Town staff backs off of Liaison discussion of cooperation on EDA situation

There was little substantive discussion on two crucial Front Royal-Warren County Liaison Committee agenda items Thursday evening, January 23. Both related to the present and future of the two municipalities relationship to their joint Economic Development Authority created in the late-1960’s.

Those relationships, particularly it would appear on the Town side, have reached stress points in the wake of the financial scandal that has resulted in dueling multi-million-dollar civil litigations, as well as 34 felony financial fraud indictments against former EDA Executive Director Jennifer McDonald, among other criminal charges against multiple defendants.

County and Town officials share a laugh prior to convening of last week’s Liaison Committee meeting. Royal Examiner Photos/Roger Bianchini. Video by Mark Williams, Royal Examiner.

The topics were “Working Together Regarding the EDA Civil Suit” and the Town’s initiative to the Virginia General Assembly seeking authority to become the first municipality in Virginia history to be allowed to create a second EDA while its first, co-created EDA still exists.

As the first of those two topics was reached, Town Attorney Doug Napier noted that there was a motions hearing scheduled the next day regarding the Town’s now $15-million civil litigation against the EDA for recovery of lost assets.

“Loose lips sink ships,” Napier offered of public discussion of the Town’s claim of $15 million in lost or misdirected assets involving Town-generated funding of EDA projects.

Earlier in the day, Napier told Royal Examiner he expected Friday’s motions hearing to be brief, as Judge Bruce D. Albertson would rule on the Town’s request that it be allowed to continue to amend its civil action against the EDA as new information became available.

But Napier also verified that the Town has not yet submitted any documentation to support its financial claims against the EDA. That claim was initially made at $3 million, then amended to $15 million. At issue during what ended up being a conference call among the judge and attorneys at their respective offices Friday morning may be whether the court will want some supporting documentation of the Town’s claims against the EDA prior to authorizing further amendments upward to its existing $15-million claim.

Getting down to business – As Mayor Tewalt chairs meeting at head of Town Hall Conference Room table, County Administrator Doug Stanley, center left, reviews paperwork on County projects of interest to Town officials.

That a rift may exist between Mayor Eugene Tewalt and his former council colleagues and administrative or legal staff regarding those topics became apparent during discussion of the EDA situation.

“The sooner we resolve this without going to court, the better,” Tewalt said following County Liaison representative Tony Carter’s observation that it would be to both municipalities benefit to work together on the situation, rather than at operational or legal odds as appears to now be town council’s preference.

“We don’t want to undermine the EDA, or at least I don’t,” the mayor added during discussion of council’s unprecedented attempt to be authorized to be party to two EDA’s at the same time.

Council is currently refusing to pay an apparently undisputed principal debt of about $8.4 million to the EDA on the Front Royal Police Department construction project as it ponders what it believes the EDA may owe it in misdirected Town assets.

EDA officials have said they will become financially insolvent, unable to pay existing debt, at some point in March without some changes to its current financial situation. However, it has been verified by both County and Town legal staffs that an EDA cannot declare bankruptcy or cease to exist while it has existing debt.

Of the potential of a second EDA being brought into the mix as the existing EDA tries to recover $21.3 million in alleged lost or defrauded assets and right its financial ship, County Supervisor Tony Carter called it an apparent duplication of costs – “To me it makes no sense,” Carter told the Liaison Committee of the Town initiative to be authorized to create a second, unilateral EDA.

Supervisor Tony Carter, left, questioned the Town’s initiative to be allowed to create a second EDA as the municipalities try to get to the bottom of the EDA’s use of municipal assets in recent years – why duplicate efforts, Carter wondered.

County Board Chairman Walter Mabe joined Carter on the County side, along with County Administrator Doug Stanley. Councilman Chris Holloway joined Mayor Tewalt on the Town side, along with Interim Town Manager Matt Tederick and Town Attorney Napier. Also present observing the Liaison Committee meeting were County Board Vice Chair Cheryl Cullers and Town Councilman Letasha Thompson.

As he has previously, Tederick asserted that the town council had not committed to creation of its own unilateral EDA while still claiming partnership in the existing EDA, but is only maneuvering to keep that option open were the existing EDA to fail.

Town Attorney Napier has suggested the Town not consider separation from the existing EDA, in order to maintain claim to half the EDA’s real estate or other assets were it to fail. Of course, the Town would be jockeying for position with several banks and the County in such a scenario.

See these discussions and updates on other business of mutual interest to the Town and County in this exclusive Royal Examiner video:

Town given okay to amend its civil suit against EDA, with some explanation