Connolly: Town was overcharged by EDA

FRONT ROYAL – For the first time since Royal Examiner broke the story on Oct. 31 that the Front Royal-Warren County Economic Development Authority had overcharged the Town of Front Royal nearly $300,000 dating back to 2009, mention of that overcharge was made during Tuesday’s Town Council meeting.

Read related story: EDA may owe Town of Front Royal nearly $300K

The EDA acknowledged that it owes the town about $291,000 stemming from overcharges related to debt service payments, dating back to 2009. In an email obtained by Royal Examiner dated Sept 18, 2018, EDA Executive Director Jennifer McDonald wrote to Front Royal Director of Finance B.J. Wilson that, “According to the documentation and with help from our auditors and new accounting firm we believe the EDA owes the Town $291,278.64.”

Tuesday evening was the first public mention of the financial discrepancy, as all previous discussions had occurred during executive sessions following regular meetings.  Councilman John Connolly said during Tuesday ’s meeting that Napier had drafted a resolution outlining the situation between the town and the EDA at his request.

Connolly said he had hoped the resolution would be approved at Tuesday’s meeting, but stated in a Wednesday telephone interview that he did not believe he had unanimous support from councilmen to adopt it into the agenda. He said the resolution will be discussed during Monday’s work session and hopefully adopted at council’s next regular meeting, on Nov. 26.

Connolly did permit the media to photograph a page of the resolution’s draft. That page states Napier sent the EDA a Freedom of Information Act request seeking “specific financial documents that the town’s finance director and the town’s auditor need to see to make an informed judgment as to the town’s financial standing with respect to the EDA.” The resolution states that the FOIA response was due Aug. 24.

The resolution further states that Mayor Hollis Tharpe, Town Manager Joe Waltz, Town Attorney Doug Napier, Finance Director B.J. Wilson, a councilman, and an auditor met Aug. 23 with McDonald, former EDA Chairman Greg Drescher, and EDA attorney Dan Whitten. At the meeting, the resolution states that McDonald, in response to questions posed to her by the Town’s Auditor, said the EDA mistakenly billed the town for a portion of a Leach Run Parkway bond and for an agreement related to debt service on the Avtex administration building.

The resolution also states that the town was informed on Aug. 23, during that same meeting, that the EDA had not finalized a $24 million New Market Tax Credit Program low-interest loan to finance “a number of very important” town capital improvement projects, although the EDA “previously represented multiple times” that the loan was closed. The resolution states this resulted in increased rates that will cost the town hundreds of thousands of dollars annually.

Greg Drescher, who stepped down as EDA Chair on August 24, and Jennifer McDonald, who has been Executive Director of the EDA since 2008. They fielded tough questions at a June 6, 2017,  joint work session of the county supervisors and EDA.

One day after that meeting, Drescher announced at the EDA’s regular August meeting that he was stepping down as chairman but would remain on the board. He stated in an email that “stepping down as chairman was not related to any meeting or issue” and that “the statement I gave outlined the reason.”

His statement indicated, in part, that Drescher was stepping back from the EDA chair because he needed to focus on his primary role as Warren County Public Schools superintendent.

The statement also said that Drescher, who was elected chairman in 2016 and reappointed in July 2018, always intended his role as chairman to be short-term. During his chairmanship, Drescher led the board through the July 2017 death of former longtime Chairwoman Patty Wines and board member Jim Eastham’s Nov. 2017 death.

Royal Examiner attempted to contact Drescher Wednesday afternoon, but his secretary said he was “in meetings the rest of the day” and would be attending an out-of-town conference until Monday.

William Biggs, the EDA’s treasurer of 30 years, resigned from his position in October, citing health reasons. He noted that he suffered a stroke four years ago and should have resigned then. He also referenced a recent fall when resigning from the post last month.

Read related story:  After 30 years on EDA board Billy Biggs announces resignation

Connolly said on Wednesday that he felt it was up to the town council to protect the public’s money, and to make sure that moving forward, the town would be able to “accurately and timely pay no more to the EDA than it should.”

He went on to praise Finance Director B.J. Wilson and the town’s auditor, for their “vigilance and tireless pursuit of the true status of the historic amount the Town should have paid the EDA.”

Connolly added that with the hard work of both the auditor and Mr. Wilson, council members should “have a reasonable bead on where our finances are.”

Contacted Wednesday for an update on the status of the situation involving town finances and the overcharge by the EDA, as well as the councilmen’s contention that the EDA “had previously represented to the Town multiple times that the New Market Tax Credit Program loan had been closed and the EDA already had that money in its bank accounts” Town Attorney Doug Napier said in an email that, “The Town has two hats to wear here. One, the Town has to safeguard the Town’s taxpayers’ money. Taxpayers’ work hard for their money, and when they pay their taxes, they want to know that it is being used strictly for the public purposes Town Council tells them it will be used for. So the Town is a guardian and a fiduciary of that money.

“But two, the Town also does not want to make any sort of statement or insinuation against any person or entity that impugns the character or reputation of anyone without being strictly certain of where the Town stands on the facts.”

Napier added that “I am dependent on the Finance Director for my information about the Town’s finances vis-à-vis the EDA, and I am waiting on him to process and confirm that additional information, which I understand is voluminous and complicated. I appreciate that this takes time, longer than I or anyone else wants, but ferreting out facts to be absolutely certain of the facts often does take time.”

NEXT:  A closer look at the New Market Tax Credit Program loan.  It’s going to cost HOW much?