EDA meets, goes into closed session and tours properties

Following a 25 minute closed session discussion of legal matters including loans, accounting, debt service and matters involving First Bank & Trust the Front Royal-Warren County Economic Development Board of Directors made no announcements regarding any of those matters at a Special Meeting called for Friday morning, October 11.

The EDA Board met in closed session the previous day in what was termed an Emergency Finance Committee Meeting. A number of First Bank & Trust officials from Abington were present for the meeting. First Bank & Trust is the holder of the $10 million EDA loan to ITFederal that is part of the $21.3 million in assets the EDA is seeking recovery of in its civil litigation. As previously noted by Royal Examiner, including in yesterday’s Opinion piece “County, EDA officials cited for failed oversight – why not the Town?” EDA officials say the ITFederal loan was acquired “under false pretenses”.

While there were no announcements forthcoming from either closed session, in open session near the end of Friday’s meeting Tom Patteson did announce his resignation as Treasurer and member of the Finance Committee, effective at the end of October. Patteson noted he is not resigning from the EDA board.

The EDA board, minus absent Mark Baker, views map locations of various properties it owns in the county, inside and out of the town limits. Royal Examiner Photos/Roger Bianchini. Video by Mark Williams, Royal Examiner.

Following Patteson’s announcement of his pull back on official duties the board convened an Asset Committee meeting during which EDA Administrative Assistant Gretchen Henderson did a power point presentation locating EDA properties, including some small ones along Leach Run Parkway she noted she had discovered by accident during a search of the County Global Imaging site <WarrenGIS.org>.

The global imaging presentation on the location of EDA properties served as a prelude to a tour of some of those properties by the board following adjournment of meeting. Properties visited included the 426 Baugh Drive warehouse, the 404 Fairgrounds Road office building, and vacant Happy Creek Technology Park properties off Shenandoah Shores Road.

Moving through a lingering early morning fog, EDA board members and staff begin a property tour close to home in the Kendrick Lane office complex.

During a brief open session at the outset of Friday’s special meeting the EDA board authorized closing of one of its bank accounts with First Bank of Strasburg. Henderson later explained the move as part of the EDA’s consolidation and transfer of financial assets over to Warren County, which has agreed to become fiscal agent for the EDA.

The transfer of financial responsibility to the County government is part of the EDA’s self-generated reform and move to transparency of operations as it deals with the repercussions of the contracted financial fraud investigation of public accounting firm Cherry Bekaert. Thus far the legal consequences of that investigation have centered on alleged actions of former EDA Executive Director Jennifer McDonald involving her real estate and certain other business dealings with family, friends and business associates.

Solar puzzle
One of those business dealings came into discussion during the first stage of the post-meeting tour of EDA properties. As staff explained an absence of electrical metering in one of the vacant spaces at the EDA’s Kendrick Lane Office complex, the issue of the Town’s sole authority to charge clients for power service in Town was broached.

While the Town opened a 15-acre solar field as part of its Energy Services Department in May 2017, the two roofs of the EDA office complex were not part of that solar field.

Above, Energy Director David Jenkins on site during construction of Town’s 15-acre solar field; below the Kendrick Ln. office complex rooftop solar array the EDA cannot charge tenants for the provision of power from. The EDA is seeking recovery of $536,037 in what it contends were unauthorized payments for an installation it claims its former executive director told her board would come at no cost to the EDA.

Director of Energy Services David Jenkins explained to this reporter that while the EDA would be able to provide power to its office and Kendrick Lane tenants from the rooftop solar array, that by Town Code the EDA would not be able to charge tenants for that power. So the EDA faces a decision to provide free power in the Kendrick Lane complex or abandon the solar power idea, at least as it applies to tenants there.

The contracting of solar panel installation by McDonald through her business associate Donnie Poe’s Earth Right Energy LLC (ERE) is one focus of the EDA’s $21.3 million dollar civil litigation. Of that amount, $945,037 is being sought from ERE for various projects EDA litigation states were never approved by the EDA Board of Directors or were approved under false pretenses.

Pages 31 and 32 of the amended EDA civil complaint indicate $536,037 of the ERE payments being sought for recovery were for “unapproved payments related to the solar installation at the Warren EDA’s offices on Kendrick Lane in Front Royal, Virginia.” The EDA contends McDonald told her board the Kendrick Lane solar installation would come at no cost to the EDA.

“She explained that the installation of equipment by Earth Right Energy would be absorbed by Earth Right Energy as part of a scheme whereby Earth Right Energy would either sell solar energy generated by equipment it installed and/or reimburse the Warren EDA through certain tax credits,” the EDA’s amended civil complaint states.

Be that as it may, the office spaces once occupied by Amerisist and the Selah Theater group in the east building were judged as very marketable as rentals, perhaps with some remodeling of the theater space to accommodate a new client’s business needs.

And then after one more quick Kendrick complex vacant space stop it was off to a tour of other major EDA properties around the town and county being marketed for sale.

Above, the entrance way to the sprawling former Amerisist assisted living offices; below, the Selah Theater space recently vacated by a move to Winchester near its director’s home and employment base.

While the fog had begun lifting by the time the EDA board headed out for Friday’s off-site property tour, the legal status of ITFederal’s Royal Phoenix site development and enabling $10-million loan remains VERY foggy.

In this first Royal Examiner video, watch the EDA meeting and tour presentation by EDA Administrative Assistant Gretchen Henderson:

In this second Royal Examiner video, go along on the tour of 426 Baugh Drive warehouse: