Many citizens present for Thursday afternoon’s Question-Answer session with Interim Town Manager Matt Tederick on his governmental reorganization plan were downtown business owners. Some of those, particularly with ties to tourism, cited Community Development Director Felicia Hart’s very proactive role in promotion and expansion of downtown business interests.
Others pointed to the role of the Town Planning and Zoning Department and Planning Director Jeremy Camp’s efforts in moving work forward on downtown infrastructure improvements utilizing $700,000 in State Community Development Block Grant (CDBG) funding. Hart, Camp and the planning department along with tourism, are all believed earmarked for termination, reorganization or outsourcing in Tederick’s budget proposal.
One volunteer at the Front Royal Visitor’s Center said that employees there were anticipating also being terminated in the near future. While that doesn’t impact her, or the Town for that matter, financially since she is a volunteer, others are paid full or part-time staff in a department Tederick said is going to be recommended for outsourcing.
Another citizen expressing concerns about the impact on tourism, was Mountain Home Bed & Breakfast proprietor Scott Jenkins. The Mountain Home B&B and hiker hostel are located near where the “AT” crosses Route 55 in southern Warren County. Jenkins was co-author, with Warren County Appalachian Trail Community Committee Co-Chair Susan Tschirhart, of a letter of concern on potential impacts of the interim town manager’s budget proposal on community tourism and marketing. The letter was sent to the mayor and town council Thursday, the same day these concerns were being voiced to Tederick at the Front Royal Brewery.
Royal Examiner received a copy of that letter, which is posted in the OPINION section of the Royal Examiner website – we recommend it as a reference point to concerns expressed during Thursday’s public meeting with the interim town manager as it echoes ground Jenkins and others covered in questions posed at the Front Royal Brewery.
Some of that ground questioned the above-mentioned tying of a revenue-diminishing tax decrease to a budget proposal bloated by nearly $30 million in proposed capital improvements. Some of those improvements have been kicked down the fiscal road by the town council in recent years out of an unwillingness to commit Town financial resources or taxes to generate new revenue to them.
Some present at Thursday afternoon’s citizens meeting at the Front Royal Brewery also questioned whether an interim town manager should be recommending such sweeping changes to the conduct of town governmental operations. In fact, there has been speculation expressed to this writer by citizens who asked that their names not be used, as to whether this reorganizational downsizing may date to Tederick’s May to early November 2019 stint as Interim Mayor, perhaps leading to Town Manager Joe Waltz’s mid-October decision to leave the town government, effective November 8. We have not been able to contact Waltz for comment.
Others wondered if more than a single budget process, the proposed changes reflected a broader philosophical perspective on eliminating governmental functions as a means of reducing taxes and turning those functions over to the private sector. To our recollection, no sitting elected town official campaigned on such policy of reduction of town services. However, several have often expressed a desire to keep the town tax rate flat, if not reduced.
And if there was no clear response to such broad questions, as Tederick told Royal Examiner for our initial story on the budget and town government reorganization plan, he works at the will and direction of the town’s elected officials. None of those elected officials were spotted by this reporter at Thursday afternoon’s initial public reaction to media exposure of the budget and personnel plan.
However, Tederick did respond that he believes the recommended changes will streamline and improve how the town government functions. However, he was not able to provide any specifics on plans to replace existing departmental functions in the near term. That lack of a specified plan to replace staff and departmental functions earmarked for termination or outsourcing worried those citizens and business owners present.
Present to hear citizen concerns or not, it will be on the town council’s authority that the interim town manager’s recommendations on outsourcing, privatization and staff cutbacks will be given.
But whether the impetus for the current interim town manager’s budget and reorganizational plan originated with Tederick, council or elsewhere, it was Tederick alone, well not completely, who was in the crosshairs of concerned, sometimes heated citizen questions and comments at Thursday’s quickly arranged public meeting. Present with Tederick was the Town’s IT Director Todd Jones, who recently had “Public Communications Director” added to his titles. While not responding to questions, Jones managed to get one negative citizen review of his new job performance thus far.
“You get an ‘F’ for communications on this,” one speaker said pointing Jones’ way. What remains to be seen is how council and the mayor will be graded by the public as this story progresses.
With revenues up, expenses down RSW superintendent pursues bonuses for staff
After a positive Finance Manager’s report on contracted bed rentals to non-member jurisdictions through the first two months of Fiscal Year-2021, Rappahannock-Shenandoah-Warren County (RSW) Regional Jail Superintendent Russ Gilkison recommended a bonus plan for remaining staff at the jail. Pointing to the loss of 16 people due to the Coronavirus pandemic and the jail and its staff fighting its way through a COVID-19 outbreak impacting inmates and staff, the RSW superintendent told the governing RSW Jail Authority on Thursday, September 24, “I’d like to reward those for sticking with us through the good and the bad.”
Gilkison estimated a $126,000 cost to implement the bonus plan. New Authority member Ed Daley, Warren County’s Interim County Administrator, suggested establishing bonus program guidelines based on length of employment at RSW through the recent pandemic situation.
On the bright side of that situation, Gilkison reported “no active cases or symptomatic staff/inmates since June 15, 2020.” He also called a remote visitation system implemented on July 13, allowing family and friends of inmates to visit them virtually “a huge success – We went from no visits to more than ever,” Gilkison said of the IWeb Visit system that is averaging 45 remote visits per day.
On the not so positive side, Gilkison noted losses that have left jail 42 staff down, the largest number ever one authority member pointed out. Asked about safety concerns from the staff shortage, Superintendent Gilkison noted procedural adjustments in the COVID-19 pandemic environment that have reduced some oversight needs.
“It looks worse on paper because that number is going up. But we’re really sitting about the same as we always have because we just operate a little differently … overall we’re operating just like we normally do. We’re still maintaining our staffing standards that we did pre-COVID. I don’t feel like we’re at risk,” Gilkison assured the authority members. He added that were it to get to a point of overstretching remaining staff he would have to begin telling outside jurisdictions the jail could not accept additional inmate bed rentals from them.
But with it not yet at that point, Finance Manager Stephanie Smith reported August contracted inmate bed rentals totaling $118,748.52, $74,723 from Culpeper County and $44,025.52 from Page County. That brought RSW’s two-month FY-21 bed rental revenue total, including medical, commissary, telephone and related housing expenses to $243,928.45.
Couple that number with reduced expenditures due to the smaller staff and Smith’s Finance Report noted that with 16% of the Fiscal Year gone, expenditures were at 12.4% and revenues at 18.5%.
Smith also reported RSW Jail’s receipt of a $49,963 grant from the Coronavirus Emergency Supplemental Funding (CESF) grant program made available through the Virginia Department of Criminal Justice Services. The grant was near the program’s ceiling amount of $50,000.
“To date, RSW has expensed $88,567.96 on materials, supplies, and services directly related to the COVID-19 pandemic, so the funding from this grant significantly helps,” Smith wrote in her finance report.
See the full Authority and RSW Finance Committee meetings of about 20 minutes each in this Royal Examiner video:
McDonald bankruptcy filing removes her from EDA civil suit – July 2022 dates set for remaining civil defendants’ trial
The Front Royal-Warren County Economic Development Authority civil litigation now seeking about $26 million in asset recovery against 24 defendants including its former executive director was dealt a harsh blow the day before scheduled motions hearings Friday morning, September 25. That blow was a notice of former EDA Executive Director Jennifer McDonald’s Chapter 7 bankruptcy filing Thursday afternoon, September 24.
As noted in the filing and as discussed in Warren County Circuit Courtroom “A” Friday, the bankruptcy filing essentially removes McDonald from the civil litigation process. McDonald’s bankruptcy filing included one of her two real estate companies, MoveOn8 LLC.
“As a result of the institution of the bankruptcy proceeding, all actions to collect a debt from Jennifer McDonald, or to recover property from the bankruptcy estate of Jennifer McDonald, have been stayed by reason of the applicability of Section 362(a) of the United States Bankruptcy Code (11 U.S.C. 362(A)),” McDonald attorney Peter Greenspun wrote in the filing received in the Warren County Circuit Court Clerk’s Office Thursday afternoon. The same holds true as to a stay on asset recovery in the MoveOn8 LLC filing.
With EDA lead attorney Cullen Seltzer acknowledging the stay on civil action against McDonald involving her now bankruptcy-trustee seized assets, a scheduled 9 a.m. motions hearing seeking financial sanctions against her for attempting to move a piece of property frozen by the court near the outset of the April 2019 EDA civil litigation filing was removed from the docket. Judge Bruce D. Albertson adjourned the 9 a.m. proceedings 10 minutes after they began.
Motions hearings on the remaining defendants’ cases commenced shortly after 10 a.m. as scheduled. Two defense attorneys connected by remote audio hookup told the court they were likely to file similar “interlocutory appeals” motions to the one April Petty and Jesse Poe attorney William Shmidheiser informed the court in person he would be filing. Those petitions will seek to have defendants removed from the single “mass trial” the plaintiff is seeking in alleging a wide-ranging conspiracy of McDonald and associates to profit from the alleged McDonald-directed embezzlements and misdirection of EDA assets.
Before making his case that his clients should be removed from the single trial of all defendants, as the 10 a.m. hearing began Shmidheiser called McDonald’s bankruptcy “the elephant in the room” that should be discussed with all involved defense attorneys linked in. That led EDA attorney Seltzer to repeat his acknowledgment that the case against primary defendant McDonald was stayed from further action due to the bankruptcy process.
Several times during subsequent discussion McDonald was referred to as “the hub” of the conspiracy “wheel” the plaintiff is alleging existed between the former EDA executive director and those believed to have benefitted financially one way or another from her alleged misdirection and embezzlement of EDA assets.
Former EDA and McDonald Administrative Assistant Michelle Henry’s attorney John Cook told the court the McDonald bankruptcy filing made his client’s case problematic, in that Henry has filed to force McDonald to pay for her legal fees in the civil case.
Also on the table Friday was McDonald’s ability or willingness to testify as a witness as the civil cases proceed in the wake of her bankruptcy filing. That she could be deposed as a witness in other cases seemed agreed upon. But whether she would quickly choose to invoke her 5th Amendment right not to self-incriminate, with the refiling of criminal charges also still a possibility, remained at issue.
Judge Albertson took defense counsel concerns about the bankruptcy filing’s impact on the other defendant’s cases under advisement, observing, “I think we can proceed with (setting) dates in the event I rule the stay is not warranted.”
EDA attorney Seltzer noted the large number of witnesses to be deposed, over 50 he acknowledged; as well as the limited days per month, three, available for those depositions, depositions he predicted would at a minimum take a full day due to the number of defendants and their counsel involved. Due to those factors, coupled with lingering pandemic limitations on court processes, Seltzer raised an eyebrow or two predicting the civil trial wouldn’t happen before July of 2022.
That prediction led to an added sense of urgency by Petty and Jesse Poe’s attorney. Responding to a question, Shmidheiser told the court he probably would file his interlocutory appeal by the end of the week, as he sought a November date for a hearing on the appeal. Judge Albertson set November 23, at 3:30 p.m., for what is anticipated to be a 30 to 40 minute or so hearing.
Shmidheiser also told Judge Albertson that one of his primary hopes for the day’s hearing was that specific dates would be set for the lengthy deposition process of witnesses, as opposed to the vague “three days a month” tag currently on the table. Agreeing that pinning down dates for depositions was a preferred course of action, Albertson set about finding dates all attorneys could be available for.
Due to varying attorney’s schedules, preferences and other court variables, Tuesdays-Wednesdays-and-Thursdays were set between January and May 2021 to get the deposition ball rolling. Deposition dates agreed to were January 13-14-15; February 16-17-18; March 30, 31, April 1; and May 11-12-13.
Acknowledging the process would likely continue through the remainder of the year, Albertson set a pre-trial motions date of February 19, with a 24-day trial scheduled 4-1/2 months later from July 5 to 29, 2022.
Seltzer did acknowledge it was possible some defendants’ motions to be removed to individual trials could be successful, leading to earlier trials for those defendants.
As for the bankruptcy situation, one attorney present familiar with bankruptcy cases, later explained to the media that the EDA could file to have certain McDonald assets separated from the bankruptcy sale process to accommodate creditors, citing her alleged embezzlements. However, without a conviction in support of those allegations that filing might be hard to get approved by a bankruptcy trustee, Shmidheiser said. He added that the bankruptcy transfers McDonald’s liability from the EDA civil case now in Warren County Circuit Court to a judge-overseen trial in a Harrisonburg U.S. Western District of Virginia Bankruptcy Court.
According to the McDonald Bankruptcy Docket posted by the U.S. Western District of Virginia Court:
The First Meeting of Creditors is scheduled for 9 a.m. on Friday, November 13, 2020 (by telephone);
Deadline for filing Proofs of Claims has not yet been set, because McDonald filed her case as a “No Asset Case”;
Deadline for filing Complaints for Exception to Bankruptcy Discharge is Tuesday, January 12, 2021. The Warren EDA will have to file a Complaint for Exception to Discharge case by the deadline, or its claim will be discharged in bankruptcy, we were told;
McDonald ‘s Bankruptcy Schedules are due to be filed by October 8, 2020 – but if time extensions are requested, they are generally liberally granted.
The Trustee is listed as Bob Stevens of Charlottesville, along with the Office of the U.S. Trustee, with a Roanoke address.
County responds to Town announcement of FRPD financing
Warren County released the following press release on Friday, September 25, 2020:
The press conference held on September 23, 2020, announcing that the Town of Front Royal has secured permanent financing for the Front Royal Police Department building is great news for the citizens of our community! It closes a chapter on one aspect of the lawsuit the Town of Front Royal filed against the Front Royal-Warren County Economic Development Authority (EDA) and ends months of dispute between the EDA, the Town, and the County. It should be viewed as a path forward to a working relationship between the Town of Front Royal, Warren County, and the EDA.
As Warren County citizens, we were brokenhearted by the EDA scandal. The breach by those who were entrusted with our tax dollars and economic development is one that will take years to restore. Efforts taken by the Warren County Board of Supervisors to restore faith and oversight of the new EDA Board of Directors are well documented. Both the Board of Supervisors and the EDA Board of Directors have worked diligently to clean up the mess and recover the stolen assets for taxpayers.
The portrayal by some Town leadership that the County was unwilling to work with the Town to resolve the EDA issues could not be farther from the truth. The County has had every incentive to work with the Town to resolve the Police Station debt owed by the Town and has repeatedly approached the Town to work together on economic development issues critical to the success of our community.
Town announces bank deal on FRPD headquarters debt service payments
In a Wednesday evening press conference the Front Royal Town Council and the Town’s mayor weighed in from varying perspectives in announcing a Town financing agreement with United Bank to assume the debt service on the principal and an undisclosed, but favorable, interest rate on payments for construction of the new Front Royal Police headquarters.
Statements indicated that the lower interest rate acquired, as opposed to the EDA’s 3% rate with United Bank on the FRPD debt service, would save the Town at least a million dollars. Town officials declined to discuss details such as the interest rate or amount of the loan at this point in the loan process.
While a summary of the loan agreement announcement read into the record by Interim Town Manager Matt Tederick and elaborated on by the town’s elected officials, was a welcome update on what has become an increasingly contentious finger-pointing exercise in municipal government dysfunction, the tone of that update maintained and perhaps up the ante on the accusatory finger-pointing.
In fact, following the full council comments Mayor Eugene Tewalt observed that he did not agree with a lot of what was said by council in lauding their bank financing deal. Since his November 2019 Special Election elevation to mayor, Tewalt has repeatedly butted heads with his former council colleagues over trying to negotiate, rather than litigate with the EDA.
When this reporter and other media present asked for details of the loan agreement and support for the accusatory nature of the announcement alleging belligerent intransience by both the county government and the re-tooled in the wake of financial scandal Economic Development Authority Board of Directors, there were few direct, substantive answers forthcoming. In fact, the interim town manager cautioned council on answers regarding support of its stated legal stance, noting the Town remained in civil litigation with the EDA.
The media was added to the negative stereotyping in past reporting on the Town’s year-and-a-half or so refusal to assume liability for undisputed principal and partial interest payments on the EDA-enabled financing for its new police headquarters. Councilman Holloway disputed what he termed “tabloid media” reports that have “beaten up” the Town in reporting the evolution of the Town-EDA financial impasse and what has evolved into dueling civil litigations. Wednesday’s announcement does not appear to impact the Town’s $20-million civil suit against the EDA.
Several county official present, including Board of Supervisors Chairman Walt Mabe, Vice-Chair Cheryl Cullers, and North River Supervisor Delores Oates, indicated possible future comments after having time to absorb what they heard Wednesday evening. However, EDA Board Chairman Jeff Browne did give Royal Examiner an on-the-record comment.
“Well, the main thing that I want to leave you with tonight is that we’re excited that the Town is finally paying the principal that they’ve owed on the police station. And that’s really what tonight’s about. We can get into some other details some other time,” Browne told us after the press conference, adding, “It’s a positive and I’m hopeful that we can start to work together. I hope that it’s a start of something good because we ought to be working together.”
United Bank is the same bank the EDA financed construction of the police headquarters through. The EDA, recently with County help, has been making monthly interest-only payments of about $21,000 on its FRPD debt service. However, the EDA announced last week that it and the County would stop covering those payments as of October. The EDA United Bank loan was slated to go to interest and principal payments of about $50,000 monthly on November 1. Thus far the EDA or County has paid about $500,000 on interest on the FRPD construction project, which appeared to cause some confusion on the EDA’s claim against the Town in its recently filed civil suit to hold the Town liable for FRPD construction costs.
But as for working together in the wake of Wednesday’s press conference, several council comments critical of the past and existing EDA board justified the Town’s move toward creation of a second, unilateral EDA, pointing away, rather than toward cooperation with the existing, half-century-old joint Town-County EDA.
In fact, Councilman Gary Gillespie took direct aim at the current EDA staff and board of directors for delays in renovation of the dilapidated Afton Inn across Crescent Street from Town Hall.
Go to the below-linked Royal Examiner video to see exactly what was said, alleged, asked, and answered, or not, at the approximate 45-minute Wednesday evening Front Royal Town Council press conference:
Town ponders its CARES Act reimbursement dilemma at end of brief Monday work session
After discussion of a change to Town policy on the vacating of streets and alleyways to accommodate past adjustments and high costs associated with assessments by real estate assessors for the government-owned property; and a review of evolving Fiscal Year 2021 revenue streams from taxes and utility/enterprise and general funds, the Front Royal Town Council focused on a lingering sore point.
That point is the County’s reluctance to take the town governmental apparatus at its word on assuming financial liability for any distribution of Coronavirus Aid, Relief, and Economic Security (CARES) Act approved funding found to not meet federal and state standards for that distribution. As previously reported, as the recipient of that federal, state-distributed money received in two $3.5 million dollar phases, about $1.2 million of which was allotted to the Town for in-Town distribution, the County is liable to reimburse the state and federal sources of that money for any portions found to not have met the federally implemented standards for qualifying business, non-profits or individual recipients.
“I don’t know what their issue is – we justified it under the CARES Act; we laid it out very specifically where in the CARES Act it’s been spent,” Interim Town Manager Matt Tederick told council citing two specific areas the County is apparently concerned about qualifying. “So, we’ll just continue to play the game and see what happens.”
“I’m concerned about getting the $970,000,” Vice-Mayor Bill Sealock told his colleagues of the money the Town has fronted out of its own General Fund budget toward what it believes to be qualifying businesses in town. That thus-far Town-absorbed expenditure is what the Town is hoping for in first-round CARES distribution reimbursement from the County.
“I can certainly appreciate that they want some checks and balances … but if we’re completely liable which we’ve signed agreements on, saying that if any of the CARES Act is spent inappropriately the Town will fund or refund,” Councilman Jacob Meza said when Tederick interrupted him.
“Let me correct you on that, Mr. Meza, we never, we haven’t signed that,” Tederick interjected, leading several councilmen including Meza to add, “But we’ve offered to do it.” Meza added, “I’d like to reoffer that and move on.”
“We’ve offered that, and they want us to take the liability, and they want to approve the spending plan, and they want us to spend the money out of our reserves, and they want us to submit the reports, and they’ll tell us whether they’re going to reimburse us. So, it’s just very convoluted. I’ve done everything I can do to get this through,” Tederick told council.
Absent from the discussion was the likely lack of County trust of Town financial “promises” in the wake of a year-and-a-half impasse on the Town accepting financial liability to pay for its $9-million dollar police station financed through what is now a solely-County supported Town-County Economic Development Authority.
However, further discussion indicated that several involved county officials had indicated a first reimbursement check from the County was anticipated early this week that had not yet been received as of Monday night.
“Well, it is Monday,” Councilwoman Lori Cockrell observed, acknowledging that Tuesday was also “early in the week”.
See Council’s full discussion on its CARES Act reimbursement concerns, as well as the street and alley vacating adjustments and FY-21 revenue numbers in this Royal Examiner video of council’s 20-minute open session work session.
Council then adjourned to closed session to discuss its permanent town manager search, the now dueling civil litigations with the EDA, and the disposition of undisclosed public property. And the following day the Town announced a full town council press conference to address the EDA litigation to be held Wednesday at 7 p.m. at the Warren County Government Center.
That announcement stated that the press conference “will cover major developments regarding the Town of Front Royal\EDA lawsuit. Statements will be given by each Council member”.
Stay tuned for that exciting development as it unfolds Wednesday …
Town press release says it was working on FRPD financing when EDA suit filed
In a press release issued at 3:15 p.m., Friday afternoon, from the office of Town of Front Royal Information Technology and Communications Director Todd Jones, Interim Town Manager Matt Tederick responds with astonishment, and some astonishing news, in reaction to the EDA filing of a lawsuit Thursday to recover the nearly $9 million cost of the new FRPD headquarters.
That news is that the Town was in the process of acquiring bank financing to pay the principal amount, if not interest, on the new town police headquarters this week.
As previously reported, at Monday’s Front Royal Town Council meeting Councilman and mayoral candidate Chris Holloway read a three-page prepared statement into the record on the Town’s stance on its lack of obligation “legal, moral or otherwise … to repay these unlawful debts” to cover what was termed “a fraudulent, unauthorized loan” acquired by the EDA to finance the FRPD headquarters construction project for the Town.
Holloway confirmed that the statement was prepared by the Town’s contracted Damiani & Damiani law firm that is handling its $20-million-plus lawsuit against the EDA, in response to his inquiry on the matter.
The statement also states that the Town “has explored other means of resolving the issue” and “is willing to make payments to the EDA for the Police Department Headquarters that are equal to the payments that Town Council authorized, which include the entire principal debt at the authorized interest rate.”
It would seem somewhere along the negotiating lines between the Town, County, and EDA, there has been a failure to communicate essential information.
Here is the Town press release and Tederick’s statement in its entirety:
The EDA Sues the Town of Front Royal on the Verge of Obtaining a Loan
24 Hours After the Town Receiving Bank Term Sheet, EDA Sues. Coincidence?
The Town of Front Royal filed a $20,226,153 lawsuit against the Warren County Economic Development Authority (EDA) in an effort to recover money fraudulently obtained by the ex-Executive Director, Jennifer McDonald, and perhaps others under the failed oversight of the Economic Development Board of Directors.
Interim Town Manager Matt Tederick commented, “This lawsuit is really bizarre, less than twenty-four hours after I received a formal Term Sheet from a lending institution to pay the principle balance which the County, the EDA, and the Town do not dispute, the EDA calls a Special Meeting, one day before it’s normal meeting date, and decides to file a Complaint and Writ of Mandamus against the Town, effectively preventing the Town from obtaining the very financing being demanded. Coincidence?
“Just yesterday I received a call from Ed Daley, Interim County Administrator, who asked me if the EDA’s Finance Director could meet with the Town’s Finance Director to reconcile Leach Run Parkway accounting. Of course, I eagerly and happily agreed. Then, 24 hours later, the EDA sues the Town. Coincidence?
“As much as I would personally like to litigate this matter in the court of public opinion, as the EDA has done, I will not. This much I will say, the EDA has caused great harm to the citizens of the Town of Front Royal, and yet, no one has been brought to justice and the EDA continually claims to be the victim. The EDA is responsible for the negative consequences flowing from the actions of its ex Executive Director. The Town is trying to assist in dealing with the economic fallout, but ultimate responsibility remains with the EDA. The Town intends to continue its efforts to finance the Police Department Headquarters.”