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.
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?
What do the Sayre-McDonald lawsuit and the Titanic have in common?
FRONT ROYAL – “This will be a damaging loss for whoever loses,” Judge Ian Williams observed Wednesday of the time, effort and expense being put into the Tom Sayre defamation lawsuit against former Front Royal-Warren County Economic Development Authority Executive Director Jennifer McDonald at the General District Court level – a level where the maximum award is $25,000.
“It’s very curious – but I’m giving you more time to arrange the deck chairs on the Titanic,” Williams added of additional time he granted Sayre attorney Tim Bosson and McDonald counsel Lee Berlik in an attempt to reach a legal consensus on filings in the case. – “There will be no more hearings on this,” the judge warned of dueling evidentiary motions before the new trial date of August 2, at 1 p.m. The Winchester-based judge explained he had to change the original trial date from June 21 due to a conflicting trial assignment.
As the March 20th motions hearing drew to a close after an hour-and-forty-five minutes, Judge Williams bemoaned the time and legal effort being put in on preliminary motions. He asked the attorneys what they made an hour. Bosson replied $350, Berlik $425 (I’m definitely in the wrong line of work).
Noting that amounted to $775 for every hour put in by both sides on the case, the judge marveled at the work being done on a case with a $25,000 award cap.
The most recent result of all that legal work was plaintiff Tom Sayre prevailing on a series of evidentiary motions argued Wednesday afternoon in his $25,000 defamation suit against McDonald.
Overruled by Judge Williams on March 20 were defense motions to: 1/ a “plea and bar” which would have essentially thrown the plaintiff’s case out as having not established the grounds, including malice, upon which the civil suit is based; 2/ to further reduce the number of complaints on statute of limitations violations; 3/ remove additional detail on specific complaints in the case added since the initial filing; 4/ and prevent any plaintiff subpoena of records of EDA/McDonald Private Investigator Kenneth Pullen as privileged information.
On that latter issue, plaintiff counsel Bosson told the court that he had verified that the EDA Board of Directors had initially hired Pullen in the wake of the May 17, 2017, EDA office break in. However, he said the EDA board had turned the private investigator’s contract over to its then executive director as incidents of alleged trespass and vandalisms reported by McDonald at her home escalated over the following month.
The fact that then-EDA Board Chairman Greg Drescher requested Town Police to drop their investigation of the EDA office break in, in favor of the EDA’s private investigator’s handling of the case has been a sticking point for EDA critics, particularly former Town Councilwoman Bébhinn Egger’s father Mark Egger. The elder Egger has repeatedly questioned the board of supervisors on lapses in county oversight of the EDA; as well as seemingly conflicting stories regarding who hired the PI and why Drescher, speaking for the EDA board, sent a letter asking for a halt to the FRPD investigation.
Judge Williams authorized a subpoena of Pullen and his records from June 6 to August 16, 2017. However, Bosson told the court he had been informed by the EDA that they do not have any documents related to Pullen’s investigation; and that either “Ms. McDonald has them or they’ve been destroyed.”
But the court ruling on Pullen and his records will allow information in a series of July 14, 2017 emails between McDonald and this reporter subpoenaed by the plaintiff and referenced several times in Wednesday’s hearing, to be corroborated or not corroborated by the private investigator, if not on paper, on the witness stand.
As Bosson noted during Wednesday’s hearing, in those emails McDonald alleges “a culprit” in the alleged June 15, 2017 rock-throwing vandalism at her home had been identified and was being approached by Pullen to wear a wire on a suspected accomplice in an alleged plot to terrorize her. Bosson told the court that based on information from the recipient of those McDonald emails the references to “the first Putin” and “our photo boy” as a director of the operation against her are references to Mr. Sayre. The alleged plot to terrorize McDonald was outlined in the crumpled, typed note the WCSO incident report indicated was pointed out in her yard to sheriff’s office first responders investigating the June 15 vandalism reported at 9:02 p.m.
As Royal Examiner previously reported, that note investigators assumed to be dropped by the vandal at the scene contains two phone numbers, Tom Sayre’s office number and former Town Manager Michael Graham’s cell phone number; as well as references a “Matt” being run off by a barking dog of McDonald’s; getting “files to the Examiner” because “Norma Jean will be waiting for them”; and instructions “not to call Tom during business hours…” and, drum roll please, “Do not take this sheet with you …”
The incident report appeared to indicate no fingerprints found on the note.
All those implicated by name and known to authorities testified at McDonald’s misdemeanor false police report trial that they had no knowledge of the note or any plot against McDonald. While dismissing the case against McDonald on October 31, 2018, General District Court Judge W. Dale Houff commented that there was something “terribly wrong” about the note. However, Houff ruled that Commonwealth’s Attorney Brian Madden had not established enough evidence or motive as to why McDonald would fabricate such a situation.*
As for defense attorney Berlik’s complaint that plaintiff counsel Bosson has not been responsive to subpoenas of plaintiff records in a timely manner, Bosson noted that many of the responses were being delivered to the McDonald team in Circuit Court where the defendant has become the plaintiff in filing a $600,000 defamation suit against Sayre.
“They filed the exact same thing in circuit court and will receive them there – I don’t understand why we are here,” Bosson said of the defense’s beef over the subpoena responses.
“Do you think the two of you can agree on anything,” Judge Williams asked the attorneys. When Berlik began, “Not now,” the judge countered, “If you can’t do it, I can go through all of (the subpoenas) and choose (what’s in and what’s out) and you can live with it … we’re not having another hearing on this.”
In making his case to reduce the scope of the defense subpoena submission, Sayre attorney Bosson pointed to his own four subpoenas totaling 20 specific requests in the wake of the judge’s earlier hearing admonishment to the attorneys not to turn evidentiary subpoenas into fishing expeditions. Bosson compared his numbers to the defense filing of seven subpoenas totaling 89 specific requests.
While setting a series of dates for submissions and responses approaching the new trial date, the judge set May 10 for the final product – “either separate orders or one agreed-upon order,” Williams observed, adding, “If you achieve that (an agreed order) I may invite you all up here for champagne.”
Williams then glanced to his left at Front Royal Town Attorney Doug Napier listening to the proceedings, offering to include him in the celebration of functional legal compromise; leading Front Royal Police Captain Crystal Cline to Napier’s left to inquire if she might be included in that celebration as well.
Back on the serious legal train, Napier told the court that the town government could not respond to a defense subpoena of town personnel text messages because “we just don’t have them.”
Napier was also present representing the Town in attempting to join the plaintiff in the effort to quash certain defense motions on the table that day. However, Napier acknowledged that two attempts he had made to notify Berlik of the Town’s planned joining in that motion had failed to reach McDonald’s attorney. During the hearing Napier simply deferred to the plaintiff’s arguments on the motions to quash.
FOOTNOTE: Despite McDonald’s criminal case acquittal, it is noteworthy as previously reported by Royal Examiner, that the prosecutor did not call the Town Police investigator who developed the false police report case against McDonald, nor the State Police officer who filed the warrant, nor an EDA employee whose recorded FRPD interview appears to corroborate this reporter’s timeline on meeting with McDonald about incidents at her home prior to the report of the vandalism rather than the following morning as asserted in her criminal case defense. Madden also did not present evidence regarding motive given to him by one prosecution witness – Royal Examiner Editor Norma Jean Shaw’s exploration of McDonald’s use of large amounts of cash in purchases and down payments in her personal real estate business; as well as Shaw’s inquiries into the identify of a “secret investor” in the since-aborted police academy project slated for EDA land in the Happy Creek Technology Park. That investor was believed to be ITFederal principal Truc “Curt” Tran. Tran has since said such an investment was discussed, but never agreed to. A file containing that information stored in an obscure place in McDonald’s office was the only thing she reported missing from the May 17, 2017, EDA office break in. Without a shovel being turned on the site, the EDA reports it spent over $500,000 on the police academy project before its abandonment.
8 million reasons for a Special Grand Jury
Local attorney, John S. Bell, calls for Special Grand Jury to investigate the EDA
Front Royal, VA — Former Senior Assistant Commonwealth’s Attorney John S. Bell, Esq., is demanding a Special Grand Jury be impaneled to investigate the alleged rampant financial discrepancies and possible fraudulent activities at the Front Royal/Warren County Economic Development Authority under former Executive Director, Jennifer S. McDonald.
Bell commented, “The local EDA’s financial irregularities have been the subject of a steady series of revelations over several years, culminated in the news reporting of last week. Some of the troubling allegations reported are: $540,000 blown on a Police Academy that will never be built and another $8 million in a loan that appears to be lost. The only proof that either of these projects were legitimate and not fraudulent, was supposedly stolen in a “break-in” of the EDA office. We have already had one criminal trial from the fallout of these incidents, to say nothing of the continuing public recriminations and dueling lawsuits making their way through our Courts. And this is what has been officially reported, it does not include the countless other rumors swirling around our community.”
Bell continued, “Many people I speak with have lost confidence in the very government and public agencies that are supposed to be investigating this situation. A Special Grand Jury is made up of ordinary citizens who are not and have not been part of the problem and who would have the independence to conduct a fair, unflinching, unbiased and complete investigation. Because they work in confidence, they can protect the good name of those who are innocent of any wrongdoing. We cannot allow even the appearance of a cover-up and corruption to cast a cloud over our hometown. Our hardworking men and women demand one rule of law for everyone, no matter who you are, no matter rich or poor, no matter young or old, no matter elected or not – justice must be fair and justice must be blind. The EDA must be investigated from top to bottom, inside and out, and if crimes have been committed by anyone, justice must prevail. A Special Grand Jury is the best and most fair way to investigate an organization as complex and connected as the EDA. The Warren County Commonwealth’s Attorney has the authority to request a Special Grand Jury and I call upon him to do so.”
No ITFederal at Royal Phoenix, no need for infrastructure either?
How the Town of Front Royal should react to the news of an abrupt change of plans at the Royal Phoenix Business Park site – news town officials apparently learned about from media reports published March 14, including Royal Examiner Editor Norma Jean Shaw’s “Update: Tran says ITFederal is not opening and is an EB-5 Visa Project” and Josh Gully’s (Northern Virginia Daily) “$500,000-plus spent on dead police academy” – were a heated topic of discussion at the Monday, March 18 Front Royal Town Council work session.
Citing “newspaper articles” about ITFederal principal Truc “Curt” Tran’s decision not to relocate his Northern Virginia-based tech solutions company to the 30-acre Royal Phoenix Business Park property gifted to him in 2015 by the Front Royal-Warren County Economic Development Authority for one dollar, Councilman Jacob Meza questioned the Town’s financial commitment to infrastructure development at the Royal Phoenix site.
That commitment is currently two-fold: 1/ to build a wastewater treatment pumping station designed to serve an estimated seven commercial pads and as many as 4,200 people on site at a cost estimated at $400,000 in 2017; and 2/ phase one of the West Main Street connector road designed to eventually serve as the main access through the 147-acre business park property. Phase One of the western connector road project through the 30-acre ITFederal parcel from Kendrick Lane has been estimated at a cost of $1.3 million, with a $650,000 VDOT match and a $150,000 commitment from Tran in exchange for not having to build an individual wastewater pumping system for his project.
How Tran’s decision not to relocate his company here, but rather attempt to sublet the 10,000 square-foot building under construction on site, will impact his financial commitments to the property remains to be seen.
But with the first commercial development project at the Royal Phoenix site in flux, Councilman Meza asked if the Town’s planned infrastructure investment at Royal Phoenix might not be put to better use elsewhere, most specifically in funding the growing debt service projections on construction of the new $10-million Front Royal Police headquarters across Kendrick Lane from the Royal Phoenix site.
As one of council’s strongest proponents last year of rejecting a locked-in 2.65% bank-secured 30-year interest rate bond issue in favor of a promised nine-year period of interest-free paybacks on a long-term loan through the New Market Tax Credit program to fund the police station, Meza has been somewhat defensive about those climbing police headquarters debt service projections during recent work sessions – “No one ever said it was going to be built for free,” Meza volunteered at a March 4 work session.
Following the revelation the EDA had not secured a $24-million capital improvement projects loan through the NMTC program as council believed had been accomplished, construction costs are currently being met through an EDA line of credit. However, those costs on the $10-million project will eventually have to be paid back at what have been steadily-climbing interest rates that are currently in the 4.5% range over a 30-year payback – numbers Meza cited on Monday resulting in the need to cover an annual debt service in the $600,000 range. When council thought the NMTC option was available initial annual debt service payments of $240,000 were cited, compared to the fixed 2.65% rate’s 30-year term annual debt service of about $342,000.
Meza suggested council move the Royal Phoenix infrastructure funding into the police station debt service payback as a means of avoiding raising taxes to cover at least a portion of that rising annual debt service number.
However, Mayor Hollis Tharpe countered that the infrastructure is not being constructed solely for ITFederal, but to facilitate the recruitment of additional commercial clients to the site. The mayor pointed out that the Royal Phoenix property was the town’s primary hope for expanded commercial development and increased commercial tax revenue for the future. And the plan at this point is still to attract a commercial client into the first Tran-constructed building on site.
Tharpe also pointed out that the West Main Street connector road was planned to, not only service the entire Royal Phoenix site, but serve as a long-sought western bypass to take north-south thru traffic off residential streets in mid-town Front Royal.
See council’s debate over the importance of a continued financial commitment to commercial redevelopment at the former Avtex Superfund site versus preventing tax hikes to cover rising debt service costs on this linked Royal Examiner video.
Follow the money: EDA-ITFederal financial roadmap tricky to navigate
FRONT ROYAL – Nearly four years ago, on June 12, 2015 former Congressman Bob Goodlatte (R-VA) announced an economic development agreement that would bring ITFederal, LLC to Front Royal. In a press release from the Sixth District congressman’s office, Goodlatte said, “I am happy to have supported the efforts leading up to this announcement and commend Front Royal and Warren County officials for their hard work to ensure it came to fruition.”
Goodlatte’s release further stated that details of the land purchase agreement were being “worked out between the EDA and ITFederal” and indicated that details were likely to be finalized the following week.
What Goodlatte’s office never released—what no office ever released—was details of the sweetheart deal in which ITFederal owner Truc “Curt” Tran payed just one dollar for a 30.11-acre tract of land. In fact, no one knew just how great a deal Tran had scored on the property until Royal Examiner broke the story Nov. 1, 2016. See Related Story:
On Oct. 26, 2015, Goodlatte showed up to join local dignitaries and shovel some dirt at the official groundbreaking for ITFederal at the former Superfund site where Tran’s company was slated to begin building shortly thereafter. Little did the community realize no other shovels would touch the soil on the project until over two years had passed.
Three months after Tran closed the deal on the former Avtex Fibers site, the Front Royal-Warren County EDA went to extraordinary lengths to ensure that he would have plenty of cash to begin building what he pledged at the time would be a complex featuring 67,000 square feet of mixed-use office space, retail space and a cloud data center. The project, according to Goodlatte’s press release of June 12, 2015 would “create over 600 high paying jobs for the community.”
On Sept. 14, 2015, after being told by the EDA that Truc Tran needed a $10 million bridge loan “to start construction” on the $40 million project, the Town of Front Royal agreed to loan the money for one month. The loan was eventually extended to three months and paid back by the EDA after it obtained a loan from another entity. Though Tran had money in hand, construction did not begin until over two years later, in Dec. 2017. Disbursement Authorization
Just two days later, on Sept. 16, 2015, the EDA used the money loaned by the Town of Front Royal to structure a loan to Tran at 3% interest, amortized over 30 years, with a possible rate adjustment every seven years. The loan agreement required monthly payments of $42,160 and payment in full by Sept. 16, 2045. After the initial seven-year period, a total of approximately $8,440,000 will remain on the principal balance. Attachment to Note
In December of 2015, the EDA managed to secure a $10 million loan from First Bank & Trust of Lebanon, Va. through its Winchester commercial loan office (not to be confused with First Bank of Strasburg, Va.). The loan was secured to “provide funding for economic incentive for ITFederal, LLC,” according to loan documents.
The loan has an interest rate of 4.35%, with the balance due after seven years. The required monthly payment was $40,000. Moreover, the EDA secured the loan with a Deed of Trust on the remaining 117 acres of land at the former Avtex site.
Additionally, it was secured by a Promissory Note that was endorsed to First Bank & Trust by the EDA. After seven years, the Principal balance due will be approximately $9,672,000. Loan Agreement
It appears that the EDA is losing money each month on the loan to Tran:
|Principal Amount||$ 10,000,000.00||$ 10,000,000.00|
|Annual Interest if no repayment of principal||$ 300,000.00||$ 435,000.00|
|Interest for 7 Years (No repayment of principal)||$ 2,100,000.00||$ 3,045,000.00|
|Difference||$ (135,000.00)||$ (945,000.00)|
Now that Tran has admitted that ITFederal will not open, and the EDA is left paying back a substantial amount of money that opens the door for Warren County citizens to ask some tough and pointed questions of the Board of Supervisors, who are using taxpayer money to perform an outside, mostly secret audit into the finances of the EDA.
The audit began around the time that Royal Examiner broke the story last fall that the Town of Front Royal was owed nearly $300,000 related to debt servicing payments by the EDA. See Related Story:
Interim EDA Executive Director John Anzivino said in a telephone interview Tuesday morning that moving forward, he felt the EDA would “operate in transparency.” He said the office is short-staffed and that he is dealing with many Freedom of Information Act (FOIA)requests, as well as working with the board regarding the ongoing audit and going through the agency files, which he admitted were sometimes lacking in terms of detailed record-keeping.
Anzivino said that over the years, the EDA had been instrumental in some very positive developments for the community, citing the corridor development along Routes 340/522 and believed the agency would foster economic growth in the future. The EDA board, he stated in the conversation, was devoted to moving forward with transparency and was hopeful regarding the future and marketing the community to prospective businesses.
Anzivino said that while he worked in nearby Fauquier County over the years, he often noted how well development was moving along in Warren County.
View all EDA loan documents related to ITFederal and Truc Tran here:
- Attachment to Note
- Opinion of Counsel
- Settlement Statement
- Title Insurance
- Town of Front Royal Resolution
- Certificate of Borrower
- Checks Listed
- Collateral Receipt
- Credit Line – Deed of Trust Receipt
- Deed of Trust
- Disbursement Authorization
- Document Checklist
- IDA Resolution
- Loan Agreement
- No Oral Agreements Notice
UPDATE: Tran says ITFederal is not opening and it is an EB-5 Visa project
Truc “Curt” Tran has finally confirmed what many have long suspected: ITFederal will not open in Front Royal on the 30-acre tract of land he purchased from the Front Royal-Warren County EDA for one dollar.
Tran has also confirmed that the once-touted project, which was to be a $40-million investment in the community and provide 400-600 employees high-wage jobs, is actually an EB5-Visa program project.
The EB5-Visa program, which began in 1990, offers permanent residency (also known as a green card) to foreigners to invest between $500,000 to $1 million in a “targeted employment area”, defined as a rural area or an area in which the unemployment rate is at least 150 percent of the national unemployment rate at the time of the EB-5 investment, according to the United States Citizenship and Immigration Services, or USCIS, an agency of the U.S. Department of Homeland Security.
The U.S. Bureau of Labor Statistics website states that the national unemployment rate for the last quarter of 2015, which is when Tran’s ITFederal project was announced with great fanfare by then-Congressman Robert Goodlatte, was five percent. Using the EB5-Visa program formula, a 10 percent unemployment rate for Front Royal during that quarter would have been required for Tran to qualify for the EB-5 program. According to the Virginia Labor Market Information website, Warren County had a 4.2 percent unemployment rate in Dec., 2015.
The EDA passed a resolution on July 1, 2015 to loan $10 million to ITFederal. The Promissory note with Tran for ITFederal, dated Sept. 16, 2015 was prepared by Blair Mitchell, former County Attorney and legal counsel to the EDA.
The Town Council of Front Royal, at the request of the EDA, and “to approve and support the Industrial Development Authority in obtaining a loan not to exceed ten million dollars for the purpose of economic development within the town limits” unanimously approved a resolution on Nov. 23, 2015 for a bridge loan to Tran because they believed he would soon begin a $40 million project that would benefit the community.
Royal Examiner reached out to former EDA Board Chairman Greg Drescher on March 7 to inquire about the due diligence that was performed regarding Tran before asking the Town of Front Royal to loan him $10 million.
Drescher replied that former Director Jennifer McDonald would have been responsible for conducting any evaluation or vetting process, and forwarded our information request to Interim Executive Director John Anzivino.
Anzivino replied on March 12 that “former Executive Director, Jennifer McDonald, was responsible for developing and completing any background investigation or reference checking that would have occurred regarding WCEDA business prospects or prospective borrowers.
“In response to your request I have audited the Authority’s existing files and regret that we cannot provide information specific to your inquiry because, in accordance with the Virginia Code Ann. §2.2-3704(B)(3), the requested records could not be found or do not exist.”
Tran says that because he’s had trouble attracting investors, ITFederal will not open. The current building, greatly scaled back from a three-phase campus with jobs for up to 600, to a still-under-construction 10,000 square foot single building could cost him to spend just $2 million.
Though his original agreement with the EDA, signed on July 3, 2015 stated the terms “to be defined as the earlier to occur of the two following events–certificate of occupancy of the 28,500 square foot bldg. OR $5 million expenditure ” those terms were adjusted downward on Feb. 27, 2017; the agreement was amended to 10,00 square feet and $2 million on February 27, 2017.
While Tran may not be able to get investors interested in the former Avtex site, and has fallen woefully short of delivering up as many as 600 high-paying jobs for local workers who held out hope they would materialize, he can likely serve up a cup of joe at his latest venture, a coffee shop in Alexandria, Va.
Town closed session with EDA officials on Afton Inn – precautionary
While a closed session of the Front Royal Town Council lasted about 10 minutes longer, 35 to 25 minutes, than the open portion of Monday night’s council meeting there were no announcements forthcoming from the session – not that, that was any surprise with the topic being a familiar one over the past seven months.
Council and town staff were behind closed doors with Economic Development Authority Interim Executive Director John Anzivino and Dan Whitten, the latter in his role as EDA attorney. The lone topic of the closed session was “consultation with legal counsel” regarding specific “legal mechanisms related to handling potential future debt service related to current and future budget years”.
But if that portion of the closed session discussion was familiar in the wake of town staff discovery last summer of about eight years of debt service overpayments to the EDA totaling about $291,000, the final portion – “with respect to the former Afton Inn building” – was not.
Asked if there was likely to be any announcement following the closed session prior to convening Monday’s meeting, Front Royal Mayor Hollis Tharpe said “no” adding that the meeting was precautionary in nature.
“We don’t want to get stuck with a $2.5-million bill,” Tharpe said.
That is the estimated cost of renovations now under way after well over a year of negotiations with the redevelopment entity now known as 2 East Main Street LLC. That discussion has included the EDA – current owners of the Afton Inn on behalf of the town – and town officials including the appointed Board of Architectural Review (BAR).
According to a Resolution approved by a 4-2 vote of council in November, the Town’s exploration of its EDA-related finances revealed an apparent EDA failure to close on a number of capital improvement loans the Town had believed were in place. That failure negatively impacted debt service projections for several existing or planned Town projects, including construction of the new Town Police headquarters.
See Related Story:
The agreement with 2 East Main Street LLC allows the EDA to retain ownership of the Afton Inn property pending completion of renovations, at which time ownership will be transferred to 2 East Main Street LLC.
See Related Story:
Apparently the Town was seeking assurances behind closed doors Monday that any necessary financing of the Afton Inn project is in place and the Town will not begin receiving any unexpected bills from contractors doing the work there.
The absence of any long faces exiting the Warren County Government Center Caucus Room site of that closed session appeared to indicate – so far, so good.
The former Afton Inn, opened in 1868 as The Montview Hotel, is the oldest and perhaps longest derelict commercial building in Front Royal’s Historic Downtown Business District. It was 2005 when the building’s final commercial use as a school book depository shut down.
A huge controversy erupted in 2014 when by a supermajority 5-1 vote council agreed to swap the old Town Hall building for the Afton Inn. The move appeared to be a two-pronged effort to remove Northern Virginia developer Frank Barros from ownership of the Afton Inn after several years of the building laying unused and deteriorating at the head of the Town’s Historic Downtown Business District in exchange for what was considered a too small and obsolete old town hall building; and involve the EDA in marketing the Afton building for redevelopment.
And four-plus years later things seem to be progressing on the Afton side of the street.