“We need to get off the pot and move forward with this,” Mayor Hollis Tharpe told the Front Royal Town Council at a February 5 work session. The object of the mayor’s attempt to propel timely movement from his colleagues was the wastewater pumping station that will serve, not only the first commercial client at the former Avtex Superfund site, but essentially the first half of commercial redevelopment in the site’s 147-acre Royal Phoenix Business Park.
Late in 2017, council began dragging its feet on the estimated $300,000 to $400,000 cost of a project the previous town manager and council appeared committed to. Work session discussion last fall even resurrected the idea the Town might be better served if the site’s first commercial client, tech and government contractor ITFederal, build its own pumping station to serve its needs.
That idea faded only when EDA Executive Director Jennifer McDonald reminded council that $150,000 ITFederal committed to construction of Phase One of the West Main Street access/connector road through the site came after the apparent Town commitment to construct a wastewater pumping station to serve multiple customers on the north half of the Royal Phoenix site.
With phase one of its access road plan now in place, Town Manager Joe Waltz told a January 18 liaison committee meeting that the Town was poised to move forward on the pumping station project. EDA staff had cited delays to the start of ITFederal construction last year as the Town’s plan for phase one of the West Main Extended access road was awaited, followed by hesitation on a decision about the pumping station.
However with the road plan in and plans for the pumping station being developed, progress at the ITFederal site has re-emerged with footers being laid as February began.
Queried about the status of the pumping station following the February 5 council work session update, Waltz elaborated on existing cost estimates. The base cost for the pumping station is $161,000. However, factoring in other infrastructure variables, including stormwater facilities and drains; water and force mains, the cost climbs into the originally-estimated $300,000 to $400,000 range, now cited at some loose change ($2.50 to be precise) under $336,000. The Town will recoup much in costs from hook up and tap fees.
Waltz said an earlier estimate the Town-constructed pumping station would serve about seven commercial pads and 4,200 people at Royal Phoenix remains accurate. He also said that while the eventual connection of the new FRPD headquarters to the pumping station is a goal, an alternate plan to initially hook the police facility into existing wastewater infrastructure in the area was now on the table.
Initial infrastructure costs
Town staff is estimating initial Royal Phoenix infrastructure costs in the $1.2 million range. Previous work session and meeting discussions have indicated the Town has about $450,000 set aside, primarily for the West Main Street extended project. Those annual set-aside tax revenues (about a third of a penny of real estate tax) were an initiative pushed by former Vice-Mayor Shae Parker about four to five years ago.
There was an original $2.5-million to $3-million estimate for the entire West Main Extended access road project, with the first phase now forecast at $1.3 million. However, projected VDOT matching funds, as well as ITFederal’s $150,000 commitment reduce the Town’s initial on-site road infrastructure share into the ballpark of its set aside funds – plus that $336,000 pumping station investment.
Experienced municipal manager appointed interim EDA executive director
Three weeks after the resignation of Executive Director Jennifer McDonald the Economic Development Authority Board has appointed an interim replacement. Following a Thursday morning, January 10, special meeting closed session the EDA Board of Directors approved a contract with John Anzivino to become interim executive director.
According to the motion to authorize EDA Attorney Dan Whitten to draw up a contract to secure Anzivino’s services that contract will be for a 90-day period at a rate of $55 per hour. EDA Board Chairman Gray Blanton estimated the interim executive director will initially put in an average of about 30 hours per week.
Following the meeting adjournment Whitten said he hoped to have the contract written and signed by the end of the day. Leaving the meeting following its re-adjournment to open session Anzivino declined comment to the media, saying he preferred to defer comment until a contract was finalized and he had been officially hired.
“I hope it’s by the end of the day – I’m tired of doing all this,” Blanton said of certain day-to-day EDA operational responsibilities he as chairman has had thrust upon him in the wake of McDonald’s resignation on December 20. Related story: Oops, ‘Reply’ who? With staff out and procedures changed EDA board chair’s frustration levels rise
Attorney Whitten said a press release on Anzivino’s hiring, background and the interview process for an interim executive director would be out later in the day. An online search of Anzivino’s name indicates a person with extensive experience in municipal government management.
That experience includes 12 years as town manager of Warrenton; 12 years as county administrator of Caroline County; and six years as county administrator of Amelia County. Anzivino was also shown to have been appointed as interim town manager of Purceville in 2017. So it would appear that while semi-retired, Anzivino has experience jumping in to municipal situations in flux.
McDonald offered her resignation by e-mail on December 20, about 20 minutes prior to the start of a second EDA board closed session (the first was Dec. 14) scheduled to discuss her job performance in the wake of the Town of Front Royal Finance Department’s discovery of some accounting irregularities in its dealing with the EDA. That discovery was made while Finance Director B. J. Wilson was exploring the Town’s internal finances due to town council’s interest in funding some departmental purchases through interest-free internal loans. Related story: Resolution commends Town staff for uncovering overpayments to EDA
What Wilson discovered was about eight years of debt service overpayments by the Town of Front Royal totaling just over $291,000. A final number or whether there might be similar accounting errors on the County side of EDA business has not been determined pending the result of an ongoing audit of EDA debt service and accounting practices.
Along with the interim executive director contract, discussion of that EDA audit was also part of the closed session agenda the morning of January 10; as was a prospective business client’s location in the Happy Creek Technology Park. Anzivino, who arrived shortly before the start of the 10 a.m. special meeting, sat in through the entire one-hour-and-thirty-two-minute closed session.
During the open portion of Thursday’s meeting the board also rescheduled its 8 a.m. monthly meeting to Wednesday, January 30, to accommodate board member schedules. The meeting, at which EDA Attorney Whitten said he hopes a final summary of the EDA audit will be available, was originally scheduled for Friday, January 25. Related Story: County will pay $90,000 to ‘outside consultant’ in audit of EDA finances; Related Story: County authorizes legal contract for EDA accounting and debt service work
County continues cloak of secrecy on EDA, citing “attorney-client privilege”
Citing “attorney-client privilege” Warren County Attorney Dan Whitten has denied in full a Freedom of Information Act (FOIA) request filed by Royal Examiner on Jan. 2, 2019 seeking the identity, resume and CV (curriculum vitae) of the consultant hired by the Warren County Supervisors on behalf of the Front Royal-Warren County Economic Development Authority to examine debt service issues in which the town and county were overcharged related to debt service.
“The identity of the consultant is exempt from disclosure under the Virginia Freedom of Information Act. The applicable exemption sections are Virginia Code Ann. § 2.2-3705.1(2) which includes “[w]ritten advice of legal counsel to state, regional or local public bodies or the officers or employees of such public bodies, and any other information protected by the attorney-client privilege” and Virginia Code Ann. § 2.2-3705.1(3) which includes “[l]egal memoranda and other work product compiled specifically for use in litigation or for use in an active administrative investigation concerning a matter that is properly the subject of a closed meeting under § 2.2-3711.” The consultant is an expert engaged to aid legal counsel, and the identity of the consultant is exempt from disclosure. Accordingly, the resume and CV of the consultant are also exempt under the same code sections of the Virginia Freedom of Information Act,“ Whitten wrote, in denying Royal Examiner’s request.
When asked if Virginia State Police investigators were involved in the EDA audit, Whitten replied, “Any possible involvement of State Police would fall under the exemptions in Virginia Code § 2.2-3705.1(2) and Virginia Code § 2.2-3705.1(3).”
The response to the FOIA request was emailed at 3:56 p.m. on Wednesday, Jan. 9, just hours after the Warren County Board of Supervisors unanimously agreed to hire the Sands Anderson law firm on behalf of the EDA to represent the EDA in “unspecified legal matters.”
Whitten said the contract has a $50,000 legal fees cap, and no money has yet been spent. The motion at Tuesday’s regular board meeting to approve the contract states that the law firm will “provide legal counsel on a specific matter.”
That decision came after the Board of Supervisors held a closed session for consultation with legal counsel regarding accounting and debt service.
Whitten, who represents both the County and the EDA, said the firm would represent the EDA on a “specific legal matter.” He said the firm already represents the county and EDA on bond counsel issues, but the matter for which the firm was hired was a different matter.
When asked if there was a conflict of interest, with Whitten representing both the County and the EDA, Whitten stated, “It is not a conflict if the County and EDA are not adverse parties to each other, and both political subdivisions agree to my representation of both bodies. If the County wanted to take action against the EDA for any reason, there would be a conflict, and I would recuse myself.”
Warren County, on Dec. 21 approved an expense of $90,000 payment to an unidentified financial consultant who has been looking into overpayments the town and county made to the EDA relating to debt service.
On Dec. 20, Jennifer McDonald, former EDA executive director, resigned from that position after the EDA board held a number of closed sessions regarding debt and accounting services. See related story: EDA Director McDonald submits a resignation by email prior to Thursday meeting
On Oct. 31 Royal Examiner broke the story that the EDA had overcharged the Town of Front Royal over $291,278.264. See related story: EDA may owe Town of Front Royal nearly $300K
County authorizes legal contract for EDA accounting and debt service work
Following a 45-minute closed session added to the Tuesday morning, January 8, meeting agenda of the Warren County Board of Supervisors, a motion authorizing an expenditure of “up to $50,000” to contract the law firm of Sands Anderson “to provide legal counsel on a specific matter” to the Front Royal-Warren County Economic Development Authority (EDA) was approved unanimously.
The closed session was called for “consultation with legal counsel on legal advice related to accounting and debt services”.
Queried later as to whether the contract for legal services to the EDA might indicate a potential conflict of interest between his roles as both County and EDA attorney, Dan Whitten indicated that rather, it simply reflected that he did not have the time to devote to the ongoing exploration of EDA finances.
Richmond-based Sands Anderson is the firm that Dan Siegel, who has acted as bond counsel for the EDA on projects including the recent Valley Health hospital construction loan, is employed by. Over the years Siegel has often appeared with another Richmond-based bond consultant, Ted Cole of Davenport & Company, before the supervisors. Davenport & Company has long served as a financial and bond consultant to the county government.
“We hope it doesn’t get to $50,000, but if it did they’d have to come back for approval of further funding,” Whitten said of the contract for legal services from Sands Anderson.
On December 21, the County Supervisors approved a contingency fund payment of $90,000 to an unnamed consultant for three months of work on EDA finances. See related story: Warren County will pay 90000 to outside consultant in audit of EDA finances
With the county government propping up some unexpected EDA operating expenses, Whitten did note that the County began this fiscal year on the plus side with the EDA, contributing half – $54,000 – of what it had given the EDA in operating expenses the previous year ($108,000).
Both the Town and County governments, as well as the EDA board have had a series of closed sessions in recent months regarding accounting and debt service issues in the wake of the discovery of accounting irregularities by Town Finance Director B. J. Wilson. As Royal Examiner’s Norma Jean Shaw first reported, the Town Finance Department discovered debt service overpayments totaling over $291,000 to the EDA over an eight-year period.
A final number on overpayments on the town side or whether there are similar issues on the county side is not expected until the final report of the current audit of EDA finances is concluded. Whitten said it is hoped the audit will be completed in time to be
presented to the EDA Board of Directors at its monthly meeting of January 25. However Whitten noted a final report could take longer, depending on what is discovered over the course of the exploration of EDA finances.
EDA to consider interim director appointment, get audit update this week
The Front Royal-Warren County Economic Development Authority has announced a special meeting for Thursday, January 10, 2019. Barring last-minute agenda alterations, the 10 a.m. meeting will immediately adjourn to closed session to discuss three topics: 1/ appointment of an interim executive director; 2/ discussion with legal counsel regarding the ongoing audit and investigation of EDA debt and accounting services; and 3/ discussion of a prospective business or industry locating or expanding in the Happy Creek Area.
It is the first two items that are of the most interest in the wake of the resignation of Executive Director Jennifer McDonald by e-mail shortly before the EDA board’s last closed meeting of December 20. That special meeting also immediately went into closed session to discuss McDonald’s job performance and the ongoing audit of EDA debt and accounting service practices. Acceptance of her resignation letter was announced following the closed meeting. See related story: EDA Director McDonald submits resignation by email prior to Thursday meeting
As previously reported EDA finances have been under scrutiny by both the town and county in a series of closed sessions for several months following the town finance department’s discovery of about eight years of overpayments by the Town of Front Royal to the EDA. That overpayment was originally estimated at just over $291,000, though a final figure has yet to be determined. Neither has it been publicly announced whether any irregularities in the EDA’s finances with the county government have become apparent during the audit.
The day after the closed EDA meeting and McDonald’s resignation the Warren County Board of Supervisors had its own special meeting and closed session. Following that closed session the county supervisors voted unanimously to authorize a $90,000 expenditure to pay for three months of work by an outside consultant working on the audit of town-county Economic Development Authority.
That consultant, whose identity had not been revealed based on attorney-client privilege according to County and EDA Attorney Dan Whitten, is one of three financial entities now involved in exploring EDA finances. The others are the contracted auditor Yount, Hyde & Barbour and the EDA’s new accounting firm of Hottel & Willis. See related story: Warren County will pay $90,000 to ‘outside consultant’ in audit of EDA finances.
Warren County will pay $90,000 to ‘outside consultant’ in audit of EDA finances
After a one-hour closed meeting convened at 10 a.m. Friday morning, December 21, the Warren County Board of Supervisors voted unanimously to authorize a $90,000 expenditure to pay for three months of work by an outside consultant working on the audit of town-county Economic Development Authority.
The money will come from the County’s Contingency Fund in its current fiscal year budget. Board Vice-Chairman Dan Murray explained the EDA does not have adequate funds in its operating budget to cover the expense. Murray added that due to the county government’s larger annual budget ($107.8 million FY19) its contingency fund for unexpected expenditures is significantly larger than the EDA’s contingency fund.
A Contingency Fund of $136,299 was approved in the County’s FY 2019 budget.
Friday’s closed meeting was attended by the full board of supervisors, County Administrator Doug Stanley, County and EDA Attorney Dan Whitten and EDA Board Chairman Gray Blanton and Treasurer Tom Patteson.
The open session motion to approve the funding was made by Murray, seconded by Tom Sayre.
Following adjournment of the special meeting shortly after 11 a.m. the board of supervisors released a brief statement regarding the funding authorization:
“In order to proceed to complete the audit of the EDA, the outside consultant has requested to be paid for their services over the past three months. Due to the uncertainty still of the various EDA accounts and loans, the Board of Supervisors is stepping up to provide $90,000 at this time. We are hopeful that the consultant can wrap up the audit process in the next month which will include specifically what is owed to the Town and County.”
Following the meeting Attorney Whitten explained that the “outside consultant for financial services” is a separate entity from the auditor or the EDA’s new accounting firm. He also explained that the name of that outside consultant remains protected under attorney-client privilege until completion of the audit report.
“Basically it’s an outside eye coming in outside of your normal accountant and normal auditor … They do fact-finding, intrinsic review – that type of thing. It’s just basically they’re looking for indicia of any improper activities,” Whitten said.
Whitten also said he, Board Chairman Blanton and Treasurer Patteson would participate in a closed meeting conference call with the new EDA accounting firm Hottel & Willis Friday afternoon to discuss the parameters of their work. Hottel & Willis was hired following the announced retirement of former EDA bookkeeper Josie Rickard earlier this year.
EDA Director McDonald submits a resignation by email prior to Thursday meeting
Following a 2-hour-and-20-minute closed session at a special meeting called for Thursday morning, December 20, the Front Royal-Warren County Economic Development Authority Board of Directors unanimously voted to accept the resignation of Executive Director Jennifer McDonald.
McDonald was not present for the meeting which immediately adjourned to closed session to discuss the executive director’s job performance and an ongoing audit of EDA debt and accounting service practices.
As first reported by Royal Examiner’s Norma Jean Shaw, EDA finances have been under scrutiny since the Town of Front Royal’s Finance Director B. J. Wilson discovered eight years of overpayments by the Town to the EDA on debt service. An initial figure slightly over $291,000 was reported, though a final number and other related matters have yet to be presented by EDA auditors.
McDonald’s emailed resignation letter was received by EDA and County Attorney Dan Whitten at 9:37 a.m., 23 minutes prior to the 10 a.m. convening of Thursday’s special meeting. McDonald’s letter and a brief board statement in reaction to it were both brief and polite.
“Dear Mr. Dan Whitten, Please accept this as my official notice of resignation. Over the past 20 years I have enjoyed the work at the EDA and want to continue to see the County grow and prosper. I wish everyone the best and look forward to working with everyone in the future on other projects,” McDonald wrote.
“Jennifer McDonald, Executive Director for the Front Royal-Warren County Economic Development Authority, has tendered her resignation effective December 20, 2018. Mrs. McDonald has served as EDA Director since April 2008 and has worked diligently to bring new business, investments and jobs to the County of Warren and the Town of Front Royal. The EDA board members thank Mrs. McDonald for her service and wish her the best in her future endeavors,” said the EDA board statement read into the record, as was McDonald’s resignation letter, by Chairman Gray Blanton.
Contacted later by phone, McDonald said, “I was ready to move on with the next phase of my career. A lot was accomplished during my tenure as Director and I am proud of those accomplishments.”
Several board members including Greg Drescher, Ed Daley and Vice-Chairman Bruce Drummond declined comment following the meeting’s adjournment. Drescher, who served as chairman in recent years and worked closely with McDonald on EDA business prior to his August 24 resignation from the chairmanship one day after he and McDonald sat down with Town officials to discuss the debt service situation, was especially tight-lipped, only nodding “no” in response to a request for a reaction to McDonald’s resignation. However, Board Chairman Gray Blanton did talk with media regarding the day’s developments.
Asked if McDonald’s resignation could have been made in anticipation she would be fired or asked to resign, Blanton replied, “I can’t really say yes or no to that.”
Further questioned on whether the board would have been divided on a vote to remove its executive director, Blanton said, “It was not divided in accepting that letter.”
As for receiving new or even final numbers on the accounting audit, the board chairman said, “We needed to get by this – and Dan has contact with that auditing firm and we will be getting those numbers.”
Asked if he anticipated that the next report from the auditors would be the final one, Blanton commented dryly, “These audit guys have charged a fortune to do what they’ve done. If they can’t come up with the numbers something’s wrong.”
Back to the subject of the EDA executive director’s resignation after over a decade overseeing town and county economic recruitment and development, Blanton said, “In the one year I’ve been here she has been very efficient in her presentations to the board. She’s always answered our calls, she’s always given us all the explanations and we all like that. That was good and we thought that everything she was doing was okay. But we found out through the audit that there might be something that’s not okay.”
Asked if “not okay” indicated that repayment of Town debt service overpayments might not be a simple matter, Blanton replied, “It won’t be as simple as that – but we do have our financing, we have our bank accounts, we have rents that we receive, we have income, we have properties that we own that are for sale. The last time I asked her, she said ‘yes, we have the money.’ ” As to specifics, Blanton who has been on the job as board chairman for less than four months pointed reporters to EDA Attorney Whitten.
“We haven’t gotten any information regarding that as to whether any – we don’t have the evidence now that funds might be missing. We don’t have any hard numbers at this point that we can present to media or to the authorities. So we’re still getting final numbers from both our auditor and the accountant,” Whitten told the two reporters present.
Whitten added that no conclusion had yet been reached on the County side of payments on EDA projects or debt service. “We haven’t gotten a final report yet, so we haven’t gotten any findings at this point – I thought we’d have them but we don’t,” the EDA and County attorney said.
Asked if he had a guesstimate on a timeframe for those final audit report figures, Whitten replied, “Hopefully soon.” He then pointed to a scheduled Friday meeting with the new EDA accountant Hottel and Willis. That meeting is scheduled for the afternoon of December 21, after a specially-called 10 a.m. closed meeting of the Warren County Board of Supervisors to discuss debt and accounting services.
Whitten was also asked if he thought McDonald’s resignation could have been pre-emptive, as in seeing board action seeking her resignation as imminent.
“She was in the closed session with us last Friday and she was met with the evidence … or documents that the auditors had found and felt she needed to resign.”