“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.
UPDATE: Tran says ITFederal is not opening and it is an EB-5 Visa project
Truc “Curt” Tran has finally confirmed what many have long suspected: ITFederal will not open in Front Royal on the 30-acre tract of land he purchased from the Front Royal-Warren County EDA for one dollar.
Tran has also confirmed that the once-touted project, which was to be a $40-million investment in the community and provide 400-600 employees high-wage jobs, is actually an EB5-Visa program project.
The EB5-Visa program, which began in 1990, offers permanent residency (also known as a green card) to foreigners to invest between $500,000 to $1 million in a “targeted employment area”, defined as a rural area or an area in which the unemployment rate is at least 150 percent of the national unemployment rate at the time of the EB-5 investment, according to the United States Citizenship and Immigration Services, or USCIS, an agency of the U.S. Department of Homeland Security.
The U.S. Bureau of Labor Statistics website states that the national unemployment rate for the last quarter of 2015, which is when Tran’s ITFederal project was announced with great fanfare by then-Congressman Robert Goodlatte, was five percent. Using the EB5-Visa program formula, a 10 percent unemployment rate for Front Royal during that quarter would have been required for Tran to qualify for the EB-5 program. According to the Virginia Labor Market Information website, Warren County had a 4.2 percent unemployment rate in Dec., 2015.
The EDA passed a resolution on July 1, 2015 to loan $10 million to ITFederal. The Promissory note with Tran for ITFederal, dated Sept. 16, 2015 was prepared by Blair Mitchell, former County Attorney and legal counsel to the EDA.
The Town Council of Front Royal, at the request of the EDA, and “to approve and support the Industrial Development Authority in obtaining a loan not to exceed ten million dollars for the purpose of economic development within the town limits” unanimously approved a resolution on Nov. 23, 2015 for a bridge loan to Tran because they believed he would soon begin a $40 million project that would benefit the community.
Royal Examiner reached out to former EDA Board Chairman Greg Drescher on March 7 to inquire about the due diligence that was performed regarding Tran before asking the Town of Front Royal to loan him $10 million.
Drescher replied that former Director Jennifer McDonald would have been responsible for conducting any evaluation or vetting process, and forwarded our information request to Interim Executive Director John Anzivino.
Anzivino replied on March 12 that “former Executive Director, Jennifer McDonald, was responsible for developing and completing any background investigation or reference checking that would have occurred regarding WCEDA business prospects or prospective borrowers.
“In response to your request I have audited the Authority’s existing files and regret that we cannot provide information specific to your inquiry because, in accordance with the Virginia Code Ann. §2.2-3704(B)(3), the requested records could not be found or do not exist.”
Tran says that because he’s had trouble attracting investors, ITFederal will not open. The current building, greatly scaled back from a three-phase campus with jobs for up to 600, to a still-under-construction 10,000 square foot single building could wind up costing him a fortune. His original agreement with the EDA would require Tran to pay the entity $2 million, if the building is not completed by September, 2020, minus any construction improvements.
While Tran may not be able to get investors interested in the former Avtex site, and has fallen woefully short of delivering up as many as 600 high-paying jobs for local workers who held out hope they would materialize, he can likely serve up a cup of joe at his latest venture, a coffee shop in Alexandria, Va.
Town closed session with EDA officials on Afton Inn – precautionary
While a closed session of the Front Royal Town Council lasted about 10 minutes longer, 35 to 25 minutes, than the open portion of Monday night’s council meeting there were no announcements forthcoming from the session – not that, that was any surprise with the topic being a familiar one over the past seven months.
Council and town staff were behind closed doors with Economic Development Authority Interim Executive Director John Anzivino and Dan Whitten, the latter in his role as EDA attorney. The lone topic of the closed session was “consultation with legal counsel” regarding specific “legal mechanisms related to handling potential future debt service related to current and future budget years”.
But if that portion of the closed session discussion was familiar in the wake of town staff discovery last summer of about eight years of debt service overpayments to the EDA totaling about $291,000, the final portion – “with respect to the former Afton Inn building” – was not.
Asked if there was likely to be any announcement following the closed session prior to convening Monday’s meeting, Front Royal Mayor Hollis Tharpe said “no” adding that the meeting was precautionary in nature.
“We don’t want to get stuck with a $2.5-million bill,” Tharpe said.
That is the estimated cost of renovations now under way after well over a year of negotiations with the redevelopment entity now known as 2 East Main Street LLC. That discussion has included the EDA – current owners of the Afton Inn on behalf of the town – and town officials including the appointed Board of Architectural Review (BAR).
According to a Resolution approved by a 4-2 vote of council in November, the Town’s exploration of its EDA-related finances revealed an apparent EDA failure to close on a number of capital improvement loans the Town had believed were in place. That failure negatively impacted debt service projections for several existing or planned Town projects, including construction of the new Town Police headquarters.
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The agreement with 2 East Main Street LLC allows the EDA to retain ownership of the Afton Inn property pending completion of renovations, at which time ownership will be transferred to 2 East Main Street LLC.
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Apparently the Town was seeking assurances behind closed doors Monday that any necessary financing of the Afton Inn project is in place and the Town will not begin receiving any unexpected bills from contractors doing the work there.
The absence of any long faces exiting the Warren County Government Center Caucus Room site of that closed session appeared to indicate – so far, so good.
The former Afton Inn, opened in 1868 as The Montview Hotel, is the oldest and perhaps longest derelict commercial building in Front Royal’s Historic Downtown Business District. It was 2005 when the building’s final commercial use as a school book depository shut down.
A huge controversy erupted in 2014 when by a supermajority 5-1 vote council agreed to swap the old Town Hall building for the Afton Inn. The move appeared to be a two-pronged effort to remove Northern Virginia developer Frank Barros from ownership of the Afton Inn after several years of the building laying unused and deteriorating at the head of the Town’s Historic Downtown Business District in exchange for what was considered a too small and obsolete old town hall building; and involve the EDA in marketing the Afton building for redevelopment.
And four-plus years later things seem to be progressing on the Afton side of the street.
Audit report still unfinished but is its shadow being cast over suggested changes to EDA processes?
While the final result of a now five-month-plus annual audit at a soaring cost of over a quarter million dollars was again not ready for review and approval at the February monthly meeting of the Front Royal-Warren County Economic Development Authority Board of Directors, repercussions of that audit may have been present.
Interim Executive Director John Anzivino opened his report by commenting that past EDA Budget formats were “not what I would call standard budget practice”.
Consequently Anzivino, hired in the wake of the December 20 resignation of Jennifer McDonald, said he had “reconstructed your budget to a simpler format, a more understandable format but with more detail.”
Noting a plan he has developed to hire a permanent executive director by May 6 “if not sooner”, Anzivino forwarded a suggestion “that the board become more involved” in the budget process on the front end, rather just at the concluding stages.
He observed a past tendency to mix operational and capital expenditures in the EDA budget, telling the board “I have got your operational budget separated from your capital budget, from your debt service budget.”
Anzivino then suggested formation of a two-person board committee to review future budgets and budget reports prior to presentation to the full seven-member board. He suggested Treasurer Tom Patteson as one member; and after some discussion, one of the board’s longer-tenured members Greg Drescher, was nominated to be that second committee member. Patteson and Drescher were then approved for those appointments without a dissenting vote.
Following an hour-and-25-minute closed session, over an hour devoted to further legal consultation surrounding the EDA’s loan programs, debt and accounting services and the New Market Tax Credit Program, Anzivino recommended formation of a second committee to help screen applicants for a permanent replacement for McDonald as EDA executive director.
On a nomination by Ron Llewellyn, Vice Chairman Bruce Drummond and Ed Daley were selected to that committee.
See Royal Examiner’s video of the first half hour of the open meeting including Anzivino’s budget format suggestions and updates on Town and County projects, including Town work at the Royal Phoenix/Avtex Business Park site; and the post-closed session discussion of the new executive director search and process:
McDonald ups the ante in civil litigation with county supervisor
The civil case legal battle between sitting Warren County Supervisor Tom Sayre and former Front Royal-Warren County Economic Development Authority Executive Director Jennifer McDonald became a little less civil on February 19.
That is the day McDonald attorney Lee Berlik filed a $600,000 defamation suit against Sayre in Warren County Circuit Court – $250,000 for injury to reputation, humiliation, insult and embarrassment; and $350,000 in punitive damages. Ironically perhaps, considering there appears to be little love lost between this litigating couple, Berlik’s paperwork to the court on the suit is dated February 14, Valentine’s Day.
Five months earlier, on September 21, 2018, Sayre attorneys filed a $25,000 defamation suit against McDonald in Warren County General District Court. Both lawsuits revolve around allegations about alleged actions of the respective defendants related to a reported rock-throwing vandalism at McDonald’s home on June 15, 2017.
While Sayre’s suit focuses on the presence of his phone number and the name “Tom” on a note discovered at the scene of the June 15 vandalism; McDonald’s suit’s focus is Sayre’s alleged reaction to public disclosure of that note and its contents. That disclosure came as part of evidence submitted in a criminal misdemeanor filing of a false police report case by Virginia State Police against McDonald on June 13, 2018.
On October 31, 2018, McDonald was acquitted of the false police report misdemeanor after Judge W. Dale Houff granted a defense motion to dismiss. In making his ruling, Judge Houff observed that the prosecution had presented no evidence as to motive that would lead the defendant to create a false criminal narrative or presented enough evidence to convict.
McDonald subsequently resigned from the EDA executive director’s position that she had held for a decade on December 20, 2018. Her job performance had been under closed session scrutiny by the EDA board in the wake of the Town of Front Royal’s discovery of eight years of debt service over-payments to the EDA totaling about $291,000.
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As it was in the misdemeanor trial, the accuracy of Royal Examiner reporter Roger Bianchini’s memory of when he was told about the vandalism by McDonald is likely to be a part of both civil defamation cases.
However, the issue of Sayre’s statements to others regarding the presence of his office phone number, as well as the name “Tom” on the note instructing a “terrorizing” of McDonald pointed out to investigators on the ground at the site of the stone-throwing vandalism at her front door in June 2017 is the pivotal issue of McDonald’s defamation case.
The Complaint notes, “To date, the person who vandalized Ms. McDonald’s home has not been identified or charged with any crime.”
“Mr. Sayre, however, has taken it upon himself to proclaim to anyone who will listen that the whole incident was ‘staged’; that Ms. McDonald herself is the person who vandalized her house; and that Ms. McDonald wrote the note herself to defraud the police and the public, and to frame him for a crime he didn’t commit.”
The Complaint further alleges, “All of these statements are false, and Mr. Sayre knows they are false and knew they were false at the time he made them” and that unnamed third parties who heard these allegations “understood the remarks as referring to Ms. McDonald in a defamatory sense.”
A second phone number on the note reflecting an apparent conspiracy to terrorize McDonald was found to belong to former Front Royal Town Manager Michael Graham. Both Graham and Sayre testified at the misdemeanor trial that they had no knowledge of the note or any conspiracy against McDonald or her property. In fact, it was reported that while dismissing the false police report charge against McDonald, Judge Houff commented that there was something terribly wrong about the note.
A June 21 date has been set for an estimated four-hour trial in the Sayre defamation suit against McDonald. Substitute Winchester Judge Ian Williams will hear that General District Court case. Sayre’s $25,000 defamation suit states that he “lost significant sleep, suffered acute anxiety, could not focus at work, sought counseling from his Priest, spent countless hours seeking to clear his name and repair damage to his reputation.”
See Related Story
As it is likely to also be a topic of testimony in both civil cases, at this point Royal Examiner will leave details of reporter Bianchini’s memory of when he was told about the McDonald home vandalism and potential corroborating or un-corroborating testimony about his memory for future discussion – or testimony.
We will note, however, that McDonald’s civil defamation filing does point to his misdemeanor trial testimony of having “been drinking the night before he spoke to police” (two or three light beers with pizza was the testimony) and that “he has a tendency to conflate dates” (at some distance like the 16 months between June 2017 and the October 2018 trial, if “not an hour later” as he told Judge Houff of the time-frame between an alleged EDA calendar-notated June 16, 2017, 9:30 a.m. meeting with McDonald and his meeting with FRPD about the May 2017 EDA office break-in an hour later); and finally that “his train of thought derails frequently” (what were we talking about?) …
(Roger Bianchini contributed to this story – as if you couldn’t figure that out.)
Citizen expands criticism of EDA processes, lack of County oversight
While the large crowd that had appeared in support of county board critic Mark Egger’s right to address a single issue – most recently a lack of oversight of EDA operations as the five-month-plus and quarter-million-dollar-plus audit drags on – without qualification were not present to celebrate their first opportunity at expanded, non-agenda item “Public Presentations”, a new voice was.
Fern Vazquez was one of just two public speakers on February 19 appearing in the early-agenda 20-minute public concerns portion of the meeting (up from a previous, sometimes loosely-enforced 15 minute limit) – the other, Bob Hill addressed the County budget process here: Public School officials describe educational ‘crisis’ point in teacher attrition
However absent Egger and his support base, Vazquez carried on past county board and EDA criticisms in a measured tone and expanded upon possible solutions. She cited a potentially growing trust gap between the Warren County Board of Supervisors and its electorate revolving around ongoing vagaries about EDA oversight, a lack of transparency about the current EDA audit, and the county board’s initial reactions to Egger’s calls for increased EDA oversight and board accountability for an apparent past absence of such oversight.
See Vazquez’s full remarks in this Royal Examiner video:
“It appears the Board of Supervisors turned a blind eye to a dysfunctional EDA, even when the facts were brought to their attention,” Vazquez said. She pointed to Mark Egger’s “numerous” appearances before them culminating with a November 15, 2018 call to reign in what he termed an “out of control EDA” and what Vazquez said news reports portrayed as “an incompetent at best and rogue EDA at worst.”
Within five weeks of that mid-November call to action by Egger the EDA’s executive director had her check-writing and bank account privileges revoked by her board, followed by her resignation submitted by email 20 minutes prior to a second scheduled closed session discussion of her job performance.
During this time, Vazquez noted the county’s elected officials were pondering limiting the number of times public criticism could be leveled their way on any one subject not scheduled for meeting discussion. However she commended the supervisors for backing off that initiative when it became apparent “there would be a public outcry” in response.
Vazquez also questioned the rising cost of contracted and in one case anonymous outside assistance in exploring EDA finances, past loan and debt service arrangements related to the audit that began in mid-September.
Noting that taxpayers have thus far footed the $250,000 bill for what is at this point an anonymous financial consultant ($150,000) and new legal representation ($100,000 to Sands-Anderson which has acted as a bond consultant to both the EDA and County in the past), Vazquez wondered at a seeming lack of transparency.
“How are we to determine if there is a conflict of interest?” she asked the supervisors, adding, “In this obstructive environment one can reasonably suspect that the public may never have full access to the results of the audit. If there have been improprieties, how can the public know that those responsible are held accountable?”
In the face of any move toward a redacted release of the audit or audit report, the latter slated to be prepared by the thus-far anonymous financial consultant contracted by the EDA with county taxpayer money, Vazquez suggested creation of a “Citizen’s Review Board” that would have full access to the findings.
A third point of concern she expressed was a lack of transparency on the appointment process of EDA board members.
“It is unclear to me what guidelines are followed, how prospective candidates are vetted, and if there is any public disclosure of this process,” Vazquez stated. “The same is true of member reappointment to a new term. Do you have certainty that the reappointed EDA members who served previously are free of culpability of past mistakes?”
Coincidentally to that expression of concern about the lack of transparency about a vetting process for EDA board appointments, the supervisors later adjourned to closed session to discuss appointments to fill two EDA Board of Director terms expiring at the end of the month. All the media was told about the applications to fill the expiring terms of Greg Drescher and Ron Llewellyn was that there were 10 original applicants, though one – Ed Daley has since been appointed to fill a vacated seat.
Whether Drescher and Llewellyn are among those applicants, as well as the identities of the others, were cited by county staff and later board Chairman Dan Murray as confidential personnel matters at this point in the process – apparently leaving the public in the dark until appointments are announced.
Her cards carefully placed on the public forum table, Vazquez suggested creation of a non-partisan citizen committee “to serve as a liaison between county officials and the community” in an effort to “heal the mistrust between the Board of Supervisors and those who elected you – Count me in to volunteer to serve on this committee,” Vazquez concluded.
UPDATE: EDA resolves to pay back soaring audit expenses as completion looms
FRONT ROYAL – At a specially-called Friday morning, February 8 meeting the Front Royal-Warren County Economic Development Authority Board of Directors again resolved to pay back funds forwarded by the county government to cover invoice billings from the confidential accounting consultant contracted to oversee this year’s audit process.
The $60,000 approved for transfer to the EDA by the Warren County Board of Supervisors on February 5 is the second such transfer. The first made on December 21, was for $90,000 for what is believed to have been an invoice for three months of completed work. The audit began in mid-September.
The Friday-morning motion to accept and utilize the most recent allotment from the County to pay the consultant’s latest invoice was made by Mark Baker and approved by a 6-0 vote, Ron Llewellyn absent.
The motion included a promise “to make every effort possible” to pay the money back as soon as the finances were in place to do so. Most EDA assets outside its operating budget or loans for specific capital improvement projects are tied up in real estate, as opposed to readily available cash. A similar intent-to-pay-back resolution was made upon acceptance of the first $90,000 forwarded to the EDA by the county supervisors to meet the consultant’s earlier invoice.
As reported upon the board of supervisor’s authorization of moving the $60,000 to EDA control on February 5, coupled with raising the allotment for audit-related legal services from the Richmond law firm of Sands-Anderson from $50,000 to “up to $100,000”, the county government has spent or authorized expenditure of a quarter million dollars ($250,000) in addition to the base auditor’s fee of $17,500 on this year’s EDA audit.
Financial alarm bells were raised when the Town of Front Royal notified then EDA Board Chairman Greg Drescher, former Executive Director Jennifer McDonald and EDA/County Attorney Dan Whitten on August 23, 2018, that its finance director had uncovered an eight-year history of Town bond issue over-payments to the EDA totaling over $291,000.
Friday’s closed session of 48 minutes was limited to matters requiring legal advice regarding discussion of “EDA loan programs and accounting services.” EDA Board Chairman Gray Blanton read the same statement explaining the closed session exclusion of all but EDA board, certain staff and auditing participants as he did on January 30.
That statement indicated the board would be hearing information from its consultant providing “a direction of how we will need to proceed as a Board as we work toward better understanding the actions of our former Director in operating the Authority” and that at this point the EDA board felt it best that it and designated staff – counsel and interim executive director – alone would be receiving that information.
Consequently, Front Royal Mayor Hollis Tharpe and Town Manager Joe Waltz, present without offering input or being asked any questions Friday, were ushered out of the meeting room with the media prior to the 8:20 a.m. start of the closed session. Both soon left the premise.
Discussion following the closed session indicated a belief the audit could be completed by February 19, leading to another special EDA board meeting being called to accept the auditor’s report. Some urgency was expressed in completing the audit process so that the county government can include the EDA report in preparing its own audit as the coming fiscal year budget process progresses.
In a related matter, a press release from the county administrator’s office issued shortly after 10 a.m. Friday morning (Feb. 8) announced the hiring of Winchester-based attorney Robert T. Mitchell to represent the County in EDA-related matters where Dan Whitten, the county attorney who also serves as EDA attorney, could have a conflict of interest regarding information revealed by the audit.
Stanley’s statement on Mitchell’s hiring states, ”We have retained Mr. Mitchell’s services to provide legal counsel to represent the Board of Supervisors on the accounting and debt service issues regarding the EDA. Mr. Mitchell has decades of experience in local government law including representing Clarke County and we value his knowledge and experience. Time will tell how much his services will be needed on this matter.”
With a possible completion date for the now quarter-million-dollar EDA audit cited just 12 days away it would seem that “time” to realize how much Mitchell’s services might be required by the County, will be soon at hand.
Perhaps ironically, though dated February 7 the press release from County Administrator Doug Stanley’s office announcing Mitchell’s retention was distributed just 26 minutes (10:16 a.m.) after Royal Examiner Editor Norma Jean Shaw sent an email (9:50 a.m.) to EDA board members, Whitten and Stanley Friday morning questioning potential attorney conflicts of interest for Whitten in the audit process.
Shaw previously questioned Whitten on the potential of such a legal dilemma in his dual County-EDA attorneys’ roles in a January 9 e-mail.
The Royal Examiner’s camera was there to capture the special meeting: