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Council approves tax decrease, ponders COVID-19 revenue shortfalls

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Following a remote, virtual world hook up work session discussion and adjournment to a virtually conducted Special Meeting Monday night, April 20, the Front Royal Town Council rolled ahead with its planned half-cent Real Estate Tax reduction despite myriad revenue shortfall scenarios flowing into the next fiscal year from the COVID-19 Coronavirus pandemic economic impacts.

By a 5-1 vote, Letasha Thompson dissenting, on a motion by Jacob Meza, seconded by Vice-Mayor Bill Sealock, council voted to reduce the Town Real Estate Tax Rate from 13.5 cents to 13 cents per $100 of assessed value and to keep the personal property tax rate flat at 64 cents per $100 of assessed value. Also included were decreases to the personal property tax relief rate – from 56% to 53% on the first $20,000 of the assessed value of qualifying vehicles, and a 100% relief on qualifying vehicles assessed at under $1,000.

Numbers included in the agenda staff summary of the tax rate proposal indicated $129,257 of tax revenue for every penny of real estate tax collected by the Town. So, while it appears to be only $64,628 of lost revenue at issue, it comes at a time the Town is pondering potential revenue shortfalls in the millions of dollars, as well as an emerging need to provide emergency financial assistance to citizens impacted by COVID-19 business closings and layoffs.

Remember the good, old days when municipal meetings were up close and personal, and there were no new viruses lurking about to take a shot at taking some of us out of here? We thought you might need a reminder, or two, from late January and early February. Royal Examiner File Photos/Roger Bianchini

Administrative staff and council continue to look at additional work sessions as they approach budget deadlines for the coming Fiscal Year 2021 in an uncertain financial landscape. One Monday night work session suggestion from Interim Town Manager Matt Tederick was to approve a contingency budget by the June deadline – the fiscal year begins July 1 – and review and tweak that budget on a monthly basis as the financial landscape evolves moving forward into the next fiscal year.

Following a power point presentation on “Options for Local Economic Recovery” Tederick presented work session numbers forecasting as much as $3,137,361 in potential revenue shortfalls, including General Fund ($1.37 million) and Utility/Enterprise Fund revenue shortfalls ranging from $720,845 (Electric Fund), $415,210 (Water), $391,530 (Sewer), and $35,028 (Refuse/Trash).
However, those numbers were dramatically reduced by cuts labeled “Contingency Transfers” slashing projects, planned merit and compensation study pay increases, insurance coverage, training, staffing, overtime and service cuts. Those cuts actually reduced that projected system-wide $3.137-million revenue shortfall to $261,636.

Tederick has been the architect of the Fiscal Year-2021 and end of Fiscal Year-2020 town government departmental and staff downsizing plan he has labeled “right-sizing” to facilitate reductions in Town budgets, present, and future. As the budget process has progressed from the first late January staff terminations that included the Planning Department and Community Development directors, among others, as well as recommended Tourism Department cuts, it has become apparent Tederick has the blessing of his fellow county Republican Committee members’ five-seat council majority.

And it appears if the pandemic-fueled revenue shortfall scenario takes a worst-case turn as the new fiscal year progresses, it will be with further departmental and staff cuts that council will meet those additional shortfalls.

On April 20, the council debated whether Town administrative and departmental staff should hear about the potential of additional staffing cuts as part of the budget process by public meeting broadcast or internal meetings.

Thompson, who as noted above cast the only dissenting vote against the tax rate proposal, worried that town staff would learn of the possibility of additional cuts to their numbers from the broadcast of the April 20th work session discussion. Had there been any preparatory briefing within departments to brace staff for the evening’s public discussion of the potential of additional staffing cuts to balance the town budget, Thompson wondered.

And while the answer was “no” other than with department heads in evaluating the most expendable staff with town administration, Tederick said he believed the bulk of personnel cuts, if it came to that, could be achieved by not hiring replacements for staff who were planning to or have already left the town government.

Earlier in the budget process, Tederick was referred to by county Republican Committee Treasurer Amber Poe Morris as “Front Royal’s Trump” for the amount of public criticism he was receiving over personnel and budget matters. Perhaps mirroring the Trump Administration policy over three-plus years of leaving cabinet and other federal positions unfilled or manned by lengthy interim appointments, on Monday Tederick estimated the town government currently was carrying “18 to 19 unfilled positions”.

At Feb. 10 council meeting, Amber Poe Morris let everyone know she is pro-gun, pro-Trump and pro-Matt as the interim town manager came under public fire for sudden, not-publicly-discussed staff terminations at the top of several Town Hall-based departments.

“We met with department heads and identified the critical hires. So, I think we can possibly get by – we’ll have that data for you more specifically as we go through this budget process – … I think we can go from 177 employees on our work chart for FY-19 to,” here Tederick struggled to pull up numbers he was searching for, continuing to estimate an 8 to 10 personnel cut “just by not rehiring people for vacated positions”. Contacted later, Tederick verified he was referencing numbers from the current Fiscal Year 2019-2020 budget.

He also told the council that during the current hiring freeze, discussion with department heads appeared to indicate an ability to reach the desired reduced expenditure levels without further personnel cuts or furloughs.

Of Thompson’s stated concern about employees learning of potential departmental personnel cuts through the council’s public discussion, rather than face-to-face discussion with supervisors, Councilman Meza observed, “We’ve also tried that route of talking to them before public meetings and that blew up in our faces. So, I’m going to be more candid about it now and say (while we haven’t talked to employees) I think generally speaking we need to understand that we have to look at the whole picture, which could include some furlough options, or temporary staff layoffs or something along those lines.

“As ugly as that sounds, I feel like if we have it stated here tonight in our budget discussions, then this isn’t some secret meeting … or some sort of hidden message that’s getting out there to the public …”

Municipal work sessions used to be up close and personal too – according to its JPG history this one is from Jan. 27, just prior to at least one council clerk, among other, terminations.

Referencing a 5% to 6% revenue shortfall estimate some municipalities are working with as a reference point for coming shortfalls, numbers based on the 2008 “Great Recession” experience which Meza observed he thought might be an underestimate of the consequences of the current financial situation, the councilman added, “If it comes in at 6% we’re still going to have a hard time hitting that. And if it goes past that, what’s the alternative?

“And our largest line item that we have is staff salaries and benefits,” Meza observed, adding, “I know I’m going to get a bunch of hate mail for saying that, but that is the cold, hard reality.” Another cold, hard reality, left unstated by an absent public, might be council’s unwillingness to back off a somewhat symbolic tax revenue reduction in the face of what several, including Meza, observed may be a revenue crisis of unprecedented proportions.

With that economic shadow hanging over its FY 2021 budget process, Councilwoman Lori Cockrell suggested future agenda information to help streamline discussion.

“As a general thought about the deficit, when we do come together and discuss these budget things, I was thinking even if we have, I won’t say a ‘hit list’, but like a list of priorities in each section, like if it’s only 4% (shortfall) these are the things we put back in; if it’s 8% then it’s these things, putting them in a priority list from like 1 to 10 … then we don’t each time have to go through re-saying this is important, this isn’t important,” Cockrell observed as budget deadlines loom.

No social distancing here on Feb. 10 prior to the convening of Front Royal Town Council meeting.

As for the existing unfilled Town staff positions, Vice-Mayor Sealock wondered at those vacancies. “Well, let’s look at reality – and Matt, follow what I’m saying very carefully – the personnel, we have four critical positions in this staffing right now that we’re understaffed; that’s got to go forward,” Sealock suggested of filling department head and other top-level positions on a permanent basis.

“There are probably 18 positions that’s been requested but 10 of them will not be filled at this time,” the vice mayor observed, calling on the interim town manager for comment.

“That’s a good point, Mr. Sealock, and that is accurate. We looked at unfilled positions currently – I don’t have the spreadsheet in front of me – I believe we’re carrying about 18, 19 unfilled positions. Of the unfilled positions, we met with department heads and identified the critical hires. So, I think we can possibly get by – and we’ll have this data for you more specifically as we go through this budget process – but Mr. Sealock is not far off,” Tederick reiterated before visiting the above-referenced numbers of existing and potential reductions to the Town’s staff of 177 in the current fiscal year.

“We’re trying to go through this, first by a hiring freeze, which we’ve done. You have to realize also that we’ve taken $3-point-some million from this year’s budget and we’ve presented a budget with $3.1 million in next year’s; so within only a few months we’ve reduced the size of government by $6 million dollars,” Tederick told the town’s elected officials.
General Fund reserve for ‘Relief’

As he closed his “Recommended Options for Local Economic Recovery” work session presentation, Tederick told the council, “Our recommendation at this point is to keep the tax rate as advertised and let us offer the incentives to businesses and individuals through our Unrestricted Fund Balance. Again, in trying to calculate the relief, first of all, this relief would go to all citizens and all businesses, which in normal circumstances I think that’s a great thing; in this circumstance, if the goal of reducing the tax rate was to target businesses that are in need and target citizens who are in need, we feel that we can do that better by a program through the General Fund Balance, as opposed to lowering the tax rate.”

At the end of his “Local Economic Recovery” PowerPoint presentation Tederick noted that as of June 30, 2019, the final day of FY-2019, other than “OPEB Liability” the Town’s Unrestricted General Fund Balance was $2.02 million above the recommended 3-month reserve level. His recommendation was to utilize “up to $1.5 million” of those reserves “to be distributed to local citizens & businesses for relief”.

That empty downtown commercial district street, above; and town shopping center parking lot, below, are definite indicators of a coming Town commercial tax revenue shortfall.

Contacted Tuesday, Town Finance Director B. J. Wilson explained OPED Liability as a State-required estimate of future employee retirement benefits known as Other Post Employment Benefits that do not directly impact a fund balance in any given budget year.

Responding to more questions, Wilson also cited the recommended three-month General Fund Balance Reserve at $3.61 million; with the total Unrestricted General Fund Balance at $9,042,845; with Enterprise Fund Balances added the number rose to $11.9 million.

So, if our calculating on these numbers is correct, the interim town manager’s recommended “Relief” package reserve expenditure of $1.5 million would leave the General Fund Balance total reserves at $4.1 million, about $500,000 above that recommended three-month minimum reserve amount that helps municipalities maintain a good credit rating. But in this uncharted economic territory who knows how long that number might last.

But we don’t want to be apart anymore! – Of course, we do want to be and have those we love, uncontaminated by a disease that has now killed 40,000-plus of over 700,000 Americans known to have been contaminated by COVID-19 since the first case was reported here on Feb. 22, just two months ago.

Listen to the far-ranging work session discussion and presentations, and the special meeting vote and other agenda items in this virtual recording:

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Future look of Front Royal’s Historic Downtown prime work session topic

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In the wake of work session discussion Monday evening, July 6, the Front Royal Town Council reached a five-member consensus, Meza absent, to commit necessary funds from the Community Development Block Grant (CDBG) Program to proceed with construction of a Pavilion building in the Village Commons area anchored by the Town Gazebo and Visitors Center.

At issue is exactly where the money to fill what the staff summary update on the status of the CDBG Downtown revitalization project cited as a $150,000 funding gap will come from. It was noted that the existing CDBG budget has $130,000 committed to the pavilion/indoor restroom project.

The Council discusses the CDBG budget at the July 6th work session. Councilman Jake Meza was absent. Photos and video by Mark Williams, Royal Examiner.

The balance is likely to come from a combination of a minimally discussed “Streetscape” portion of the CDBG project, with additional funding coming out of unused portions of the Façade Grant program. Exactly how much surplus will be left out of the Façade Grant’s $325,000 remains a somewhat unknown variable.

While it was noted that only $13,395 has thus far been spent of that $325,000 façade grant total, staff and project consultants indicated that number is likely to start rising quickly as the 14 active downtown business participants begin submitting bid proposals for their façade improvements. One remotely connected consultant noted that some of those participating businesses have dual façades up for improvement. That variable is likely to bring the number of façade improvement applications close to the 21 or 22 businesses originally participating when funds were being allocated on the federal, state-enabled local economic revitalization grant funding.

Interim Town Manager Matt Tederick told the council that he thought the move to materials only bidding process from the original materials and labor, had saved that aspect of the project. Original bids including labor had come in unexpectedly high, threatening to tank that portion of the project.

Vice-Mayor Bill Sealock reminded his colleagues that a downtown pavilion catering to both tourists and local downtown visitors had been on the Town’s radar for 20 years – “I think we should make that our focus,” Sealock told his colleagues.

Mayor Gene Tewalt agreed, adding that the necessary funds should be located from somewhere within the project or Town assets “to show we’re doing what we’re supposed to be doing.”

Also discussed was a downtown “Mural” aspect of the CDBG revitalization tied to the “Façade” Program. Individual murals were estimated at individual costs of $25,000 to $40,000. Artistic themes, general standards, and qualifications of applicants were discussed.

Christopher Brock, Town Zoning Officer explains the process for applying for a mural/sign permit.

Vice-Mayor Sealock recalled the downtown mural work of the late artist Patricia Windrow as a very positive, if now largely abandoned and painted over, part of downtown’s visual history.

While the future look of downtown and the Historic Downtown Center was a prime topic of Monday’s work session, there was no mention of the future of the Visitors Center operations and staff under the announced Tourism Marketing management of the recently contracted Norfolk LLC “Strategic Solutions by Tricia”. Currently, the Visitors Center continues to be open into FY-2021 with existing staff and management, though for how long no one involved directly seems to know. An online search of “Strategic Solutions by Tricia” indicated a past focus of the newly hired consultant in non-profits fundraising activities – but that is a topic for another day.

Watch the discussion of progress toward the revitalization of Front Royal’s Historic Downtown Business District, as well as other topics including debt service variables on the cost of the I&I (Infiltration & Inflow) Abatement infrastructure improvement to the Town’s stormwater and sewer system mandated by the state; upgrades and replacement of Front Royal Police Department equipment such as body-worn and in-car cameras, the 911 radio system and radio consoles; the coming Town-County Liaison Committee agenda; FRIBA’s (Front Royal Independent Business Alliance) request for the placement of the “LOVE” letters downtown; and an expiring planning commission term in this exclusive Royal Examiner video:

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Tederick contract extended through council’s town manager search

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At its special meeting of June 30th the Front Royal Town Council approved a new contract extending the service of Matt Tederick beyond his previous contract’s end of the fiscal year termination date. The new contract commencing July 1 is on a month to month basis and differs from Tederick’s previous contract in that it is with him as a person, rather than a business entity.

That adjustment led Councilman Jacob Meza to comment prior to the unanimous vote of approval. Meza observed that the previous contract’s structure which did not deduct taxes or include benefits “saved” the Town what he estimated at $50,000. The new contract is at the same monthly rate of $12,500 as Tederick’s previous contract, but notes that the $12,500 “shall be paid net of any applicable withholding or deductions required by Applicable laws and Authorities.”

Without deductions Tederick’s contract equated to $150,000 take-home pay annually. Despite the lost “savings” Meza said he would support the new contractual arrangement.

The new contract observes that Tederick’s tenure will continue “until such time as a new Town Manager is appointed” and the “new Town Manager assumes his/her duties … following a suitable and appropriate transition period for the new Town Manager to familiarize himself/herself with the position …”

Matt Tederick presides as interim mayor during October 2019 meeting. Royal Examiner File Photo

As previously reported, council adjourned to closed session Tuesday evening for a “personnel” matter believed to be the first of two interviews of town manager candidates scheduled this week.

Tederick’s initial interim town manager appointment was approved by a 5-1 vote, Tewalt dissenting, in October 2019, effective November 9, the day after Joe Waltz’s resignation took effect. The October majority council vote to transition Tederick from interim mayor to interim town manager coincided with its vote, also 5-1 Tewalt dissenting, to hire the Damiani & Damiani law firm that shares an Alexandria business address with Tederick, to handle the Town’s civil litigation against the Town-County Economic Development Authority (EDA).

Perhaps ironically, Tuesday’s extension of Tederick’s contract coincided with council’s unanimous approval of a “Reservation of Rights Agreement” concerning its EDA litigation and claim of no liability to compensate the existing EDA for its financing of the Town’s new $9-million police headquarters.

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

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EDA in Focus

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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Tederick likely to continue with Town

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It looks like the Town of Front Royal’s interim manager may get an extension to his employment contract, which expires today, the final day of the Town’s fiscal year.

Town council members will hold a special meeting at 7 PM tonight at the Warren County Government Center, to consider a contract to extend Tederick’s post.

Matthew Tederick began working as the interim town manager on Nov. 9, 2019, after the council approved a contract by a 5-1 vote with Councilman Eugene Tewalt dissenting.

Tederick has earned a $12,500 monthly salary and a $300 monthly car allowance, while working on a contractual basis.  His contract came under public scrutiny when it was learned that the contract stated Tederick “may transfer and assign this Agreement to Manager’s wholly-owned limited liability company (LLC), which transfer and assignment shall not relieve in any manner the personal duties, obligations and responsibilities of Manager.”

Some citizens have questioned whether Tederick should have been classified as an employee, rather than a contractor.  The state corporation commission’s database lists Tederick as the registered agent of a number of LLCs.

A source close to the negotiation indicated that the new contract could name Tederick as an employee, rather than having him continue as a contractor.  If that happens, at the same rate of pay, taxpayers would pony up even more to offset payroll taxes.

According to the IRS website, employers and employees both contribute to FICA taxes, each paying half. Social Security is 12.4% and Medicare is 2.9% for a total of 15.3% as of 2020.  That means that Tederick would be responsible for contributing 7.65% of his salary; the taxpayers would then be on the hook for the remaining 7.65%.

According to a June 29 Town of Front Royal website posting, there will be a second council meeting this week, on July 2, for “the purpose of consideration or interviews of prospective candidates for employment with the Town.”

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Town to vote on agreement to make FRPD debt service payment

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According to an agenda summary distributed to the media for tonight’s June 30th Special Meeting, the Front Royal Town Council is poised to vote to approve an agreement with the Warren County government and the joint Economic Development Authority to make a scheduled July 1st payment on construction of the new Front Royal Police Department headquarters.

Thus far the now $8.7 million debt to the EDA on principal payments has been publicly referred to, without contradiction from town authorities, as “undisputed” with the dispute over that debt revolving around the amount of interest the Town asserts it is obligated to pay based on verbal promises of former EDA Executive Director Jennifer McDonald.

Perhaps appropriately, this June 22 photo of council is without Mayor Tewalt, who has been a lone Town voice against litigation with the EDA amongst his council colleagues. Tewalt has unsuccessfully sought acceptance of the EDA’s offer of ‘good-faith negotiations’ to determine exactly what the EDA owes the Town in misdirected assets.

It is believed the county supervisors and EDA board have discussed stopping covering what they believe is the Town’s “moral obligation” debt on the town police construction project as of the end of Fiscal Year 2020, which is today, June 30. The specter of which entity, the EDA which has been covering the payments on a contracted agreement on bank financing of the project it oversaw for the Town, or the Town itself, which up to now has had an uncontested and implied “moral obligation” to cover that debt upon completion of and receipt of the FRPD headquarters, will suffer the most credit-wise upon non-payment has likely been a HOT TOPIC of conversation behind closed doors of council, the county supervisors who fund EDA operations, and the EDA board as July 1 approaches.

The June 30 council meeting agenda summary states:

“The County of Warren has asked the Town of Front Royal to make a good faith payment for the disputed July 1, 2020 payment for a loan incurred by the Economic Development Authority (EDA) in constructing and financing the construction of the Town of Front Royal Police Department and the Town has agreed, subject to the terms and conditions stated in the Reservation of Rights Agreement. Council is requested to approve the Reservation of Rights Agreement as presented.”

Whose police headquarters is this – the EDA’s or the Town of Front Royal’s? – Is likely to be an early question if Town civil litigation against the EDA reaches trial.

Contacted, Town Administrative Assistant and Acting Town Clerk Tina Pressley explained a copy of that Reservation of Rights Agreement would not be made public until it and the payment have been approved, if they are, by council. However, by the above wording it appears an agreement in principal between the three involved parties has been reached, rather than to continue a tenuous legal gamble on whose credit reputation will suffer the worst if payments stop being made by anyone on Wednesday.

But on exactly what terms that agreement is poised to be reached will remain a mystery until it is, if it is, reached and that consequent July 1 payment made.

Background

As eventually came to light, the FRPD headquarters capital improvement project did not even qualify for the New Market Tax Credit Program (NMTC) 1.5% rate McDonald purportedly told town officials was secured on the police headquarters construction. A phone call or appropriate question to the program’s administrator, Brian Phipps of People Inc. with whom council met several times would have revealed that fact.

Phipps even advised council during late 2017, early 2018 discussions, including at a January 2018 work session, to take a 30-year 2.65% interest rate guaranteed by a private sector bank because the Town was competing with multiple other municipalities for a limited amount of NMTC funds. It was advice also recommended by then Town Manager Joe Waltz and Finance Director B. J. Wilson.

However, led by Jacob Meza’s stated desire to hold out for the chance at nine years of interest-free payments on a long-term NMTC loan, council ignored the advice of its staff and the program administrator. Consequently, council continues to assert in its subsequent civil litigation claiming $20-million-plus in damages against the EDA that the gap in actual versus verbally “promised” interest payments are part of those damages.

A now pandemic masked Jacob Meza held sway over his colleagues in pre-pandemic times in gambling the new FRPD headquarters would qualify for NMTC funding designed for projects creating jobs, rather than just moving them from one place to another. Below, hard to miss that EDA-overseen in-town redevelopment initiative next door to Town Hall.

Despite the overwhelming amount of EDA projects centered inside the town limits on behalf of the town government, council is also claiming it had no oversight responsibilities regarding EDA activities during McDonald’s decade-long term as EDA executive director during which alleged misdirection of EDA and municipal assets occurred.

Tonight’s vote and the content of that Reservation of Rights Agreement may be an indicator of how long council intends to hold the course on that double-edged legal gamble.

The smart money is on “until after the November election” – depending of course, on the results of that election. Several candidates, most notably Bruce Rappaport and Betty Showers, have aimed pointed criticism the current council’s way regarding their actions toward the existing EDA, and the Town’s planned new unilateral EDA.

As he has on more than one occasion, council candidate Bruce Rappaport, at podium June 22, makes a case against the current council’s actions regarding the EDA – both the existing and envisioned new and totally Town-funded one. But council appears committed to a legal gamble that $20-million in civilly awarded assets from the old EDA would help that new start-up project.

It has been noted by public critics of the County Republican Committee-dominated council and recent austerity moves initiated by Interim Town Manager and long-time County Republican Committee official Matt Tederick, aimed at reducing governmental functions, particularly regarding Tourism, that the Town alone will be responsible, not only for debt service incurred by its new EDA, but operational funding as well. Since an agreement several years ago on double taxing of town citizens, the County took over full operational funding responsibility of the existing joint County-Town EDA.

That new EDA operational funding will include an anticipated six-figure executive director’s salary one Town critic, Linda Allen, recently publicly asked council if it might be considering directing the current interim town manager’s way once his six-figure interim manager’s salary is gone. As captured on Royal Examiner’s video of that June 22nd meeting, Tederick reacted with laughter at that notion.

Properly social distanced, the interim town manager and town attorney during June 22 regular council meeting. Tederick was left laughing at the suggestion he was poised for a third council appointment, though without an ‘interim’ attached to it if council’s new EDA gets off the ground.

Speaking of the interim town manager, the other primary agenda item on tonight’s special meeting of council involves extending Tederick’s interim town manager agreement beyond its current termination date of June 30, until a permanent replacement is named. In that regard, council has also scheduled a work session for Thursday evening to adjourn to closed session for town manager interviews. The field appears to have been narrowed down to a few candidates called in for in-person interviews.

And so the wheels of town government turn as Fiscal Year-2021 approaches tomorrow with the calendar’s turn to July and an election just over four months away.

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Local Government

It’s back – The Front Royal Golf Club will remain open for coming year(s)

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Like a Phoenix rising from its own ashes, on Monday, June 29, the VA. Golf LLC management team gathered a four-person majority of the Warren County Board of Supervisors, Archie Fox dissenting, to resurrect the Front Royal Golf Club less than two days before its planned closing. That closing seemed cemented for the July 1st start of the new fiscal year after another four-person county board majority, Tony Carter dissenting, rejected the VA. Golf LLC’s initial management offer six days earlier.

All it took was the “little more skin in the game” County Board Chair Walt Mabe asked for on Tuesday, June 23rd. That skin amounted to a $49,000 turnaround in year one of a three-year initial lease period, followed by a minimum $37,000 turnaround in the years that follow.

Rather than the County paying the largely in-house management team $25,000 per year to try to turn an operation losing somewhere over $110,000 annually in recent years, Va. Golf LLC will pay the County $2,000 a month in the first year, followed by $1,000 per month in subsequent years, plus 5% of the management team’s profits, if there are profits.

I’m growing fond of this perspective of our now-resurrected municipal golf course – maybe I’ll learn to yell ‘Fore’ in my declining athletic years. File Photo/FR Golf Club website

And that Louis Nicholls and Ray Nash expect to be able to turn a profit from an aggressively managed, member and guest-friendly golf and clubhouse-based recreational facility along the banks of the Shenandoah River, seems apparent. And it is a belief shared by past members, including a recent Royal Examiner Letter to the Editor writer with membership and golf course work experience, skeptical of the County’s ability or interest in the successful management of a municipal golf club.

Louis Nicholls and Ray Nash expect to be able to turn a profit from an aggressively managed, member and guest-friendly golf and clubhouse-based recreational facility. Royal Examiner photo and video by Mark Williams.

How long that municipal golf club-based management lease will run depends on a variety of variables. The base term is a three-year lease with three, three-year renewal options at the management team’s discretion for a potential 12-years at the helm of what had become a money-pit for a county management team that, as noted above, some club members in recent years felt was unequipped, or uninterested in the successful management of the course on land gifted to this community’s citizens for golf and other recreational opportunities 82 years ago.

In making the motion to accept the proposal and authorize Chairman Mabe to sign a contract on behalf of the County to facilitate operations not ceasing between Tuesday and Wednesday, Cheryl Cullers told Nicholls and Nash that unlike the earlier rejection of a $100,000 management proposal the County would have had to pay to keep the course open, she had felt the passion of the VA. Golf LLC team and had felt bad about its rejection on a fiscal hard line that the County would pour no more money into the support of the course.

“You’re on my prayer list,” Culler said for their success.

“We’re on our prayer list too,” Nicholls said of the new offer that promises payment to the county regardless of when the course turns profitable for VA. Golf LLC.

Only the Fork District’s Fox decided to look this “gift horse in the mouth” saying he preferred an extra $500 cash added to the $1,000 per month payments as opposed to 5% of profits over subsequent years of the lease.

Supervisor Carter countered that 5% of profits could reflect additional income if the course became profitable in the coming years. And he told Fox, VA. Golf LLC would also be paying BPOL and sales taxes to the county on its operations, again adding income the County would not otherwise have.

Not enough, want more cash, not anticipated profits, Archie Fox told the management team.

However, Fox remained negative to the proposal, casting the lone dissenting vote.

There was no public comment, and since the special meeting was for reconsideration of a counteroffer made in the wake of last Tuesday’s public hearing and rejection of their original proposal, no public hearing at Monday’s 35-minute meeting.

See the VA. Golf LLC presentation, their counter to Fox’s arguments, and the board discussion and vote in this exclusive Royal Examiner video:

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