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Could Town-EDA disagreement over dynamics of Afton Inn sale kill redevelopment plan?

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During the Asset Committee report at Friday’s Front Royal-Warren County Economic Development Authority meeting, the Town of Front Royal, specifically through its legal department, was accused of “obstructing” the closing process on the sale that would allow redevelopment of the historic Afton Inn site to proceed at the head of the town’s Historic Downtown Business District.

“2 East Main, the contract purchasers of the Afton Inn, continues to work toward a settlement by the end of December. The Town of Front Royal, via their legal department, has begun obstructing this process by not cooperating with requests made by both 2 East Main and the EDA,” Asset Committee Chairman Greg Harold stated in his December 4th meeting agenda written report.

Greg Harold during the Dec. 4 EDA Board virtual meeting. His Asset Committee report highlighted a recent email exchange between potential Afton Inn developer 2 E. Main St. LLC and Town Attorney Doug Napier expressing the opinion the EDA cannot finalize the sale without written Town approval, which apparently has not been given. Royal Examiner Photos by Roger Bianchini

Harold’s Asset Committee report on the status of the Afton Inn sale that would facilitate redevelopment observed, “The EDA’s sole ambition in this sale is to remove it from our asset book by selling it to a private developer that is qualified and capable of rebuilding this historic structure to the benefit of the entire community, including the Town Administrative Offices that sits adjacent to this currently dilapidated building.”


Royal Examiner called Harold following the 10:40 a.m. adjournment of Friday’s EDA Board of Directors meeting to seek more information on the impasse between the Town and EDA over the sale and redevelopment of the Afton Inn property. Harold referred us to Board Chairman Jeff Browne as point man on the EDA’s effort to solicit cooperation from the Town of Front Royal governmental apparatus to facilitate the long-pending sale to redeveloper 2 East Main Street LLC.

Contacted by phone, Browne explained that the 2 East Main Street development partnership and its title company had sought legal assurance from the Town that it agreed to the pending sale. The Town Attorney’s November 30th email reply to 2 East Main and the involved title company – the EDA was not copied in Napier’s response, Browne noted – disputed the EDA’s ability to sell the property to the development group without the Town’s written consent, consent apparently not yet given. Napier referenced a 2014 Land Exchange Agreement (LEA) and Memorandum of Agreement (MOA) in making the assertion, Browne said. That was a condition of the referenced 2014 MOA, he explained.

With Town Hall’s proximity to the derelict Afton Inn, one is left to wonder why the town council would not have already endorsed the EDA sale for redevelopment.

In response to this assertion the EDA Board of Directors is preparing a response to town officials, including the mayor, council, and town manager, seeking a meeting of all involved parties as soon as possible to resolve the impasse to everyone’s mutual benefit, Browne told Royal Examiner. The EDA and 2 East Main Street LLC hope to have the sale closed by the end of the calendar year.

Town perspective

In an email response to our inquiry on the matter, Town Attorney Doug Napier explained his and apparently the town council and its governmental apparatus’s stance.

That stance is that the EDA has simply been a real estate broker for the Town in dealing with the Afton Inn property. “The EDA itself never had any skin in the game. The Town was never about to ‘give’ the EDA a million-dollar piece of property in the form of Old Town Hall for nothing, that would be insane,” Napier wrote, perhaps highballing the 2014 assessment a bit in referencing the eventual EDA-enabled 2014 swap of the old Town Hall building the town government had outgrown, for the Afton Inn in order to facilitate its marketing and redevelopment.

The town attorney and interim town manager at a recent council meeting. Questions may have risen through EDA Board discussion as to whether there are sufficient communications between staff and council and the mayor on the status of the EDA’s attempt to sell the Afton Inn for redevelopment.

Perhaps coincidentally, that swap was bitterly opposed by then citizen Matt Tederick who repeatedly appeared before the town council to berate the swap idea. That idea was hatched to get the Afton property out of the hands of its owner, Northern Virginia developer Frank Barros. Barros let the property languish for several years, refusing to take calls from the Town about the property after the town council had alienated him, in part by suing its own Board of Zoning Appeals to overturn its code exception granted to allow Barros’s elaborate Afton Inn redevelopment plan to increase the height of the building to about 10-feet above the height of the County Courthouse across the street. Building above the height of the courthouse was and remains against Town Code.

“For many years the Town had been trying to get the owner of the Afton Inn to fix up that building, but could get nowhere with the owner,” Napier wrote in his December 4th reply to our inquiry on the current sale impasse, adding, “Town Council had an idea to exchange Old Town Hall for the Afton Inn, but it is difficult for local governments to do real estate investment deals on its own under the Code of Virginia, a big reason EDAs exist in the first place … The title company doing the real estate closing agrees with me. It’s the law, as well as the facts of the case. There is no real controversy here at all.”

No real controversy here?

However, the EDA Board of Directors and its legal counsel do not agree.

The 2014 Land Exchange Agreement and Memorandum of Agreement referenced above by EDA Chairman Browne were attached by Napier to his reply to us to bolster his contention the EDA does not own outright and cannot sell the Afton property without the Town’s written authority.

However, Harold pointed us to a December 1st email from EDA attorney Sharon Pandak in response to Napier’s November 30 reply to 2 East Main Street LLC and its title company seeking the Town’s signing off on its purchase contract with the EDA. In the letter, Pandak counters Napier’s conclusion and the developer’s title company’s concurrence with it. – The short version:

1 – the 2014 MOA, which came after the LEA, was never signed by an EDA representative; and

2 – the Town was not a party to the Lease Exchange Agreement in which Barros’s Afton Inn LLC conveyed the Afton property directly to the EDA.

The complete explanation of the EDA stance penned by the EDA attorney elaborates:
“As I indicated to you … previously, we do not believe that 2 East Main LLC’s current title company’s (Chicago/Champion Title Company) position is meritorious. The EDA can convey “good and marketable fee simple and unencumbered title” to the Afton Inn for the following key reasons:

1 – The conveyance to East Main is not for a required “future purpose” under the Memorandum of Agreement between the Town and the EDA, dated June 23, 2014 (MOA). The MOA, if operative, relates to future use of the Afton Inn, and is not a limitation on the EDA’s ability to convey the property. Therefore, the MOA, if operative, simply does not apply.

2 – The MOA was signed by the Town after the conveyance of the property by the Town to the EDA (June 11, 2014). The agreement is not signed by the EDA.

3 – The Land Exchange Agreement (LEA) between the EDA and Afton Inn, LLC conveyed the Afton Inn to the EDA. The Town was not a party to LEA, and the land never passed through Town ownership to get to EDA ownership. There are no restrictions on the EDA’s use or future conveyance in the LEA. The LEA precedes the incomplete MOA,” Pandak wrote. But she wasn’t finished countering the Town stance.

Two perspectives of March 2019 Town-permitted work on the Afton Inn related to the 2 E. Main St. LLC redevelopment plan. If the Front Royal Town Council finally authorizes the EDA sale to the developer, within a year or so the site might be worth a second look from the town trolley.

“There are other reasons for believing that the Town Attorney’s recently expressed opinion is not well-taken which include: The Town has already issued permits to 2 East Main for some work on the Afton Inn and the Town has implicitly approved 2 East Main’s proposed redevelopment by including it in its VDHR (Virginia Department of Historic Resources) grant application (resulting in the Town’s Community Development Block Grant – CDBG award from the State). These actions indicate a Town approval of the ‘future purpose’ by 2 East Main for the Afton Inn, if the MOA is operative. Mr. Napier also does not acknowledge that the EDA gave the Town notice of its Purchase Contract with 2 East Main on June 16, 2020, directly and through him.

“The Title Company’s requirement to have the Town of Front Royal provide consent to the transaction is not well-grounded for the reasons set forth above,” Pandak concludes.

Delaying sale to what end?

Asked what investment the EDA has made in marketing and moving the Afton Inn property toward redevelopment since acquiring it in 2014, Brown and Harold both pointed to $478,000 in various legal, closing, and developmental costs, including masonry work to shore up the crumbling building as its sale and redevelopment have stalled. The sale price if made this month will be $345,000. Had it been made by September it would have been $325,000. So, the EDA is not looking to even recoup its total investment in the property, which means the Town would not be eligible to collect any proceeds from the sale according to the disputed MOA were it ruled to be enforceable without an EDA signature on it.

Bullet point 5D of the MOA states the “EDA shall be entitled to retain from the sales proceeds an amount equal to any sum it has paid without reimbursement from the Town during its ownership, management, maintenance, repairs and marketing for sale or lease of the Afton Inn property.”

So, one might wonder why the Town is stalling on endorsing the EDA’s sale to 2 East Main Street LLC after past permitting of work related to the 2 East Main Street development plan and referencing that plan in its CDBG application.

“Their stonewalling this sale only hurts them and the community,” a perplexed Harold told Royal Examiner. Following conversations with 2 East Main principals Alan Omar and Jim Burton, the EDA Asset Committee chairman said, “I am fully confident 2 East Main Street wants to move forward and are willing to develop the property to the betterment of the community in a way that will make it a cornerstone of historic downtown Front Royal. We are willing to broker communications and we’ve both tried to work with the Town to realize this project since September.

“If this sale can’t occur because of obstruction by the Town we are going to execute any leverage we can to covey the property if this falls thru,” Harold said of the EDA, including acquiring a demolition permit “to keep all available options at our disposal”.

Harold’s written report to his board Friday morning added a call for public action to add another dimension to EDA Board Chairman Browne’s effort to bring all involved parties to the table for a mutually beneficial resolution before the year’s end.

“The community should start lobbying Town Council to allow this sale to commence without further delay or disruption. This is critical both from a safety standpoint as stated by Town Attorney Doug Napier and from an aesthetic standpoint being the corner of historic downtown Front Royal. Delaying the sale and settlement places additional unnecessary risk to public money in the maintenance and public security of this building which has been previously stated by the Town Attorney as the responsibility of the Town taxpayer.”

The EDA Board of Directors hopes a new face and perspective on the scene, new Town Manager Steven Hicks who begins work Monday, Dec. 7, might mean a new day in the EDA-Town relationship. Hicks was lauded by the council for his work in Selma, N.C. on a redevelopment project.

During subsequent open meeting discussion Friday morning, board member Tom Pattison suggested “reaching out” to new Town Manager Steven Hicks, who begins the transition from Interim Town Manager Matt Tederick on Monday, December 7, in an attempt to re-establish a meaningful relationship with the town government. That relationship has deteriorated into expensive hostile civil litigation and an absence of communications under Tederick and the current town council majority over the past year-plus. While a spot for a “Town Manager’s Report” has remained on the monthly EDA Board meeting agenda, as has been the case for much of 2020, no town manager or designee was present virtually to deliver that report Friday morning despite the Town’s continued legal partnership with Warren County in the operational oversight of the half-century-old joint County-Town EDA.

EDA Board Chairman Jeff Brown and the five-member quorum present virtually concurred with Doctor Pattison’s notion of attempting to restore a meaningful relationship with the town government with the coming personnel change at the head of the Front Royal Administrative network.

While we didn’t get a call back from Mayor Tewalt, we did reach Vice-Mayor Bill Sealock about the EDA board discussion of “Town obstructionism” in finalizing the Afton sale to 2 East Main Street. Sealock said his last recollection of council discussion of the proposed sale to 2 East Main Street LLC group was when the September option date was missed.

The vice mayor also expressed disappointment council and the mayor wasn’t included in the EDA communications with town staff over the project. “I’m very upset – we’re the ones who would decide these things,” Sealock said of Town approval or endorsement of the sale.

Above, in the wake of his proactive work bringing council and the Save Happy Creek Coalition together could Vice-Mayor Bill Sealock find himself at the point of helping correct another possible communication breakdown in Town affairs? EDA Board Chair Jeff Browne, below at Friday’s virtual EDA meeting, hopes to aid in bridging any communications gaps between the council, the EDA, and the Afton Inn redevelopment group.

 

“I’d be happy to do that,” EDA Board Chairman Browne said when told of Sealock’s observation, adding that he had personally been involved in several “reach outs” to council and the interim town manager in past efforts to resolve issues surrounding finalization of the Afton sale. And as reported above, he is planning to have a letter to all involved parties, including council and the mayor out by early in the coming week.

And he noted that the recent email exchange with the town attorney came from 2 East Main LLC and its title company’s direct effort to seek assurance the Town would endorse the EDA sale of the property, not from an EDA inquiry.

So, it seems the EDA, the Front Royal Town Council, and mayor, and 2 East Main Street LLC principals and staff will have an opportunity in coming weeks to sit down and get on the same page philosophically and legally to the joint benefit of the entire community. Will they be able to pull it off?

Stay tuned as the Afton Inn redevelopment project perhaps reaches a point of no return if a sale is not finalized within the next three weeks.

Can council reach a quick consensus that an EDA sale of the Afton Inn property to 2 E. Main LLC for redevelopment is a good thing for the community? One might wonder why that consensus hasn’t already been reached.

 

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EDA ups ante in civil litigation versus McDonald – without defense objection

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Could the Warren County Economic Development Authority (EDA) and its former executive director, Jennifer McDonald, be headed toward a settlement of the EDA’s multi-million dollar civil litigation against her and her two real estate LLCs, MoveOn8 and DaBoyz? That would appear to be a possibility in the wake of a “Stipulations” agreement hearing Friday morning, April 9, in Warren County Circuit Courtroom A.

Then EDA Executive Director Jennifer McDonald speaking at a 2017 town council work session – might she and her attorney soon be talking to EDA attorneys about a mutually agreeable settlement of the civil litigation against her? Royal Examiner File Photos by Roger Bianchini

After the adjournment of the 9 a.m. docket hearing to deal with remote phone connection issues for other defendants’ attorneys not present for the two-pronged April 9 hearing, Judge Bruce D. Albertson reentered the courtroom at 9:25 a.m. with the remote connection issues resolved. EDA lead civil attorney Cullen Seltzer of the Richmond law firm of Sands Anderson then read the five-point “Stipulations” submission to the court as McDonald and her attorney Peter Greenspun listened at the defense table.

The first of those stipulations set an amount of $62,315,315.51 as the EDA’s claimed damages in the civil case against McDonald and her two real estate companies alleged to have been used to move EDA assets to her or co-defendants’ personal benefit. It is worth noting that the original EDA civil litigation filing was in the $21-million range, later being amended with added defendants to near $28 million.


The second and third stipulations note that the McDonald-LLC defendants “take no position on the basis for” that plaintiff-claimed amount; nor do they admit to “any wrongdoing” regarding the EDA’s claim of damages.

It is the wording of the final two stipulations approved by the court that may hint at negotiation between the plaintiff and defendant:

“The Defaulted Defendants (McDonald, MoveOn8, and DaBoyz) have endorsed an order providing money damages judgment in the amount of $62,315,315.51 in favor of the plaintiff (the ‘Money Judgment Order’),” Stipulation 4 reads, followed by this:

“No sooner than 60 days from April 9, 2021, Plaintiff’s counsel may tender to the Court the Money Judgment Order if the Defaulted Defendants and the Plaintiff do not sooner enter into an agreement satisfactory to the parties. The Defaulted Defendants do not oppose the Court’s entry of the Money Judgment Order once tendered pursuant to this paragraph.”

Did Friday’s EDA civil litigation hearing indicate signs of progress toward an out-of-court resolution of, at least a portion of that litigation?

Defense attorney Greenspun and his client left the courtroom after the five minutes it took for the “Stipulations” submission to be read to the court by EDA counsel and for Judge Albertson to accept them, as indicated above, without objection from the defendant or her counsel, as the second part of the morning’s hearing began. That hearing was on a “Protective Order” request by defendant April Petty’s attorney Bill Shmidheiser to prevent volumes of his client’s bank records not relevant to the EDA case against Petty being posted on a secured database accessible by all the associated defendants, 15 in the first amended complaint and nine more added later.

Shmidheiser cited 3 pages related to a $41,000 check deposit regarding one real estate transaction as relevant to the case out of an estimated one thousand pages of Petty’s bank records from at least six accounts reviewed by the plaintiff attorneys and posted to the database.

EDA co-counsel Sean Hutson argued that the defendant should not be the one to determine the relevance of her own documents, that other defendants’ counsel should. After he polled four defense attorneys connected to the hearing remotely and getting four “no objections” to Petty’s counsel’s request, Judge Albertson granted Petty’s requested exclusion of apparently unrelated bank records from the case database.

Following adjournment after that 20-minute hearing, we asked EDA lead counsel Seltzer about the implications of the Money Judgment Order “Stipulations” agreement approved by the court earlier. However, he declined to discuss details of the status of an active case on the record.

Pictured virtually hosting recent EDA Board meeting, Chairman Jeff Browne is hopeful discussion can lead to out-of-court agreements on at least parts of EDA efforts to recoup alleged miss-directed assets.

So, we soon tried EDA Board of Directors Chairman Jeff Browne with whom we’d briefly discussed the morning’s hearing following adjournment of an 8 a.m. Emergency Meeting of the EDA Board earlier that morning. No action followed a 50-minute closed session. During the brief open session, Browne explained the “emergency” designation simply meant the meeting had been called within 24 hours of its convening.

While also reluctant to discuss the still-active EDA civil litigation, Browne did observe that the entering of a signed agreement by the involved parties citing a 60-day window to reach a mutually satisfactory conclusion was a positive sign that discussion would take place. Of the potential of such discussion, Browne observed, “If we can avoid trial and save tons of money by coming to an agreement it would be a positive development. I hope it works out.”

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County updating equipment, rewriting IT software in wake of system ‘intrusion’

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During his update on County business at the virtual meeting of the Warren County-Front Royal Economic Development Authority Board of Directors Friday morning, March 26, Interim County Administrator Ed Daley addressed the status of the County’s software situation in the wake of the early March discovery of what has been termed an “intrusion” of that system. Daley has fallen short of calling the incident a “hack” due to an absence of discovered consequences such as stolen files or manipulation of existing files or systems.

However, the consequences which began with a nearly three-week halt in use of all county officials and staff emails due to the County server being taken down as a security precautionary measure, continues to be felt. As previously reported, the local IT system intrusion was part of a larger “intrusion” of software at various unspecified locations across the country. It’s source and purpose continues to be a matter of investigation from the federal level down.

A day prior to Daley’s report at the EDA’s monthly meeting, Warren County Emergency Services Coordinator Rick Farrall’s March 25 County “Situation Report” also began with an update on the post software “intrusion” consequences:

COMMUNITY INFORMATION


  1. Warren County Email Update
    1. Warren County, the Warren County Sheriff’s Office, and the Warren County Department of Fire and Rescue Services are still experiencing significant computer/email issues.  The County is working diligently to restore full computer and email service to all personnel.
    2. Please note that any emails sent to County personnel at warrencountva.net, warrencountysheriff.org, or warrencountyfire.com may not be received until all email services are fully restored.

File photo of County Emergency Services vehicle in front of WCGC in March 2020. A year later the on-site emergency services have revolved around software protection and clean up. Royal Examiner Photos by Roger Bianchini

A clue to that restored service came Friday during the interim county administrator’s report to the EDA. Daley told the EDA board that 150 new laptop computers were slated to arrive Tuesday (March 30). Contacted late Friday afternoon, Daley told Royal Examiner by phone that it was anticipated all County emails would be back online at the beginning of the coming week, possibly coinciding with the arrival of the new computers and a rewrite of the County IT network. The system overhaul is to assure whoever was behind the intrusion no longer has access to the system, Daley explained. In a late update Monday morning, Daley said it now appeared the computers would not arrive until Thursday, delaying the restored email use until later in the week.

“We’re just busy buying computers and throwing computers out and wondering why we still have 2007 computers… – It’s a new experience every day,” Daley began his report to the EDA board Friday morning.

“Well, we wish the County well – it’s a horrible problem,” EDA Board of Directors Chairman Jeff Browne told his former fellow EDA Board member and chairman. EDA officials later told Royal Examiner the separate EDA server had not been impacted by the County intrusion, though a downed 10-year-old router had temporarily taken the EDA system offline for about a day this past week.

As noted in our original story on the hack – “A new municipal ‘normal’ – large scale software ‘intrusions’ and targeting an international human organ harvesting business?!?” – Daley said that while the beginning date of the intrusion hadn’t been established, it was verified it did not involve or impact election data from last November.

Interim County Administrator Ed Daley at early March county supervisors meeting. A portion of his recent reports, regardless of to whom, has traced the impact of and reaction to the county software intrusion discovered earlier this month.

Daley told us that discussion of acquiring upgraded technology for the County was already underway when the intrusion was discovered March 7 to 12. In fact, the old County Information Technology was only capable of support of Windows 7, which will soon be non-serviceable as Window 10 and beyond continue development.

“So this gave us a reason to upgrade now,” Daley told Royal Examiner of the County IT software intrusion. One sign of the upgrade will be an eventual switch from .net to .gov in the County network, including staff and other official emails.

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EDA authorizes escrow fund use to help cover FY-21 debt service

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Following a multi-faceted hour-and-a-half closed session Friday morning the 26th at its regular board meeting of March, the Warren County-Front Royal Economic Development Authority Board of Directors authorized use of a portion of the $158,598.31 balance of an escrow account related to the Leach Run Parkway loan to make regularly scheduled loan payments for the Avtex loan and the Leach Run Parkway loan for April, May and June 2021. It was pointed out this will provide some relief to the County’s financial burden in covering the EDA’s debts for the remainder of Fiscal Year-2021 in the wake of the EDA financial scandal predating the current board and staff.

EDA attorney Sharon Pandak prefaced the motion by reviewing circumstances surrounding the Leach Run Parkway Loan escrow account, which also predates the current board and executive director’s tenure, and its recent reimbursement in part by United Bank following the bank’s finally closing with the Town of Front Royal on the assumption of responsibility for a loan to pay off the balance of the $8,440,797 FRPD headquarters construction project.|

The clouds have begun to clear from the FPRD headquarters financing situation – but about that $640k in previously paid interest … – Royal Examiner Photos by Roger Bianchini

Contacted later, EDA Executive Director Doug Parsons explained the original balance of the Leach Run Parkway Loan escrow account was $250,000 that had never been accessed. However, United Bank elected to draw on that Leach Run Parkway Loan escrow account for the interest and principal payments on the FRPD construction loan during the four months – November 2020 to February 2021 – it was awaiting finalization of the Town’s FRPD loan. The delay, as explained by both Town and EDA officials, was due to the discovery of a needed partial release of the deed of trust of the former Avtex Superfund site, for the 5.24-acre parcel upon which the FRPD headquarters is situated at 900 Monroe Avenue, had never been realized.



The Warren County Board of Supervisors chose to stop covering the EDA’s original FRPD loan payments that the Front Royal Town Council refused to accept moral responsibility for in the wake of the EDA financial scandal during the tenure of former EDA Executive Director Jennifer McDonald, after the October 2020 payment. That was when the EDA FRPD loan payments went from 3% interest-only in the $21,000 monthly range to over $50,000 in principal and interest monthly payments.

Parsons cited the United Bank Leach Run Parkway Loan reimbursed escrow account amount based on fluctuating monthly principal payments at $116,246.84, as noted above bringing the escrow account balance to $158,598.31. With a virtual ZOOM meeting torrent of numbers dancing through our heads, we asked Parsons for a rundown of exactly what was approved regarding the use of the escrow funds.

File photo of Doug Parsons, speaking center, dating to Feb. 2020, pre-pandemic and virtual ZOOM meeting world days.

“In an effort to help the County service our debt, the Board of Directors voted this morning to apply $53,953.29 toward the loan payments of the Leach Run Parkway loan and the Avtex loan for the remaining three months of FY-21 – April, May, June 2021,” he began, breaking that number down further: Avtex loan monthly payments of $14,021.80 and Leach Run monthly of $3,962.63 totals $17,984.43 x 3 = $53,953.29.

With the FRPD loan future principal and interest payments finally assumed by the Town, as had always been anticipated by the EDA upon completion of the project it financed for the Town, the lone remaining sticking point on the FRPD financing situation between the Town and EDA appears to be reimbursement of the approximately $640,000 of construction loan interest previously covered by the EDA and the County. And it is likely that number was part of a closed session discussion of the EDA’s countersuit against the Town, the second of three closed session topics adjourned from open session to at 8:06 a.m. Friday.

 

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Supervisors try to absorb County budget numbers: past, present and future

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Early Tuesday evening, March 9, the Warren County Board of Supervisors, particularly its three newest, first-term, second-year trio of Chair Cheryl Cullers, Delores Oates and Walt Mabe, tried to get a handle on the County’s finances. First up on the work session agenda starting at 6 p.m. in the main meeting room of the Warren County Government Center was an Audit Report from Robinson, Farmer, Cox Associates’ Michael Lupton. That was followed by Deputy County Administrator Taryn Logan’s report on the status of a two-decade-old joint County-Town Wayfinding Sign project aimed at directing tourists toward the county’s myriad natural and historical attractions on both sides of the town-county line. And batting cleanup were Interim County Administrator Ed Daley and new Finance Director Keith McLiverty for an update on the Fiscal Year 2022 County Budget process.

Audit Report and Budget time – everyone’s favorite time of the year: the county supervisors, minus 1, prepare to get the numbers – lots of numbers. Below, Audit company rep Michael Lupton opens with a report on County finances for completed FY-2020. Royal Examiner Photos by Roger Bianchini

Audit company representative Lupton gave an overall positive report, with some gaps in financial reporting. Lupton cited those gaps as a likely result of a high turnover among upper-level staff, most prominently at the head of the County Finance Department. Stabilization in that area with the arrival of County Finance Director McLiverty, who with Interim County Administrator Daley, helped guide the board through some of their logistical questions on the audit report summary, was cited as a positive turn for the future. Also acknowledged was interim help from former Finance Director Andre Fletcher, as well as Carolyn Stimmel, the latter mostly on the EDA side of the equation.

Some board questions revolved around what Lupton called “finicky numbers” related to asset versus debt ratios that are impacted by market fluctuations. Of particular attention were debt service numbers between $147 million and $155 million. It was explained that the $8 million discrepancy related to the County’s pension fund, which unlike past Capitol Improvement Project (CIP) debt, is not liable to a bank call, unless as Daley observed, the entire County staff hit retirement age at the same time.



As the actual numbers stand, Cullers cited an annual debt service of $953,000 to be covered. So, the supervisors are likely to be encouraging bond consultant Davenport & Company to be keeping a close eye on the approaching market numbers impacting potential savings on a group re-financing of a large portion of the CIP debt related to past public school and other construction projects.

Variables related to the aftermath of the Town-County Economic Development Authority (EDA) financial scandal, including still being prepared 2018 and 2019 EDA audits, as well as legal expenses were also prominent on the supervisors’ radar. Replying to a question from the chairwoman, Interim County Administrator Daley noted that the audit report “does not include EDA debt” but “did include County expenditures” on the EDA’s legal and operational expenses. There also was a $1-million discrepancy in EDA legal fees that seemed to be floating as an unresolved number.

Chair Cullers, above, and North River’s Oates, below, absorb the numbers – lots of numbers.

Overwhelmed by “finicky numbers”, floating numbers, and delayed reporting of some budget variables during the past year, Board Chair Cullers commented several times, “It’s clear as mud” to which North River Supervisor Oates added, “Now, I’m really confused.”

Perhaps trying to cheer the supervisors up after their emersion into the depths of municipal finances, Daley suggested next year’s process would be easier after their “training” with this year’s budget and all its staffing and emerging post-EDA financial scandal variables.

Which way to tourism dollars?

On the Wayfinding Sign front, long-time County Planning Director and new Deputy County Administrator Logan reviewed the 20-year joint Town-County effort and new signage planned on both sides of the town-county line. She explained an urgency on the Town side related to new signage that would be paid for through the Town Community Development Block Grant (CDBG) that carries a spending deadline approaching at the end of the month.

She said that an MOA (Memorandum Of Agreement) between the municipalities was anticipated to be presented to the Board at its March 16 meeting.

Recently elevated to Deputy County Administrator, Taryn Logan explains the latest chapter in a 20-year joint County-Town effort to direct visitors to the myriad tourism destinations on both sides of the town-county line.

Responding to a question from Fork District Supervisor Archie Fox, Logan explained that Wayfinding sign guidelines on the State side prevented Wayfinding Signs directing motorists to specific private business locations like motels, restaurants etc. However, she noted that other types of municipally developed signage, particularly in town, could be utilized outside the Wayfinding Sign Project to alert tourists to those types of amenities available in the town and county.

Logan also reviewed how the changes from a Town Tourism Department and move to outside private-sector contracted marketers advised by the Joint Town-County Tourism Committee were impacting Tourism promotion on both sides of the town-county line.

Approaching the two-hour mark, Daley and Finance Director McLiverty’s report was fairly brief, with Daley telling the supervisors, minus absent Happy Creek Supervisor Tony Carter, that they would return at the end of the following week with the FY-2022 Budget summary.

One down, empty table at right, three pictured including the back of one head, and one, Walt Mabe, out of frame, the supervisors listen to the audit report for completed FY-20. Below, Interim Administrator Ed Daley, left, and Finance Director Keith McLiverty try to make the numbers and the process resulting in them as understandable as possible.

It was noted near the work session’s end that the planned Joint Meeting, Retreat or “Advance” as it is now being referenced, with the Front Royal Town Council is targeted for May, though no date has yet been established.

For more detail on all these discussions watch the linked County meeting video and/or view the linked PowerPoint presentations.

VIDEO HERE

  1. Warren County Audit Presentation – FY2020
  2. Wayfinding Sign Report – March 2021
  3. Warren Comp Annual Finance Report – 2020
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EDA welcomes Town Manager Steven Hicks to meeting & gets good news from McDonald bankruptcy hearing

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Things appear to continue to be turning in a positive direction for the Warren County Economic Development Authority (WC-EDA) in the wake of the recent sale of the Afton Inn for redevelopment by the 2 East Main LLC investment group. On the heels of that sale, authorized at a Special Meeting of February 12 and finalized a week later, the WC-EDA held its monthly meeting by way of the now familiar virtually connected ZOOM format the morning of Friday, February 26.

Two things stood out during the open session sandwiching a 57-minute closed session. The first was the welcoming of Town Manager Steven Hicks shortly after the 8 a.m. meeting start. It was the first appearance of a town manager with an accompanying update on Town business at an EDA Board of Directors meeting in about 18 months.

Beginning with the Afton Inn sale, it appears a newly thawed relationship between Town Hall, at right, and the WC-EDA has begun. It continued with Town Manager Steven Hicks presence at the Friday, Feb. 26, EDA Board meeting. Royal Examiner Photos by Roger Bianchini

That traditional line of communications was terminated during the tenure of former Interim Town Manager Matt Tederick as the town government took on an increasingly adversarial and litigious stance with the EDA as a revamped EDA board worked to right its ship in the wake of the $21-million-plus financial scandal alleged to have developed during the tenure of former EDA Executive Director Jennifer McDonald.


EDA civil litigation gets reboot

The second positive note came post closed session during Board Chairman Jeff Browne’s Executive Committee Report. Browne acknowledged a decision by Harrisonburg-based U.S. Bankruptcy Court Judge Rebecca B. Connelly returning consideration of exactly what assets Jennifer McDonald can claim as part of her bankruptcy filing to the state court level.

“The bankruptcy court has remanded her particular case to state court to assess damages, at which point damages are assessed it will go back to the bankruptcy court to decide whether or not it should go back to the state courts or be handled in the bankruptcy court,” Browne told his board.

Contacted after the meeting, Browne elaborated on the implications of Judge Connelly’s ruling. He explained it will allow the EDA’s civil litigation against McDonald to re-start to determine exactly what EDA assets McDonald may have misappropriated and how they may have been used to purchase properties or other tangible assets. Her surviving real estate company MoveOn8 is also part of her bankruptcy filing, he noted.

The EDA’s civil litigation against Jennifer McDonald, on the job in December 2016 as the late Patty Wines, right, chairs meeting, and other co-defendants not in bankruptcy court, can once again proceed at the state level in the Warren County Courthouse.

When the state court findings are returned to the U.S. Bankruptcy Court in Harrisonburg, Judge Connelly will determine what assets McDonald can legitimately claim as her own that are subject to bankruptcy claims and asset distribution, versus what assets held by her or her real estate company the EDA would have civil claim to as restitution for her alleged criminal acts of embezzlement and misappropriation of EDA funds to her own use.

A virtual Town-EDA ‘lovefest’

Back on the Town-EDA relations front, EDA Board Chairman Browne welcomed Hicks by virtual connection, offering him the opportunity to give his report prior to adjournment to the closed session. And while an opening portion of that report was acknowledgment of the town council’s decision to move forward with creation of its own EDA with Hicks as executive director, that there was a renewed sense of Town-EDA cooperation was soon apparent.

“As town manager I’m here to help in any way I can,” Hicks told Browne and the four-member EDA Board quorum present virtually (Browne, Harold, Pattison, Wolfe), before reporting on the status of the Town’s FY-2022 Budget process.

“I just want to congratulate you on your new position. You must have found the secret to a 48-hour day,” Browne told Hicks at the conclusion of the town manager’s report. “I just want to tell you for our board, that anything we can do to help in the areas you’re focused on: redevelopment, tourism, retention of businesses are all good things that we look forward to working with FREDA (Front Royal Economic Development Authority) on.

EDA Board Chairman Jeff Browne, above virtually at Friday’s EDA Board meeting, and Front Royal Town Manager Steven Hicks, below in file photo of recent council meeting, seem to be on the same page on cooperation between now separate County and Town EDAs.

“We would like to work with you and coordinate with the Town. I think that we can do a lot to help economic development for the entire area. So, we appreciate you’re stepping up and taking on what will be a challenging task,” Browne added of Hicks new dual role.

“Will do – I’ll definitely stay in contact and share everything as much as I can with you and Doug (EDA Executive Director Doug Parsons) and Ed (Warren County Interim County Administrator Ed Daley). So yea, sounds great,” Hicks replied.

At that point EDA Board member Jim Wolfe, who has taken point in his board’s work on development of short and long-term Strategic Planning on economic development and job creation, joined the conversation. Wolfe offered to get a copy of what the WC-EDA has done on that front recently to Hicks by Monday.

“Then you and I can sit down and talk about it at some point. And if any other board members want to join me … So, I want to make sure that the … Town has our plan and use that for a touch point for how you coordinate on different projects,” Wolfe said of developing a unified plan of action community wide.

EDA Board member Jim Wolfe jumped on the Town-County EDA cooperative bandwagon with an offer of added assistance from himself and other EDA board members, to Hicks in his new role as FREDA executive director.

“I’d appreciate that,” Hicks replied, perhaps seeing his “48-hour days” reduced in some measure by that level of County EDA involvement with his work on the Town side. Continuing in that vein of cooperation, Hicks added, “Again, I just wanted to call in (on ZOOM) and touch base with you all and be as transparent as I can. And always reach out to me when you need anything, and I’ll do the same.”

“Good, thank you so much,” Browne replied to the new attitude being reflected out of Front Royal Town Hall as Hicks signed off from the meeting.

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EDA in Focus

Summary of the Warren County EDA Board meeting of Friday, February 26

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The EDA Board of Directors conducted their regular monthly board meeting this morning, February 26, via Zoom. The Board welcomed Front Royal Town Manager Steven Hicks prior to going into Closed Session. Mr. Hicks noted that the Town’s budget proposal for the fiscal year 2022 was being prepared. A summary overview was included in the board packet and digital copies of the 32-page presentation are available from the EDA office. Please contact Administrative Assistant Gretchen Henderson at 635-2182.

Board Chair Jeff Browne congratulated Mr. Hicks on his appointment to Executive Director of the Front Royal EDA and stated that the Board of the Front Royal Warren County EDA is looking for working with him.

Following an approximately 30-minuted Closed Meeting, the Board approved a motion on the disposition of McKay Springs. In order to facilitate and expedite the sale of parcels at the McKay Springs location, the Board approved transferring the parcels deeded in the name of the EDA to Warren County.

Continuing in Open Session, Jeff Browne gave a report from the Executive Committee. He advised the Board and the public that Warren County will be designated as a Spotted Lanternfly quarantine locality in mid-March, along with Clarke and Frederick counties, and the City of Winchester. This will impact businesses located in and doing business in Warren County. For more information please visit www.vdacs.virginia.gov/plan-industry-services.shtml


Director Jim Wolfe shared information on the progress of the EDA Strategic Plan updates. He’s looking forward to feedback on the working document and completing a final draft for review.

Asset Committee Chair Greg Harold discussed a new development that will have an impact on the EDA-owned property on Royal Lane. He shared the news that the Town of Front Royal is considering updating the Town Code to allow a Conditional Use Permit to be bonded with the property rather than the owner. With this change, Harold expects to improve the successful marketing of this property for a developer of multi-family workforce housing. The EDA is very interested in selling this property and supports the Town Planning Department in its efforts.

EDA Executive Director Doug Parsons had several items of interest to share, including the launch of the renovated EDA website at www.wceda.com, and that the auditors are finalizing their report. Additionally, he reported that the proceeds of $323,179.18 from the sale of the Afton Inn have paid down the principal on the First Bank & Trust Line of Credit. This lowered the payment, saving the taxpayers $1,242.70 per month, or $14,912.40 per year.

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Mad Science Kit @ Warren County Community Center
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The Warren County Parks and Recreation Department Mad Science Kit contains experiments that focus on fun, interactivity, and entertainment. Participants ages 6-12 will be able to perform four (4) experiments, including Dyed Carnations, Lava Lamps,[...]
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Color Run Fundraiser @ Warren County Department of Social Services
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Players will enjoy several hands of Mah Jongg against skilled opponents. This club meets on Tuesdays from April 6, 2021 through April 27, 2021 from 10:00 a.m. – 1:00 p.m. at the Warren County Community[...]
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