FRPD project ‘double draw’ draws EDA Finance Committee’s attention

From United Bank to the EDA, office seen here from the Monroe Ave. intersection with Kendrick Ln. where the new FRPD headquarters is located …

The so-called January double draw on the United Bank account the Economic Development Authority is using to pay for work or debt service on the Front Royal Police Station project was a topic of conversation at Friday morning’s EDA Finance Committee meeting. The double draw involves a second deposit from the EDA’s Construction Account into its checking account from which payments are made.

It came to light in recent weeks that a January 30 transfer of $1.1 million to the EDA checking account was not necessary because of a January 8 transfer of $2.8 million from which funds were still available.

Finance Committee Chairman and EDA Treasurer Tom Patteson raised the issue, stating, “Nothing was lost, stolen or misdirected.” He added that the Town, for whom the EDA has been overseeing project payments, had not been charged interest for the period of time the second checking account deposit had been received until the requisition for project payments utilizing the second deposit.

… for work on those headquarters last January – at issue is why and how a second January deposit. Royal Examiner Photos by Roger Bianchini. Video by Mark Williams.

Retired Warren County Finance Director Carolyn Stimmel, who has been helping with the audit and bookkeeping review of EDA finances in the wake of the financial fraud investigation, observed that the second draw was made during a time of transition for the EDA. That transition included the hiring of an interim executive director for resigned Executive Director Jennifer McDonald.

Stimmel noted that one thus far unsolved mystery of the second January draw on the construction account was that no draw request signed by an authorized EDA official has been discovered.

“The process was flawed but the money was used for the correct purpose,” Committee member Jorie Martin noted, adding, “There was no malfeasance,” in that once deposited into the payment checking account the money was eventually used for payments on the FRPD headquarters project.

“We do want an explanation of how this happened,” current EDA Executive Director Doug Parsons told the committee and media present.

The January 30 deposit carried a draw notice addressed to then EDA and County Attorney Dan Whitten stating the deposit was being made “upon your request”. But prior to his weekend departure for the county attorney’s job in Prince George County, Virginia, Whitten said he hadn’t made the request and noted he didn’t have the authority to make it. He also has indicated in the past that the January 8 draw was set in motion by former EDA Executive Director McDonald prior to her December 20 resignation.

From left, Carolyn Stimmel, Jorie Martin, Tom Patteson and Doug Parsons ponder how a second FRPD project bank transfer was made without evidence of a draw request.

EDA Treasurer Patteson and others with the authority to request the draw at the time have also denied having requested the second January draw. Bank officials have not yet publicly commented or responded to requests for information about where the impetus for the January 30 draw came from.

So while the process remains a mystery under investigation, according to the EDA the end result seems to be mysteriously-transferred money spent on what it was supposed to be spent on, without undue expense to the Town of Front Royal.

Projects
The Finance Committee also discussed negotiations and the bid process on several outstanding projects. Those include repairs on the residential apartment building at 514 East Main Street attached to the old Stokes Mart building at 506 East Main; roof repairs at 1325 Progress Drive in the EDA’s Happy Creek Technology Park; and a contract negotiation on the Fairgrounds Road property. Prior to his early departure from the 11 a.m. committee meeting, Greg Harold told the committee he had another meeting with the Afton Inn developers on a mutually agreeable path forward.

Harold has previously told the EDA board that the developer is anxious to be allowed to resurrect the project halted upon filing of the EDA civil litigation in March due to the alleged use of the project to move some misdirected EDA assets. However the development group 2 East Main Street LLC was not cited as involved in that alleged misdirection of EDA assets. The EDA suit contends that former EDA Executive Director Jennifer McDonald utilized project funds for unauthorized transfers for personal use.

Greg Harold, left, has continued to meet with Afton Inn developer 2 E. Main St. LLC which is anxious to be allowed to restart the redevelopment project.

The EDA hopes to have several bids in place on repairs to the 514 East Main Street apartments within the week. It has given the three displaced tenants notice the EDA will stop covering their living expenses in a nearby motel as of September 30. Parsons later noted the tenants will be allowed to apply their rent payments to their accommodations until they are resituated in the repaired apartments.

Attorney
Conversation early in the meeting indicated that Interim County Attorney Jason Ham of Litten & Sipe LLP had declined to also serve as EDA attorney. Parsons later explained that Ham indicated potential conflicts of interest between the County and EDA Attorney roles due to the swirling civil litigation had made him uncomfortable serving in both positions.

The EDA will utilize the services of counsel from Sands-Anderson, the Richmond-based company handling the EDA’s civil suit filed March 26. Bids on legal services long term are expected to be in by Monday. The EDA is exploring the use of independent counsel from the County’s in the wake of the prevalence of potential conflicts of interest that became increasingly apparent as the financial investigation and consequent litigation evolved in recent months.

See the entire open meeting of the EDA Finance Committee in this Royal Examiner video: