“Can we sing Hallelujah now,” Economic Development Authority Board member Jorie Martin exuded following 5-0 roll call approval (Gordon absent) of a motion by Greg Harold, seconded by Martin, authorizing the sale of the Afton Inn property to developer 2 East Main LLC at a price of $325,000. The sale is to be accomplished upon signing of the Deed of Sale and necessary Title company documents “at the earliest possible time”.
The landmark achievement, in the works now well into last year if not longer as the EDA and Town negotiated some rocky legal terrain on a variety of fronts, was accomplished Friday afternoon following an approximate 45-minute Special Meeting Closed Session of the EDA Board of Directors convened shortly after 2 p.m.
Royal Examiner contacted EDA Board Chairman Jeff Browne, who along with Board Secretary Greg Harold will sign the Afton Deed of Sale for the EDA, shortly after the 3:05 p.m. adjournment of the February 12 Special Meeting. “Is this a done deal, is the Town okay with this,” we asked Browne four days after an occasionally tense Monday night meeting exchange with Front Royal Mayor Chris Holloway on the dynamics of a potential Afton sale.
Yes, the EDA board chairman replied, explaining that subsequent communications with the Town this week enabled Friday’s action to proceed on the most recent extended 2 East Main LLC sales contract deadline date of February 12.
“To me this is symbolic that we’re working together to get some things done and getting the Afton Inn resolved is a good sign. And hopefully we’ll move on and get other things resolved as well,” Browne said of renewed EDA-Town communications.
He noted that the EDA had received a letter from the Town indicating it would not dispute the EDA’s title claim to the Afton property ownership. And while there was some language in that message found somewhat “cloudy” by the Sterling-based title company or EDA counsel, a subsequent letter signed by Mayor Holloway dated February 12 promised that language would be clarified to remove any perceived ambiguity.
Browne pointed out the sales price is the originally discussed one that has fluctuated somewhat up and down over the months the sale was on hold due to variables involving both the EDA’s financial scandal civil litigation and Town questions over its ownership interest in the property.
As Browne noted during his February 8 report to the Front Royal Town Council, 2 East Main LLC plans to begin its massive renovation project within a year and hopes to complete the $2-million project within two years. See more detail on those renovation plans in Royal Examiner’s December 29 story “From Town Eyesore to Downtown Anchor: Reimagining the Afton Inn”
Also following Friday’s closed session, the EDA approved a short-term lease proposal on part of the Baugh Drive warehouse space with WOW Airlines. An initial three-month lease will be offered on 4400 square feet (s.f.) of warehouse space and 860 s.f. of office space, which includes a $1,000 security deposit and $900 utility payment, with month-to-month renewal options after the initial three-month period.
WOW Airlines would be the fourth short-term lease tenant in the sprawling Baugh Drive warehouse that the EDA eventually hopes to sell, possibly in relation to its connection to Parallel LLC’s bid to become the region’s medical marijuana distributor.
‘Ghosts of EDA Loans Past’ come back to haunt county supervisors
The most interesting part of Tuesday evening’s Warren County Board of Supervisors meeting was likely behind closed doors after the board adjourned to Closed/Executive Session for a legal-based answer to North River Supervisor Delores Oates question as to what benefit to the County and its taxpayers there was in approval of a Resolution admitting a “moral obligation” to continue to pay the debt service on bank loans made by the EDA during its developing financial scandal, circa 2016 or so. There was one of three loans at issue of particular interest – the $10-million-dollar loan to Truc “Curt” Tran’s ITFederal company poised to jumpstart commercial redevelopment at the 149-acre portion of the former Avtex Superfund site known as the Royal Phoenix Business Park.
Of particular interest, because the “moral obligation” for that loan was initially believed covered by the Town of Front Royal, whose elected officials agreed to provide a $10-million-dollar “bridge loan” requested by then EDA Executive Director Jennifer McDonald to indicate to First Bank and Trust that “the community” stood behind the loan and proposed project it supported. That request for and Town show of financial support for the ITFed project came despite the fact the company showed virtually no assets other than the three acres at the Royal Phoenix/Avtex site valued at slightly over $2-million-dollars that was “gifted” to the company by the EDA behind closed doors for one dollar.
A clue to what the county supervisors heard over about 15 minutes in Closed Session may have been offered by the board’s action out of it. After some hesitancy in response to the Chair’s call for a motion on the Resolution, Oates’ motion for approval of the “EDA First Bank and Trust Support Agreement”, seconded by Walt Mabe, passed by a unanimous roll call vote. The vote commits the County to continue to absorb those “moral obligation” payments through the Fiscal Year 2021-22 at an estimated cost of $214,000.
In open session, responding to questions about the Resolution in support of the “EDA First Bank and Trust Support Agreement”, County Administrator Ed Daley mentioned consolidation of three loans, including the above-mentioned ITFederal loan (at $9,551,500), as well as a First Bank and Trust Line of Credit ($8,691,600), and a First Bank of Strasburg loan ($3,450,000). Contacted later, Daley cited one condition that would bring the EDA’s payments to the bank on the ITFederal loan in line with what ITFederal pays the EDA monthly at about $42,000. Before the EDA payments fluctuated to more or less than the ITFed payments, sometimes as much as $7,000 a month more.
Despite the commitment to an estimated $214,000 in payments through this fiscal year, the board’s unanimous vote in support of its moral obligation payments likely reflects negative consequences were the County to bail on covering an EDA debt mid-fiscal year. But again, the agreement is only to the end of the current fiscal year, June 30, 2022. What might the future of “moral obligations” related to the “Ghost of EDA Loans Past” bring in FY-2022-23? – Stay tuned for another seasonal episode of “A Front Royal-Warren County EDA Carol”.
Thermal Shelter bathrooms
County Administrator Daley was also prominent in responding to another matter raised by three speakers during Public Comments about things, not on the meeting agenda. That was the elimination of two bathrooms in the Health and Human Services Complex at the old 15th Street middle school utilized by the County and involved churches and civic organizations to house the community’s homeless indoors at night during the winter. Opening that discussion was First Baptist Church Pastor Christy McMillin-Goodwin, followed by Aneita Bryant and Jim Bunce.
That trio said an alternate plan for mobile outdoor restrooms was unadvisable due to security and additional personnel to monitor out-of-building night trips, as well as potential severe weather issues. Noting a replacement plan that would not have new indoor facilities in place in time for this winter’s thermal shelter setup, these speakers wondered how the removal plan had been initiated without notice to those involved in helping the County operate the thermal shelter. Bryant suggested allowing access to the next closest indoor facilities.
In responding, Daley said he had been at point for the County in initiating the bathroom removal due to failing pipes that caused toilet backup issues. He said he had envisioned a much quicker turnaround in replacing the removed indoor facilities in that section of the building than ended up being the case. He promised to work proactively with those involved to see that an adequate alternate overnight option was available when the thermal shelter opens as winter arrives.
Also Tuesday following public hearings, the board unanimously approved three Conditional Use Permit applications, two for short-term tourist rentals and one for a private use campground. Following application summaries by Planning Department Deputy Director Matt Wendling the first two CUP applications, Charles and Lou Ann Dotson’s for the Private Use Campground on their property on Burma Road in the Man-Da-Lay Subdivision; and Jacob W. Lott Jr. and Sandra J. Kiepfer for a short-term tourist rental on their 1.6-acre lot on Little Indian Road in the Blue Mountain Subdivision in Linden went to a vote with no public hearing speakers. Wendling did note that a letter from the chairman of the Blue Mountain Property Owners Association had been received, expressing “no problem” with Lott and Kiepfer’s short-term tourist rental application.
Up last were Nicole and Sean McMinn with a short-term tourist rental permit application for their 2.42-acre property on Sagar Drive in the Highland Estates Subdivision in the Fork District. Again, there were no public speakers after the applicants responded to the board chair’s offer to summarize their request. The D.C.-based couple told the board they had run into little opposition from neighbors, and what opposition there had been from neighbors was not from those closest, but with property over a thousand feet from theirs.
And while there were no public speakers, the McMinns noted a number of letters to the board from supporters of their short-term tourist rental CUP application, which they asked to be read into the meeting record. Board Clerk Emily Ciarrocchi then read nine letters of support, including one with “25 to 30” signatures. Several of the letters, including one from the owner of the Downriver Canoe Company, noted positive impacts on tourism-related businesses from short-term renters. One letter noted, “They come; they spend; they leave”.
The board then made its final unanimous vote of approval on a motion by Archie Fox in whose district the applicant’s property lies, seconded by Walt Mabe.
Following that vote, Happy Creek Supervisor Tony Carter noted a “Bless you” included in one of the letters read by the clerk that was well-timed to a sneeze by someone present in the government center meeting room.
In fact, facing a future out of the public eye politically – Carter did not file to be on the ballot for reelection to his Happy Creek seat in November – Carter appeared at times Tuesday to be auditioning for Comedy Club spots during his member report and at various other times during the meeting. In fact, his coming local election, Halloween costume advice during his member report led three of his four colleagues to decline to try and “follow that act”.
See all the fun, business, and other public perspectives, including opening Public Comments speaker Michael Williams question as to whether a recent church-sponsored candidates forum in which the moderator was shown prior to the forum to have contributed to one church-associated candidate’s campaign could threaten that church’s tax-exempt status on U.S. Constitutional separation of church and state guidelines, in the County video:
EDA gets McDonald company property as part of settlement agreement
On Wednesday, October 20, Warren County Economic Development Authority Board of Directors Chairman Jeff Browne verified the EDA’s acquisition of the 41-acre “Happy Creek Road” parcel owned by former EDA Executive Director Jennifer McDonald’s Moveon8 real estate LLC. Acquisition of the undeveloped property assessed at just over a million dollars according to county court records is part of the $9-million-dollar no-fault settlement agreement reached between the EDA, McDonald, and the Harrisonburg Bankruptcy Court handling McDonald’s 2020 bankruptcy filing. The EDA will now be able to market the property as a developable EDA asset. It is located near the intersection of Happy Creek Road and Leach Run Parkway.
Browne said that in addition to receiving full value on the Happy Creek parcel, the EDA was in line to receive a percentage of the sale price of other McDonald assets distributed through the bankruptcy court proceeding. Exactly how close those percentages might get the EDA to the $9-million-dollar settlement figure remains to be seen. It was not immediately clear as to whether the EDA will have an outright full value claim to any other McDonald-held properties or assets.
McDonald is the central figure in the EDA financial scandal that began unravelling in mid-to-late 2018. She resigned in December 2018 under mounting pressure from her board of directors. She has been accused in civil and criminal court of utilizing her EDA position to misdirect EDA assets to her and others personal benefit. Western District of Virginia federal authorities have taken over the criminal side of the EDA case after a state special prosecutor’s office in Harrisonburg dropped criminal charges against McDonald and as many as 23 co-defendants due to speedy trial concerns as it wrestled with the volume of evidentiary material – estimated at 800,000 to over a million pages at the time. With charges against some defendants originating with the county commonwealth attorney’s office that initially handled the criminal investigation during Brian Madden’s tenure heading the department, failure to meet speedy trial timelines could have led to defense motions for dismissal of criminal charges against the defendants.
On August 31, 2021, federal prosecutors made their initial move, handing down a 34-count indictment against McDonald. Of those 34 counts, 16 were for money laundering, 10 for bank fraud, 7 for wire fraud, and 1 count of aggravated identity theft regarding someone identified as “T.T.” – ITFederal principal Truc Tran perhaps?
EDA completes audits for 2018 and 2019; 2020 audit is next
The Board of Directors of the Front Royal and Warren County Economic Development Authority accepted its audited financial statements for fiscal years 2018 and 2019, today, October 5, 2021. The audit of the financial statements was conducted by the firm of Brown Edwards, CPAs of Harrisonburg, VA.
“We have received the final outside audits conducted for 2018 and 2019,” said EDA Board Chairman Jeff Browne. “This was a huge effort on the part of Brown Edwards, and they have done very good work in challenging circumstances. Getting these two financial audits completed is a major step forward in putting the EDA’s past difficulties behind us. Now we can better focus on economic development issues to benefit the community.”
“The auditors’ letter points to three areas for improvement of internal controls,” Browne said. “It was important to make each improvement recommended by the CPAs, and we have done just that. The Warren County staff now administer the check-writing duties, collection of rents, and have layers of approvals for expenses within EDA and the County administration that were not there three years ago.”
The audited financial statements show that, at the end of the fiscal year 2019, the EDA’s total net assets were $38,036,737, and its net liabilities were $44,575,435, resulting in a deficit net position of $6,538,698. The EDA will work with Warren County’s auditors starting with the fiscal year 2020, which audit can now be undertaken.
The EDA Board of Directors will have their next regular monthly board meeting via Zoom on Friday, October 29, 2021, at 9 a.m.
EDA reminds rental tenants, Small Business Loan Program clients to now send payments to WCGC
Starting October 1, 2021, the Warren County Finance Department will take over and manage payments made to the EDA for rents and the Small Business Loan Program (RBEL and IRP). The EDA will no longer be accepting payments at their office or office address.
Please continue to make your check or money order to the EDA. You must hand-carry or send your payments to:
Warren County Government
ATTN: Finance Department
220 N. Commerce Ave.
Front Royal, VA 22630
Any payments sent to the EDA will be returned. As a result, you may incur fees for late payment. We appreciate your cooperation. Thank you for your attention to this matter.
EDA briefed on structural and legal options in closed session; gets open session updates on committee work during transition phases
The EDA Board of Directors met Friday, September 24, for their regular monthly meeting. The Board went into closed session for approximately 90 minutes to discuss transition, personnel, 2018- 2019 draft audits, loan restructuring, and disposition of property. The Board returned to open session at approximately 10:20 a.m. Jeff Browne, EDA Chair, opened the session with an overview of the transition. Browne asked each board member to report on their assigned transition project.
Search Committee-Transition: Dr. Tom Patteson, reported the committee met and reviewed applications. Three applications were submitted to the county administrator. The county and EDA will work together in selecting replacements for the Administrative Assistant and Executive Director.
Finance Committee-Transition: Jim Wolfe reported the “numbers” on the 2108 and 2019 audits are final. Jim Wolfe stated the management letter will be revised and recommended a special meeting for next week to finalize and accept the audits for 2018 and 2019. The Board agreed and the date of the meeting will be announced. Mr. Wolfe will also be meeting with the finance personnel at the county in the next several weeks.
Marketing Committee-Transition: Scott Jenkins, Chair reported the 38-page PowerPoint presentation is complete. The marketing material can be tailored to specific clients. The marketing is targeted on the Core Industries: Advance Manufacturing, Transportation and Logistics, Information Technologies, and Food Processing. Scott reviewed documents and key data. The marketing material is organized and stored on the EDA network. The September Marketing Committee report included other updates and visions including Small Business opportunities, focus on the Strategic Plan, and marketing opportunities with VEDP, Site Selector Guild, and Trade shows in 2022.
Administration Committee-Transition: Jorie Martin reported Gretchen Henderson prepared an Operation Manual for future reference. The manual is detailed in all the operations of the office including resources to use. The new administrative assistant as well as the EDA Board are well prepared to transition smoothly. Mrs. Martin reported The EDA now has the capability to update portions of the website in-house. This week a meeting section was added so the public can go to the site and see upcoming meetings.
Asset Committee: Greg Harold reported the transition and updates on the assets of the EDA were complete. Doug Parsons worked closely to make sure all projects are up to date.
Greg Harold presented the Project Management – Stage-Gate: The Stage-Gate is a comprehensive document standardizing the process for disposition of property. The document will be reviewed and discussed at length at the October board meeting.
Motions coming out of Closed Session: The Board approved the technical revisions to the EDA By-Laws adopted at the August meeting. The Board approved the Board Chair, and Secretary to sign documents for the restructuring of the EDA debt with First Bank and Trust. All documents will be reviewed by legal counsel.
Other items that the Board of Directors addressed included an expression of gratitude for all the work done by Executive Director, Doug Parsons. Jeff Browne expressed and the boards’ appreciation for all the hard work and effort to bring the EDA where it is today. Through Doug’s efforts, the EDA has sold property, expanded business, and brought new business to the town and county.
The next monthly EDA Board Meeting is scheduled for October 22, 2021.
County moves toward restructured EDA staffing in hopes of restored municipal cooperation – 6 CUPs approved, 5 for short-term tourist rentals
At its meeting of Tuesday evening, September 21st, the Warren County Board of Supervisors made the first official move toward an altered structure of its, and the Town’s, Economic Development Authority futures. That move was unanimous 5-0 approval, on a motion by Delores Oates, seconded by Walt Mabe, of County Administrator Ed Daley’s presentation of a “Request to Create a Warren County Office of Economic Development”. As reported in our recent story, County work session takes unexpected turn on EDA front – ‘Reunited’ operational option broached, the supervisors elected to have Daley forwarded an idea originally slated for Closed Session discussion at a September 14 work session, in open session that day. That idea is to have an Economic Development Director’s staff position under the municipal government umbrella, rather than as a staff position hired by the board of an independent Economic Development Authority (EDA), albeit an EDA board appointed by the municipal government or governments that created it.
As we understand it from subsequent conversations with Daley following last week’s supervisors’ work session, that in-house EDA director’s position would work in the best interest of both the county’s municipal governments, networking what it appears at this point will continue to evolve into two unilateral Town and County EDAs. Now theoretically, both the existing WC EDA and FREDA – the Front Royal EDA that is in the interview stage of establishing a board of directors – could create their own independent Offices of Economic Development with their own executive directors. But the impetus after last Thursday’s resurrected Town-County Liaison Committee meeting appears to be to work together to select an executive director who will work to the mutual benefit of both municipalities while networking with two EDA Boards of Directors.
Confusing? Perhaps – but it would cut payment of the six-figure salary range position in half if both municipalities could agree on the concept and a person to fill that conceptual central administrative position. For with a statewide trend toward regional EDA cooperation in a highly competitive economic development environment, what future would this community’s economic development have with dueling EDAs competing, not only with other regional governments’ economic development structures but with each other’s, particularly when the WC EDA has control of significant portions of economic development properties inside the town limits?
The answer to that question has, perhaps, already been given in the pending October 1st departure of WC EDA Executive Director Doug Parsons, to a county directly to our east where as one local observed upon hearing the news, “Warrenton isn’t suing Fauquier County” (or perhaps more accurately, its EDA).
And a move toward “us and us” from “us versus them” in County-Town relations was a reoccurring theme for several supervisors involved in last week’s first Liaison Committee meeting since January. Both Board Chair Cheryl Cullers and Delores Oates commented on the positive feeling they carried out of that meeting that the deteriorated relationship featuring hostile litigation involving the Town and existing WC EDA, and canceled face-to-face meetings of elected officials on matters of mutual interest, might be turning a corner. Of course, as the third county board member at that Liaison Committee meeting, Walt Mabe, wondered during it: Why can’t we return to one, re-tooled EDA working to both the County’s and Town’s benefit, with one executive director not alleged to have had their hands in both municipalities’ economic development pockets?
And in a loosely related item, as part of the September 24th WC EDA monthly board meeting, departing Executive Director Doug Parsons’ last, the agenda includes the information that the long-awaited 2018 and 2019 EDA audits have been completed by the contracted auditing company and are awaiting EDA Board approval. Stay tuned for more developments on the auditing front. – Maybe the completed audits could even establish exactly how much of whose money went where and is owed to who by whom, negating the necessity for the continued dueling Town-WC EDA civil litigations. As previously reported, the sitting council ignored then-Mayor Gene Tewalt’s 2019 advice to accept the offer of the WC EDA to sit down with accountants rather than attorneys to follow the money to establish exactly who was owed what on the back end of the EDA’s now $62-million-dollar financial scandal.
But off that “movie script”, in other business the supervisors approved six Conditional Use Permit (CUP) requests Tuesday, five for Short-Term Tourist Rentals, and one for alterations to a Kennel Permit. See all these discussions, public comments, and votes in the County video; and see the meeting agenda cover page with the full list of CUP application public hearings linked here: