Update: EDA Board grills Tederick on Town’s intent toward this EDA

Chairman Ed Daley discusses issues with Interim Town Manger Matt Tederick. Photo and video by Mark Williams, Royal Examiner.

The gloves came off at Friday morning’s Front Royal-Warren County Economic Development Authority meeting. A hint of things to come was alluded to at the 8 a.m. meeting’s outset when Asset Committee Chairman Greg Harold made a motion to add a statement on the status of the Front Royal Police Department construction project and the town government. Harold’s agenda addition passed unanimously.

As Interim Town Manager Matt Tederick completed his report on Town business, EDA Board of Directors Vice Chairman Jeff Browne questioned Tederick on several matters related to the status of negotiations with ITFederal on a drainage line through that property; and the Town’s intent as it builds a “war chest” to fund its civil suit against the EDA and discusses creation of a second EDA while the Town-County one continues to exist.

See that exchange and other EDA board member questions to Interim Town Manager Tederick in this exclusive Royal Examiner video:

In response to Browne’s opening question on the Town-ITFederal drainage dispute Tederick reasserted the Town’s stance that it is the owner’s responsibility to install the drainage system across its property, but had no update on that impasse with Tran.

Then Browne asked the interim mayor about his sense of the town council’s attitude in its recent decision to divert scheduled debt service payments to the EDA totaling $282,000 into “the Town’s legal war chest” for its civil suit against the EDA. The Town has filed litigation seeking recovery of “up to $15 million” in allegedly misdirected or promised Town assets from the EDA. The EDA has a civil action against 14 people and business entities for recovery of $21.3 million in misdirected EDA assets at this point.

Browne pointed out that initial statements from Town Attorney Doug Napier at the time the Town suit was filed indicated it was done as a precautionary measure against Statute of Limitations running out on unknown and still unspecified Town assets involved in the EDA financial scandal.

“Do you have a sense where you all are going with all of this?” Browne asked the interim town manager about the Town’s evolving and seemingly more contentious legal stance against the EDA.

“I do have a sense but I’ll have to refer you to our counsel, related to that,” Tederick replied, without elaborating if he was referring to the town attorney or the Alexandria law firm of Damiani & Damiani council authorized payments of up to $200,000 in legal fees to related to its suit against the EDA on November 25. Council also approved $45,000 of those diverted EDA debt service payments to Mitchell & Company for auditing services related to its EDA litigation.

“How do town residents feel about paying double legal fees when the EDA is willing to sit down and figure out the differences with you?” Browne continued – later elaborating that as dual Town and County citizens, town residents’ tax payments to the County are helping fund County financial support of EDA legal expenses, including in defense of the Town civil action against it.

“I can’t speak for town citizens,” Tederick replied.

About this second EDA

“Then finally on another issue, could you explain the reasoning behind your attempt to create a second economic development authority?” Browne asked, this time eliciting a more detailed response.

“The town council I believe, is of the belief that the EDA is going to be insolvent in February or March based on public comments of the EDA members and Mr. Parsons has made based on financial records. So, we want to be in a position that in the event of the … EDA does become insolvent, we want to be able to have an economic development authority to promote business and to get appropriate financing.

“So, there’s been no decision by the Town to do that,” Tederick added, then describing the process chosen on advice of the town attorney to lobby the State General Assembly for a Code change permitting the Town of Front Royal alone, to be able to create a second EDA while the existing one it created with the Warren County Board of Supervisors in the 1960’s, presumably will still exist.
“A strong argument can be made that until all the debts and bonds of the existing EDA are paid, the existing EDA must remain in existence,” Napier wrote in his agenda summary of December 2.

“It’s not uncommon, there are a number of towns in the Shenandoah Valley that have Economic Development Authorities,” Tederick continued of the second EDA initiative, adding, “So there hasn’t been a firm decision that we actually are going to get one.”

“How many towns have two economic development authorities?” Browne queried Tederick.

“I don’t think any towns have two, no sir, and neither is the Town of Front Royal going to have two – we’re going to have one,” Tederick asserted.

With the town attorney’s recommendation that the Town maintain its founding co-membership in the existing EDA due to the potential of receipt of half of EDA assets if and when it is dissolved, we asked Tederick about his assertion of only one EDA as he was leaving following his presentation and Q and A with the EDA board.

The interim town manager said he meant the Town would have only one solely-created “Town EDA”, not that it wouldn’t still have its membership in the existing Town-County EDA.

Harold then asked Tederick if the Town was in communications with ITFederal and Tran regarding the drainage impasse.

“I know they’re not communicating with me,” Tederick said. However, he added that he was aware of a recent communication with a staff member whose identity he did not know, regarding whether the Town would contribute to the drainage pipe costs.

“I can find out, I’ll go back and ask,” Tederick told EDA officials.

“I think it would be very helpful, sir, if correspondence between the Town and ITFederal on this thing, if we could be included in that … as part of our negotiations with ITFederal … so we can tell if he’s telling the Town one thing and telling us another, just kind of playing the two off there,” EDA Board Chairman Ed Daley told Tederick of re-opening lines of communication the Town seems to have been pulling back from as it strikes a more aggressive litigious stance.

Afton Inn status

The conversation then concluded as the EDA board and Tederick discussed the physical and ownership status of the Afton Inn. A scheduled post closed meeting two vote on terminating the lease/purchase agreement between the EDA and Afton Inn developer 2 East Main Street LLC was tabled to the January EDA Board meeting.

Following the meeting’s adjournment, EDA Executive Director Doug Parsons said he and the board were holding out hope the redevelopment project, derailed by the civil litigation and the uncertain EDA financial situation, might still be saved.

The developer has not been implicated in any of the alleged financial misdeeds; however, it is alleged that McDonald used the Afton Project to move EDA funds to her personal benefit, including payment of credit card debts and attorney fees.

Following the old Town Hall/Afton swap, circa 2014-ish, the Town transferred ownership of the dilapidated 151-year-old Afton Inn building to the EDA for marketing. Friday there was brief discussion of the process of transferring ownership back to the Town should the EDA/2 East Main redevelopment partnership be terminated.