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EDA releases ‘voluminous’ media packet to explain workforce housing project questions

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Read the cover letter below or view this attached PDF.


Stacked neatly at the EDA office, 17 informational packets lie ready to be picked up and perused in response to questions raised about the EDA’s workforce housing project.

Read the release below or view this attached PDF


FOR  IMMEDIATE  RELEASE
May 19, 2017         

EDA Addresses Questions Regarding the Royal Lane Workforce Housing Project

May 17, 2017, Front Royal, Virginia:  The Economic Development Authority Board of Directors and Staff have prepared a comprehensive package of information to address questions posed by certain Town Council members, County Supervisors and members of the local press regarding the EDA’s Royal Lane Workforce Housing Project.  Included here is a detailed timeline of events and history of the Workforce Housing Project and appendices to support each phase of the evolution of the Project and EDA’s involvement thereto.

History of the Workforce Housing Project:

In 2002, Workforce Housing was identified in the Front Royal-Warren County Economic Development Authority’s strategic planning process as an area of economic development the EDA should begin to focus on (with the Town and County) in order to diversify the inventory of housing available to our local workforce.  (The EDA designed its written “Strategic Plan,” to guide the efforts of the EDA Staff and Board.  Every two to four years, the EDA Board of Directors and Staff take one full day to review, discuss and update this document.  The most recent version of this document is available to the public, and can be found on EDA’s web site, wceda.com under “About the EDA.” Note:  all revisions and updates to EDA’s “Strategic Plan” are delivered to the Front Royal Town Council and the Warren County Board of Supervisors for review and input.)

2007:  Additionally, the “SRI Roadmap,” (Note:  The  SRI Roadmap, a $300,000 report commissioned by then Town Council, County Board of Supervisors and Economic Development Authority in 2007 to identify community development strengths, weaknesses and recommendations) identified workforce housing as an issue that the community should address and was included as initiative 8D in SRI’s Third Quarter Report, 2007.  No action was taken on the Workforce Housing Project at that time.  It was identified again, in EDA’s 2010-2012 Strategic Plan and yet again in its 2013-15 Strategic Plan.

In a survey, conducted in December 2009 by the County, many people said that the community did not have high quality and affordable apartments and townhouses for young people and the elderly.  In the 2010 Census, the age group of 60 and older, comprised 16.7% of Warren County’s total population.  The issue of affordable housing for retired people and young couples moving into the community should be explored more thoroughly.

The housing affordability issue also affects young families. Those working in lower-paying or entry level jobs are likely to experience difficulty in buying or renting in the County.  The gap in affordable housing can affect the ability of employers, including local government, to attract employees crucial to the community’s health and safety, as well as to the area’s economic growth and prosperity.

2008 and 2012:  The County, along with assistance from the EDA, conducted employee surveys of industry, public school employees, police, deputies and fire personnel to determine how many in that workforce sector lived in Warren County and how many lived outside of Warren County.

In July 2014, EDA Staff began collecting data on workforce housing availability in the community, along with median salaries of teachers, nurses, police and fire personnel, etc.  In August 2014, Steve Burke, then Town Manager, and Doug Stanley, County Administrator, were notified by Jennifer McDonald (EDA Executive Director) that the EDA was launching an initiative to research its ability to develop a workforce housing project geared not at low-income subsidized housing, but geared to accommodate the service industry workforce (specified above); and that the EDA would not ask for any County or Town funds to assist with the project.  Mr. Stanley responded promptly to the information; Mr. Burke did not respond.

On August 14, 2014, Jeremy Camp (Front Royal Planning Director) responded in detail to an e-mail from Jennifer McDonald questioning whether land on Royal Lane in the Town limits would be suitable for a workforce housing apartment project.    From his response, EDA compiled a list of potential properties for workforce housing and narrowed the search to three properties.  It was at or about this time that Jennifer McDonald disclosed in closed session to the EDA Board of Directors her familial relationship with the Campbell’s (owners of one of the three properties).

In November 2014, Martha Shickle (then Executive Director of the Regional Commission) notified Jennifer McDonald that “HOME” (HUD) funds would be available through the Commission for workforce housing development.   EDA secured $300,000 for construction assistance for the project.  EDA continues to work with the Regional Commission on this project.

Subsequently, in February 2015, one of the three sites identified as suitable for workforce housing development was eliminated due to topographic issues and the need and attendant costs to build a bridge to the site.

EDA Staff worked for months to assemble feasibility research including traffic counts (by Pennoni & Associates) and environmental studies, and to prepare a cohesive plan for the project, including working with Town officials to identify appropriate project layout, architectural drawings, plats, and other paperwork required for submission to the Planning Commission for review.

In June 2015, a joint meeting was held of the EDA, Town Council and County Board of Supervisors.  The first item on the agenda was workforce housing; the site layout of Royal Lane was presented at that meeting.  There was considerable discussion between the three entities with no objections.

Town Zoning Regulations for Multi-Family Dwellings (Apartments):  Jeremy Camp provided Jennifer McDonald with a Town zoning map outlining those areas where multi-family dwellings are allowed either by-right or special use permit.  Many of the areas were cost-prohibitive due to the total parcel acreage, or location and attendant costs (i.e. downtown properties would not be suitable, as they would require numerous purchase contracts and enormous amounts of investment in renovation and infrastructure upgrades).     Note:  According to Town Code, apartment complexes cannot be developed in areas zoned “Residential,” but may with approval from the Town Planning Commission be developed on land zoned “Commercial” through a special use permit thus limiting Town parcels that were considered suitable and available for workforce housing development.

According to Mr. Camp, “HEPTAD probably has the most readily available ‘large’ site for development of apartments other than perhaps Royal Lane.  The area behind Rural King has been considered for apartments in the past by others.  There are many other potential sites as well, but many would require demolition and acquisition of multiple parcels ….”  EDA was not interested in purchasing a large tract of land, as the overview limited the project to three buildings on approximately 3-5 acres of land.  The Royal Lane parcel fit the prospectus perfectly.  The parcel was zoned C3 (commercial), but EDA was granted residential build-out by special use permit voted on by the Town Planning Commission.

September 2015:  Jennifer McDonald disclosed in open session at EDA Board of Directors meeting her familial relationship to the Campbell’s (the property owners).

October 2015:  EDA presented the first design plan, traffic counts, environmental studies, etc. to the Town Planning Department and Town Council. In November 2015, a meeting was held with EDA and Town Staff to address concerns on the site layout.  EDA spent a considerable amount of time and money on redesigning the project layout as per Town request, only to be told to then return to the original design.

In December 2015, Jeremy Camp sent Jennifer McDonald an e-mail outlining a meeting on workforce housing with Hollis Tharpe (Town Councilman).  At that time, EDA worked with Pennoni to redesign the layout of the project as requested by Town officials.

January 2016, EDA was told by Town officials to take the design back to its original concept – now 3 months have been spent in agreeing upon the layout design.

On January 12, 2016, Gerry Maiatico (Fire Marshal) sent McDonald a letter of no objection to a single complex entrance (as requested by Town).  Maiatico letter was sent to Jeremy Camp and Steve Burke on January 14, 2016.

From January 2016-April 2016, EDA worked with Pennoni (engineers) to finalize the site plan to eventually be submitted to the Town Planning Department.

Pennoni & Associates engineering firm conducted the Impact Analysis on the site and under the section, Access and Transportation stated:  “The proposed 36 apartment units would generate 252 average daily vehicle trips.  Compared with the commercial uses that could be realized on the Property on a by-right basis, this special use permit application substantially reduces the trip generation potential for the site.”

 April 2016, the application was submitted to the Town Planning Department; EDA received an e-mail request from Jeremy Camp asking for a letter from the Fire Marshal allowing one entrance; EDA re-forwarded the original e-mail dated January 14, 2016.

June 2016, EDA took ownership of the property in order to comply with Town regulations for applying for a special use permit.  The Workforce Housing Project was put on the Town Planning Commission agenda.

July 2016:  EDA Staff met with adjacent property owners and the final vote was taken in November 2016 approving the project by Town Council.  At this meeting, Ms. McDonald was questioned by Councilman Egger on the “assessed value” of the property, which Ms. McDonald wanted to clarify the difference between “assessed value” or taxable real estate value versus “appraised value” or market value.  In an effort to emphasize that “appraised” value is usually higher than “assessed” value, Ms. McDonald indicated that the higher number $445,000 (versus $345,000) would be the appraised value – causing some to assume that an official appraisal had been conducted on the property; which it had not.  “I take full responsibility for causing some confusion,” said Ms. McDonald.  “I simply wanted Councilman Egger to understand that the appraised value is usually higher [that it would be the higher number] than the assessed value.   Unfortunately, I used the word ‘appraisal’ instead of ‘comparable’ in my response to her questioning.  And I acknowledge that mistake.  There has been no appraisal on the property.”

 (Note:  Appraisals are not required in the negotiation phase of real estate projects.  They are, however, required for construction loans, mortgage loans or when property is being held as collateral and that point at which the project involves a bank, loan company or other financial institution.)

Town Council Meeting Minutes, October 24, 2016, Page 3 of 7:  “Councilman Egger noted that she had issue with the road not going through to Remount Road at this point.  Councilman Tewalt noted that one day it could most likely be extended.  He stated that he would have no issue with supporting the request as presented.

“Councilman Hrbek stated that he would support the proposal as submitted to Council.  He stated that many teachers lived in Strasburg and Stephens City though they taught in Warren County and eventually the Town would lose them to other positions in other localities.  Mr. Hrbek stated that there was a need for these young professionals and it was time to catch the millennial generation and provide appropriate housing in the Town for them.

 “Councilman Egger noted that there are no apartment buildings currently in Town that are not subsidized and this would be the first.”

Land Values and Purchase Price:  The purchase price of $445,000 was determined through price comparisons on comparables of in-Town parcels of land zoned for multi-family housing (apartment) complexes.  This is a common practice in real estate for determining price point negotiation.

“The EDA decided that not only was the purchase price of $445,000 reasonable, but it seemed a small price to pay to launch the workforce housing initiative – something we’ve talked about for ten years,” said Patty Wines, Chairwoman of the EDA.

“In response to concern from certain Town officials that we did not disclose the March 1st construction start deadline,” said Wines, “the EDA was witness to a confidential real estate transaction and no monies from the Town were involved in the transaction, therefore, the EDA upheld its responsibility to confidentiality and was under no obligation to inform Council.

“Now, we are moving forward to make this project happen.”

Current Status of the Royal Lane Workforce Housing Project:  The Front Royal-Warren County Economic Development Authority owns the 3.6 acre parcel on Royal Lane and prepares to move forward with the housing project.  EDA has been granted a “special use permit” by the Town Council and Planning Department.  EDA has submitted site plan documents to the VA Department of Environmental Quality and awaits final permits in order to move forward with ground breaking projected in June-July 2017.  To reiterate:  no Town or County funds are involved.

“The EDA Staff will continue our work guided by our Board of Directors and Strategic Plan,” said Jennifer McDonald, Executive Director of the Economic Development Authority.  “We actually put our strategic plan into action resulting in viable, tangible projects for this community.  This document will drive us forward — not simply gather dust on a shelf somewhere ….” 

“The EDA Board of Directors has very comprehensive and thoughtful discussion on every project we take on,” said Greg Drescher, Vice-Chairman of the Economic Development Authority.  “Our Executive Director, Jennifer McDonald, works under the Direction of this Board and does not make unilateral decisions without our approval.  Often the work of the EDA involves unique situations.  Those knowledgeable of more traditional agreements involving businesses may be surprised and even question the creative solutions the EDA is able to present to unique land and/or business dealings.  However, our community can rest assured that any agreements being made are done legally and with the best interests of our community at heart.”

 “I find it ODD,” said Patty Wines Chairwoman of the EDA, “that despite the fact that we have delivered our Strategic Plans and Annual Reports each time they are revised and updated to Town and County officials, certain members of Town Council and County Board of Supervisors do not remember telling the EDA to move forward with workforce housing.

“I also find it ODD that there seems to be a group of people in Front Royal who are determined to manufacture a scandal ….  Let me assure everyone – our work is challenging but we are certainly up to the task and we are devoted to the economic well-being of our entire community.  There is no scandal here!”

###
See attached appendices for detail on the above noted timelines.

Appendices

Appendix I.
News Articles:  The Northern Virginia Daily
December 7, 2015, by Alex Bridges
August 19, 2016, by Alex Bridges

Appendix II.
EDA Strategic Plans

  1. 2002-2006
  2. SRI Roadmap
  3. 2010-2012
  4. 2013-2015

Appendix III.
EDA Annual Reports, 2008-2015

Appendix IV.
Zoning Map with Identified Parcels

Appendix V.
EDA Board of Directors Workforce Housing Minutes + Resolution

Appendix VI.
Invoices & Contracts

Appendix VII.
Royal Lane Impact Analysis Statement

Appendix VIII.
“The Role of Workforce Housing in Creating Jobs and Stimulating Economic Development,” Center for Housing Policy


The Royal Examiner received the press release, in response to our questions, along with those of others, late Friday morning.  We are currently examining the documents…continue reading the Royal Examiner, the News Behind the News, for this developing story.

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Town reversed initial commitment to cover Afton Inn ‘winterization’ costs

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During an update on the status of various properties at a Front Royal-Warren County Economic Development Authority Asset Committee meeting, Friday morning, the status of the on-hold Afton Inn “winterization” project two months into the winter of 2019-20 was broached.

In the agenda summary the project, described as once “a high priority” of the town government, was now observed to apparently be dead in the cold winter elements.

Why?

According to Asset Committee Chairman Greg Harold, Town staff apparently did an about-face on responsibility for, or the necessity of, covering the winterization costs.

Harold told those present that since the Town approached the EDA about working together with Afton Inn redeveloper 2 East Main Street LLC in November to get the stabilization project underway to prevent further deterioration of the 151-year-old brick and wood building shell, he had a record of communications with Town Attorney Doug Napier indicating Town responsibility for, and intent of, paying for the winterization work.

Asset Committee Chairman Greg Harold, center, traces the status of EDA properties, including the Afton Inn and its now apparently-abandoned ‘winterization’ project. The bottom line as from left, Doug Parsons and Ed Daley listen – the Town decided not to fund those stabilization and safety measures. Photos by Roger Bianchini. Video by Mark Williams, Royal Examiner.

At various points in those communications a Memorandum of Understanding (MOU) dating to the 2014 transfer of ownership from the Town to the EDA for marketing and redevelopment purposes was referenced; as was Napier’s written expression of a “moral obligation” of the Town to provide for the “safety and welfare” of its citizens as pieces began falling off the building; and former Town Planning Director Jeremy Camp’s written notice of the apparent availability of Community Development Block Grant (CDBG) funding for the Main Street façade improvement work that could be utilized by the Town to pay for its own staff to work on the winterization project.

Consequently, Harold noted the EDA spent $3,500 on an engineering report to get a cost estimate on the project to the Town. However, several subsequent emails from the Town indicated logistical complications discovered by its staff leading to the likelihood of increased costs.

Harold observed that Interim Town Manager Matt Tederick had stepped in at a mid-December EDA board meeting to state that earlier communications indicating the Town would cover the winterization costs were a “mistake”.

Harold noted that his response to Town Attorney Napier asking for substantiation to support the interim town manager’s assertion was forwarded to the Town’s outside counsel, Damiani & Damiani, handling its civil claims against the EDA with no further communications.

However, EDA Board Treasurer Jorie Martin interjected by phone hook up that she had one initial communication from Damiani & Damiani stating that they “would get back to us” after which there were no further communications.

In that December 19 email to Napier forwarded to the Town’s outside counsel, Harold wrote, “I have read the MOA, and I am not able to find any subordination clause or other languages that strips Front Royal of this requirement (of funding),” adding, “Contrarily, there are 2 paragraphs which explicitly detail and reaffirm the town’s commitment.”

One of those paragraphs from the MOU dated June 23, 2014, is quoted stating, “The Town agrees that during ownership of the Afton Inn property by the EDA, the Town shall not require the EDA to perform any repairs, maintenance or demolition of any part of the Afton Inn building unless the Town agrees to bear the costs of such repairs, maintenance or demolition.”

The following paragraph describes the Afton Inn’s close proximity to Town Hall at the head of the East Main Street Historic Downtown Business District, observing, “The Town has clearly identifiable interests in the use to be made and in the appearance, of the Afton Inn property … As such, the Town has an appropriate, identifiable interest in keeping the Afton Inn property in both a viable safe physical condition and an aesthetically pleasing condition.”

I guess it depends on how you define ‘Safe’ and ‘Pleasing’ – gets harder the closer you get.

It was again noted that 2 East Main Street LLC continues to express hope of maintaining its interest in the Afton renovation project now stalled by the EDA’s financial dilemma tied to the financial scandal asserted in the County-EDA funded Cherry Bekaert forensic audit of EDA business in recent years.

And put up a parking lot?

However, it would appear in this season of the interim town manager and a new council majority committed to cost and tax reductions despite $29 million in capital improvement funding needs in the coming budget year, those steering the ship of Front Royal Town government have simply decided the Afton Inn’s appearance, condition and redevelopment are no longer fiscal priorities.

As the discussion moved to the collection of bad debts, EDA Board Vice Chairman Jeff Browne noted that since the involvement of the EDA’s contracted attorney, the first check from a debtor had been received – “We just have to pick it up … so, we’re already starting to see results,” Browne told the Asset Committee, leading Board Chairman Ed Daley to quip, “Was this a large check from a municipal corporation that owes us a very significant amount of money?”

Harold displays documentation on referenced EDA assets, as from left, Jeff Browne, Doug Parsons, Ed Daley, Cheryl Cullers and others invisible by phone link, listen.

“The answer would be no,” Browne replied, dashing the hope the Town had decided to make good on at least a portion of its undisputed $8.4 million debt to the EDA on the principal for the Town Police Department construction project, if not on Afton Inn winterization costs.

See this discussion just past the 38-minute mark of the linked Royal Examiner video, as well as other topics in the entire meeting video. Among topics discussed were bids received on removal of the solar panels on the EDA’s Kendrick Lane office complex; a pending closing date of February 28 on the Stokes Mart property sale; and re-acquisition of the Workforce Housing parcel, hopefully, at the same $10 price, it was inexplicably transferred to the Cornerstone LLC branch of the Aikens Group in late November 2018 for.

After initially being “gifted” to the EDA for $10, due to unmet, publicly undisclosed deadlines not being met, the EDA acquired the property at a cost of $445,000, with additional resources allegedly being committed to the project leading to the property being written off as a $600,000-plus loss.

In addition to Harold, Daley, Browne, and Martin, the latter by phone hookup, present at Friday’s Asset Committee meeting were EDA attorney Sharon Pandak, also by phone connection, EDA Executive Director Doug Parsons and South River Supervisor Cheryl Cullers.

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Town, County, EDA join forces with commercial realty community

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EDA Board Vice-Chairman Jeff Browne launches the joint Town-County-EDA Commercial Property Open House with local commercial realtor representatives. Photos by Roger Bianchini, Royal Examiner.

At 8 a.m. Wednesday morning, February 19, members of the local real estate brokers community gathered at the Kendrick Lane Front Royal-Warren County Economic Development office for a “Commercial Property Open House.

After some breakfast snacks provided by the EDA through the Shenandoah Valley Golf Club’s catering service and a briefing by EDA Executive Director Doug Parsons on economic incentives available locally and through the state economic development partnership, the group representing 10 realty companies, accompanied by EDA, Town and County officials began the tour close by.

First to be viewed of 28 properties were two vacant offices in the EDA office complex at 400 Kendrick Lane. Then it was on to the Town Trolley for a foray into the adjacent Royal Phoenix Business Park’s 117 vacant acres before heading into the Route 522/340 North Commercial and Industrial Corridor.

Above, tour started close to home as realtors view one of the vacant office spaces at the EDA’s Kendrick Ln. complex in old American Viscose/FMC/Avtex Admin building; and then it was on the trolley to view 27 more available commercial properties around the town and county.

Royal Examiner caught up with Parsons and Administrative Assistant Gretchen Henderson shortly after noon following the Open House tour’s conclusion back in Front Royal. In fact, Parsons noted that of the 28 EDA overseen properties on the tour, all but seven were in the town limits.

On the Town side, Community Development Director Felicia Hart had taken the point, working with EDA Board Vice-Chairman Jeff Browne to propel the Commercial Property Open House forward. Following Hart’s January 29 termination with several other Town staff and department heads as part of the interim town manager’s Fiscal Year 2021 budget proposal, Browne worked with Interim Town Manager Matt Tederick to see things moved forward on the logistical side.

Planning Director Taryn Logan represented Warren County and Chris Brock, who identified himself as Interim Planning and Zoning Director, was present for Front Royal. Parsons and Henderson acknowledged the contribution of town staff in preparation of a properties’ booklet for the open house and the provision of the trolley for the tour.

As Interim Town Planning & Zoning Director Chris Brock listens at right, Doug Parsons briefs realtors on some economic development financial incentives that might help close some deals.

“Everybody’s working together,” we observed to Parsons of the joint EDA-Town-County driven interaction with local commercial realtors.

“Yes, as always,” the EDA executive director replied.

“Or at least ‘almost’ always,” we suggested of certain litigious efforts of one participating municipal partner. However, Parsons declined to take the bait, preferring to accentuate the positives of the day. So, we asked for his assessment of the day and its impetus.

“The idea behind the event was to bring together the Blue Ridge Association of Realtors members and take them on a tour of 28 properties here in Front Royal and Warren County that we think are good, viable properties for both commercial and industrial development. So, we looked at 21 properties in town and seven outside of town.

“I think we saw a good variety of buildings, vacant ground that could be used for a variety of purposes. I think the realtors appreciated the information, and I think it was a good partnership effort between the Town and the EDA. I want to thank Chris Brock and Alfredo Velasquez for their help in collating and binding the materials. And Chris’s expertise was a big part of the day as he was able to talk to the group about planning and zoning and certain properties in town.

The Open House tour turns off Kelley Drive near the Dominion Power Plant and a Rappahannock Electric Cooperative office/warehouse.

“Taryn Logan was also a very valuable asset to help explain the planning and zoning in the county and some of the history of the properties.

“And a lot of the realtors that were on the tour, they knew a great deal about some of these properties because they’d either bought or sold them before; or had dealt with them in the past, so knew the history. There was a lot of knowledge on the bus which was shared amongst the group and hopefully, it’ll lead to some sales for some of the properties here in town – and out in the county,” Parsons concluded what he believes was a morning well spent.

Apparently the private sector participants agreed. A sign out sheet was punctuated with “Comments” including “Great Event”, “Good Idea”, “Thank you so much!!”, “Wonderful – very informative” and “Next Year?”

We asked Parsons about his pre-tour briefing on some financial incentives available through the Town, EDA and the Virginia Economic Development Partnership (VEDP).

“I know a lot of times the real estate community in states across the nation may not be as in tune with the local and state incentives that these job developers’ programs have to offer. So, I was hoping to make them aware of what is out there for them in that regard … Because if you’re a realtor and you are dealing with someone and maybe there’s a ten or twenty thousand dollar gap in being able to close the deal, if you can bring the Virginia Jobs Investment Program incentive to the table, or the tech zone incentive here locally to the table, it could be a deal closer for someone,” Parsons observed.

And deal closings on some commercial properties are what the EDA, its municipal partners, and private sector realtors are all looking to make happen.

There appears to be some action at a portion of this warehouse property as the Commercial Property Open House pulls in.

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EDA presents budget proposal to Board of Supervisors; delinquent taxes from contractors

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EDA Executive Director Doug Parsons presents a budget proposal to the Board of Supervisors. Photos and video by Mark Williams, Royal Examiner.

On Tuesday, February 11 at the evening work session of the Warren County Board of Supervisors, the EDA Board and staff presented its budget proposal to get through the final 3 1/2 months of this fiscal year and to continue into FY 2021.

Also included on the agenda was a discussion with Building official David Beahm and Commissioner of the Revenue Sherry Sours on the payment of delinquent taxes and business license fees by contractors prior to issuance of building permits.

County Administrator Doug Stanley discusses the management and lease agreements of the Front Royal Golf Club.

County Administrator Doug Stanley discussed the Department of Environmental Quality Financial Assurance requirements. Also, Stanley, along with County Attorney Jason Ham, discussed the management and lease agreements of the Front Royal Golf Club.

See the presentations, including discussion of the Town’s $8 million-plus debt to the EDA on the new police station and the status of the Front Royal Golf Club in this exclusive Royal Examiner video:

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EDA report to County – long-time annual auditor withdraws from lagging 2018 audit process

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During one of six operational updates from entities with which it is either directly or indirectly involved at its Tuesday, February 4 meeting, the Warren County Board of Supervisors got what Front Royal-Warren County Economic Development Authority Executive Director Doug Parson called “bad” and “very disappointing” news.

That news was that long-time EDA auditor Yount-Hyde-Barbour had withdrawn from the EDA’s 2018 audit process. That process is running considerably behind as the EDA tries to get to the bottom of the final year of a number of years during which a contracted financial investigation by Cherry Bekaert, known for its forensic audit discoveries of criminal financial behavior, alleged a number of years of financial improprieties within EDA operations.

As EDA attorneys Dan Seigel and Cullen Seltzer look on, EDA Executive Director Doug Parsons updates county supervisors on the EDA’s state of affairs. That state includes the withdrawal of long-time auditor Yount-Hyde-Barbour from the long-developing audit of 2018 EDA finances. Royal Examiner Photo by Roger Bianchini

The Cherry Bekaert investigation conducted from mid-September 2018 into the spring of 2019 has resulted in a $21.3-million EDA civil litigation against what currently stands at 14 human and business entity defendants and multiple financial felony indictments by a special grand jury empaneled to investigate potential criminality tied to the EDA civil litigation. At the center of both the civil and criminal cases is former EDA Executive Director Jennifer McDonald.

It was Yount-Hyde-Barbour that was contracted by the EDA to conduct its annual audits during most, if not all of the years during which the EDA financial scandal is believed to have occurred. In recent months retired Warren County Finance Director Carolyn Stimmel and Heather Tweedie of the auditing firm Hottel-Willis have been pouring through the EDA’s 2018 financial records trying to ascertain what EDA assets went where, how, to what purpose and most importantly, were those purposes legitimate and authorized by the EDA Board of Directors.

Yount-Hyde-Barbour had been expected to take the result of Stimmel and Tweedie’s work to belatedly conduct their annual audit for 2018. Completion of that audit has been termed crucial to the
EDA’s future ability to function as it attempts to traverse the operational aftermath of the financial crimes alleged to have occurred under McDonald’s decade of executive leadership of the EDA.

One EDA civil case defendant’s attorney wondered aloud during a past motions hearing that if their client was a defendant for the financial actions alleged against them, why the EDA auditor that had rubber stamped the EDA’s finances annually through the years of alleged embezzlements and misdirection of assets, wasn’t also a defendant.

Could Yount-Hyde-Barbour’s withdrawal from the 2018 audit process be an indicator of potential legal issues between the auditor and the EDA? In response to media questions Sands Anderson attorney Dan Siegel, present with lead EDA civil case attorney Cullen Seltzer for a closed session discussion with County officials of the EDA’s civil case landscape, said only that EDA counsel continues to explore potential legal liability in many directions.

EDA civil attorneys enter WCGC caucus room where the supervisors would eventually adjourn to a three-hour-plus closed session on a variety of topics, including the EDA civil litigation and Town litigation against the EDA. Photo and video by Mark Williams, Royal Examiner.

VDOT Revenue Sharing
In other business Tuesday, after a week’s delay to allow new supervisors to gather additional information, the county board unanimously approved the County’s contribution to the Virginia Department of Transportation (VDOT) Revenue Sharing Program. It was explained that the program that runs through multiple municipal fiscal year budgets allows involved municipalities to get a 50% revenue match from the State on needed and desired road improvements throughout the county.

Numbers presented projected the County’s contribution in the coming FY 2021 budget at $250,000. It was a number projected to remain constant in FY 2021 through FY 2024. Six total involved road project costs were cited at $2.9-million over a number of years, with a 25% County contribution total of $753,312.50 and a 25% contribution from involved Sanitary District and POA fees at $703,313.50.

Short-term rental permit
By a 3-2 margin, a divided board approved a short-term rental Conditional Use Permit (CUP) for Stephen J. Aron Jr. despite some objections from neighbors in the gated River Ridge Property Owners Association. Tony Carter and Archie Fox cast the two dissenting votes.

Carter cited neighbor concerns about security issues tied to the applicant’s efforts to recoup some of his residential property improvement costs in purchasing what he said at the earlier public hearing was the run-down home of what he described as the less than conscientious previous occupants. In explaining her vote for the CUP, Delores Oates noted that renters wouldn’t be given the code to the gate, but would utilize a locked key box key to activate entry to the gated community.

Carter replied that, that solution still allowed entry and access of strangers to a community that many residents may have located to for the additional security provided by locked access available only to residents and their guests.

During the January public hearing it was noted in favor of the request that many short-term rental operations do quite a bit of vetting of guests. The applicant indicated he intended to be conscientious about those allowed to stay at the residence he and his family plan to spend a great deal of time at themselves.

In addition to the EDA, other operational updates the county received were from VDOT, RSW Jail, the Virginia Cooperative Extension Service, Department of Social Services and the Town of Front Royal.

See a related story on the Town report; and see the full Warren County Board of Supervisors meeting – other than the 3-hour-plus closed session – in this Royal Examiner video:

Who’s doing what for whom? Terminated employees pop up in written Town Report to County

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Economic development proceeds amidst legal and Spotted Lanternfly threats

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This reporter sat down with Front Royal-Warren County Economic Development Authority Board of Directors Vice-Chairman Jeff Browne and Executive Director Doug Parsons on Friday, January 31, to discuss the work they do amidst challenges they face in the aftermath of the financial scandal that developed during the executive leadership of Jennifer McDonald and a previous EDA board majority.

Executive Director Doug Parsons  and Vice-Chair Jeff Browne meet in the Royal Examiner studio with Roger Bianchini to discuss what the EDA has been doing recently. Photo and video by Mark Williams, Royal Examiner.

In what we hope is the first of at least monthly video interviews on EDA business and affairs, listen as Browne and Parsons describe how their time is budgeted as they continue the EDA’s work of business retention and recruitment in an environment of dueling civil litigations. They continue to offer an olive branch to the Front Royal Town Council to work together in good faith to determine exactly what the EDA owes the Town in allegedly misdirected EDA assets generated by Town taxpayers, as opposed to an increasingly expensive attorney-driven civil suit filed by the Town against its existing co-created EDA.

It is litigation, as is pointed out in the interview, in which town taxpayers face the unhappy task of funding both sides, as Town taxpayers for the plaintiff and as County taxpayers for the defendant.

And speaking of olive branches, Browne and Parsons conclude the interview by describing the economic threat presented by the expanding presence of the fruit-tree and grapevine feeding Spotted Lanternfly in Frederick County to our north; and how Warren County citizens and businesses can be on the alert to spot, report and mitigate early signs of the destructive bug’s presence in our county.

Watch the discussion in this exclusive Royal Examiner video:

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EDA in Focus

Judge denies EDA civil suit defendants’ motions for removal from case

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In a written ruling signed January 24 and filed in the Warren County Circuit Court Clerk’s Office on January 27, Judge Bruce D. Albertson denied a host of EDA civil litigation defense motions for removal from the case as alleged co-conspirators with central defendant, former EDA Executive Director Jennifer McDonald.

Among defendant attorneys involved in the December 12 motions hearing were those representing April Petty, Jesse Poe, Donald Poe and his Earth Right Energy (ERE) solar panel installation company, and ITFederal and its principal Truc “Curt” Tran.

The basis of those defense counsel arguments for dismissal of their clients from the civil case primarily revolved around the plaintiff’s notion of an overarching conspiracy that somehow links the various defendants to central figure and former EDA Executive Director McDonald; and that there are legally definable contractual breaches making those defendants individually liable for funds that came their way through McDonald.

At the December motions hearing christened “Groundhog Day” by one media rep present (guilty as charged) for the bulk of four-and-a-half-hours of repetitive legal arguments put forth by each defense attorney on essentially identical claims for removal of their clients from the civil case, lead plaintiff attorney Cullen Seltzer’s counter was briefer.

It has been a long EDA litigation day into night, and it’s only just begun – will we be seeing EDA ‘Night Court’ before it’s over? Royal Examiner File Photos/Roger Bianchini

That was because Seltzer’s reply was essentially a one-response-fits-all argument. That response was that there did not have to have to be direct knowledge among all defendants of each interlocking conspiracy McDonald is alleged to having been a party to, for that conspiracy to exist to the benefit of separate defendants in separate transactions. Seltzer scoffed at the idea of McDonald as “a rogue tornado” distributing EDA assets to various defendants without a general common knowledge that something illegal was transpiring to each defendant’s benefit.

“I deny each Demurrer and Plea in Bar for the reasons cited by the plaintiff,” Judge Albertson wrote in his brief, three paragraph ruling.

However, the judge also ruled that a plaintiff claim of “Breach of Fiduciary Duty” against all defendants, cited only McDonald and her former Administrative Assistant Michelle Henry for such action.

“Plaintiff alleges that this count applies to all defendants due to the conspiracy count. The manner in which this count is written, however, names only Ms. Henry and Ms. McDonald as parties that have breached this duty. I find that his count does not apply to the other defendants as written in the Amended Complaint,” the judge ruled.

The judge also continued a decision on Earth Right Energy’s “Plea in Bar and separate Motion for Sanctions” based on other arguments heard December 12. There was disagreement between ERE attorney Ryan Huttar and EDA counsel on the validity of contracts between the EDA and ERE in amounts over $10,000, which is most, if not all involved contracts.

The EDA Board of Directors meets under the executive leadership of Jennifer McDonald, center, in September 2018, about the time the Cherry Bekaert financial fraud investigation began. Who approved what, when and why??? – are likely to be long-contested questions as the various EDA civil and criminal cases grind forward in the coming year …

EDA counsel noted that any EDA transaction or contract over $10,000 had to be approved by the EDA Board of Directors, which EDA counsel stated did not happen in the Earth Right Energy cases. However, Earth Right attorney Huttar contended the company’s contracts, including a $27-million one with the Warren County Public School system negotiated while Greg Drescher was both an EDA board member and superintendent of schools, were legally binding.

It appears a decision on those arguments will require additional factual information to be brought to the court.

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