As Royal Examiner reported on September 11, that day Shenandoah District Supervisor Tom Sayre was awarded $20,000 of $25,000 in damages he was seeking in a General District Court defamation civil suit against former Front Royal-Warren County Economic Development Authority Executive Director Jennifer McDonald.
While an overview of the case and Judge Ian Williams’ decision and damages ruling was presented in that linked story, there was quite a bit of courtroom drama that led up to that decision that went unreported due to time constraints. We will endeavor to fill in some of that detail now. And with neither side in the case requesting a court reporter for day two of the trial, this is the best you’re going to get.
As Sayre took the stand to open day two of his defamation lawsuit against McDonald there soon were tears from the plaintiff upon recalling the moment he discovered he had been implicated in a series of alleged criminal incidents targeting McDonald and the EDA headquarters.
Sayre based his $25,000 General District Court claim of defamation of character upon the presence of his office cell phone number and the instruction “Do not call Tom during business hours” on a crumpled note McDonald pointed out to Warren County Sheriff’s Office responders to her June 15, 2017 report of an act of vandalism at her home.
Sayre contended that the typed note, as well as the alleged criminal incidents to which it appeared linked, was fabricated either by McDonald or at her direction as a means to deflect attention from her activities as the EDA’s chief executive that led to her December 2018 resignation and current civil and criminal legal problems. Those problems include being a primary defendant in civil suits brought by the EDA and Town of Front Royal seeking recovery of as much as $20 million and $15 million, respectively; as well as 28 felony criminal indictments stemming from the EDA financial fraud investigation launched in September 2018.
Though you might think it would be the defendant crying in this circumstance, it was the plaintiff’s tears that began shortly into direct examination by his attorney Tim Bosson. Asked how he found out he had been implicated in criminal activity targeting McDonald and the EDA, Sayre began to recall an August 2017 phone call from former Royal Examiner Editor Norma Jean Shaw telling him he needed “to protect” himself due to the above-cited references in the vandalism scene note.
“I was in the kitchen,” Sayre began haltingly, as he glanced over his shoulder from the witness chair toward his wife seated behind press row. Sayre’s testimony halted for several minutes as he tried to regain control of his emotions, sobbing gently at times.
Those tears eventually evolved into sometimes confrontational cross examination exchanges with McDonald attorney Lee Berlik that led to admonitions from the bench to Sayre not to critique Berlik’s questions to him: “These are yes and no answers – you were doing real well there for about eight seconds,” Judge Williams told Sayre at one point during the plaintiff’s nearly two-and-a-half hours on the stand.
The eight seconds of court-approved exchange between Berlik and Sayre referenced by Williams was Sayre’s reply to the question, “Did you ever tell the police that Mr. Bianchini (yes, this one) was suspected of cutting the brake wires on your car?”
After a slight pause Sayre replied, “I’m going to answer no,” elaborating that he had three suspects to what he testified was discovered to be sliced brake wires causing warning lights to come on and the vehicle not to start as his wife attempted to leave their property in their Chevy Traverse several years ago.
It would not be the only reference to your humble reporter during the day’s testimony and closing arguments. That is due to Bianchini’s (I hate referring to myself in the third person) day one testimony that McDonald told him details of the vandalism the afternoon of June 15, 2017, during a lengthy meeting at her office. It turned out that conversation came five to six hours before McDonald reported the stone-throwing vandalism of her home at 9:02 p.m. that evening. Also drawing attention to this reporter were the plaintiff’s day one introduction of a series of texts and emails between him and McDonald regarding the vandalism event at her home and her private investigator’s research into the incident.
They were messages largely concerning a potential suspect supposedly connected to Sayre as a past criminal client, who was approached about wearing a wire to draw an admission from Sayre to his involvement. McDonald’s Private Investigator Ken Pullen testified there was neither an ID’ed suspect nor any plan for wiring a suspect during his day one testimony on August 2.
Asked by Berlik during cross examination if he had feared for his safety or that he might be murdered, Sayre explained that he feared McDonald or associates might kill him for crossing the then EDA executive director concerning the Workforce Housing Project. During a June 2017 county board-EDA work session Sayre and fellow county supervisor Archie Fox had questioned McDonald and EDA board Chairman Greg Drescher about the process of that project.
It was a project that bore questioning, as it evolved from a reported 2014 $10 “gift” from McDonald’s aunt and uncle for whom the EDA executive director maintained a real estate broker’s license and job, to a $445,000 “moral obligation” purchase of 3-1/2 acres by the EDA upon disclosure a previously unmentioned federal tax credit deadline had not been met in 2017. Of course Sayre and Fox weren’t the first to question that and other recent EDA projects. Councilwoman Bébhinn Egger and Royal Examiner had begun asking questions, particularly about Workforce Housing and the ITFederal project over the previous year.
“There are people who get knocked off if they know too much,” Sayre explained, referencing the 1983 murder of Front Royal Police Sgt. Dennis Smedley, and another apparently fatal incident involving a local physician he identified as “Doctor Lind”.
“She talked about killing me … that she missed an opportunity to ‘take me out’,” Sayre told Berlik, adding of the still unsolved Smedley murder, “There is a theory he knew too much about drugs in the community.”
The give and take between McDonald’s attorney and Sayre led to Berlik’s closing argument that because the plaintiff believed something in his mind did not mean it was true, or that his client had caused those beliefs to formulate.
Berlik argued that Sayre’s fears were stoked more by Shaw’s phrasing of her warning phone call to him, the recollection of which led to Sayre’ initial battle with his emotions on the stand, more so than the actual presence of his number and the instruction “don’t call Tom during business hours” on the typed note pointed out by McDonald to first responders at the home vandalism scene.
Berlik also questioned whether Sayre had suffered any actual damage from the note and its contents. While Sayre testified he had gone from full-time legal practice to part-time in the wake of the note’s discovery, Berlik elicited the information that his salary at job he took upon cutting back his legal practice, as Human Resources Director at Seton Home School, paid him $93,000 to $95,000 with subsequent Cost Of Living (COLA) increases. However Sayre insisted he had taken about a $10,000 loss of income hit due to his employment shift.
Berlik also referenced previous testimony from witnesses who all indicated they did not believe Sayre’s reputation had been impacted in the community by the alleged conspiracy note.
Sayre countered that he had run into a woman during his current campaign for re-election who said she would not vote for him because of a belief he had been involved in the alleged incidents targeting McDonald. Asked her name by Berlik, Sayre could say only that she lived “up on Freezeland Road”.
Sayre also testified that he had a perhaps unexpected opponent in his run for re-election to the Shenandoah District Supervisors seat. Berlik asked if that opponent, identified as Walter Mabe, was running against him because he believed Sayre had been involved in a criminal targeting of McDonald.
“Where is he? … Where is the woman on Freezeland Road?” Berlik asked during closing arguments. His point to the court was that if either could provide evidence of the plaintiff’s assertion of damage to his reputation, why hadn’t they been produced as plaintiff witnesses.
“I don’t believe it happened,” Berlik said of the Freezeland Road encounter.
Berlik also questioned Sayre’s claim of emotional damage. The plaintiff said he suffered a great deal of stress and anxiety about his personal, professional and political future in the wake of information about the note circulating in the community. Sayre said he had talked to a priest, among others, though not in professional clinical treatment settings.
Defense counsel also cited a number of examples involving personal disputes with a variety of people to illustrate that the plaintiff was exceptionally thin-skinned and might take offense where others wouldn’t. Berlik pointed out that others implicated in the note, including Shaw and Michael Graham, had not filed defamation actions as a result.
Sayre attorney Bosson countered by saying the defense “eggshell” ego argument didn’t matter – that if his client was negatively impacted, as he asserted the plaintiff had illustrated he was, that was the bottom line in a defamation case.
“She was trying to destroy me – I called the BAR about it,” Sayre told Bosson on direct examination about fears for his professional future.
Noting his client has never been proved to have been the author of the vandalism scene conspiracy note, defense counsel Berlik pointed to others in the community who might have motive to attempt to set Sayre up for criminal acts out of various personal or professional conflicts with him.
Wait, what – WHO?!?
“We’re not saying Mr. Bianchini threw the rock – but they have a negative history. He had as much motive as anyone,” Berlik told the judge of testimony of past conflicts between the reporter and plaintiff including Sayre’s brake wire cutting suspicion of Bianchini and Bianchini’s filing of a 2011 stalking report involving Sayre around the time of the multi-million dollar SolAVerde tortious interference in a business contract lawsuit against Sayre and then fellow councilmen Chris Holloway and Carson Lauder.
However in his closing argument Sayre attorney Bosson pointed to the past tensions between the reporter and his client brought out by the defense as a positive for the plaintiff’s case. “In a way Mr. Berlik is our best witness – he’s gone out of his way to show Mr. Bianchini doesn’t like Mr. Sayre; so his (Bianchini’s) bias is in the opposite direction.”
Defense counsel Berlik argued that it was Sayre himself, upon being informed of the note and its contents by Shaw in August 2017, who had done the most to spread the information he was implicated throughout the community.
However plaintiff counsel countered that McDonald had played Bianchini with the “off the record” information about the note and investigation in order to get the information spread into the community.
Sayre was asked on the stand about Bianchini’s testimony that he only told four “close associates”, three professional and his long-time girlfriend, in confidence about the information he had gotten from McDonald about her PI’s investigation into the vandalism situation.
“I think he may have forgotten how many people he told,” Sayre replied. (Why is everybody picking on my memory?!? – What were we writing about?)
In the end the case revolved around two primary arguments – who was a likely author or architect of the note and the reported crimes against McDonald and the EDA offices; and were there actual damages involved, or just Mr. Sayre’s perception of damage where none actually existed.
In closing Bosson said the plaintiff didn’t have to prove McDonald herself wrote the note or threw the rock through her front door window.
“She told Mr. Bianchini that afternoon – how does she know about a crime that hasn’t happened? We are not saying she threw the brick or that she wrote the note. What we are saying is Ms. McDonald knows who threw the brick; what we are saying is Ms. McDonald knows what was in the draft note – she was the one behind it …
“This was all a scam by her to deflect attention off of herself – she may have thought it was for kicks to implicate Tom Sayre in a crime,” Bosson told the court, referencing both the home vandalism and McDonald’s report in May 2017 of a break in at the EDA headquarters.
On the stand Sayre expressed distress at being tied to racial slurs on one of the photos of McDonald and family members discovered at the EDA office after McDonald reported a break-in there on May 17, 2017, about a month before the reported vandalism at her home. The vandalism scene note referenced “Norma Jean” and “the Examiner” waiting for information supposedly taken from the EDA office that day.
At the time Shaw was exploring the large amounts of cash McDonald was using in her real estate business transactions, as well as the presence of the Sheriff as an agent on one of McDonald’s two real estate companies.
“This is far from a simple case,” Judge Williams said after a 10 minute recess to formulate his ruling. He cited four elements of defamation: 1/ publication, or perhaps in this case dissemination; 2/ an actionable statement; 3/ recklessness; 4/ false and defamatory information.
Noting that both parties were public figures constantly under public scrutiny, the judge observed, “They must be thick skinned about such things – but they don’t need to be thick skinned about malice.”
Williams said the evidence must be viewed in its totality, rather than compartmentalized.
“The plaintiff has evidence that the defendant had compelling reasons to use the plaintiff as a dupe in this,” the judge said referencing EDA/County Attorney Dan Whitten’s testimony that “things were falling apart” at the time and that “the defendant had reason to keep a lid on it … She had a reckless disregard for truth” and “reason to shift attention from herself to another public figure,” Judge Williams observed.
Judge Williams then referenced the different outcome he was about to render to the not guilty verdict in McDonald’s criminal misdemeanor false police report case last October 31. Judge W. Dale Houff dismissed the case against McDonald regarding her reported vandalism of June 15, 2017, at her home. That case was initially developed by FRPD investigators based on information supplied by this reporter during a police interview the morning of June 16, 2017. After nearly a year the warrant was brought forward by the Virginia State Police on June 13, 2018.
Judge Williams said it was unfortunate the outcomes were conflicting, adding of a key witness in both trials, “Mr. Bianchini’s memory seem to have been rehabilitated.”
The reference was to McDonald criminal attorney David Crump’s October 31, 2018 cross examination question to this witness about a notation on EDA Administrative Assistant Missy Henry’s 2017 calendar about an alleged meeting Bianchini had scheduled with McDonald at 9:30 a.m. Friday morning, June 16. It was then that McDonald and her attorney asserted Bianchini was told about the vandalism of the previous evening at her home, rather than the previous afternoon as he claimed.
Like McDonald, Henry has since been indicted on criminal felony charges related to the EDA financial fraud investigation, though in Henry’s case only two indictments related to disbursement of EDA assets related to the EDA-financed B&G Goods operation in the old Stokes Mart building.
But as Bianchini testified in this defamation trial, if he admitted to an “imperfect memory” and expressed confusion on the stand last October, it was confusion about whether he had scheduled a meeting with McDonald for that Friday morning 16 months earlier, rather than confusion about the Thursday meeting.
And Judge Williams noted that two witnesses called in this defamation trial corroborated key aspects of Bianchini’s testimony. Those witnesses were former EDA Marketing Director Marla Jones and FRPD Investigator Landin Waller. Neither was called as a witness by the prosecution in McDonald’s 2018 false police report trial.
On August 2, 2019, Jones testified that Bianchini was in McDonald’s EDA office for an extended period of time behind closed doors on Thursday afternoon, June 15, 2017, around 3 p.m. She also testified that she did not see Bianchini in the office the following morning. It was that Friday morning that Jones told FRPD investigators that McDonald had told her about the vandalism; and that the two talked for much of the morning.
Also on day one of the defamation trial last month Investigator Waller confirmed that Bianchini had informed him and Captain Crystal Cline in an interview the morning of June 16, 2017, between 10:40 a.m. and 11:30 a.m. about receiving the information about the vandalism from McDonald the previous afternoon.
And as Bianchini testified on day one of this defamation trial, had he been told about the vandalism at a meeting with McDonald within an hour of arriving for his interview at FRPD’s investigative headquarters, he would not have forgotten that – “I probably would have had to go straight from the EDA office to police headquarters,” Bianchini observed on the stand during his August 2 testimony.
And as Bianchini told fellow reporter Josh Gully during a phone interview for his story on the defamation trial, “Anyone can write anything on a calendar at any time”; and that if a meeting had once been scheduled with McDonald for June 16, 2017, it had previously been cancelled.
But without the corroborating witness testimony and no redirect examination to explain his hesitancy in response to the June 16, 2017 morning meeting question posed by the McDonald defense on October 31, 2018, Judge Houff dismissed the criminal case against McDonald without the defense even having to present its case.
However 10-1/2 months later the civil litigation surrounding McDonald’s vandalism report would have a different outcome.
As previously reported, after hearing nearly 3-1/2 hours of testimony and arguments on day two of the trial, Judge Williams awarded Sayre $5,000 in damages, $15,000 in punitive damages, and $676 in court filing costs. McDonald has 10 days from the judgment to file an appeal to Circuit Court.
Settle down boys
In another ruling, Williams declined to impose sanctions on either attorney for their conduct in or out of court during this case.
“There has been some hostility in this case … at times moderate to heavy … about what a dog the opponent was,” Williams said of the attorneys, describing “braggadocio” from both sides on how tough they were going to be in seeking a successful resolution for their clients.
In fact as Bosson and Berlik argued a motions point during last Wednesday’s hearing, Judge Williams admonished them at one point, “Now both of you, sit down.”
Despite the theatrics and contentious nature of the case, Williams said, “I am not inclined to sanction either side in this case.”
Bosson argued for some sanction against Berlik for attempting to bury the plaintiff in motions filing in the case’s earlier days. In fact during a March hearing the number of motions filings and legal hours spent on the case led the judge to question how much money the two sides were spending in a case with a maximum recovery cap of $25,000.
“It’s very curious – but I’m giving you more time to arrange the deck chairs on the Titanic,” Williams famously observed of the hours and expense of the case on March 30 when he put a lid on further motions hearings.
In fact costs were a point of testimony during Sayre’s lengthy cross examination last week. Berlik asked the plaintiff if his legal costs had reached $77,000. Sayre replied, “No, they are much less than that,” estimating them at $6,000.
Following the trial’s adjournment outside the courthouse Bosson explained to the media that he had taken a flat up-front fee of $6,000, with a percentage of the award granted by the court. Typical percentage arrangements could add another $6,000 to Sayre’s legal fees.
While Bosson indicated he and his office had actually put $77,000 worth of legal time into the case, he said he had taken the reduced fee arrangement because he thought it was the right thing to do for his client in this particular legal circumstance.
EDA ups ante in civil litigation versus McDonald – without defense objection
Could the Warren County Economic Development Authority (EDA) and its former executive director, Jennifer McDonald, be headed toward a settlement of the EDA’s multi-million dollar civil litigation against her and her two real estate LLCs, MoveOn8 and DaBoyz? That would appear to be a possibility in the wake of a “Stipulations” agreement hearing Friday morning, April 9, in Warren County Circuit Courtroom A.
After the adjournment of the 9 a.m. docket hearing to deal with remote phone connection issues for other defendants’ attorneys not present for the two-pronged April 9 hearing, Judge Bruce D. Albertson reentered the courtroom at 9:25 a.m. with the remote connection issues resolved. EDA lead civil attorney Cullen Seltzer of the Richmond law firm of Sands Anderson then read the five-point “Stipulations” submission to the court as McDonald and her attorney Peter Greenspun listened at the defense table.
The first of those stipulations set an amount of $62,315,315.51 as the EDA’s claimed damages in the civil case against McDonald and her two real estate companies alleged to have been used to move EDA assets to her or co-defendants’ personal benefit. It is worth noting that the original EDA civil litigation filing was in the $21-million range, later being amended with added defendants to near $28 million.
The second and third stipulations note that the McDonald-LLC defendants “take no position on the basis for” that plaintiff-claimed amount; nor do they admit to “any wrongdoing” regarding the EDA’s claim of damages.
It is the wording of the final two stipulations approved by the court that may hint at negotiation between the plaintiff and defendant:
“The Defaulted Defendants (McDonald, MoveOn8, and DaBoyz) have endorsed an order providing money damages judgment in the amount of $62,315,315.51 in favor of the plaintiff (the ‘Money Judgment Order’),” Stipulation 4 reads, followed by this:
“No sooner than 60 days from April 9, 2021, Plaintiff’s counsel may tender to the Court the Money Judgment Order if the Defaulted Defendants and the Plaintiff do not sooner enter into an agreement satisfactory to the parties. The Defaulted Defendants do not oppose the Court’s entry of the Money Judgment Order once tendered pursuant to this paragraph.”
Defense attorney Greenspun and his client left the courtroom after the five minutes it took for the “Stipulations” submission to be read to the court by EDA counsel and for Judge Albertson to accept them, as indicated above, without objection from the defendant or her counsel, as the second part of the morning’s hearing began. That hearing was on a “Protective Order” request by defendant April Petty’s attorney Bill Shmidheiser to prevent volumes of his client’s bank records not relevant to the EDA case against Petty being posted on a secured database accessible by all the associated defendants, 15 in the first amended complaint and nine more added later.
Shmidheiser cited 3 pages related to a $41,000 check deposit regarding one real estate transaction as relevant to the case out of an estimated one thousand pages of Petty’s bank records from at least six accounts reviewed by the plaintiff attorneys and posted to the database.
EDA co-counsel Sean Hutson argued that the defendant should not be the one to determine the relevance of her own documents, that other defendants’ counsel should. After he polled four defense attorneys connected to the hearing remotely and getting four “no objections” to Petty’s counsel’s request, Judge Albertson granted Petty’s requested exclusion of apparently unrelated bank records from the case database.
Following adjournment after that 20-minute hearing, we asked EDA lead counsel Seltzer about the implications of the Money Judgment Order “Stipulations” agreement approved by the court earlier. However, he declined to discuss details of the status of an active case on the record.
So, we soon tried EDA Board of Directors Chairman Jeff Browne with whom we’d briefly discussed the morning’s hearing following adjournment of an 8 a.m. Emergency Meeting of the EDA Board earlier that morning. No action followed a 50-minute closed session. During the brief open session, Browne explained the “emergency” designation simply meant the meeting had been called within 24 hours of its convening.
While also reluctant to discuss the still-active EDA civil litigation, Browne did observe that the entering of a signed agreement by the involved parties citing a 60-day window to reach a mutually satisfactory conclusion was a positive sign that discussion would take place. Of the potential of such discussion, Browne observed, “If we can avoid trial and save tons of money by coming to an agreement it would be a positive development. I hope it works out.”
County updating equipment, rewriting IT software in wake of system ‘intrusion’
During his update on County business at the virtual meeting of the Warren County-Front Royal Economic Development Authority Board of Directors Friday morning, March 26, Interim County Administrator Ed Daley addressed the status of the County’s software situation in the wake of the early March discovery of what has been termed an “intrusion” of that system. Daley has fallen short of calling the incident a “hack” due to an absence of discovered consequences such as stolen files or manipulation of existing files or systems.
However, the consequences which began with a nearly three-week halt in use of all county officials and staff emails due to the County server being taken down as a security precautionary measure, continues to be felt. As previously reported, the local IT system intrusion was part of a larger “intrusion” of software at various unspecified locations across the country. It’s source and purpose continues to be a matter of investigation from the federal level down.
A day prior to Daley’s report at the EDA’s monthly meeting, Warren County Emergency Services Coordinator Rick Farrall’s March 25 County “Situation Report” also began with an update on the post software “intrusion” consequences:
- Warren County Email Update
- Warren County, the Warren County Sheriff’s Office, and the Warren County Department of Fire and Rescue Services are still experiencing significant computer/email issues. The County is working diligently to restore full computer and email service to all personnel.
- Please note that any emails sent to County personnel at warrencountva.net, warrencountysheriff.org, or warrencountyfire.com may not be received until all email services are fully restored.
A clue to that restored service came Friday during the interim county administrator’s report to the EDA. Daley told the EDA board that 150 new laptop computers were slated to arrive Tuesday (March 30). Contacted late Friday afternoon, Daley told Royal Examiner by phone that it was anticipated all County emails would be back online at the beginning of the coming week, possibly coinciding with the arrival of the new computers and a rewrite of the County IT network. The system overhaul is to assure whoever was behind the intrusion no longer has access to the system, Daley explained. In a late update Monday morning, Daley said it now appeared the computers would not arrive until Thursday, delaying the restored email use until later in the week.
“We’re just busy buying computers and throwing computers out and wondering why we still have 2007 computers… – It’s a new experience every day,” Daley began his report to the EDA board Friday morning.
“Well, we wish the County well – it’s a horrible problem,” EDA Board of Directors Chairman Jeff Browne told his former fellow EDA Board member and chairman. EDA officials later told Royal Examiner the separate EDA server had not been impacted by the County intrusion, though a downed 10-year-old router had temporarily taken the EDA system offline for about a day this past week.
As noted in our original story on the hack – “A new municipal ‘normal’ – large scale software ‘intrusions’ and targeting an international human organ harvesting business?!?” – Daley said that while the beginning date of the intrusion hadn’t been established, it was verified it did not involve or impact election data from last November.
Daley told us that discussion of acquiring upgraded technology for the County was already underway when the intrusion was discovered March 7 to 12. In fact, the old County Information Technology was only capable of support of Windows 7, which will soon be non-serviceable as Window 10 and beyond continue development.
“So this gave us a reason to upgrade now,” Daley told Royal Examiner of the County IT software intrusion. One sign of the upgrade will be an eventual switch from .net to .gov in the County network, including staff and other official emails.
EDA authorizes escrow fund use to help cover FY-21 debt service
Following a multi-faceted hour-and-a-half closed session Friday morning the 26th at its regular board meeting of March, the Warren County-Front Royal Economic Development Authority Board of Directors authorized use of a portion of the $158,598.31 balance of an escrow account related to the Leach Run Parkway loan to make regularly scheduled loan payments for the Avtex loan and the Leach Run Parkway loan for April, May and June 2021. It was pointed out this will provide some relief to the County’s financial burden in covering the EDA’s debts for the remainder of Fiscal Year-2021 in the wake of the EDA financial scandal predating the current board and staff.
EDA attorney Sharon Pandak prefaced the motion by reviewing circumstances surrounding the Leach Run Parkway Loan escrow account, which also predates the current board and executive director’s tenure, and its recent reimbursement in part by United Bank following the bank’s finally closing with the Town of Front Royal on the assumption of responsibility for a loan to pay off the balance of the $8,440,797 FRPD headquarters construction project.|
Contacted later, EDA Executive Director Doug Parsons explained the original balance of the Leach Run Parkway Loan escrow account was $250,000 that had never been accessed. However, United Bank elected to draw on that Leach Run Parkway Loan escrow account for the interest and principal payments on the FRPD construction loan during the four months – November 2020 to February 2021 – it was awaiting finalization of the Town’s FRPD loan. The delay, as explained by both Town and EDA officials, was due to the discovery of a needed partial release of the deed of trust of the former Avtex Superfund site, for the 5.24-acre parcel upon which the FRPD headquarters is situated at 900 Monroe Avenue, had never been realized.
The Warren County Board of Supervisors chose to stop covering the EDA’s original FRPD loan payments that the Front Royal Town Council refused to accept moral responsibility for in the wake of the EDA financial scandal during the tenure of former EDA Executive Director Jennifer McDonald, after the October 2020 payment. That was when the EDA FRPD loan payments went from 3% interest-only in the $21,000 monthly range to over $50,000 in principal and interest monthly payments.
Parsons cited the United Bank Leach Run Parkway Loan reimbursed escrow account amount based on fluctuating monthly principal payments at $116,246.84, as noted above bringing the escrow account balance to $158,598.31. With a virtual ZOOM meeting torrent of numbers dancing through our heads, we asked Parsons for a rundown of exactly what was approved regarding the use of the escrow funds.
“In an effort to help the County service our debt, the Board of Directors voted this morning to apply $53,953.29 toward the loan payments of the Leach Run Parkway loan and the Avtex loan for the remaining three months of FY-21 – April, May, June 2021,” he began, breaking that number down further: Avtex loan monthly payments of $14,021.80 and Leach Run monthly of $3,962.63 totals $17,984.43 x 3 = $53,953.29.
With the FRPD loan future principal and interest payments finally assumed by the Town, as had always been anticipated by the EDA upon completion of the project it financed for the Town, the lone remaining sticking point on the FRPD financing situation between the Town and EDA appears to be reimbursement of the approximately $640,000 of construction loan interest previously covered by the EDA and the County. And it is likely that number was part of a closed session discussion of the EDA’s countersuit against the Town, the second of three closed session topics adjourned from open session to at 8:06 a.m. Friday.
Supervisors try to absorb County budget numbers: past, present and future
Early Tuesday evening, March 9, the Warren County Board of Supervisors, particularly its three newest, first-term, second-year trio of Chair Cheryl Cullers, Delores Oates and Walt Mabe, tried to get a handle on the County’s finances. First up on the work session agenda starting at 6 p.m. in the main meeting room of the Warren County Government Center was an Audit Report from Robinson, Farmer, Cox Associates’ Michael Lupton. That was followed by Deputy County Administrator Taryn Logan’s report on the status of a two-decade-old joint County-Town Wayfinding Sign project aimed at directing tourists toward the county’s myriad natural and historical attractions on both sides of the town-county line. And batting cleanup were Interim County Administrator Ed Daley and new Finance Director Keith McLiverty for an update on the Fiscal Year 2022 County Budget process.
Audit company representative Lupton gave an overall positive report, with some gaps in financial reporting. Lupton cited those gaps as a likely result of a high turnover among upper-level staff, most prominently at the head of the County Finance Department. Stabilization in that area with the arrival of County Finance Director McLiverty, who with Interim County Administrator Daley, helped guide the board through some of their logistical questions on the audit report summary, was cited as a positive turn for the future. Also acknowledged was interim help from former Finance Director Andre Fletcher, as well as Carolyn Stimmel, the latter mostly on the EDA side of the equation.
Some board questions revolved around what Lupton called “finicky numbers” related to asset versus debt ratios that are impacted by market fluctuations. Of particular attention were debt service numbers between $147 million and $155 million. It was explained that the $8 million discrepancy related to the County’s pension fund, which unlike past Capitol Improvement Project (CIP) debt, is not liable to a bank call, unless as Daley observed, the entire County staff hit retirement age at the same time.
As the actual numbers stand, Cullers cited an annual debt service of $953,000 to be covered. So, the supervisors are likely to be encouraging bond consultant Davenport & Company to be keeping a close eye on the approaching market numbers impacting potential savings on a group re-financing of a large portion of the CIP debt related to past public school and other construction projects.
Variables related to the aftermath of the Town-County Economic Development Authority (EDA) financial scandal, including still being prepared 2018 and 2019 EDA audits, as well as legal expenses were also prominent on the supervisors’ radar. Replying to a question from the chairwoman, Interim County Administrator Daley noted that the audit report “does not include EDA debt” but “did include County expenditures” on the EDA’s legal and operational expenses. There also was a $1-million discrepancy in EDA legal fees that seemed to be floating as an unresolved number.
Overwhelmed by “finicky numbers”, floating numbers, and delayed reporting of some budget variables during the past year, Board Chair Cullers commented several times, “It’s clear as mud” to which North River Supervisor Oates added, “Now, I’m really confused.”
Perhaps trying to cheer the supervisors up after their emersion into the depths of municipal finances, Daley suggested next year’s process would be easier after their “training” with this year’s budget and all its staffing and emerging post-EDA financial scandal variables.
Which way to tourism dollars?
On the Wayfinding Sign front, long-time County Planning Director and new Deputy County Administrator Logan reviewed the 20-year joint Town-County effort and new signage planned on both sides of the town-county line. She explained an urgency on the Town side related to new signage that would be paid for through the Town Community Development Block Grant (CDBG) that carries a spending deadline approaching at the end of the month.
She said that an MOA (Memorandum Of Agreement) between the municipalities was anticipated to be presented to the Board at its March 16 meeting.
Responding to a question from Fork District Supervisor Archie Fox, Logan explained that Wayfinding sign guidelines on the State side prevented Wayfinding Signs directing motorists to specific private business locations like motels, restaurants etc. However, she noted that other types of municipally developed signage, particularly in town, could be utilized outside the Wayfinding Sign Project to alert tourists to those types of amenities available in the town and county.
Logan also reviewed how the changes from a Town Tourism Department and move to outside private-sector contracted marketers advised by the Joint Town-County Tourism Committee were impacting Tourism promotion on both sides of the town-county line.
Approaching the two-hour mark, Daley and Finance Director McLiverty’s report was fairly brief, with Daley telling the supervisors, minus absent Happy Creek Supervisor Tony Carter, that they would return at the end of the following week with the FY-2022 Budget summary.
It was noted near the work session’s end that the planned Joint Meeting, Retreat or “Advance” as it is now being referenced, with the Front Royal Town Council is targeted for May, though no date has yet been established.
For more detail on all these discussions watch the linked County meeting video and/or view the linked PowerPoint presentations.
- Warren County Audit Presentation – FY2020
- Wayfinding Sign Report – March 2021
- Warren Comp Annual Finance Report – 2020
EDA welcomes Town Manager Steven Hicks to meeting & gets good news from McDonald bankruptcy hearing
Things appear to continue to be turning in a positive direction for the Warren County Economic Development Authority (WC-EDA) in the wake of the recent sale of the Afton Inn for redevelopment by the 2 East Main LLC investment group. On the heels of that sale, authorized at a Special Meeting of February 12 and finalized a week later, the WC-EDA held its monthly meeting by way of the now familiar virtually connected ZOOM format the morning of Friday, February 26.
Two things stood out during the open session sandwiching a 57-minute closed session. The first was the welcoming of Town Manager Steven Hicks shortly after the 8 a.m. meeting start. It was the first appearance of a town manager with an accompanying update on Town business at an EDA Board of Directors meeting in about 18 months.
That traditional line of communications was terminated during the tenure of former Interim Town Manager Matt Tederick as the town government took on an increasingly adversarial and litigious stance with the EDA as a revamped EDA board worked to right its ship in the wake of the $21-million-plus financial scandal alleged to have developed during the tenure of former EDA Executive Director Jennifer McDonald.
EDA civil litigation gets reboot
The second positive note came post closed session during Board Chairman Jeff Browne’s Executive Committee Report. Browne acknowledged a decision by Harrisonburg-based U.S. Bankruptcy Court Judge Rebecca B. Connelly returning consideration of exactly what assets Jennifer McDonald can claim as part of her bankruptcy filing to the state court level.
“The bankruptcy court has remanded her particular case to state court to assess damages, at which point damages are assessed it will go back to the bankruptcy court to decide whether or not it should go back to the state courts or be handled in the bankruptcy court,” Browne told his board.
Contacted after the meeting, Browne elaborated on the implications of Judge Connelly’s ruling. He explained it will allow the EDA’s civil litigation against McDonald to re-start to determine exactly what EDA assets McDonald may have misappropriated and how they may have been used to purchase properties or other tangible assets. Her surviving real estate company MoveOn8 is also part of her bankruptcy filing, he noted.
When the state court findings are returned to the U.S. Bankruptcy Court in Harrisonburg, Judge Connelly will determine what assets McDonald can legitimately claim as her own that are subject to bankruptcy claims and asset distribution, versus what assets held by her or her real estate company the EDA would have civil claim to as restitution for her alleged criminal acts of embezzlement and misappropriation of EDA funds to her own use.
A virtual Town-EDA ‘lovefest’
Back on the Town-EDA relations front, EDA Board Chairman Browne welcomed Hicks by virtual connection, offering him the opportunity to give his report prior to adjournment to the closed session. And while an opening portion of that report was acknowledgment of the town council’s decision to move forward with creation of its own EDA with Hicks as executive director, that there was a renewed sense of Town-EDA cooperation was soon apparent.
“As town manager I’m here to help in any way I can,” Hicks told Browne and the four-member EDA Board quorum present virtually (Browne, Harold, Pattison, Wolfe), before reporting on the status of the Town’s FY-2022 Budget process.
“I just want to congratulate you on your new position. You must have found the secret to a 48-hour day,” Browne told Hicks at the conclusion of the town manager’s report. “I just want to tell you for our board, that anything we can do to help in the areas you’re focused on: redevelopment, tourism, retention of businesses are all good things that we look forward to working with FREDA (Front Royal Economic Development Authority) on.
“We would like to work with you and coordinate with the Town. I think that we can do a lot to help economic development for the entire area. So, we appreciate you’re stepping up and taking on what will be a challenging task,” Browne added of Hicks new dual role.
“Will do – I’ll definitely stay in contact and share everything as much as I can with you and Doug (EDA Executive Director Doug Parsons) and Ed (Warren County Interim County Administrator Ed Daley). So yea, sounds great,” Hicks replied.
At that point EDA Board member Jim Wolfe, who has taken point in his board’s work on development of short and long-term Strategic Planning on economic development and job creation, joined the conversation. Wolfe offered to get a copy of what the WC-EDA has done on that front recently to Hicks by Monday.
“Then you and I can sit down and talk about it at some point. And if any other board members want to join me … So, I want to make sure that the … Town has our plan and use that for a touch point for how you coordinate on different projects,” Wolfe said of developing a unified plan of action community wide.
“I’d appreciate that,” Hicks replied, perhaps seeing his “48-hour days” reduced in some measure by that level of County EDA involvement with his work on the Town side. Continuing in that vein of cooperation, Hicks added, “Again, I just wanted to call in (on ZOOM) and touch base with you all and be as transparent as I can. And always reach out to me when you need anything, and I’ll do the same.”
“Good, thank you so much,” Browne replied to the new attitude being reflected out of Front Royal Town Hall as Hicks signed off from the meeting.
Summary of the Warren County EDA Board meeting of Friday, February 26
The EDA Board of Directors conducted their regular monthly board meeting this morning, February 26, via Zoom. The Board welcomed Front Royal Town Manager Steven Hicks prior to going into Closed Session. Mr. Hicks noted that the Town’s budget proposal for the fiscal year 2022 was being prepared. A summary overview was included in the board packet and digital copies of the 32-page presentation are available from the EDA office. Please contact Administrative Assistant Gretchen Henderson at 635-2182.
Board Chair Jeff Browne congratulated Mr. Hicks on his appointment to Executive Director of the Front Royal EDA and stated that the Board of the Front Royal Warren County EDA is looking for working with him.
Following an approximately 30-minuted Closed Meeting, the Board approved a motion on the disposition of McKay Springs. In order to facilitate and expedite the sale of parcels at the McKay Springs location, the Board approved transferring the parcels deeded in the name of the EDA to Warren County.
Continuing in Open Session, Jeff Browne gave a report from the Executive Committee. He advised the Board and the public that Warren County will be designated as a Spotted Lanternfly quarantine locality in mid-March, along with Clarke and Frederick counties, and the City of Winchester. This will impact businesses located in and doing business in Warren County. For more information please visit www.vdacs.virginia.gov/plan-industry-services.shtml
Director Jim Wolfe shared information on the progress of the EDA Strategic Plan updates. He’s looking forward to feedback on the working document and completing a final draft for review.
Asset Committee Chair Greg Harold discussed a new development that will have an impact on the EDA-owned property on Royal Lane. He shared the news that the Town of Front Royal is considering updating the Town Code to allow a Conditional Use Permit to be bonded with the property rather than the owner. With this change, Harold expects to improve the successful marketing of this property for a developer of multi-family workforce housing. The EDA is very interested in selling this property and supports the Town Planning Department in its efforts.
EDA Executive Director Doug Parsons had several items of interest to share, including the launch of the renovated EDA website at www.wceda.com, and that the auditors are finalizing their report. Additionally, he reported that the proceeds of $323,179.18 from the sale of the Afton Inn have paid down the principal on the First Bank & Trust Line of Credit. This lowered the payment, saving the taxpayers $1,242.70 per month, or $14,912.40 per year.