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EDA in Focus

Meet Doug Parsons: New EDA Executive Director

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Doug Parsons, EDA Executive Director and Royal Examiner publisher Mike McCool. Photo and video bt Mark Williams.

On May 8th, Douglas J. Parsons took over as the Warren County EDA’s new Executive Director.

Beginning his career as Project Administrator for the Region VI Planning and Development Council, Mr. Parsons served as Executive Director of the Lewis County Economic Development Authority for eleven years where he developed and executed a multi-faceted strategic plan for infrastructure, business attraction and retention resulting in the successful location of a variety of businesses employing several hundred new employees. While in Lewis County Mr. Parsons also was instrumental in securing land for a new 73-acre industrial park and writing and administering over $10 million in grants. Mr. Parsons also served as Business Development Manager in the Town of Leesburg for three years and currently serves as Business Manager for the Workforce Solutions Division of the Commonwealth’s Virginia Economic Development Partnership (VEDP). In his current position, Mr. Parsons has responsibility for project management of 91 prospects and active accounts in the Northern Virginia area, assisting with the development of workforce training analysis for clients and business prospects, working with local economic development authorities, universities, community colleges and state agencies.

When he accepted the position Mr. Parsons stated that, “I’m grateful for the opportunity to serve in this role. Warren County is a thriving, growing community that has so much to offer business and industry. I’m anxious to start working with our existing companies, new business prospects and community leaders to help create new jobs and expand the tax base for our citizens.”

Mr. Parsons has a Bachelor of Science in Journalism/Advertising with a minor in Psychology from the Perley Isaac Reed School of Journalism at West Virginia University. In the past Mr. Parsons has been certified as an Economic Development Finance Professional through the National Development Council and has taken advantage of numerous economic development related courses offered through the International Economic Development Council. He is a 2002 graduate of Leadership West Virginia and a Certified Project Administrator through the West Virginia Infrastructure and Jobs Development Council.

Chairman A. Gray Blanton noted that during the interview process, “Doug impressed us with his preparation and the depth of his experience He has what is needed to perform as our executive director, experienced, knowledgeable, organized and a pleasant personality.”

WCEDA Treasurer Thomas Patteson indicated that, “The Warren County-Front Royal EDA is most fortunate to have Mr. Doug Parsons as its new executive director. He has a wealth of knowledge and experience in economic development and should serve the citizens of Warren County with distinction”.

Recently elected WCEDA Secretary Ed Daley stated that, “We are honored that Doug Parson will be joining the WCEDA team. His experience in West Virginia and with the VDEP makes him an ideal candidate to lead our efforts to promote economic development in Front Royal and Warren County. His relationships with many area businesses and industry leaders will help to move forward immediately”.

Mr. Parsons was chosen from a national pool of twelve candidates who were screened by a committee selected by the Board. The committee narrowed down the pool to four candidates and each candidate was interviewed by the Board. Finalists were subjected to an intensive background check.

Mr. Parsons lives in Rippon, West Virginia with his wife and son and has a daughter currently residing in Germany.

Doug stopped by our studios last week and had a conversation with Royal Examiner’s publisher Mike McCool:

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EDA in Focus

Pared back FRPD payment ‘Reservation of Rights Agreement’ revealed by County

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In an unexpected and somewhat stunning development in an added agenda item to conclude Tuesday’s Warren County Board of Supervisors Work Session, it was revealed that a revised “Reservation of Rights Agreement” has been negotiated between members of the county board and the Front Royal Town Council. Following the discussion about the new agreement on making the July FRPD construction debt service payment, a board consensus was reached to place a vote on approval of the revised agreement on the board’s July 21st meeting agenda.

The new agreement is a radically pared-back version of the one the town council unanimously approved at a June 30 Special Meeting to cover half the July FRPD headquarters debt service payment, as will be explored in detail below.

FRPD building at Ground Zero of a legal, financial, and ethical dispute between two municipalities and their joint Economic Development Authority. What’s confusing is this is one project that was not implicated in the alleged misdirection of EDA, Town, or County assets – better not be, the occupants are packing heat. Royal Examiner Photos/Roger Bianchini, Video by Mark Williams.

Board Vice-Chairman Cheryl Cullers made the motion to add the item to Tuesday’s work session. Delores Oates then noted she and Cullers “met, I think you guys know, with Ms. Cockrell and Chris (Holloway)” on the matter, observing that the supervisors had not appropriated funding to continue covering the EDA FRPD debt service payments into the new fiscal year.

It seems the County and Town are on the verge of taking a high-stakes gamble on whose credit rating will suffer the worst if the EDA’s FRPD debt service payments are not covered this fiscal year.

The pared-back Reservation of Rights Agreement appears to be a compromise to avoid that gamble being played into the commercial banking community as of July 16.

It was revealed during the subsequent discussion that today, Wednesday, July 15, is the last day before the $21,102 interest-only payment to United Bank goes overdue. If the agreement to keep the loan current is realized before either elected body votes to sign off on the method by which it will be done, at least for July, the Town will still only pay half of the monthly amount due, or $10,529.

That half interest-only payment is based on council’s contention that verbal assurances by former EDA Executive Director Jennifer McDonald of a New Market Tax Credit-based 30-year, 1.5% interest rate on the FRPD construction project that it did not even qualify for, is somehow legally binding. The EDA is paying United Bank 3% interest on the debt service.

The new EDA Board of Directors and staff left to clean up the financial mess inherited from predecessors finds itself under fire from one of its supporting municipalities, well previously ‘supporting’.

And while it is the EDA’s loan, supported by the County’s operational funding, both municipalities have traditionally and continue to be responsible for covering the debt service on their capital improvement projects funded through the EDA. It seems clear outside of Town Hall that precedent indicates the intent was for the town government to assume the Town Police Station construction debt service upon completion of the project, dating to October 2018.

But that was before the previous EDA administration financial scandal began unraveling in 2018. That unraveling led to the EDA’s initial March 2019 $21.3 million civil litigation against former EDA Executive Director Jennifer McDonald and 14 co-defendants alleged to have conspired with her to misdirect or embezzle EDA assets to their own benefit. It was followed by the Town’s filing of escalating litigation against the EDA, now seeking recovery of “at least $20 million” of allegedly misdirected or promised Town assets.

Delores Oates explains her perception of the evolution of negotiations to head off a potential financial disaster for both the county and town governments’ financial ratings and ability to acquire preferred financing terms on future capital improvement projects.

But on Tuesday, Oates asserted that the new agreement, which removes the conditional legal language that would have had the County and EDA signing a document that stated the Town had “no moral or legal obligation” to pay for its police station, indicates ongoing “good faith” negotiations between the two municipalities to resolve the FRPD debt service impasse; and perhaps other issues related to the Town’s $20-million-plus civil litigation against the half-century-old joint County-Town EDA. That litigation relates to the previous EDA administration’s financial scandal, details of which were revealed by a 2018 forensic audit commissioned by the EDA and County.

That audit was commissioned in the wake of Town Finance Director B. J. Wilson and Town auditors discovery of financial irregularities in some of the Town’s debt service arrangements with the EDA, though the police station project was not one of those.

It is against this legal backdrop our community financial drama is unfolding.

Pared-back legal verbiage

As opposed to the convoluted legalese we described in our story “Legal questions surround Town offer of one-time, recoverable FRPD payment”, the new, one-paragraph draft “Reservation of Rights Agreement” is brief and to the point, at least comparatively.

It reads: “The Town of Front Royal (‘Town’) tenders $10,528.95 to the Industrial Development Authority of the Town of Front Royal and County of Warren, Virginia a/k/a Economic Development Authority of the County of Warren (‘EDA’) for the July 2020 payment on the loan by United Bank for the Town Police Department with no admission of obligation and reserving all rights to continue to contest this and other matters in pending litigation between the Town and EDA. The EDA accepts this payment acknowledging this reservation of rights.”

A view of FRPD headquarters from the EDA Kendrick Lane office complex at left – so close and yet so far away, at least to a resolution of a nebulous legal dispute on financing its construction.

Gone are the “Conditions” that led EDA attorney Sharon Pandak to tell Royal Examiner upon our reading them to her over the phone, that she would be reluctant to advise the EDA to sign off on the initial agreement. Those deleted passages include:

“The Town denies that it owes any moral or legal obligation to repay the Loan”;

“The County and the EDA acknowledge that this payment shall not be construed as, considered to be, or argued to be, in any forum, an admission for any purpose, including but not limited to of liability of the Town for the Loan or the Costs”; and,

“All parties agree that payment hereunder shall be inadmissible for any purpose except by the Town to recover this payment as damages in the Litigation,” among other legally qualifying passages.

So, good-faith negotiations perhaps – just in small steps, VERY small steps with a very large credit rating gamble looming in the balance that could impact this community’s financial future on both sides of the Town-County boundary.

Thus far the EDA, with County support has been making what have been interest-only payments on the $9-million FRPD project. That will change on November 1, when the United Bank loan moves to principal and interest payments. EDA Executive Director Doug Parsons estimated that would take the monthly payments to about $50,000 from the $21,000 interest-only range.
According to Parsons the balance on the United Bank FRPD headquarters loan as of June 1, when the EDA submitted an invoice to the Town for slightly over $441,300 paid thus far by the EDA, is $8.44 million.

How not only this month’s payment but also coming ones will be handled by both municipalities appears to be hinted at by the new one-paragraph Reservation of Rights Agreement spitting the FRPD debt service down the middle with minimal additional legal verbiage. Letting the EDA’s FRPD debt service go delinquent may not be a gamble in either involved municipality’s best interest.

Delinquent debt service payment – what do we have to lose, it’s not our responsibility, or is it? The county board, above, and town council, below, appear to be trying to fold on that gamble – for now.

At issue now appears to be will July’s $21,102 payment be made by somebody, somehow before the end of the July 15th banking day; and will majorities of both the Town and County’s elected bodies to agree to this arrangement on an ongoing basis to prevent that rather large credit-rating gamble being played on the municipal-banking poker table??

Stay tuned for the next thrilling episode of “As the FRPD Debt Service – and EDA, Town and County Credit Ratings – Turn”. But while you wait for that next episode, see Tuesday night’s episode unfold over the last 10 minutes or so of Tuesday’s meeting in this Royal Examiner video:

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Town authorizes new EDA; Chamber as CARES administrator; and FRPD equipment upgrades

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On Monday, July 13, the Front Royal Town Council took several actions, for better or worse, that will shape several key future functions in coming months and years. At the top of the list was second and final reading approval – 4-1, Thompson dissenting as she did at the June 22 first reading – of creation of a new Economic Development Authority solely overseen and funded by the town government and its taxpayers.

The Town will become the first municipality in Virginia to concurrently be a part of two EDA’s. In an unprecedented example of attempting to “have your cake and sue it too”, the Town has maintained its half-century-plus, co-founding membership in the half-century-old joint County-Town EDA while civil litigating for virtually all the money the EDA is trying to recover in its initial $21.3 million civil action against its former executive director and 14 co-defendants accused of conspiring to misdirect or embezzle EDA assets.

The Town’s legal and administrative department heads may now be pondering what’s next after final approval of a new unilateral EDA to counterbalance the one the Town is suing. We know, appointment of a board of directors – they’re volunteers, so that won’t cost anything. Royal Examiner Photos/Roger Bianchini – Royal Examiner Video/Mark Williams

But at least the Town does not have to fund operational costs of the old EDA, as in EDA legal fees to fight the Town litigation, while figuring out where its operational costs for it new unilateral EDA will come from, if not a successful civil litigation against its old EDA. For as previously reported, the County took over the Town’s share of joint EDA operational funding several years ago as part of ongoing negotiations about the double taxation of town citizens. So, while the town government doesn’t have to fund the EDA’s legal defense against it, its citizens do as county taxpayers.

Alright, enough of that dizzying legal scenario.

Also approved Monday were a Fiscal Year-2021 budget amendment authorizing receipt of $1,276,558 of the County’s $3.5 million in CARES (Coronavirus Assistance, Relief Equities and Securities) Act federal funding for COVID-19 relief for private-sector economic losses incurred due to the Coronavirus pandemic emergency management response restrictions; as well as an agreement with the Front Royal-Warren County Chamber of Commerce to manage distribution of the Town’s CARES Act funds.

The amount of money authorized to be put under the Chamber’s control was $1,176,558, $100,000 less than the total amount being transferred to Town control. According to the staff summary, that $100,000 is being put into the General Fund Contingency account to cover “COVID-19 expenses”.

‘How much is that going to cost?’ Lori Cockrell asked of administering $1.2 million of CARES Act federal COVID-19 relief funding received through the County. The interim town manager said costs should be ‘minimal’.

Questioned about those expenses by Councilwoman Lori Athey Cockrell, Interim Town Manager Matt Tederick said those costs were an “unknown” at this time, so no amount was being cited at this point in the process.

However, Tederick said he was “confident” those costs would be “minimal”.

Also approved in a series of 5-0 votes, Holloway absent, as were the CARES Act related items, were three appropriations totaling $256,981.72 for equipment upgrade purchases for the Front Royal Police Department. FRPD Chief Kahle Magalis made a detailed presentation on the need for the equipment upgrades at council’s previous work session.

Those equipment purchase authorizations were:

  • $82,159.72 for a VESTA 911 phone system;
  • $162,000 for replacement of 10 WatchGuard 4Re In-car WIFI camera systems, and 24 VISTA body cameras, and;
  • $12,822 for Avtec-Motorola radio console equipment to replace existing equipment termed at its “end of life” stage of service.

As Chief Magalis told council at his work session presentation, these equipment upgrades are the cost of doing law enforcement work at an optimum of communications efficiency; and self-monitoring standards that protect both the public and the department’s personnel legally.

It’s always good to be packing a little heat when you’re asking this group for a quarter million dollars in operational funding, FRPD Chief Magalis may have been thinking as he dressed for Monday’s meeting.

The agenda summary noted that the Town will pay for the car and body cameras at $32,440 annually over a five-year period. Funding for all three purchases were cited as available through existing FY-2021 FRPD budget line items.

A scheduled Closed Session to discuss unspecified “Personnel” matters was deleted from the agenda at Councilman Meza’s suggestion, due to the absence of one member, Chris Holloway.

Lori Cockrell’s request to then add a Closed Session to discuss the Town’s litigation against the County-Town Economic Development Authority was rejected for not receiving the required unanimous vote to alter the advertised agenda. Councilwoman Letasha Thompson explained she would oppose the addition on the same grounds council had agreed to remove the scheduled Closed Session, Holloway’s absence preventing consideration by the full council.

E.J. Swindell and Jorge Guerrero are recognized by the Town Manager as Town ‘Stars of the Month’ for work ‘above and beyond’ in gathering up wind-blown recycling in the Ay-View Estates subdivision.

The final agenda item was unanimous approval of a Resolution of support for a Town “Employee Appreciation Day” to be this Wednesday, July 15. The resolution cited the ongoing contributions of the Town’s remaining 168 part and full-time employees, particularly during upheavals in normal service resulting from the COVID-19 Coronavirus pandemic emergency management response. Staff will be honored with a Town-hosted luncheon tomorrow to mark Employee Appreciation Day.

As his children and new chief watch, Scott Baker is introduced and pinned – carefully – by his wife as FRPD’s newest officer. Baker came over from the WC Sheriff’s Office investigations division.

See the staff summaries, discussion and votes on these matters, as well as Stars of the Month Employee recognitions to the Solid Waste Department’s EJ Swindell and Jorge Guerrero for work “above and beyond”; and the departmental “pinning” by his wife, of FRPD’s newest Officer Scott Baker; and public presentations on town road infrastructure/pothole issues (Mike McCool), trash accumulation and overflow at the County Dog Park in town (Betty Showers), and another 2nd Amendment Sanctuary initiative seeking to shield citizens from State-enacted gun laws presented to council (Paul Aldridge) in this Royal Examiner video:

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Legal questions surround Town offer of one-time, recoverable FRPD payment

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Without accepting any responsibility for the nearly $9-million cost of its new police headquarters building, at a hastily called Tuesday evening Special Meeting to accommodate the turn of the fiscal year today, Wednesday, July 1st, the Front Royal Town Council unanimously approved a “Reservation of Rights Agreement” allowing the Town to pay a portion of the first debt service payment of Fiscal Year 2021 on that Town/EDA capital improvement project. The project was completed in October 2018 and the Town has yet to compensate the EDA for any of its costs in financing the project as will be elaborated on below.

Also approved during the eight-minute meeting prior to an adjournment to closed session for personnel matters believed to be the first of two town managers interviews scheduled this week, was an extension past June 30, and alteration to the contract payment terms of Interim Town Manager Matt Tederick. That will be covered in a separate Royal Examiner story.

Councilman Jake Meza says the Town saved about $50,000 by hiring Matt Tederick as a contractor, but as of July 1 that arrangement no longer exists. Royal Examiner photos and video by Mark Williams.

As to the Reservation of Rights Agreement with Warren County, the authorized one-time payment of $10,528.95 covers half of the Front Royal-Warren County Economic Development Authority’s interest-only payment of approximately $21,102 due at the July 1st start of FY-2021.

Contacted Wednesday morning, EDA Executive Director Doug Parson explained the EDA’s loan to facilitate construction of the Town Police headquarters have thus far been interest-only payments based on a 30-day month. That will change on November 1, when the United Bank loan moves to principal and interest payments. Parsons estimated that would take the monthly payments to about $50,000 from the $21,000 interest-only range.

The United Bank’s interest rate on the loan is 3%. However, the town council has taken the legal stance that it should only have to pay a 30-year, 1.5% interest rate it asserts was verbally promised to it by former EDA Executive Director Jennifer McDonald. As previously reported by Royal Examiner, that 1.5% rate was tied to the construction project qualifying for a 30-year New Market Tax Credit Program (NMTC) loan with a nine-year waiver of interest payments. However, the NMTC program loans are for municipal capital improvement projects that create new jobs, which the FRPD project did not.

Councilwoman Lori Athey Cockrell took the opportunity of council’s passage of the agreement facilitating a one-time, half monthly payment on the FRPD debt service as an indicator that the council and its staff are working proactively with the Warren County government to resolve outstanding legal and financial issues surrounding the EDA.

Prominent among those Town-County/EDA issues is what EDA officials have called “an undisputed” $8.4 million Town “moral obligation” debt on principal to the EDA on the police headquarters construction project. With interest, the balance on that debt is $8.8 million, EDA Director Parsons told Royal Examiner Wednesday.

EDA Board of Directors Chairman Ed Daley was present to watch Tuesday’s council action unfold. Asked for a reaction prior to having a chance to read the Reservation of Rights Agreement, Daley said, “Anything that moves it forward is positive.”

However, after a closer read, exactly how far forward Tuesday’s council action takes the Town-County-EDA discussion, remains a question.

$440,000 invoice – $10,500 (recoverable) payment

The opening paragraph of the Reservation of Rights Agreement notes that the Town had received a June 2 invoice “ostensibly setting out all costs incurred by the EDA in constructing and financing the construction of the Town of Front Royal Police Department (‘Costs’), including the costs and expenses associated with the loan from United Bank obtained to finance construction (‘Loan’)” and continues to note those costs and loan “are currently the subject of dispute” in the Town’s civil action against the EDA.

It is a civil action in which the Town’s contracted Damiani & Damiani law firm appears to have mirrored much of the language in the EDA’s initial civil litigation against Jennifer McDonald and 14 civil co-defendants and which seeks essentially all ($20 million-plus) of the $21.3 million the EDA alleges was misdirected by its former executive director and her first group of co-defendants. In April the EDA filed a second civil action, adding nine defendants and “not less than” $4.45 million in recoverable assets to its litigation.

But as to that June 2 invoice from the EDA, an invoice implying a request for payment on a debt, according to numbers in that invoice what the EDA presented to the Town was a bill for slightly over $441,300 spent thus far on the $8.8 million FRPD headquarters construction loan balance.

What the County and EDA got in response was the above-cited agreement facilitating a recoverable $10,529 payment that on a closer examination appears to try and legally tie the County and EDA’s hands in future court proceedings.

Legal ties that bind?

That agreement references ongoing “discussions” between the Town and County “which may result in amending the Town’s claims in the Litigation (against the EDA)”.

Contacted Wednesday, County Administrator Doug Stanley said county staff had not been involved in those discussions. Attempts to reach Board of Supervisors Chairman Walt Mabe, Vice-Chair Cheryl Cullers, and County Attorney Jason Ham for information on the referenced discussions and council proposal were unsuccessful prior to publication.

Reservation of Rights Agreement, Condition 1 states – “The Town denies that it owes any moral or legal obligation to repay the Loan”

So, referencing the “Reservation of Rights Agreement” passed 6-0 by council Monday, it states:

“WHEREAS, to facilitate the discussions, the County has asked the Town to make the disputed July 1, 2020, payment on the Loan and the Town has agreed, subject to the terms and conditions stated herein.” – As noted above, what was agreed to was a payment of $10,528.95, or half of the interest-only payment due for July, under the following conditions:

Condition 1 – “The Town denies that it owes any moral or legal obligation to repay the Loan” followed by Condition 2, noting that its payment is calculated on the unrealized New Market Tax Credit interest rate of 1.5%, rather than the actual 3% bank loan interest rate.

Condition 3 – “The County and the EDA acknowledge that this payment shall not be construed as, considered to be, or argued to be, in any forum, admission for any purpose, including but not limited to of liability of the Town for the Loan or the Costs.

Condition 4 – “The County and the EDA acknowledge that the Town’s payment is for a disputed debt, under a reservation of rights, and the Town reserves the right to continue to deny liability for the Loan or Costs and to recoup this payment should the discussions prove ultimately unsuccessful.

And drum roll, please, Condition 5 – “All parties agree that payment hereunder shall be inadmissible for any purpose except by the Town to recover this payment as damages in the Litigation.”

So, while Councilwoman Cockrell called the agreement a sign of good faith negotiations in the public interest by the Town, adding that news reports the Town is acting other than in good faith concerning the EDA as creating “a false narrative”, is she right?

Perhaps the EDA’s and County’s attorneys would be the best judge of that – hopefully prior to the signing of the “Reservation of Rights Agreement” by County and EDA officials. For at issue appears to be whose rights are being reserved, and in exactly what legal context regarding the Town’s civil litigation against the EDA and any related litigation over the Town’s responsibility to pay for its $9-million police station.

Because according to the document approved unanimously Tuesday night by the Front Royal Town Council, the Town has no “moral or legal” obligation to pay the EDA-undertaken $8.8-million loan that financed the construction of the Front Royal Police headquarters.

Is that something EDA and Warren County officials really want to sign off on in exchange for a one-time, recoverable, half monthly debt service payment?

Let’s see, a total of $20 million or more at stake versus a “recoverable” $10,500 payment – what do you think?

Ed Daley – File Photo.

We asked EDA Board Chairman Daley his opinion on Wednesday after he had a chance to review the Reservation of Rights documents more closely.

“The first the EDA heard of this was last night, which seems odd in that we are asked to sign off on it. But we’ll need to consult with our attorney first,” Daley reasoned.

Of the contention on a lack of Town liability to pay for its police station included in the document, Daley observed, “The EDA was happy to facilitate a project like that. But it was their (the Town’s) contract, their design, we just helped finance it. I think they need to get their financing together and pay for their police station.”

After we read the conditions in the agreement to her over the phone, EDA Attorney Sharon Pandak lauded the opportunity for further communications on Town-EDA/County issues but was skeptical as to a recommendation on the EDA signing off on the Reservation of Rights Agreement as worded.

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Sleeping with the enemy? After long closed session, EDA wonders if it should make 2 year-end reports

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The Front Royal-Warren County Economic Development Authority had an end of the fiscal year report from its committees at the regular monthly meeting on Friday morning, June 26. In addition to the status of its finances, assets, communications with related agencies, and executive committee business, the board elected officers for FY-2021. See the EDA office’s press release describing details of various actions taken regarding those reports in the related story below.

As for its officers, the EDA Board of Directors decided to stay the course for another year. On a motion by Tom Pattison, seconded by Jeff Brown after a check with EDA attorney Sharon Pandak that he could vote as one of the nominees, by a 5-0 vote, Gordon absent and Gray Blanton’s seat vacant, the board re-elected its sitting officers: Ed Daley chairman, Browne vice-chair, Jorie Martin treasurer, and Greg Harold secretary.

It was still a virtually conducted meeting for the EDA, which is fine with the media at 8 a.m. Royal Examiner Photos/Roger Bianchini

But before those reports, officer elections and new business are taken care of, five minutes after convening the 8 a.m. meeting the EDA board moved into closed session to discuss “the disposition of publicly held real property” including the Royal Lane so-called “Workforce Housing” parcel recently reacquired without the necessity of additional litigation, as well as discussion of the EDA’s resurrected small business loan program, and its two-pronged civil litigation.

As you “indoor sports fans” know, the first prong of that litigation is against its former Executive Director Jennifer McDonald and 24 co-defendants alleged to have conspired with her to misdirect, fraudulently obtain and/or embezzle $21.3 million of EDA assets. The second prong is the Town of Front Royal’s suit against the EDA. That suit alleges lost assets of over $20 million as a consequence of the EDA financial scandal. After three-hours-and-20 minutes behind closed doors, the board emerged without action or announcement and moved to the open meeting agenda.

The virtual presence of Sands Anderson civil case lead attorney Cullen Seltzer and his colleague Dan Siegel may have offered a clue as to which topic may have accounted for the largest time slot behind closed doors.

The re-tooled EDA board and staff at work in December 2019. From left at table are Tom Pattison, Chair Ed Daley, Greg Harold, Executive Director Doug Parsons, Vice-Chair Jeff Browne, Gray Blanton, and Jorie Martin, the latter two around the table from Browne. The board continues to morph with the addition of Melissa Gordon replacing Mark Baker and Gray Blanton’s recent departure.

“Without the necessity of additional litigation” – what a novel concept. Wonder if anyone in Town Hall has considered such an idea in lieu of an “all in” rather expensive legal gamble that every asset the EDA recovers is somehow owed to you – despite their lack of work on your behalf for over a decade publicly verbalized as justification to pull away from them toward the creation of a second EDA the Town would have full operational funding responsibility for, as opposed to none with the existing EDA?

The irony of still working for a town government that is claiming that essentially every penny the EDA is out to recover in its civil litigation should come to it directly or indirectly despite the above-referenced public claim by Councilman Gary Gillespie, undisputed by his colleagues, that the EDA hasn’t really worked on the Town’s behalf in 15 years, was apparent as the board discussed a fiscal year-end presentation to its sponsoring municipalities.

Should they present to the Town, as well as the County, Chairman Daley, and his board wonder? There appeared little enthusiasm for a presentation to town officials who have repeatedly rejected EDA offers of “good faith negotiations” to determine exactly what the EDA may owe the Town in misdirected assets. Once again the scheduled interim town manager’s monthly update to the EDA board on Town business was neither presented nor even submitted in writing despite the Town’s maintaining its co-founding EDA connection on a legally advised chance for asset distribution was the EDA to somehow fail, despite state codes that prevent EDA’s from declaring bankruptcy.

The Warren County Courthouse is casting a long shadow over relations between, not only the Town and EDA, but potentially between the Town and County, the latter of which has full operational funding responsibility for the existing EDA due to negotiations on double taxation responsibilities of town citizen. However, many including several council candidates are wondering if it is a necessary legal shadow.

And what might such a presentation to a municipal body that is claiming no oversight responsibility of the EDA despite enabling the largest single item in the EDA’s civil suit, the $10-million ITFederal loan, by issuing a three-month $10-million “bridge loan” at McDonald’s request to convince a bank to make that loan despite serious asset questions about the eventual recipient, sound like?

“Mr. Mayor and Council, the EDA ends the fiscal year with $85,089 in its operational checking account and another $62,936 in its rental income account ($148,025 combined) – BUT we’d have a lot more if the Town would make good on its undisputed $8.4 million principal debt to us on the construction of the new town police headquarters, not to mention the $701 of daily interest on that FRPD project debt, though a disputed portion based on verbal promises of the former EDA executive director, that is accumulating as the civil litigation creeps forward.

Also noted during the financial report of board Treasurer Jorie Martin, was a $64,439 balance in the EDA’s Rural Business Enterprise Loan (RBEL) account and a $307,043 balance in its Intermediary Relending Program (IRP) account.

Chances are some of those loan balances will find their way into the hands of businesses located inside the Front Royal town limits.

EDA’s June 26 meeting action agenda

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EDA in Focus

EDA’s June 26 meeting action agenda

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The Front Royal/Warren County EDA Board of Directors held their regular monthly board meeting today:

Finance Committee

Finance Chair Jorie Martin reported that the EDA will end the fiscal year with a positive bank balance. Additionally, the FY 2018 and FY 2019 audits and solar panel removal are all proceeding on schedule.

EDA Chair Ed Daley took the opportunity to point out that the EDA has reduced its total loan balance during FY2020 by approximately $2,000,000. Factors that contributed to this success included the EDA completing the sale of three properties-two to a private developer in the town and one to a small business in the county.

Proceeds then went toward other loans which reduced principal amounts. Additionally, the EDA negotiated an interest rate reduction on a line of credit. These decisions translate into savings to the taxpayers.

Small Business Loan program-Mrs. Martin reported considerable improvement in payments and collections in the Rural Business Enterprise Loan (RBEL) program during FY20. In May 2019, only 56% of loan clients were up-to-date on their payments. As of June 2020, 70% of clients were on time. Additionally, as Executive Director Doug Parsons reported, the USDA Small Business Loan committee is currently reviewing applications from two new borrowers. They are vetting these applicants and look forward to supporting these small businesses in the Front Royal and Warren County areas. Finally, the board approved a Pay Agreement with Steve Ontiveros, of Fireball Arcade, for repayment of his RBEL loan.

Other Actions from Finance-The board approved Mrs. Martin’s motion to cancel the EDA insurance policy covering the Avtex property and EDA office building at 400 Kendrick Lane currently held by Stoneburner-Carter Insurance. The motion also approved the EDA to enter into a policy with Grange offered through McGreevy Insurance. The new annual policy provides more in-depth coverage at a lower cost, saving taxpayers approximately $1,000.

Finally, the board approved a motion for Phil Rexrode to complete electrical work on the solar panel removal. He will disconnect the solar panels from the current electrical system and connect the EDA office building back to Town electric.

Asset Management Committee

Chair Greg Harold shared an overview of the committee’s activities and accomplishments during FY20. Highlights included:

Afton Inn-The negotiations and sales agreement of the Afton Inn will be the fourth property sale by the EDA and the third in the Town of Front Royal. Seeing this property in the hands of private development is a real win for the community and will contribute in a major way to the revitalization of East Main St., Front Royal.

The EDA is looking forward to 2 E. Main, LLC realizing their vision for the property.

Royal Lane “Workforce Housing” property-Mr. Harold completed considerable research on this parcel, also located in the Town. The Board of Directors approved his motion to sell the property through a Request for Development Proposal (RFDP) process. That proposal is under attorney review and is projected to be published by mid-July. This is an opportunity to bring to Front Royal the first multi-tenant housing development in 22 years.

Communications Committee

Litigation Update-EDA Vice-Chair and Communications Committee Chair Jeff Browne gave an update on the civil suit EDA v. Jennifer McDonald, et al. and the Town v. EDA suit. The board approved a resolution appointing Mr. Browne as Designated Representative of the EDA for interrogatories and depositions in the suit EDA v. Jennifer McDonald, et al. Mr. Browne will work with EDA counsel from Sands Anderson as the civil case continues through the judicial process.

Existing Business Listening Groups-Mr. Browne is working with the Front Royal Chamber of Commerce on creating business listening groups. Any business leaders, finance professionals, and anyone interested in the local tourism industry is encouraged to participate.

Other EDA Business

Annual Report-EDA Staff and the Board of Directors are preparing an annual report for presentation to the Warren County Board of Supervisors in July. Dr. Daley expressed an interest in presenting this report to the Front Royal Town Council as well.

Annual Officer Elections

The board approved each of the current officers-Chair, Vice-Chair, Treasurer and Secretary-to serve another one-year term.

As of May 2020, the Town of Front Royal owes the EDA $8,444,797.16 for the construction of the Front Royal Police Department headquarters. This loan costs Town taxpayers $703.39 per day in interest expense. In April 2019, the Town Council approved a resolution to issue a bond for permanent financing of the project but has not followed through on its commitment. The EDA welcomes community support in encouraging the Town Council to follow through and secure permanent financing in order to retire the EDA construction debt.

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EDA in Focus

Still working for the Town – EDA announces sale of 514 E. Main apartments

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Both gone now – the market and adjacent apartment building. Royal Examiner File Photos/Roger Bianchini

In a late-afternoon press release from the office of Executive Director Doug Parsons, the Front Royal-Warren County EDA announced the sale of another in-town parcel. Here is that release in its entirety:

The Front Royal/Warren County Economic Development Authority (FRWCEDA) is pleased to announce the sale of their apartments at 514 East Main Street to East Main Apartments II, LLC, owned by Jim and Dawn Weber of Front Royal. The property sold for $127,500.00 and the proceeds of the sale will pay off one of the FRWCEDA’s loans for the apartments and the old Stokes Market, which also sold recently.

“We’re pleased that Jim and Dawn Weber have purchased this property. They are experienced developers, and we know the property and tenants will be in good hands”, said Doug Parsons, Executive Director, for FRWCEDA.

“These properties weren’t congruent with our economic development mission and goals, and we’re excited to see them return to the private sector to generate more tax revenue while reducing the taxpayer’s debt and future expenses.”

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