EDA in Focus
A ‘Perfect Storm’ of silence raises questions about 1st Avtex client
Egger confronts McDonald over potential fraud related to foreign funding stream
An otherwise routine monthly report by Front Royal-Warren County Economic Development Director Jennifer McDonald, took an unexpected turn when Front Royal Councilwoman Bébhinn Egger asked about funding to ITFederal LLC through a federal immigration and economic investment program that grants EB-5 visas to family members of wealthy foreigners.
Raising the issue of financing of the first company the EDA has contracted to build at the former Avtex Superfund site, Egger asked if the Immigrant Investor Program and EB-5 visas issued through the United States Citizenship and Immigration Services (USCIS) could be a danger sign of potential financial fraud.
EDA Executive Director Jennifer McDonald, at podium, and Councilwoman Bébhinn Egger squared off on exactly what ITFederal LLC is; and what it is planning here, during the October 24 Town Council Meeting.
“There have been some things in the media about certain politicians using EB-5 companies as a front, where the companies don’t actually produce anything,” Egger pressed of the ITFederal connection to a federally-controlled foreign funding stream.
Egger pointed to a “politician” she identified only as “high profile” under investigation for touting an EB-5 company to manufacture cars through the EB-5 visa program, “And they haven’t produced a single car,” Egger said. “So, I guess if there’s any way you could give Council some concrete evidence that ITFederal is not a money laundering system for this EB-5 visa program – maybe money laundering is the wrong term – but you know what I mean: there is a front so that they invest in a company and get their visa.”
McDonald explained that EB-5 visas were not acquired directly by the involved company, rather, “What happens is If someone from China, wants to educate their child in the United States, they put $500,000 to a million dollars in this investment fund; their child gets a two-year visa to be educated in the United States. That’s where that money comes from,” McDonald explained, adding, “No one’s trying to get a visa; someone is trying to get educated. That’s the only thing these visas are for; they are two-year education visas, not for someone to get a visa to come over here and live. The EB-5 funding program has been around for years. They have to create jobs – American jobs have to be created with the EB-5 financing,” McDonald explained of the impetus for the program.
The EB-5 discussion began as Egger asked McDonald about a website for the “American Commonwealth Regional Center”. McDonald explained, “That is part of the regional financing that is part of the EB-5 financing – the Regional Center is the one that finances the projects.”
That website states that “America Commonwealth Regional Center, LLC (ACRC) is an approved EB-5 regional center (located in Tyson’s Corner) under the USCIS’s Immigrant Investor Program … ACRC objectives include the promotion of economic growth, improved regional productivity, job creation, and increased domestic capital investment … ACRC is approved by the USCIS to promote economic growth, and offer capital investment opportunities …”
One of two building designs being considered for ITFederal building one at Royal Phoenix. This one is titled “Training Academy”.
Egger had built up a head of steam before dropping potential “money laundering system” into the equation. The query came near the end of a series of questions about the IT solutions company poised to make what McDonald has said will be a $40-million investment at a portion of the former federal Superfund site now known as the Royal Phoenix Business Park. That investment on 30 acres at the site is projected to bring 400 to 600 jobs to the planned business park situated on 147 acres. Royal Phoenix is part of the former 467-acre Avtex synthetic fibers manufacturing plant and federal Superfund site, off Kendrick Lane in the Town of Front Royal.
‘Perfect Storm’ of silence
Egger said she was simply trying “to clear the air” about questions that have arisen in a vacuum of information over the past year. Egger and her Council colleagues have a vested interest in seeing commercial redevelopment occur at the former Synthetics Fibers manufacturing site that for decades after its 1940 opening was the largest private-sector employer (and polluter) inside the Town limits.
“I know you said we can’t talk about their contracts, but it seems to have created this perfect storm that they do work that we can’t see or talk about; and with one hand they are doing this and with their other hand they are doing this. So, it creates an atmosphere of confusion,” Egger observed.
Contracts
At the outset of her questions to McDonald, Egger asked about the contract base upon which ITFederal’s business is based, and the value of those contracts. “I can’t give you a total,” McDonald replied, leading Egger to ask if the information was available to be retrieved.
“They have contracts with ‘the Nuclear Defense Department’; these contracts we’ll never see because they probably have stuff in there we can’t see,” McDonald said of classified aspects of the company’s work.
An alternate ITFederal building design under consideration for the Royal Phoenix site.
Of course Egger did not ask to see details of ITFederal’s work on Nuclear Defense computers, just their contractual value to the company. So, McDonald added, “I do know the first contract they had was a $140-million contract with the Defense Department. They have received several contracts since then. They have been working on those out of a satellite office while, one, waiting for the EPA approval, and now to see if VDOT is going to come through with that funding. So, they have been working on these contracts while we’ve been waiting on that. So, that’s who their contracts are with, the Nuclear Defense Department.”
Queried later after online searches turned up no such US Defense agency, McDonald corrected the ITFederal contracting agency’s name to the “Defense Special Weapons Agency”. A quick online check revealed DSWA as a subsidiary of the Department of Defense (DoD). To summarize from the Federal Register, the DSWA was established in 1971 as DoD’s “center for nuclear and advanced weapons effects expertise and performs essential missions in the areas of nuclear weapons stockpile support, nuclear effects research and operational support and nuclear threat reduction to include arms control verification technology development. The functions of DSWA were absorbed into the Defense Threat Reduction Agency (DTRA) by DoD Directive 5105.62 of September 30, 1998.
Shhh …
Okay, we get it – if we, the public or Councilwoman Egger saw details of the information within the DSWA computer system that ITFederal may work on, “they’d” have to kill, or at least disappear, us. But that’s NOT what’s being asked. What IS being asked is the monetary value of the federal contracting base upon which ITFederal’s promised $40-million investment here will be built.
Of course, if the history of this decade, century and millennium has taught us anything, it is how aggressive government officials and agencies can be in the protection of national security, from threats both real and imagined. The vagaries around ITFederal’s business model and contractual value may simply be an indication that private contractors on the federal payroll have fallen into the same pattern of a perhaps overbroad veil of secrecy.
However, when that secrecy surrounds a company that the EDA and the Town of Front Royal have pinned their hopes on – and invested, if temporarily, $10-million in – to launch an economic renaissance at the long-dormant former Avtex site, it would appear that silence is not always golden.
Egger observed that with a large amount of money having changed hands, initially through the Town and EDA, with no result for over a year, people had questions they wanted answered – “These are things I’ve heard,” the Councilwoman told McDonald of her questions about ITFederal, its CEO and peripheral investments he has recently made in this community.
“And as I told you this morning, people seem to talk without having the knowledge of what they are talking about,” McDonald said of the line of questioning Egger was pursuing.
Asked later about the year-plus delay between the ceremonial groundbreaking of October 26, 2015 and the now projected Spring 2017 start of construction at the former federal Superfund site, McDonald pointed out, “It’s a little over a year delay in a very complicated 27-year process – it doesn’t look so long if you look at it that way.”
Everyone will be happy to see economic redevelopment begin at the Royal Phoenix Business Park portion of the former Avtex Superfund site. A preliminary drawing indicates the initial ITFederal building will go just west of (below) the EDA Headquarters in the old Ad-ministration Building at center left. The photo is looking east toward south-central Front Royal.
Perhaps contributing to the sense of delay is the fact the ITFederal announcement came about three months before the company and the EDA actually reached an agreement on the 30-acre land purchase at Royal Phoenix. Late last year as delays in post-ceremonial work at the site drug on, McDonald admitted to this reporter that the June 2015 announcement of the ITFederal deal was somewhat premature, but pushed forward by US 6th District Congressman Bob Goodlatte. McDonald credited Goodlatte with bringing ITFederal to the EDA as a potential economic development opportunity. And in the flush of excitement at was potentially the first commercial investor in the Royal Phoenix site after the above-mentioned 27-year cleanup, remediation and marketing process, conceding to a slightly premature announcement may not be that hard to understand.
The sale agreement between the EDA and ITFederal was announced as a done deal in September 2015. The subsequent delay of over a year was due to the length of time it took Superfund site overseer the EPA to approve removal of the 30-acre ITFederal parcel from a $2,060,000 lien on the property, so it could be given to ITFederal for one dollar as an up-front economic incentive to begin positive movement at the site.
(Part 2 of our coverage of the exchange between Bébhinn Egger and Jennifer McDonald will include the rationale for the Town’s $10-million “bridge loan” to ITFederal in September 2015; confusion over websites with the ITFederal name attached; a peripheral land purchase made by ITFederal CEO Curt Tran on a 70+ acre parcel off Happy Creek Road, as well as the business plan for that property that includes on-site cattle ranching and “a wide range of trade and agricultural training programs.”.)
Community Events
Front Royal-Warren County EDA gears up for its Open-Door Business Session: An opportunity to shape Warren County’s future
In an effort to foster regional economic growth, the Front Royal-Warren County Economic Development Authority (EDA) has announced its next Open-Door Business Session. The event is scheduled for Thursday, June 1, from 10:00 am to 12:00 pm at the Warren County Community Center, located at 538 Villa Ave, Front Royal, VA 22630. This event is a part of the EDA’s continuous initiative to strengthen Warren County’s workforce development and enhance the economic prosperity of the region.
The two-hour session will be packed with presentations, open discussions, and plenty of networking opportunities. The main focus of the event will be the exploration of Warren County’s workforce development prospects, overcoming related challenges, and celebrating its successes in economic development. Participants will have a chance to engage in meaningful discussions and network with key players influencing Warren County’s economic landscape.
While pre-registration for the session is not compulsory, the organizers have encouraged interested parties to RSVP by Tuesday, May 30, ensuring they don’t miss out on this influential meeting. Those interested can register via the provided link.
The Front Royal-Warren County EDA is known for its commitment to fostering an environment conducive to economic growth. Hosting these Open-Door Business Sessions, they provide a platform where individuals, businesses, and community members can discuss and strategize on various economic development issues, paving the way for a more prosperous Warren County.
Don’t miss this opportunity to engage with the local community, network with important stakeholders, and directly contribute to the future of Warren County’s economy.
For more information on the event and registration details, visit the REGISTRATION LINK.
EDA in Focus
Front Royal-Warren County EDA holds productive monthly meeting with updates on financial statements and new business
The Front Royal Warren County Economic Development Authority held its monthly meeting on Friday, April 28, 2023, and all seven board members, legal counsel, and the County Director of Economic Development were present. Board Member Bruce Townshend participated remotely. The meeting started with committee reports, and Board Chair Scott Jenkins provided updates on recent meetings and the Avtex Conservancy Property progress.
The Treasurer, Jim Wolfe, and the Director of Economic Development, Joe Petty, gave an update on the EDA financial statements, and Mr. Wolfe provided a review of the recent kick-off meeting for the Small Business Loan Committee and proposed next steps for the committee. The next Open-Door Business Session, which is rescheduled to June 1, will focus on the workforce, with more details to come.
Under new business, Mr. Petty provided an update on the draft EDA & County MOU, which updates the existing fiscal agent agreement to include current and future operational support between the two organizations. The board then held a closed session to discuss the potential disposition of real property to business prospects and legal consultation on active litigation.
Following the closed session, the board approved two motions. The first granted permission for Laurel Ridge Community College to temporarily utilize the parking lot on Kendrick Lane for their CDL class from May 15 to June 30. The second motion asked the County to perform appraisals on EDA-owned properties at 1321 Happy Creek Road and Stephens Industrial Park.
The next regular monthly board meeting will be held on Friday, May 19, 2023, at 8:30 am, at the Warren County Government Center. The meeting was a productive one with important updates on committee reports, financial statements, and new business. The board’s approval of motions to grant permission for Laurel Ridge Community College and perform appraisals on EDA-owned properties demonstrate the board’s commitment to improving economic development in the area. The upcoming Open-Door Business Session in June will also provide opportunities for members of the community to learn about the board’s efforts to improve workforce development.
EDA in Focus
Front Royal-Warren County Economic Development Authority launches USDA Rural Development Loan Program to boost small business growth
On Tuesday, April 25, 2023, the Front Royal-Warren County Economic Development Authority’s Small Business Loan Committee held an informational work session at the Warren County Government Center Caucus Room. The meeting aimed to introduce committee members to each other and to provide an overview of the USDA Rural Development Loan Programs. These programs offer low-interest (1 percent) loans to local lenders who then re-lend to businesses in rural communities in order to improve economic conditions and create jobs. The Loan Committee discussed the next steps during the meeting, including applications, outreach, and review processes.
To qualify for the program, intermediary lenders can be nonprofit corporations, public agencies, cooperatives, and federally-recognized tribes, while individuals, public or private organizations, or other legal entities can apply for intermediary loans as “ultimate recipients” provided they meet certain criteria, such as being U.S. citizens or permanent residents, not owing a delinquent debt to the U.S. Government, and not being able to obtain affordable commercial financing elsewhere. The project must also be located in an eligible rural area, and the applicant must have no influence, legal or financial interest in the work of the intermediary lender.
The Front Royal-Warren County EDA will administer a Revolving Loan Fund (RLF) to provide financial incentives for the expansion of existing local industries or commercial business ventures and for the attraction of new industries or commercial business ventures to Warren County. The RLF will be utilized to ensure that a maximum number of jobs will be created and retained, the local and regional industrial base is broadened, and the Warren County property tax base is broadened. In reviewing the employment impact of the proposed loan, priority will be given to those projects which create (and in some cases retain) jobs that pay a minimum of 1.5 times the federal minimum wage.
Eligible activities include site purchases of industrial land, relocation costs incurred in construction and occupancy of the facility, new construction or rehabilitation of existing buildings, machinery and equipment acquisitions, start-up operating costs, and working capital (capped at 25 percent of total project cost). Eligible applicants are industrial or manufacturing firms where goods are assembled, re-assembled, modified, manufactured, or produced at the job site, wholesale and distribution enterprises, and commercial enterprises that establish new businesses, expand existing businesses, create new jobs or save existing jobs.
Local businesses can benefit from this program as it offers low-interest loans to intermediary lenders who then re-lend to businesses in rural communities. This can help to improve economic conditions and create jobs, while the RLF provides financial incentives for the expansion of existing local industries or commercial business ventures and for the attraction of new industries or commercial business ventures to Warren County.
Watch the meeting on the exclusive Royal Examiner video.
EDA in Focus
Newly aligned County EDA Asset Committee views a path forward at Avtex site among other business recruitment options
The newly aligned County-overseen Front Royal-Warren County Economic Development Authority Asset Committee sat down to establish an overview of the work ahead at a committee meeting officially convened at 3:10 p.m. Thursday afternoon, April 20. Present were the full committee lineup of Jori Martin and new board and committee members Hayden Ashworth and Rob McDougall, along with Warren County Director of Economic Development Joe Petty. Martin chaired the meeting.
The full WC EDA Asset Committee, with new member Hayden Ashworth to acting Chairman Jori Martin’s left. The committee’s other new member Rob McDougall is at near right, with County Director of Economic Development Joe Petty to McDougall’s right. Royal Examiner Photos Roger Bianchini
Following a 20-minute open meeting during which jump-starting the long-dormant development of the 148-acre Avtex/Royal Phoenix business park site, along with development of the larger Conservancy Park area between the business park and Shenandoah River, was a primary topic of conversation, the board adjourned to Closed/Executive Session. The motion into closed session indicated behind-closed-door: “Discussion of disposition of publicly held real property … at Stephens Industrial Park, 1321 Happy Creek Rd., and 400 Kendrick Lane … and legal advice related thereto …”
As it was a committee meeting without the full board, no action or announcements out of closed session were anticipated. However, with concerns expressed by former EDA board Chairman Jeff Browne and former Asset Committee Chairman Greg Harold concerning possible pressure from the board of supervisors in an election year to unload EDA properties to what might not be the best long-term prospects in order to show some immediate EDA revenue recovery, it will be interesting to see how this topic proceeds toward full EDA board consideration and potential action. Browne and Harold’s terms, which expired February 28, were not renewed by the supervisors despite both applying for reappointment.
Dynamics of the two-pronged Avtex properties redevelopment included the possible transfer of ownership of the Conservancy Park property inside the town limits to the County to enable Parks & Recreation Department maintenance and oversight. Having the Town on board with plans for the Conservancy Park area which will connect various in-town locations to foot and non-motorized transportation trails was cited. Also how that transfer of ownership would impact the County financially, and its Parks & Rec Department work and personnel-wise, was broached.
So, what are we working with on this end of town? – Two perspectives of the former federal Superfund/Avtex redevelopment site with the 240-acre Conservancy Park parcel to left between river and railroad tracks in above aerial photo, with planned 148-acre business park in upper right-center. The WC EDA is moving aggressively toward positive movement on both portions of the site. Below, graphic with color portion illustrating low-impact Conservancy Park development. Above that section is b&w rendering of potential development at the business park. Aerial Photos by Roger Bianchini Courtesy of CassAviation and Reggie Cassagnol
Martin also pointed out to her new colleagues that for the most part, related infrastructure at the Avtex site to support development was in place. “So, it would be being able to support these trade sectors that are listed, which is kind of right following the goals that we were looking at as we review the RFI (Request For Information),” Martin said regarding EDA marketing strategies moving forward. “I would suggest that we make it an agenda item for the main (EDA board) meeting, that we put it as a formal item on the agenda and focus on what’s been sent as the draft RFI. It has been reviewed by our attorney. And it has been reviewed by the prior EDA board. And what I’d look for from our next committee meeting that we could come out of that meeting and get a full board vote on support to move this RFI forward.
“And the process of that before it went out would be to get on the agenda for the Town and the County as well, so that they would review the RFI — they would have input into it as well. And then at that point, once all parties weigh in, we would at that point hopefully by June or July, send that RFI out to prospective companies that may want to get a vision plan and development plan for the Avtex site. That’s kind of what I’ve been working on before, the committee had been working on before you came on the board. And that’s where we are,” Martin said in bringing her new colleagues up to date on development prospects, particularly at the long-floundering former federal Superfund and Avtex property redevelopment site.
Aerial photo, pre-ITFederal construction, of the Royal Phoenix Business Park section of the property.
In addition to the “Avtex Redevelopment Site Review”, topics broached in open Asset Committee meeting prior to the closed session included “GO Virginia Grant Opportunities” and a “FR-WC EDA Property Overview”. Martin cited the EDA’s eligibility for grant opportunities due to meeting certain criteria, calling it a “wonderful opportunity” for redevelopment funding assistance at the former Avtex property site, and the recruitment of new business to the community there or elsewhere.
The now fully-manned, seven-member EDA Board of Directors will have its regular monthly meeting this coming Friday morning, April 28, at 8 a.m. at the Warren County Government Center.
EDA in Focus
Warren County Economic Development Authority’s regular meeting agenda revealed for April 28, 2023
The Warren County Government Center’s Caucus Room will be hosting a regular meeting of the Warren County Economic Development Authority on April 28, 2023, at 8:00 am. The meeting is set to commence with a call to order, followed by the adoption of the agenda and approval of the minutes from the previous meeting held on March 25, 2023.
The meeting will then proceed with reports from various committees, including the Executive Committee, Asset Committee, Finance Committee/Budget Update, Board Members Updates, and Warren County Director of Economic Development Update.
The meeting will also feature new business items that include an open-door business session for June, a County Payment Memo, and an EDA & County MOU. The closed session that will follow at 9:00 am will focus on four matters and two matters, where discussions will involve the disposition of publicly held real property and consultation with legal counsel pertaining to actual or probable litigation.
Any additional new business will be discussed before the meeting concludes with an adjournment at 10:00 am. Stay tuned for updates on the outcomes of the Warren County Economic Development Authority’s meeting.
EDA in Focus
FR-WC Economic Development Authority Small Business Loan Committee to hold first meeting: Learn about USDA Rural Development Loan Programs
The Front Royal-Warren County Economic Development Authority (FR-WC EDA) has announced that its Small Business Loan Committee will be holding its first meeting on Tuesday, April 25th, at 2:00 pm in the Warren County Government Center’s Caucus Room. The meeting will provide an opportunity for the committee to get acquainted with each other and learn about the USDA Rural Development Loan Programs. The agenda for the meeting and reference materials from previous years are available for those interested in attending online, and a Teams link will be provided for this purpose.
Some of the FR-WC EDA Board of Directors will also be present at the meeting, and they will be available for discussion and to answer any questions that attendees may have. This meeting is an excellent opportunity for small business owners in the Front Royal-Warren County area to learn about the available loan programs and how they can benefit from them.
The agenda for the meeting includes a call to order at 2:00 pm, followed by welcome and introductions. The committee will receive an overview of the existing loan program and hear from the USDA Rural Development at 2:30 pm. The meeting will then move on to discuss the next steps, including applications, outreach, and the review process. The meeting will conclude at 4:00 pm with a discussion of upcoming meetings.
Small businesses in the Front Royal-Warren County area are encouraged to attend the meeting, as it presents a unique opportunity to learn about the loan programs available to them. The FR-WC EDA is committed to promoting economic development in the area, and this meeting is just one way they are fulfilling that commitment.
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