Front Royal poised to lobby for State Code change to allow 2nd EDA

Could the Rt. 522/340 N. Corridor become ground zero for another economic development battle between Front Royal and Warren County?

Despite unresolved legal complications the Front Royal Town Council plans to move forward with approval of a Resolution seeking State General Assembly authority to create its own Economic Development Authority (EDA) despite the continued existence of the EDA it co-created with Warren County in the mid-1960’s.

“I’m all for it,” Gary Gillespie exuded after a five-minute work session briefing by Town Attorney Doug Napier Monday night, December 2.

“I agree with you,” Gillespie’s council colleague Letasha Thompson added, with no opposition opinion being expressed.

Mayor Gene Tewalt then instructed staff to include a vote on the Resolution at the next scheduled meeting agenda, Monday, December 9. That is council’s only meeting of December’s holiday season.

However, what appears to be council’s preferred path of distance from the existing EDA and creation of its own alternate Economic Development Authority may not be such an easy task, with or without the legislative sponsorship Interim Town Manager Matt Tederick says he has been promised, without citing a name.

Existing State Code 15.2-4905 forbids the creation of a second EDA or IDA (Industrial Development Authority) in a locality without the concurrence of “the governing body of such locality” to the “inducement resolution” of the second EDA or IDA. The fact that the Town and County co-created the existing EDA could present a legal hurdle to the Town’s planned move away from the now largely retooled EDA Board and totally revamped Executive staff.

The work session agenda summary prepared by the Town Attorney notes that, “The Town no longer appoints any of the members of the Board of Directors of the existing EDA (an apparent voluntary abdication of appointment authority), nor does it fund the existing EDA” (an operational funding consequence of County compensation to the Town for its 1998 agreement to extend Town central water-sewer into the County North Corridor without annexation).

The legal staff summary continues, “However, under current State Code, even if the Town rescinds its EDA creation ordinance, because the existing EDA was jointly created by the Town with the County, the Town will be unable to create a separate Town EDA which can finance facilities outside the Town, unless the County concurs with this financing by a Board of Supervisors’ resolution.”

But that isn’t all, as Town Attorney Napier points out in his agenda summary of the Town’s options.

“In fact, as the next paragraph will show, there may well be an argument that as long as there are outstanding EDA bonds whether the Town can even rescind its ordinance co-creating the existing EDA at all, in which case the Town would not even be able to create a separate Town EDA which could fund Town EDA facilities in Town,” Napier wrote.

 The Town Council appears settled on a course of action fencing itself off from the existing EDA as a new EDA staff and largely new board tries to right the ship of community-wide local economic development. Royal Examiner File Photo

The referenced legislative code paragraph cites the potential of an EDA Board of Directors stating its mission accomplished, with all debts paid, leading to its own initiative to dissolve itself. At that point, “the title to all funds and properties owned by the authority at the time of such dissolution shall vest in the locality creating the authority and possession of such funds and properties shall forthwith be delivered to such locality.” (bold in agenda text context)

Of this language Napier writes, “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. Additionally, even if the Town could rescind its ordinance which created its part of the existing EDA, would the Town wish to give up its rights to its legal one-half of the EDA property and other assets? … That potentially could be a lot for the Town to consider walking away from.”

Prior to the mayor’s polling of council on a preferred course of action, Jacob Meza asked Town Attorney Napier if proceeding with his suggested effort to alter State law to allow the Town of Front Royal alone to create a second, functioning EDA within the community wouldn’t produce the same complication in giving up the Town’s claim on half of the existing EDA’s assets.

When Napier responded that it would not, Meza began the expression of support for the town attorney’s recommended option on a path forward if council’s desire is to create its own EDA while its civil litigation against the existing co-created EDA proceeds. As Napier confirmed to us the following day, that recommended path is toward a legislative exception for the Town of Front Royal to create a second EDA independent of the County without withdrawing from its legal interest in the existing, co-created EDA.

Interim Town Manager Matt Tederick told council that it must move quickly to get its request for a State Code change on the floor during the next session of the General Assembly or face waiting another year for the opportunity. Tederick also said he had made contact with a member of the state legislature who would be willing to sponsor the Town legislative exemption request, though he did not publicly name that state representative. Warren County and the Town have three State House representatives, the 15^th (Todd Gilbert), 29^th (Chris Collins) and 18^th (Mike Webert), as well as 26^th District State Senator Mark Obenshain, in the Virginia General Assembly. The smart money is on one of those four.

However, it remains to be seen how such a legislative move toward a singular exception for the Town to create a second EDA while suing the existing one it co-created with the County over a half century ago will play in Richmond, or for that matter across town at the Warren County Government Center.

Napier’s independent, Town-created EDA situation agenda summary observes that there may be times that it would be advantageous for the Town to consider economic development financing of “facilities outside its boundaries”. Such times could relate to the expansion of “water or waste disposal facilities … the addition of facilities of higher education … the expansion of additional medical facilities” or if the Town “wanted to expand its tax base” Napier observed.

However, these are things the Town could only accomplish in a joint Town-County EDA or with a Resolution of Support from the County Supervisors related to actions of an independent Town-controlled EDA. And the latter is contingent on a General Assembly majority granting the Town its desired exemption to the existing State Code.

Is this writer the only one who sees irony in the Town’s coming initiative to seek a one-of-a-kind State legislative exemption to facilitate creation of an independent EDA? After all, wasn’t it a first-of-its-kind State exemption, though judicially approved in 1999, that allowed Warren County to receive the economic development benefit of Town of Front Royal water-sewer utilities in its North Corridor without the established process of annexation by the municipality controlling those utilities preceding that extension?

Perhaps in a clue of things to come, toward the work session’s end Councilman Chris Holloway suggested Town staff explore the pros and cons of revisiting Town annexation of the North Corridor “out to Rockland Road”. Mayor Tewalt observed that a Memorandum of Understanding between the Town and County that may be attached to the Town’s water policy, prohibits Town annexation in the North Corridor for as much as 20 years from its inception.

Wonder if the Town could get a one-of-a-kind exception, perhaps from the State Executive branch this time, to rescind that MOU while they’re at it?

Town skirts EDA request for FRPD construction back payments