Tewalt distances Town from EDA business – but where is that distance?

The specter of EDA scandal permeated the Front Royal Town Council meeting of April 22 despite an absence of any overt Economic Development Authority business or citizens belaboring town officials over past oversight lapses.

As council approached a vote on authorization of a resolution regarding its long-term financing plan for the $10 million new Front Royal Police headquarters project, Councilman Eugene Tewalt felt compelled to distance the town government from EDA business.

“If you heard the EDA mentioned here don’t get confused. We have to pay the loan that the EDA got for us so that we could build the building. Now this loan is going to be done through a bond issue through the VML, which is the Virginia Municipal League. So it’ll have nothing to do with the EDA, period,” Tewalt stated.

He then returned to his oft-stated rationale that the County’s assumption of the Town’s portion of annual operational funding of the EDA as part of ongoing North Corridor water-sewer compensation negotiations several years ago ended Town involvement in EDA business.

“We have nothing to do with the EDA, we don’t finance them; we have no say in the EDA whatsoever. The only thing is they were used as our fiduciary, which means that they borrowed money for us,” Tewalt said, though he might have added additional exceptions like the number of projects the EDA recruits inside the town limits; the Town’s role in construction plans for the West Main Street connector road through the Royal Phoenix Business Park property being marketed by the EDA; council’s granting of code waivers to the EDA for the workforce housing project that would not likely be granted to the private developer the EDA passed the project on to; the lost financing gamble that New Market Tax Credit (NMTC) program loan discounts for Town capital improvement projects could be achieved through the EDA; or the Town-County fair-funding arrangement on EDA projects of mutual municipal interest inside the town limits; or – well you get the point.

Despite Tewalt’s ongoing assertion of a lost involvement in the EDA, the town government actually maintains a wide and varied interest in EDA business, projects and financing variables. So it would seem that any withdrawal of oversight of EDA workings by council would be self-imposed, rather than mandated by the County’s assumption of another expense town citizens faced double jeopardy for as taxpayers to both the county and town governments.

In fact, Tewalt addressed council’s EDA-driven lost NMTC gamble that will cost the Town about $220,000 in additional annual debt service payments due to interest rates now soaring above the fixed 2.65% 30-year bank option (about $340,000 annual debt service) council had on the table early last year. Last week a council consensus was to pursue a 30-year bond issue to pay off the FRPD headquarters debt with a projected 4.03% annual debt service of $563,822. That option compared to a 20-year, 3.92% rate requiring $691,548 of annual debt service. While the 20-year option would save about $3 million in total costs, the need to find $265,603 of additional revenue to meet the yearly debt service compared to $137,877 of new revenue to meet annual payments on the 30-year option held sway.

“When the New Market Tax Credit went down the drain and we no longer had that opportunity… we had to find another source to pay for this building,” Tewalt noted of the dynamics contained in the financing resolution on the table April 22. “So that left us no other choice than to go out on the bond market and borrow the $10 million… so we could pay back the EDA and their financial people, which I think was United Bank… but whoever they were we have to pay them back. So we have to secure this loan so we can move forward with the police department building. So when you hear the word EDA here, it has nothing to do with them other than we’re going to pay somebody back for the amount of money we got from them to build the police department,” Tewalt concluded.

Okay, fine.

See the councilman’s remarks, council’s vote on the financing resolution and other business, including recognitions of “Workers Memorial Day” and “Vietnam War Veterans Day” on the Royal Examiner video:

Above, members of the area chapter International Brotherhood of Electrical Workers (IBEW) are recognized by Vice-Mayor William Sealock in declaring April 28, 2019 “Workers Memorial Day”; below, Vietnam veterans are recognized by the vice mayor, who as they noted is one of their own, in retroactively proclaiming March 29, 2019 as “Vietnam War Veterans Day”. Royal Examiner Photos/Roger Bianchini