FRONT ROYAL – Legal arguments on the substance of the civil defamation lawsuit brought by local attorney and Shenandoah District Supervisor Tom Sayre against Front Royal-Warren County Economic Development Authority Executive Director Jennifer McDonald will be heard in Warren County General District Court the afternoon of December 19.
However, Judge W. Dale Houff, who dismissed the criminal misdemeanor filing of a false police report case against McDonald in that courtroom on October 31, will not preside over that hearing or trial, if the court rules on December 19 that there are grounds for the civil case to proceed. During a November 16 hearing, Sayre attorney Timothy Bosson requested Judge Houff be replaced due to potential conflicts of interest.
Houff agreed and signed an “Order of Disqualification” recusing himself from the Sayre-McDonald civil case because “the plaintiff is a local attorney that regularly appears before this court.” Consequently, Winchester General District Court Judge Ian Williams is slated to preside at the December 19 hearing in the civil case at 2:30 p.m.
In the wake of McDonald’s criminal case acquittal, her attorney Lee Berlik has said he will move to have Sayre’s $25,000 civil defamation case dismissed. It is also anticipated he will ask the court to hold Sayre responsible for his client’s legal fees. And listed among the top-four defamation attorneys in the D.C. Metro Area those fees might not be cheap. It is also likely McDonald would file a counter-defamation civil action against Sayre were his civil case to be dismissed or if she were to prevail in a civil trial.
However, Sayre attorney Bosson asserts he has evidence not introduced during the Halloween Day prosecution of McDonald in the false police report case. He also notes that the standard for conviction in civil and criminal matters differs. While in criminal court the prosecution case must be proved “beyond a reasonable doubt”, in civil court the standard of proof is that alleged behavior was “more likely than not” to have occurred.
On Friday afternoon, September 21, Sayre filed a $25,000 defamation lawsuit against McDonald. Sayre’s suit revolves around the reported stone-throwing vandalism at her home that McDonald reported at 9:02 p.m. on Thursday, June 15, 2017. Sayre contends that a note found at the scene following the vandalism that contained his phone number and the notation “do not call Tom at work” was planted by the EDA executive director as a means of implicating him in what he believes to be a “faux” or false crime set up by McDonald herself.
During the October 31 false police report trial it was revealed that in addition to Sayre’s phone number, the phone number of former Town Manager Michael Graham was also on the note found at the scene of the vandalism. The note described as “a
piece of trash” near her front door was pointed out to sheriff’s office investigators at the vandalism scene by McDonald. It contained instructions about planned incidents at McDonald’s property designed to scare her, as well as a reference that “Norma Jean” was awaiting “files” related to an incident believed to be the EDA office break-in; as well as instructions “Do not take this sheet with you …” and “Do not call Tom during business hours …”
Norma Jean Shaw is editor of the Royal Examiner.
‘Fabricated’ evidence – but by whom?
And while Judge Houff granted McDonald attorney David Crump’s motion to dismiss the criminal case against his client before even presenting a defense case, news reports of the trial quoted the judge commenting that it was “fairly clear” that the note alleged to have been dropped by a suspected perpetrator at the McDonald property was likely “fabricated” and that “something is made up and is horribly wrong with this.”
Shaw, Sayre and Graham all testified during the McDonald misdemeanor trial that they had no knowledge of the note with their name and/or numbers attached to it and had nothing to do with any incidents targeting McDonald’s home or the EDA headquarters.
The Front Royal Police have placed the EDA office break-in in the department’s “inactive” or “leads exhausted” file. However, FRPD Investigator Landin Waller told Royal Examiner that as a felony breaking and entering case there is no statute of limitations on reopening the case were additional evidence to come forth.
In fact as was reported last year, on June 17, 2017 about two months after the EDA office break-in and one month after the McDonald property vandalism, in a letter signed by then-Board Chairman Greg Drescher the EDA Board of Directors “formally” requested that the town police place their investigation on “inactive status”.
Drescher wrote that the EDA had hired a private investigator “to handle the investigation” though it was later elaborated that McDonald had actually hired the PI, Ken Pullen. The FRPD case file indicates that Pullen later communicated to law enforcement that he believed the EDA office and McDonald home property incidents were related. The McDonald property incidents were investigated by the Warren County Sheriff’s Office.
In the FRPD case file acquired by Royal Examiner via a Virginia Freedom of Information Act (FOIA) request, the town police also noted there was a concern both departmentally and among EDA officials about keeping the names of several public officials cited by McDonald in a police interview as potential suspects in the EDA break-in out of the public eye as the investigation proceeded.
According to the case file McDonald was asked by town police Investigator Waller if she “could think of anyone that might be mad enough to do something like this” regarding the EDA break-in during which a photo of McDonald was pinned to her meeting room chair by a knife and several other photos were left behind with scratch marks on her face.
“She informed me that there is a group of people who have made derogatory statements about the Work-Force Housing Project in the Royal Examiner …She listed Councilwoman Bébhinn Egger, Mike Graham, Stan Brooks, Shae Parker, Tom Conkey, Roger Bianchini and Norma Jean Shaw as persons she felt were angry with her,” the police summary of the interview states.
In the loop and under the bus?
Egger, Brooks, Parker and Conkey are all former Front Royal town councilmen, Brooks has also been mayor, and as stated above Graham is a former town manager. Bianchini and Shaw are Royal Examiner’s editorial staff. While Shaw and McDonald seemed to have a more contentious relationship due to that reporter’s lines of inquiry about McDonald and the EDA’s financial dealings, Bianchini and McDonald appeared to maintain a good working relationship as evidenced by a series of June 2017 texts from McDonald to him related to developments at her home property that were included in the police file.
The FRPD case file indicates no sign of forced entry into the old Avtex Admin building or the EDA office in that building shared with the Northern Shenandoah Valley Regional Commission; or of any helpful forensic evidence.
Interviews with McDonald and the two other EDA staffers who work out of the office, Marketing Director Marla Jones and Secretary Missy Henry, indicated only those three had keys or knew an office combination lock that Henry told police had been changed a few days before the office break-in. Jones also told police that the working relationship between the three was excellent and there was no animosity between the EDA staff.
As far as additional evidence available to the civil case plaintiff, it has also been noted by several court observers at the McDonald misdemeanor criminal trial – Shaw and Bianchini were barred from the courtroom as witnesses in the case – that Commonwealth’s Attorney Brian Madden left several potentially crucial witnesses uncalled as part of the prosecution case. Those uncalled witnesses who were available to testify included FRPD Investigator Waller, EDA Marketing Director Marla Jones, and EDA Secretary Missy Henry.
Waller headed the town police investigation into the EDA office break-in and developed evidence related to the McDonald property vandalism.
Jones told police investigators that Bianchini was in McDonald’s office between 3 p.m. and 4 p.m. on Thursday, June 15, 2017, when he told FRPD investigators he received the information about the rock-throwing vandalism. Jones also told police that McDonald had no morning meetings on Friday, June 16, 2017, when McDonald attorney Crump asserted this reporter was scheduled to meet with his client, rather than the previous afternoon.
Jones told police that McDonald told her about the vandalism incident “Around 9 a.m.” the morning of June 16, 2017. Investigator Waller then asked if McDonald had any meetings that morning. “No, we talked most of the morning,” Jones replied of McDonald’s June 16, 2017 schedule the morning after the vandalism.
It was on Henry’s calendar that McDonald attorney Crump insinuated at trial his client had a 9:30 a.m. June 16 meeting scheduled with Bianchini. That alleged Friday-morning meeting was pivotal to the defense scenario that Bianchini received the information about the vandalism from McDonald the morning after it happened, rather than the prior afternoon about six hours before she reported the incident.
The false police report case revolved around Bianchini’s statement to FRPD around 10:30 a.m., Friday, June 16, 2017, that he had learned details of the home vandalism incident from McDonald in her office the previous afternoon around 3 p.m.
In seeking the maximum $25,000 civil compensation available in General District Court Sayre cites: “reputational harm … since it was clear numerous people in the Town and County had heard about the allegations against Tom” and “that if he was indicted and/or convicted for these crimes he could lose his law license, be unemployable, be removed from the Board (of Supervisors), and he and his family would suffer immensely.
“Tom lost significant sleep, suffered acute anxiety, could not focus at work, sought counseling from his Priest, spent countless hours seeking to clear his name and repair damage to his reputation.”
And on December 19 attorneys will argue if there is a substantive legal argument that Sayre’s lost sleep and acute anxiety had enough of a basis in documentable evidence to be argued as a civil case before the court.
Town endorses Royal Arms Apartments redevelopment plan thru EDA bond
While it was a divided Front Royal Town Council that approved a resolution detailing the discovery of years of overpayments on bond issues though the Economic Development Authority on November 26, council was unanimous in approving a resolution in support of a new EDA bond issue of up to $17-million for the renovation of the Royal Arms Apartments on Criser Road inside the town limits.
Support for the bond issue was recommended to council following a late October EDA public hearing and unanimous project endorsement by the EDA Board of Directors.
During that EDA public hearing, two representatives of a nationwide affordable housing redevelopment company CPP-Housing pitched their plan to purchase and upgrade the Royal Arms Apartments. That plan, as explained by CPP-Housing Senior Project Manager John Fraser, is to upgrade the 144-unit complex, including an existing outdoor pool, but keep it affordable for the existing residents.
“The goal is for there to be no displacement of tenants during the project,” Frazer told the EDA board.
“We are a for-profit but mission-based company,” CPP-Housing Vice President Seth Gellis told the EDA. Of its “mission-based” business model, Gellis told the EDA, “It pays to care – the better you treat residents, the better they take care of the property.”
CPP Project Manager Frazer told the EDA board and staff that the project’s “main goal” was “to preserve and extend” the lower income, affordable housing aspect of the development over an anticipated 40 to 50-year life of the existing buildings. Frazer said his company projects additional renovation work on an approximate 15-year cycle. Responding to a question, Frazer said the plan was to maintain federal “Section 8” housing assistance parameters.
Of working with Frazer and Gellis’ company, Citi Community Capital Managing Director Mike Hemmings is quoted on the CPP website stating, “CPP brings a creative and sophisticated approach to acquiring and developing low-income multifamily communities. Citi values their relationship with CPP because they are true professionals and have always performed as advertised.”
CPP-Housing, with a home office in Irvine, California, and an “Eastern Division” headquarters in Reston, Virginia, is a subsidiary of WNC, described on its website as “a leading provider of investment, asset management and development services to a wide array of partners.”
Those partners range “from for-profit and nonprofit developers and property owners to the nation’s largest corporations and financial institutions” according to the WNC website. WNC is described as “a family-owned business for more than 47 years” which has “acquired more than 1,375 properties representing $9.3 billion in assets” since its 1971 inception.
“Our success is built on enduring partnerships with our developers and investors. We’ve earned their trust, which is why they choose to work with us time and time again,” parent company WNC’s website states.
As with the Valley Health revenue bond approved earlier by the EDA, Town and County, no liability for payment of the bond is incurred by the EDA or either involved municipality or member thereof. The bond issue is to a subsidiary entity “Royal Arms Community Partners LP” whose address is CPP’s Irvine, California address.
CPP-Housing Vice President Gellis explained his company’s desire for the revenue bond issued through the local EDA as a means to access federal and state tax credit programs from its resulting work.
The Resolution approved by the town council on November 26 notes that the Town’s endorsement of issuance of the revenue bonds does not obligate the Town, County or EDA “to pay the Bonds or the interest … or other costs” associated with the issuance “except from the revenues and money pledged therefore” which in the Town’s case is nothing, according to the wording of the resolution.
The resolution also notes that 100% of the principal amount of the bond issues will be allocated by the Town, with 0% by the County based on an estimation of “a reasonable relationship to the respective benefits to the Town and the County” from the bond issue.
EDA Confidentiality Agreement sends 2 councilmen out of closed session
FRONT ROYAL – As Royal Examiner reported in its introduction to a video of the annual auditor’s report to the Town Council Finance Committee on November 19, following that report and a scheduled work session council adjourned to a closed session with officials of the Front Royal-Warren County Economic Development Authority.
Informed of no anticipated announcement from that work session that included continuation of a several month long discussion of “debt service related to prior and current budget years regarding the Economic Development Authority” that requires “the provision of legal advice” and a late addition: discussion of “a prospective business or industry … where no previous announcement has been made of the business’ or industry’s interest … in the community” the media present evacuated town hall – apparently a tad too quickly.
For if those two intrepid reporters had stuck around just a bit longer they would have seen two councilmen – John Connolly and Jacob Meza banished from the closed session. At issue for the two was a request from EDA officials present – Executive Director Jennifer McDonald, recently-installed EDA Board of Directors Chairman Gray Blanton and board member Ron Llewellyn – for the signing of a confidentiality agreement.
According to Connolly that agreement related to the late addition topic of a prospective business or industry’s interest in expanding into the community. And Connolly said the EDA officials were clear in explaining they were simply forwarding the requirement a confidentiality agreement be required to sit in on the discussion.
Connolly, who did not run for reelection this year, said he felt the signing of a confidentiality agreement by council adjourning to its own closed meeting that by its own rules details must remain confidential didn’t seem appropriate to him.
“I don’t think it says much about our relationship with our EDA that they feel they need to require or pass along a request for an extra layer of confidentiality,” Connolly said. He elaborated that he felt it was not a violation of the closed meeting rules that he discuss the confidentiality agreement because that was not a stated purpose of the closed meeting.
“What I can say is that in closed session I’ve always felt protected by the fact that anything you discuss will always remain confidential. And so not having advance notice of something prior to that; not getting a chance to talk to our attorney just made me feel uncomfortable,” Meza told Royal Examiner.
Connolly said he found it odd that the agreement presented to council on November 19 was dated April with only EDA Executive Director McDonald’s name printed on it and the council’s names handwritten in.
“I just thought the April dating was weird,” Connolly said, adding his impression was there had been no advance notice to the Town that such a request would be made to participate in the closed session.
“It is still unclear to me if it was communicated to the mayor or others – but it was not communicated to me,” Connolly said. “I have been on council four years and this is the first time multiple members have been excluded from a closed meeting due to an outside request.”
Meza was also put off by the sudden procedural change being sprung on council. “Number one I don’t sign anything I don’t have a chance to review. Since I’ve been on council I’ve never experienced something like that,” he said of the unanticipated addition of a confidentiality agreement requirement being added to a closed meeting.
Connolly said he and Meza were in the Town Hall hallway for about half an hour before they were allowed back in to participate in the discussion about EDA-Town loan payment discrepancies uncovered by the Town’s Finance Director B. J. Wilson.
Upon his return to the closed meeting after the EDA officials’ departure, Connolly said he did notice one more oddity – the signed confidentiality agreements had been left behind by the departed EDA trio.
“How important were they really, anyway?” Connolly wondered. He said he believed Town Attorney Doug Napier had collected the agreements signed by the remaining councilmen present – Chris Morrison was absent – and two councilmen elect, Letasha Thompson and Chris Holloway; and had called to see if the EDA wanted to pick up the signed agreements.
Asked about the status of the signed confidentiality agreements after council’s November 26 meeting, Napier declined comment.
Connolly made one other observation, noting Morrison’s absence. “If three councilmen had refused to sign they couldn’t have discussed that topic in closed session,” he observed of the lack of a quorum were three councilmen expelled from the meeting.
WATCH: Council discusses Town’s debt service to the EDA
The Royal Examiner’s camera was at the November 26, 2018 Front Royal Town Council meeting. Below is the resolution to read.
Watch the council’s discussion and vote below:
RESOLUTION REGARDING TOWN’S FINANCES WITH EDA
WHEREAS, during the May 21, 2018 Work Session Town Council requested recommendations from the Town’s Finance Director on the possibility of using various Town budget fund balances to pay off existing Town debt, recommending future tax rates, and giving Town Council the Town’s current financial status regarding debt service. Upon researching payoff amounts for the debt service the Town owed to the Economic Development Authority (EDA), the Finance Director discovered the Town likely had not have been billed correctly for debt service incurred by the EDA, and therefore, incorrect information apparently had been provided to Town Council for its decision-making process.
WHEREAS, it appeared that, as of May 2018, the payoff amounts provided by the EDA for debt service were higher than the Town had anticipated to end in Fiscal Year 2021, with a later payoff amount provided by the EDA to the Town was considerably higher than the Town anticipated. The Town had been previously been informed verbally and at least twice via email by the EDA that these loans would end in 2021.
WHEREAS, The Town’s Finance Director met with the EDA’s Executive Director on June 4, 2018 to discuss the debt service. The Finance Director was told by the EDA’s Executive Director that all of the EDA’s debt service was refinanced in January 2016 by the EDA and that all of the EDA’s debt service should be refinanced in 2024, which was not consistent with previous correspondence from the EDA from a few days earlier.
WHEREAS, after the June 4, 2018 meeting with the EDA, the Town’s Finance Director began a retrospective review of the Town’s historic finance records with the EDA and the EDA’s Financial Statements prepared by the EDA’s independent auditor. Based on the debt service listed in the EDA’s Financial Statement, the invoices the Town received from the EDA, and various agreements between the Town and the EDA approved by Town Council, it appeared to the Finance Director that the EDA had annually overbilled the Town by approximately $87,000.00 for the projects listed on the invoices.
WHEREAS, the Finance Director then contacted the EDA of what appeared to be the EDA’s billing errors and provided the EDA with the Town’s calculations based on the EDA’s Financial Statements. The Town requested additional support documents and an explanation regarding the differences.
WHEREAS, on June 21, 2018, the Town’s Finance Director again met with the EDA’s Executive Director to discuss the Town’s debt service concerns. The EDA’s Executive Director informed the Finance Director that the EDA had been billing the Town for various items associated with EDA/Town joint projects that were not included in the loan amounts that the EDA had financed for the Town, which was why the amounts being billed the Town were higher than the amounts seen on the EDA’s Financial Statements relating to long-term debt and that some of these items were paid for out of the EDA’s lines of credit. The Town requested documentation from the EDA to establish this assertion.
During this meeting the Town also asked why the invoice for debt service did not change for some projects when EDA refinancing had occurred in January 2016. The EDA responded that credits which were associated with the lower debt service were applied to the amounts with higher debt service, but overall were proportionally correct. The Town requested documentation to establish this assertion, in the form of support documentation showing the calculations from the refinance, copies of amortization schedules, coupons from the bank for debt service payments, and estimates on any future maintenance fees that would be associated if the Town were to pay off the current debt.
WHEREAS, on June 25, 2018, the Town received correspondence from the EDA that some of these debts the EDA had been billing the Town would be paid off in the near future with the potential sale of EDA property. The Town was also notified of a project from 1999 regarding some Avtex engineering that did not appear to have been recently invoiced to the Town. The EDA stated in the June 25 correspondence that “…since 2008 we have not put any insurance or maintenance of projects in loans except for the Leach Run Parkway. I was under the impression we would pay that directly out of our funds and not add to the Town or County debt”. Also, in the June 25 correspondence, the EDA sent several amortization schedules that appeared to have been created by the EDA itself, and not by the originating bank, and copies of various bank coupon payments for loans. Based on previous correspondence the Town had been informed by the EDA that all of the EDA’s debt was refinanced into one loan. Upon receiving copies of multiple bank coupon payments, the Town requested an explanation for the multiple coupons and the response received from the EDA’s Executive Director was “I am just sending you everything we have.”
WHEREAS, The Town’s Auditor, Mitchell & Company, had been kept apprised on an ongoing basis of the various financial matters and correspondences between the Town and the EDA, and the Town’s Auditor agreed with the Town’s Finance Director that it appeared the Town has been overbilled based on the approved Town agreements and the EDA’s Financial Statements. Mitchell and Company likewise requested, on the Town’s behalf, support documents and explanations for the EDA’s billings to the Town.
WHEREAS, given that the Town’s Finance Director and Town’s Auditor were unsure of the exact financial standings regarding the debt service and or maintenance costs associated with various Town projects being funded by the EDA, the Town’s Finance Director and the Town’s Auditor recommended that a meeting be set up between representatives of Town Council, the Finance Director, the Town Auditor, the Town Attorney, the EDA’s Executive Director, the E.D.A.’s accountant or auditor and whoever other EDA representatives the EDA deemed appropriate. If at that point satisfactory explanation and support documents could not be provided by the EDA, the matter would need to be escalated to a resolution satisfactory to the Town.
WHEREAS, following specific direction by Town Council at the request of the Town’s Finance Director, Town Manager, Town Auditor, and Town Attorney, the Town Attorney sent the EDA a
formal Freedom of Information Act (FOIA) request, setting forth specific financial documents that the Town’s Finance Director and the Town’s Auditor needed to see to make an informed judgement as to the Town’s financial standing with respect to the EDA. This FOIA response was due from the EDA on August 24, 2018.
WHEREAS, on August 23, 2018, the Town’s Mayor, another Town Council Member, the Town Manager, the Town’s Finance Director, the Town’s Auditor, and the Town Attorney, met with the EDA’s Executive Director, the EDA’s Chairman of its Board of Directors, and the EDA’s attorney, to answer a number of questions directly related to the FOIA request. At this meeting, the EDA’s Executive Director, in response to questions posed her by the Town’s Auditor, stated the EDA had mistakenly billed the Town for a portion of a $1.9 Million Virginia Department of Transportation performance bond related to Leach Run Park Parkway; further, the EDA had mistakenly billed the Town for an agreement related to debt service on the Avtex Administration Building; and further, the EDA had not closed on a more than $24 Million New Market Tax Credit Program low interest loan to finance a number of very important Town major capital improvement projects, even though the EDA had previously represented multiple times to the Town that the New Market Tax Credit Program loan had been closed and the EDA already had that money in its bank accounts. As a result of the EDA not having closed on the New Market Tax Credit Program loan, the resultant increase in interest rates now likely will cost the Town hundreds of thousands of ollars per years in additional borrowing payment amounts over what Town Council had allocated in its annual budget.
WHEREAS, the Town’s Finance Director and the Town’s Auditor continue to investigate to determine the true status of the amount of overbilling of the Town by the EDA, and resultant overpayment by the Town to the EDA.
NOW, THEREFORE, BE IT RESOLVED, that Town Council commends its Finance Director and the Town’s Auditor for their vigilance and their tireless pursuit of the true status of the historic amounts the Town should have paid the EDA, as the financial transactions between the Town and the EDA span years are voluminous and are very complex, and commends both officials that in going forward the Town will be able to more accurately and timely pay no more to the EDA than it should.
NOW BE IT FURTHER RESOLVED that the Town will continue to pursue this matter, and will continue to carefully monitor all future financial transactions between the Town and the EDA,
between the Town and all other government agencies, and between the Town and all other entities with which and with whom it deals, to ensure, to the best of the ability of the Town and its officials and staff, that all financial transactions are conducted strictly in accordance with the terms of the agreements between the Town and the entities with which the Town has agreed, and so that the hard earned tax dollars of the taxpayers of the Town of Front Royal are protected and paid wisely and in the manner for which they are voted upon by Town Council.
This Resolution was approved at the Regular Meeting of the Town of Front Royal, Virginia, Town Council conducted on Nover 26, 2018, upon the following recorded vote:
Hollis L. Tharpe, Mayor
Town Council Members:
John P. Connolly ____y___ Gary Gillispie ____y_____ Jacob Meza ___y____
Christopher Morrison ___y___ William A. Sealock ___n_____ Eugene R. Tewalt ___n______
See related story here.
Resolution commends Town staff for uncovering over-payments to EDA
FRONT ROYAL – The ever-wise “they” say “follow the money” and you’ll get to the bottom of any story.
On Monday night, November 26, a resolution commending town staff for uncovering financial irregularities totaling hundreds of thousands of dollars in Town over-payments past, present and apparently future in its dealing with the Front Royal-Warren County Economic Development Authority was presented to the town’s elected officials.
And by a 4-2 margin, the Front Royal Town Council approved that resolution titled “Resolution Regarding Town’s Finances with EDA”. Approval of the resolution appears to put, if not a period, at least a semicolon on months of closed meetings on the subject of past, present and future Town loans or debt service payments to the EDA.
The two dissenting votes were Vice-Mayor Eugene Tewalt and Councilman William Sealock. Both prefaced their negative votes with explanations that lauded transparency while criticizing either the resolution’s form or content as incomplete.
Sealock was particularly critical of the release of what has thus far been discovered, but without all the facts – as in every penny the Town has overpaid the EDA over the past nine years, as well as a clear-cut explanation of exactly how the accounting mistakes happened. Elected to council two years ago from a seat on the EDA board of directors, Sealock wondered at what junctures town staff may have failed in the past to uncover the accounting errors.
Jacob Meza countered those arguments from the majority perspective. He said the three-plus page resolution’s accounting of what has been discovered by Town Finance Director B. J. Wilson and contracted auditor Jeff Mitchell of Mitchell & Company was both factual and an outline of what has thus far been discovered.
While details may remain to be determined, Meza reasoned that release of a factual, Town staff-assembled summary of the step-by-step accounting of the nearly six-month discovery process was preferable to portions leaking out to the public in a piecemeal fashion.
That “piecemeal” fashion began with Royal Examiner Editor Norma Jean Shaw’s October 31 – trick or treat – published story revealing that the EDA could owe the town government $291,278.64 due to over-billings beginning in 2009. The factual basis for that story was acquired by a Royal Examiner Freedom of Information Act (FOIA) request.
Piecemeal as either that initial public revelation by Royal Examiner or Monday’s approved “Resolution Regarding Town’s Finances with EDA” may be, as Meza said of the resolution – the content is all factual.
And from an accounting standpoint, the content of Monday’s resolution is troubling, even if the primary fault, cause and source of that trouble has yet to be fully determined.
Of the accounting discrepancies, EDA Executive Director Jennifer McDonald told Royal Examiner on Tuesday, “We have acknowledged the issue and are working on it and are committed to making it right.”
According to the resolution, Town Finance Director B. J. Wilson came across EDA billing irregularities as a result of council’s request that he examine the feasibility of financing recent departmental purchase requests through internal loans that would be free of interest payments.
The three-plus page resolution documents a series of meetings and communications beginning in May that led, first Wilson, and then contracted auditor Jeff Mitchell, to question the EDA’s billing of the town government on a number of fronts.
Discovered were: the EDA “mistakenly billed the Town for a portion of a $1.9 Million Virginia Department of Transportation performance bond related to Leach Run Park Parkway; further, the EDA had mistakenly billed the Town for an agreement related to debt service on the Avtex Administration Building …”
Also uncovered was another reported EDA inaccuracy the resolution states is likely to continue to cost the town hundreds of thousands of dollars per year over the lifespan of recently approved capital improvement projects like the new $11-million police station. That failure involved the New Market Tax Credit Program.
Of that issue the resolution states, “and further, the EDA had not closed on a more than $24 Million New Market Tax Credit Program low interest loan to finance a number of very important Town major capital improvement projects even though the EDA had previously represented multiple times to the Town that the New Market Tax Credit Program loan had been closed and the EDA already had that money in its bank accounts.”
If the Town Finance Director’s assessment was that for years the Town had been overpaying the EDA “by approximately $87,000 annually for projects listed on (previous) invoices” the assessment of the New Market Tax Credit problem resonates into the town government – and its taxpayers – futures: “As a result of the EDA not having closed on the New Market Tax Credit Program loan, the resultant increase in interest rates now likely will cost the Town hundreds of thousands of dollars per years in additional borrowing payment amounts over what Town Council had allocated in its annual budget.”
The revelation of the VDOT/Leach Run Parkway, Avtex Administration Building and New Market Tax Credit mistakes are dated to an August 23 meeting regarding a Town FOIA request attended “by the Town’s Mayor, another Town Council Member, the Town Manager, the Town’s Finance Director, the Town’s Auditor, and the Town Attorney” on one side and “the EDA’s Executive Director, the EDA’s Chairman of its Board of Directors (Greg Drescher), and the EDA’s attorney (County Attorney Dan Whitten).
The following day after an August 24 closed session at an EDA board meeting, Drescher announced he would step down as chairman of the EDA board of directors. He cited conflicting work schedules with his “real job” as superintendent of Warren County Public Schools. Other recent turnovers at the EDA include the resignation of 76-year-old Board Treasurer William “Billy” Biggs on October 8 – citing health issues after 30 years on the board, 28 as Treasurer; and the announced retirement of bookkeeper Josie Rickard effective in December. Following Rickard’s announcement, in October the EDA announced the hiring of the accounting firm of Hottel & Willis.
The council resolution of November 26 also points to what are perceived as accounting irregularities and inconsistencies in the EDA’s response to requests, including FOIA requests from the town finance department and auditor.
Referencing a June 25 EDA reply to a request for clarification on earlier explanations of how the miss-billings occurred, the resolution states, “… in the June 25 correspondence, the EDA sent several amortization schedules that appeared to have been created by the EDA itself, and not by the originating bank, and copies of various bank coupon payments for loans.
“Based on previous correspondence the Town had been informed by the EDA that all of the EDA’s debt was refinanced into one loan. Upon receiving copies of multiple bank coupon payments, the Town requested an explanation for the multiple coupons and the response received from the EDA’s Executive Director was ‘I am just sending you everything we have.’ ”
And “everything we have” is now being scrutinized by the town finance director and auditor seeking additional clarification for nine years of miss-billings and the Town’s belief it had been assured by EDA Executive Director Jennifer McDonald that a $24-million New Market Tax Credit Program capital improvement loan had been closed on and its 9 years of interest-free payback would be available to the Town for projects including the new Front Royal Police Station under construction across Kendrick Lane from the EDA office.
The resolution concludes by trying to assure town taxpayers that their money will be protected and utilized only per approved projects, stating: “the Town will continue to pursue this matter, and will continue to carefully monitor all future financial transactions between the Town and the EDA, between the Town and all other government agencies, and between the Town and all other entities … so that the hard earned tax dollars of the taxpayers of the Town of Front Royal are protected and paid wisely and in the manner for which they are voted upon by Town Council.”
Through the resolution council also commended “Its Finance Director and the Town’s Auditor for their vigilance and their tireless pursuit of the true status of the historic amounts the Town should have paid the EDA.”
Norma Jean Shaw contributed to this story.
Former Winchester City Manager Edwin C. Daley tapped for EDA board
FRONT ROYAL – A former city manager with about 40 years experience as city manager in Winchester and other municipalities was named Tuesday as the newest board member of the Warren County-Front Royal Economic Development Authority.
Edwin C. Daley will fill the vacancy created by the October resignation of William “Billy” Biggs, the EDA’s treasurer of 30 years.
Daley became Winchester city manager in 1986, serving for 19 years before moving on to replace Hopewell’s retiring city manager in 2007. He also served as the Projects Administrator for the City of Emporia before being named Interim City Manager.
Supervisor Dan Murray said at Tuesday’s meeting that the supervisors felt he was the right candidate for the board at this time.
There may be more new faces on the EDA board soon, as the terms of Greg Drescher and Ron Llewellyn expire in Feb. 2019.
Egger to Supervisors: EDA board and director ‘out of control’, should be removed
For the third time this year, Front Royal resident Mark Egger addressed the Warren County Board of Supervisors Tuesday evening, imploring the panel to remove Front Royal-Warren County Economic Development Authority Director Jennifer McDonald and the entire board for “the good of the community.”
Egger, the father of former Front Royal Town Councilwoman Bébhinn C. Egger, told the board that he believed, based upon transcripts of police interviews with McDonald and others, that lies were concocted to distract from questions asked by Ms. Egger regarding the IT Federal and workforce housing projects.
He also told the supervisors that, based upon transcripts of the police investigation files he obtained through a Freedom of Information Act request, McDonald appeared to have staged the break-in and vandalism at the EDA office and attempted to set-up various community members, including the editor and a reporter of Royal Examiner.
Following the meeting, when asked about confidence in the current EDA board and its executive director, only Dan Murray was willing to go on the record and express that he was confident in the board as it is currently staffed.
When asked about his confidence in the board and its executive director, County Administrator Doug Stanley replied, “No comment.”
Incidentally, the board announced at Tuesday’s meeting that it had selected Edwin Daley to fill the seat vacancy created by the resignation of long-time treasurer Billy Biggs. Daley’s term runs until Feb. 29, 2020.