Feds OK ‘Dollar Special’ on first Avtex property sale

But is ITFederal poised to begin promised $40-million investment?

Will the EDA office complex on Kendrick Lane soon have company?

One of the best-kept secrets in Front Royal and Warren County seems to be the cause of a year-long delay in federal approval of the FIRST commercial property sale at the remediated Avtex Superfund site in Front Royal.  In fact, we had to start a new online news source just to get that reason published and into the public conversation – just kidding, sort of …

During monthly updates on September 26 and October 4, Front Royal-Warren County Economic Development Authority (EDA) Executive Director Jennifer McDonald informed, first the Front Royal Town Council and then Warren County Board of Supervisors, that the lengthy wait for federal approval of the first sale of property for commercial redevelopment at what is now called the Royal Phoenix Business Park was over.

According to a preliminary site plan presented to Town Council on Oct. 24, “Building 1A” of the planned ITFederal complex will abut the existing EDA office in the old American Viscose/Avtex Administration building to the west, toward the river, at bottom left of aerial photo.

Absent from McDonald’s report, as it has been from any public discussion or media reporting we are aware of over the past year, was the reason for the delay.  That reason is the EDA’s decision to pack economic incentives to “get the ball rolling” on commercial re-development at the former federal environmental disaster remediation site, on the front end of the ITFederal deal.

So, rather than the $67,000 per-acre, $2-million sale price on the 30-acre ITFederal parcel initially discussed in July 2015, the price agreed upon after about two months of negotiations was one dollar – yes, $1.00 American.  Consequently, the EDA had to get permission from the federal government to remove the ITFederal parcel from a $2.06-million lien on the former Superfund property.  That release from the Justice Department came on September 23, 2016, just over a year after it was requested by the EDA.

In a September 18, 2015 letter seeking the lien waiver, then-Warren County and EDA attorney Blair Mitchell explained, “This 30 acres has been sold for $1.00 in order to get a developer to come in and begin the process of other buyers.  The EDA already has a buyer for a 3-acre parcel to sell at $67,000 per acre, so selling this parcel as a way of breaking the ice will pay off in the long run.  While the $1 will not be used to pay down the $2,060,000, sales proceeds from future sales will be applied toward the paydown of the secured debt.”

As Mitchell recounted in his letter, “This Deed of Trust secures repayment to the United States and to the FMC Corporation and to the Bankruptcy Trustee of the sum of $2,060,000 to be paid from the sales proceeds of all or parts of the Site, as they sell.”

FMC is the sole surviving of three past owners of the rayon and synthetic fibers manufacturing plant opened in 1940 as American Viscose, and closed as Avtex Fibers in 1989 by Virginia Attorney General Mary Sue Terry.  That closing was for ongoing violations of State Water Control Board guidelines on pollutant emissions into the Shenandoah River, upon whose bank the plant was built.

The 3-acre buyer cited in Mitchell’s letter was confirmed at the May 2016 EDA Board meeting by County Administrator Doug Stanley as CBM Mortgage.  By then CBM Mortgage opted out of that Avtex site negotiation.  The company ended up purchasing the former Warren County Department of Social Services building off Commerce Avenue in Front Royal, about a mile east of the Avtex/Royal Phoenix site.

On May 27^th following an EDA Board meeting, we asked Front Royal Vice-Mayor Hollis Tharpe, currently running unopposed for Mayor, about the still-pending one-dollar ITFederal sale.  Gazing out at the business park site looming behind the EDA headquarters, Tharpe commented, “I’d give it ALL away if I could.”

And after over a quarter century of cleanup, remediation and lost commercial tax base at the site, Tharpe’s rationale is understandable of Town officials looking for positive movement and job creation there.

The remaining question is whether ITFederal can and will accomplish what has been promised by the EDA in the way of commercial redevelopment and job creation (400 to 600) at the site.  That and other tough questions were posed to McDonald by Councilwoman Bébhinn Egger at the October 24 Front Royal Town Council meeting.

Keep an eye on the Royal Examiner website for a soon-to-be-published full report on the Egger-McDonald exchange about the nature of ITFederal’s business; the reason for a twice-extended monthly, September 2015, $10-million bridge loan from the Town to ITFederal; and CEO Curt/Truc Tran’s purchase of other land in the area.