No ITFederal at Royal Phoenix, no need for infrastructure either?

Mayor Hollis Tharpe, glaring from head of table, and Councilman Jacob Meza, pictured below, were at odds over the importance of a continued town government commitment to infrastructure development at the planned Royal Phoenix Business Park portion of the former Avtex Superfund site. Photos/Roger Bianchini

How the Town of Front Royal should react to the news of an abrupt change of plans at the Royal Phoenix Business Park site – news town officials apparently learned about from media reports published March 14, including Royal Examiner Editor Norma Jean Shaw’s “Update: Tran says ITFederal is not opening and is an EB-5 Visa Project” and Josh Gully’s (Northern Virginia Daily) “$500,000-plus spent on dead police academy” – were a heated topic of discussion at the Monday, March 18 Front Royal Town Council work session.

UPDATE: Tran says ITFederal is not opening and it is an EB-5 Visa project

Citing “newspaper articles” about ITFederal principal Truc “Curt” Tran’s decision not to relocate his Northern Virginia-based tech solutions company to the 30-acre Royal Phoenix Business Park property gifted to him in 2015 by the Front Royal-Warren County Economic Development Authority for one dollar, Councilman Jacob Meza questioned the Town’s financial commitment to infrastructure development at the Royal Phoenix site.

That commitment is currently two-fold: 1/ to build a wastewater treatment pumping station designed to serve an estimated seven commercial pads and as many as 4,200 people on site at a cost estimated at $400,000 in 2017; and 2/ phase one of the West Main Street connector road designed to eventually serve as the main access through the 147-acre business park property. Phase One of the western connector road project through the 30-acre ITFederal parcel from Kendrick Lane has been estimated at a cost of $1.3 million, with a $650,000 VDOT match and a $150,000 commitment from Tran in exchange for not having to build an individual wastewater pumping system for his project.

How Tran’s decision not to relocate his company here, but rather attempt to sublet the 10,000 square-foot building under construction on site, will impact his financial commitments to the property remains to be seen.

Curt Tran on site on Dec. 20, 2018, the day EDA Executive Director Jennifer McDonald tendered her resignation while under job performance scrutiny by her board.

But with the first commercial development project at the Royal Phoenix site in flux, Councilman Meza asked if the Town’s planned infrastructure investment at Royal Phoenix might not be put to better use elsewhere, most specifically in funding the growing debt service projections on construction of the new $10-million Front Royal Police headquarters across Kendrick Lane from the Royal Phoenix site.

As one of council’s strongest proponents last year of rejecting a locked-in 2.65% bank-secured 30-year interest rate bond issue in favor of a promised nine-year period of interest-free paybacks on a long-term loan through the New Market Tax Credit program to fund the police station, Meza has been somewhat defensive about those climbing police headquarters debt service projections during recent work sessions – “No one ever said it was going to be built for free,” Meza volunteered at a March 4 work session.

Following the revelation the EDA had not secured a $24-million capital improvement projects loan through the NMTC program as council believed had been accomplished, construction costs are currently being met through an EDA line of credit. However, those costs on the $10-million project will eventually have to be paid back at what have been steadily-climbing interest rates that are currently in the 4.5% range over a 30-year payback – numbers Meza cited on Monday resulting in the need to cover an annual debt service in the $600,000 range. When council thought the NMTC option was available initial annual debt service payments of $240,000 were cited, compared to the fixed 2.65% rate’s 30-year term annual debt service of about $342,000.

No ITFed, no continued Royal Phoenix infrastructure investment was Councilman Meza’s (to right) solution to rising FRPD headquarters bond issue debt service numbers.

Meza suggested council move the Royal Phoenix infrastructure funding into the police station debt service payback as a means of avoiding raising taxes to cover at least a portion of that rising annual debt service number.

However, Mayor Hollis Tharpe countered that the infrastructure is not being constructed solely for ITFederal, but to facilitate the recruitment of additional commercial clients to the site. The mayor pointed out that the Royal Phoenix property was the town’s primary hope for expanded commercial development and increased commercial tax revenue for the future. And the plan at this point is still to attract a commercial client into the first Tran-constructed building on site.

Tharpe also pointed out that the West Main Street connector road was planned to, not only service the entire Royal Phoenix site, but serve as a long-sought western bypass to take north-south thru traffic off residential streets in mid-town Front Royal.

See council’s debate over the importance of a continued financial commitment to commercial redevelopment at the former Avtex Superfund site versus preventing tax hikes to cover rising debt service costs on this linked Royal Examiner video.

A yet-to-be-completed building in limbo – Curt Tran is looking for a business or businesses interested in subletting space in this 10,000 s.f. building under construction at the Royal Phoenix Business Park.

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