EDA director addresses Town lawsuit amendments & dissolution threats

EDA Executive Director Doug Parsons, upper left, on the job at recent EDA board meeting. Royal Examiner File Photos/Roger Bianchini

Royal Examiner approached new Front Royal-Warren County Economic Development Authority Executive Director Doug Parsons about his reaction to the Town of Front Royal’s recently-amended lawsuit that increased the Town’s claim for recoverable assets from the EDA to a total of $15 million from the originally-filed $3 million amount.

“It’s really out of my hands as it relates to the lawsuit or what the Town wants to do. I understand that they want to protect their interests and want to recover the money that the taxpayers of Front Royal put out for expenses or debt service to the EDA; and I understand there were overpayments there … I think the exact figure is something that nobody knows right now. It’s just going to take some further analysis to really drill down and see what that number is. I don’t know how much it is – I don’t think it’s $15 million, I really don’t,” Parsons said with an optimistic laugh.

We conveyed Napier’s explanation that the $15-million was a high-end estimate on, not only the debt service overpayments discovered last May by Town Finance Director B. J. Wilson, but other direct and even indirect losses the town government believes it incurred as a result of the former executive director’s actions and misrepresentations to town officials.

“I guess what I’m hoping is that whether it’s with the Cherry Bekaert papers or if it’s through further analysis by the Town and us and our accountants, we can arrive at what that number truly is. And whatever it is, I’ll certainly work to try to put the Development Authority in a position where we can pay the Town back. I don’t dispute for a second that there’s been some amount of overpayments. I want to make things right with the Town, and the County,” Parsons continued of debts incurred either involuntarily or voluntarily by the involved municipalities.

In the County’s case that voluntary debt includes the fronting of over a million dollars of budget contingency funds to the EDA to cover unanticipated operational costs related to the financial fraud investigation.*

At last count those costs include $600,000 to the investigative public accounting firm Cherry Bekaert for that investigation resulting in 2900 pages of “working papers” and $500,000 to the Sands Anderson law firm for associated legal expenses stemming from that fraud investigation.

Following County approval of those expenditures, the EDA board passed resolutions of intent to pay the County back when in a position to do so.

“I think the best way forward is for there to be a quantitative analysis, and it may take some time, to arrive at what the real figure is to the best of our abilities. And I want to do that and I want to make things right. I want to get the Town paid back for what we truly owe them; and the same with the County whether its Cherry Bekaert expenses or Sands Anderson.

“And we just need to have the opportunity to keep working to turn the boat around and get on a path where we can start making those payments. And we’re going to need to be able to operate long enough to do that,” Parson observed.

Perhaps ironically, that observation came the day before the July 18 Town-County Liaison Meeting during which Interim Front Royal Mayor Matt Tederick broached the possibility of the town government unilaterally dissolving the EDA and taking half of its assets in a 50/50 split with the County.

With discussion of “Dissolution of the EDA” a Tederick/council-added agenda topic of the next day liaison committee discussion we asked Parsons if he was considering attendance as an EDA observer. Tederick has mentioned publicly that he had a good one-on-one discussion with Parsons about the EDA situation and believes the new executive director has the right intentions on correcting EDA operations.

Parsons is hoping for the opportunity to correct EDA operations, not oversee a death sentence for past mistakes of judgment and trust.

“I don’t know if I’m going to be there or not,” Parsons replied after a pause and sigh, adding, “I mean if they need me there, that’s fine. If dissolution of the EDA is something the Town wants to explore that’s not in my control. I’m really trying to stay focused on doing the job that I was hired to do. And a lot of this other stuff I don’t have any control over. So if I sit around and fret about it then it’s distracting me from the job.

“I’m hoping this is not an insurmountable problem and that we’ll be able to be allowed to continue to operate. It’s hard to do when you’re in the middle of it, but I’m hoping that people can not throw the baby out with the bathwater.

“And every community deserves to have a properly-functioning EDA to try to bring in more jobs, to try to bring in more capital investment because the more business you bring in then you can have a higher percentage of your tax base being paid by businesses and that alleviates the burden on citizens.

“And if I get a chance to do my job and am able to do my job and bring in more business or help existing businesses expand, maybe we can get to a point where we and the County can balance their budget; and you don’t have to talk about tax increases on the residents – that kind of thing,” Parsons said of life in the best of all possible EDA worlds.

But back in the world of Front Royal and Warren County economic development the new EDA executive director observed, “I’ve looked at the code a little bit, and I think from my discussions with other attorneys and as I read the code, you can’t dissolve an EDA or an IDA until all their debt is paid – we’re pretty far from that,” Parsons observed with a smile.

As for EDA debt versus assets, we posed one last question to Parsons – whether from his experience at the state level with the Virginia Economic Development Partnership (VEDP), the Front Royal-Warren County EDA owns an unusual amount of property?

“That is correct. It’s definitely not typical for an EDA to own the types of properties, like the Stokes Market, that is very atypical for an EDA to own – it’s not our purpose. Now the Baugh Drive building, that is in the tin ring – that is exactly the kind of building we should own and market. That is a 76,800 square-foot building – think of the number of jobs and the capital investment that could be there to provide revenue for the county and jobs, and mostly high-paying jobs. That’s exactly the kind of building, kind of asset that we should be investing our time in marketing.

“But the 506, 514 East Main Street properties – that’s just outside of the realm of what an EDA typically does for sure,” Parsons said of the Stokes/Main Street Market and nearby residential apartment buildings.

Of another, at this point former EDA property in the wake of the inexplicable November 28, 2018 $10 giveaway of a parcel it has since written off as a $600,000-plus loss in the EDA civil suit, Parsons added, “The workforce housing, in my opinion and I’m not speaking for the board here, but I don’t think that housing – period, is something that an EDA should be involved in. I think there are other entities in the region that are more properly geared to pursue those types of developments.

“And I think workforce housing is a crucial venture to pursue, I think it’s needed – there’s a lot of areas, especially in Northern Virginia where there’s not affordable housing for middle class, working class people – and there needs to be work done there. I just don’t think it’s on us to do it,” Parsons said of EDA involvement in housing and residential rentals.

And on that note Parsons exited to a scheduled meeting in the EDA board room related to economic development in this community.

* FOOTNOTE: Front Royal is off the hook on EDA operational funding because the County took over the Town’s portion of EDA operational funding several years ago as part of the ongoing North Corridor Agreement Town central utility compensation discussion.

Let’s see, how was all this commercial and industrial development in the County’s North Corridor facilitated? Oh that’s RIGHT, with Town central water-sewer utility extended outside town limits without annexation. That was a good idea, right …?