status of the property.

A look at single-family homes along Royal Ln. – the treed workforce housing parcel adjacent to existing development ‘curbside utilities’ is partially visible at the end of the road. Royal Examiner File Photos/Roger Bianchini

Artist’s rendering of one of three, initially-planned 12-unit Workforce Housing apartment buildings.

That status, Harold said, is C-1 zoning with extensive Special Use Permitting; nearby access to Town electric, water, and sewer central utilities extended to adjacent residential and commercial development; and a lack of comparably permitted C-1 zoned properties in Front Royal near shopping and other commercial amenities desirable to potential renters.

Harold pointed to a “robust need” for quality and affordable rental units in Front Royal, but also noted that federal Housing and Urban Development (HUD) guidelines didn’t specifically qualify the type of professional employment that affordable “workforce housing” projects could rent to. Discussion following the EDA purchase of the parcel from the Campbells, Jennifer McDonald’s aunt and uncle, initially for $10 as a gifted property said to qualify the Campbells for federal tax credits which later fell through due to delays in the development of the property, had targeted a “young professional” tenant base of law enforcement, teaching and emergency services personnel.

Questions about the EDA or anyone’s ability to limit rentals to such specific professional networks were raised by some, including former Councilwoman Bebhinn Egger, early in the purchase, zoning, and permitting process in 2016-17.

Another question raised by Egger, the Town Council’s then lone voice in the EDA oversight wilderness, was why with so many questions attached to the property and its residential development potential, the EDA Board of Directors had agreed to purchase the parcel for $440,000, over $100,000 above its assessed value of a little over $300,000, after the Campbell’s tax credit opportunity fell through.

Remember these days – above, Bebhinn Egger goes head to head with Jennifer McDonald in 2017, as her colleagues remained silent, unquestioning and even belittling of Egger for her questions on EDA projects now at issue in dueling civil litigations; below, McDonald far left and the EDA Board of Directors listen to report on County business from the county administrator, circa April 2017.

The explanation then forwarded by McDonald and then EDA Board Chair Patty Wines that the EDA had already spent nearly half a million dollars on pre-development costs turned out not to be true. McDonald later told Royal Examiner that only about $16,000 for a VDOT traffic study had been unrecoverable money at the time of the EDA’s $440,000 purchase decision.

But whether any of these variables played into the Asset Committee’s exploration of the property is unknown. Because after Harold’s presentation during the 48-minute open session, EDA Attorney Sharon Pandak read a motion to go into a closed session that was moved and seconded by committee members and unanimously approved by those members, Harold, Ed Daley, Jorie Martin, and Melissa Gordon.

That motion included discussion of the “disposition of public real property where discussion in an open meeting would adversely affect the bargaining position and negotiating strategy of the EDA; and consultation with legal counsel regarding related legal matters for the Royal Lane property …”

There was no announcement following the half-hour closed session and the Asset Committee meeting was adjourned to so quickly that by the time this reporter re-logged into the virtually-conducted meeting, he found himself a lonely “participant” of one.

But considering the late afternoon press release on the sale of the 514 East Main Street apartments – Still working for the Town – EDA announces the sale of 514 E. Main apartments – it may be debatable whether both of those closed session topics related to Royal Lane. But with the previous discussion of residential development not being the natural province of EDA’s, this reporter votes “probably both”.

Still working for the Town – EDA announces sale of 514 E. Main apartments

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Crime/Court

Rappawan, Campbell Realty civil hearing date set; April Petty, Jesse Poe pre-trial hearing request under consideration by court

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Although neither she nor her attorney was present live or virtually for scheduled Economic Development Authority civil case hearings Thursday morning, June 18, Jennifer McDonald’s presence was apparent throughout defense motion’s hearing arguments in the cases of defendants April Petty and Jesse Poe.

Prior to those arguments a hearing date of July 30, beginning at 8:30 a.m. was set for pre-trial motions in the cases of Rappawan Inc., and principal William Vaught Jr. and Century 21, Campbell Realty Inc., and principals Walter and Jeannette Campbell. Attorneys for those defendants were among the few physically present in the older, larger Warren County Circuit Courtroom with Judge Bruce D. Albertson Thursday morning.

The Campbells were represented by Warrenton attorney Peter Hansen; Rappawan and Vaught by local real estate attorney Joseph Silek Jr., though it appeared Hansen might also have a hand in the Rappawan case. However, he said he would defer to Silek on the availability of the July 30 date for that client.

It was noted that coming motions reply dates were July 10 for a plaintiff response to defense motions, and July 24 for a defense reply to the plaintiff’s assertions in their reply.

‘They didn’t know’
In arguing for a pre-trial plea in bar hearing for his clients, April Petty and Jesse Poe – the latter not to be confused with fellow civil defendant Donald Poe – attorney William Shmidheiser III repeatedly told the court he was not disputing lead civil defendant Jennifer McDonald’s embezzlement of the amounts of money cited in real estate home purchases McDonald achieved for his clients, rather he was asserting his clients had no knowledge that that money (totaling $410,000) had been embezzled.

While not directly involved in Thursday’s EDA civil hearings, Jennifer McDonald, left with then EDA Board Chair Patty Wines, cast a long shadow over two defendants’ arguments for a pre-trial hearing chance to plead their innocence. Their arguments, who would have suspected a successful local real estate agent and Economic Development executive of criminal embezzlement? Royal Examiner File Photo/Roger Bianchini

So, Shmidheiser told Judge Albertson his clients should have the right to present their cases to him at a plea and bar hearing prior to the primary civil trial alleging a conspiracy among all 15 defendants to benefit from McDonald crimes, admitted or alleged, in an amount totaling over $21 million dollars.

The amount of embezzled money he cited involving his clients was $125,000 in Petty’s transaction and $285,000 in Jesse Poe’s. Their attorney said his clients recruited McDonald to be their real estate agent for home purchases from knowing her through family connections. Poe dated a niece of McDonald’s at the time, his attorney said; and Petty knew McDonald as the successful “golden child” of relatives she knew socially.

Shmidheiser said that if his clients could be proven to not have been involved in the larger conspiracy alleged by the plaintiff in a pre-trial plea and bar hearing, it would serve the “judicial economy” in simplifying and speeding up the primary case.

Arguing for the plaintiff EDA after being introduced to the court over phone connection by lead Sands Anderson/EDA attorney Cullen Seltzer, was Sean Hudson. Hudson countered the defense “judicial economy” argument, noting that Schmidheiser’s clients weren’t denying that embezzled funds had been used in their real estate transaction, only that they weren’t aware it was embezzled at the time of their home purchases with former EDA Executive Director McDonald acting as their real estate agent.

EDA attorney Hudson also noted that neither Petty nor Poe had offered to return the embezzled money utilized in their home purchases; adding his firm had not yet been able to depose either defendant, a conversation between plaintiff and defendants that could lead to a pre-trial settlement offer.

Defense counsel Shmidheiser countered that once involved, he had offered multiple dates for depositions of his clients but that an impasse with Sands Anderson over a location for those depositions – the law firm’s Richmond home base or Warren County where the case will be heard – had occurred.

Their attorney also noted that neither April Petty nor Jesse Poe had been indicted by the EDA Criminal Case Special Grand Jury after testifying before it, in Petty’s case at least, multiple times. That indicated the grand jury believed his clients’ stories, Schmidheiser asserted to the court.

The Warren County Courthouse is cranking back up toward a late-pandemic caseload, though still partly by remote hook up and masked, social distancing inside.

“She would like some closure. She has a lot at stake,” her attorney said, pointing to her federal emergency management job.

As the arguments concluded, Judge Albertson returned to the oft-touched topic of “fairness” and asked plaintiff counsel if he thought it “fair” that the court is allowed to at least “consider a pre-trial resolution for two or more defendants”.

After a long pause, Hansen offered that he thought keeping the defendants in the primary civil action would achieve the best chance of a pre-trial settlement, ultimately serving to streamline the case to the desired “judicial economy”.

Judge Albertson then took the arguments under advisement.

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