With a public hearing and first reading vote on adjustments to Front Royal’s electric service rates on its meeting agenda of Monday, March 11, town staff addressed citizen concerns at a question and answer session held at 6 p.m., an hour prior to the beginning of the first regular town council meeting of the month. Present to field questions were Town Director of Energy Services David Jenkins, Director of Finance B. J. Wilson and Town Manager Joe Waltz.
Council observers from near the outset included Mayor Hollis Tharpe, Vice-Mayor William Sealock, Councilwoman Letasha Thompson and Councilmen Eugene Tewalt, Gary Gillespie and Chris Holloway. Jacob Meza was absent from Monday’s Q&A and regular meeting.
“Everyone on Facebook is complaining about increases up to $200 dollars or more,” one woman told those present.
“Everyone on Facebook” translated to six citizens at the session’s outset who asked questions about the dynamics involved in creating that higher electric portion of town utility bills in recent months. That number grew to nine and then 12 with the addition of three downtown business people, Rick Novak, Mike McCool and Ann Orndorff, and a few others as the regular meeting time approached.
Only one of those, Springtime Garden Center owner Orndorff, spoke at the public hearing preceding the regular meeting first-reading vote on the proposed increase. That vote was 4-1, Holloway dissenting and Meza absent, for approval of the proposed rate changes. A second and binding vote is scheduled for March 25.
At issue for those present on March 11, and the social media multitudes absent, are substantial increases in the electric portion of town utility bills in recent months. Thus far those cost-of-service increases have been reflected in a Power Cost Adjustment (PCA) line that has been included in Town utility bills since November 2008.
“What is that a tax? Will it ever go away,” the first citizen to speak asked of the PCA line item on utility bills.
The PCA aspect is generally utilized to accommodate costs that fluctuate in the short term, sometimes monthly, to allow those service provision costs to be met without necessitating a lengthier – Waltz cited two months – political process of approving base rate adjustments back and forth on a continual basis.
“The PCA is a tool used by most electric utilities so they can recover those costs without having to increase their actual electric rates,” Director of Energy Services Jenkins and his Administrative Assistant Mary Ellen Lynn explained to this reporter in response to earlier questions, adding, “A big part of it is also the fluctuation in fuel costs to generate the power. The PCA provides an avenue to adjust dependent on any differences in the average cost from the base cost of wholesale power.”
“We were hoping the increases were anomalies but they stayed,” Town Manager Waltz told those assembled Monday at the Warren County Government Center meeting room, noting that when that permanence in power provision costs became apparent the Town commissioned a consultant rate study. That study resulted in a series of recommendations to increase rates to cover the Town’s electric utility expenses.
“It is the cost of doing business – we have not raised our base (electric) rate in 10 years,” Waltz told those present on March 11.
In response to previous questions from Royal Examiner, Jenkins and Lynn elaborated, “The Town has seen an increase in wholesale power cost, transmission and congestion charges on the transmission network over the past year. This increase has prompted staff to engage GDS Associates to perform a Cost of Service Study to determine the appropriate rate structure. The Town’s distribution system is continuously changing, and we must adjust accordingly to accommodate any changes and ensure that our rates recover our costs to serve our customers.”
As Waltz noted several times, by law municipal utilities are not operated for profit and can only charge fees necessary to maintain and expand their service as necessary.
And while aided by its municipal energy cooperative membership in American Municipal Power (AMP) Front Royal was enjoying its place as one of the three cheapest municipal power providers in Virginia, including several years in the number one spot on that list, no one took notice of those monthly PCA adjustments. But when the PCA started adding $100 or more to monthly bills in recent months, people definitely took notice.
When a rate change is approved following the required second reading those cost increases now showing on the PCA line of utility bills will be incorporated into the kilowatt hour usage aspect of those bills (ELEC-RE) and will vanish from the PCA line.
“The energy charge increase and PCA decrease almost balance each other out,” Energy Services staff told this reporter. The proposed adjustment in the Town’s residential electric rates would see a hike in the charge per kilowatt hour from the current 8.49-cent rate to 9.85 cents (+1.36 cents); and a corresponding drop in the PCA from 2.3-cents down to 1.0 cent (-1.3 cents).
The bulk of the estimated two-dollar hike per 1,000 kilowatt hours of residential usage come from a $1.50 increase to the “facility or customer charge” aspect of the electric bill from the current $7 level to $8.50.
According to energy department staff the facility or customer charge, “is essentially a fee on each customer’s bill that helps pay for the equipment, infrastructure and upkeep associated with providing electricity – transformers, power lines, etc.”
However, it is the increase already felt and thus far reflected in the existing PCA line on utility bills that is the basis of citizen complaints and confusion. And as Waltz explained early on, those increases “are the (rising) price of doing business” after 10 years of not having to do so on the power provision front.
On the commercial side of the increase the monthly facility/customer charge will go from $7.16 to $20; with the charge on the first 700 kilowatt hours rising from 11.5 cents to 12.6 cents; and from 7.56 cents to 8.8 cents per kilowatt hour over 700.
That commercial facilities or customer charge jump from the seven to twenty dollar range (200%) compared to the $1.50 jump (about 23%) on the residential side definitely attracted the attention of commercial customers Novak and Orndorff, as did a base rate hike five times the residential rate – $2 per 1,000 kilowatt hours per month residential versus $11 per month on the commercial side.
When Novak asked if the rate hikes couldn’t be spread more equally between residential and commercial customers, staff explained the proposed changes reflected the consultant study of how commercial and residential rates are generally balanced.
And if adjusting to the increased costs has taken the Town of Front Royal down a notch in the cheapest municipal energy provider “sweepstakes” according to a chart provided by the town staff, Front Royal does remain favorably positioned among energy providers statewide. With its PCA adjustment in place the Town ranked eighth of 31 various types of municipal providers across the commonwealth; after the rate adjustment on the table the Town will fall to 12th place.
Where does the Town of Front Royal rank among other utilities in VA?
Town Planning Commission Meeting May 15, 2019: Dog kennel, daycare & new subdivision
At the May 15th Town of Front Royal Planning Commission meeting, one public hearing on a special use permit, submitted by Fianna Litvok, for a dog training facility, with a kennel, at 650 W. 11th Street, Ste A in Front Royal. The Commission also reviewed a preliminary plan application, submitted by Ramsey, Inc. for a 33 lot subdivision within the R-1 district.
The proposed dog training facility/dog kennel would be called Tip Top K9. It would offer obedience training for dogs. The applicant Fianna Litvok states that most training would be done off-site at the pet owner’s house or other location. However, there would be “doggie bootcamps” on-site. Commercial kennels are described as secondary and relate only to the “doggie bootcamps”, where pet owners would leave their dogs at the facility for 2-4 weeks. Litvok says initially hopes to be able to have 1-4 dogs housed at the site, but with a potential for up to 10 dogs. Click here to download complete application and photos.
Chris Ramsey of Ramsey, Inc submitted a preliminary plan for a 33 lot subdivision at the end of Ewall Street and and the end of Happy Ridge Drive to be called Happy Creek Knolls.
The daycare application was extended to the next Planning Commission meeting in June.
Jeremy Camp, Town Planning and Zoning Director gave his report to the Commission.
The Royal Examiner‘s camera was there:
Town of Front Royal Receives Certificate of Achievement for Excellence in Financial Reporting
The Certificate of Achievement for Excellence in Financial Reporting has been awarded to the Town of Front Royal by the Government Finance Officers Association of the United States and Canada (GFOA) for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2018. The Certificate of Achievement is the highest form of recognition in the area of governmental accounting and financial reporting, and its attainment represents a significant accomplishment by a government and its management. The Town has received this award consecutively for 32 years.
An award of Financial Reporting Achievement has been awarded to the designated by the Town of Front Royal as primarily responsible for preparing the award-winning CAFR.
The CAFR has been judged by an impartial panel to meet the high standards of the program, which includes demonstrating a constructive “spirit of full disclosure” to clearly communicate its financial story and motivate potential users and user groups to read the CAFR.
Tran defense motions echo earlier filings, cite vague summary of allegations
On May 2, the attorney for ITFederal and its CEO Truc “Curt” Tran followed attorneys for the other seven defendants in the EDA civil suit of March 26 in filing defense motions attacking the style and substance of the case against their clients.
In the demurrer seeking dismissal of five of the six counts (1-4 and 6) in the EDA Civil Complaint it is asserted that the filing by attorney Cullen Seltzer of the Richmond law firm of Sand-Anderson lacks the legally-required specificity and factual basis to support its oft-stated conclusion that the defendants have acted to improperly divert EDA assets based “on information and belief”.
“And many of the Plaintiff’s allegations being made solely ‘on information and belief’ is fatal under the heightened pleading requirement for fraud,” Tran/ITFederal attorney Brandon H. Elledge writes citing case history, adding of such wording, “and thus to avoid dismissal, a fraud plaintiff must supplement such allegations with ‘a statement of facts on which the belief is founded’ and also ‘must delineate at least the nature and scope of plaintiff’s efforts to obtain, before filing the complaint, the information needed to plead with particularity’.”
As to the sixth count omitted from the Tran/ITFederal request for dismissal, Count 5 – “Breach of Fiduciary Duty of Loyalty” – the demurrer notes that it “does not purport to state a claim against Mr. Tran and ITFederal” but rather asserts actual claims “only against Defendant McDonald” – which does appear to be the case as it would impact all defendants other than McDonald. See Related Story:
“As an employee of the Warren EDA, Defendant McDonald owed the Warren EDA a fiduciary loyalty,” Count 5 begins in recounting the obligations of McDonald’s role as the executive director of the EDA.
And it is in the absence of the detail of the preceding 160 paragraphs leading to the $17.6 million-plus civil suit’s call for compensation in six counts against all nine defendants upon which defense attorneys have focused their arguments for dismissal.
The six counts seeking a judgment of “not less than $17,640,446.16” against “the Defendants jointly and severally” are: 1/ Fraud and Fraud in the Inducement; 2/ Conversion; 3/ Conspiracy; 4/ Unjust Enrichment; 5/ Breach of Fiduciary Duty of Loyalty; and 6/ Ultra Vires (improper) Transactions and Agreements.
And other than that one mention of the minimum of $17.6-million-and-change of allegedly misdirected or embezzled EDA assets there is no other reference to specific amounts of money tied to any defendant in the plaintiff presentation of the resultant civil “Counts” against those defendants. In fact, only “Defendant McDonald” and “Defendant Earthright Energy LLC” are cited in the six counts – McDonald in the aforementioned Count 5 “Breach of Fiduciary Loyalty” that does appear focused on her alone; and Earthright Energy LLC in Count 6 “Ultra Vires Transactions and Agreements” related to work arrangements or contracts engaged in with Earthright Energy through McDonald without approval of the EDA Board of Directors “in the manner required by law.”
However as alluded to above and noted in previous stories on the EDA complaint and defense motions against it, there is detail concerning specific amounts of money involved in specific transactions involving specific defendants throughout the first 160 paragraphs of the complaint. Those 160 graphs appear to present the basis of fact and finance leading to the final 39 paragraphs stating of the more generalized summary of offenses described in Counts 1 through 6 of the EDA civil suit. See Related Story:
However for Tran/ITFederal attorney Elledge that detail too, is lacking.
“While the Complaint is long on allegations as to McDonald’s misconduct, it offers very little as to Defendants … Tran … and ITFederal except for conclusory recitations or vague statements made only ‘on information and belief’,” Elledge asserts, adding, “Mr. Tran and ITFederal expressly deny the meritless claims asserted against them and any alleged wrongdoing in this matter.”
Of the summary nature of the stating of the Counts against the defendants, the Tran/ITFederal defense memorandum of support of the demurrer for dismissal states, “… the group pleading method employed by the Warren EDA in its Complaint is improper and fails to fairly inform Mr. Tran and ITFederal of the nature of the claims levied against them …”
However, is that true of the first 160 paragraphs of the 199-graph complaint – well 209-graphs if you include the 10 paragraph “Prayer for Relief” seeking return of EDA assets, attorneys fees and “punitive damages (of at least one million dollars) jointly and severally against the Defendants”?
The complaint devotes many paragraphs to the securing of a $10-million bank loan for Tran/ITFederal through the EDA, citing the involvement of McDonald and then-U.S. Congressman Robert Goodlatte, R-6th, along with Tran. It is noted that loan was made at Goodlatte’s request despite repeated assertions by “Tran and Defendant McDonald …that Tran did not need the financial support of the Town and Warren EDA”.
However that “unnecessary” $10 million dollars of financial support was acquired, along with the gift of a 30-acre parcel at the Royal Phoenix site publicly valued by the EDA at $2 million for a one dollar price. Conditions were attached to that gift, including completion of the project by an eventually extended completion date of mid-2020; and a reduction of the scope of the project from an approximate 40,000 s.f. in a three-building complex alleged by Goodlatte to produce over 600 high-paying tech jobs through ITFederal to the community, to a 10,000 square-foot building producing at least 10 jobs of indeterminate wage.
And while the complaint notes that far less than $10 million appears to have been spent to date on the ITFederal Project here, the Tran/ITFederal motion for dismissal asserts Tran did nothing wrong and has worked within the parameters of his agreement with the EDA, both on the loan and a Memorandum of Understanding (MOU) regarding nearly $1.5 million in what is described as “Subsequent Payments to ITFederal” alleged to have been unauthorized by the EDA.
Regarding the Count of “Conversion” of EDA assets to Tran’s personal benefit, Elledge writes on behalf of his clients, “The only Warren EDA funds allegedly retained by ITFederal are a $10 million loan pursuant to a promissory note and a deed of trust and some $1.5 million pursuant to a Memorandum of Understanding. Thus, ITFederal received those funds in accordance with such agreements. Plaintiff does not – and cannot – allege a breach of such agreements, and it, therefore, alleges no right to immediate possession of the funds. Rather, it lawfully controls them subject to the terms of the loan documents and the MOU …
“The only payments due to Plaintiff is the repayment terms of the promissory note, and it has not – and cannot – allege that ITFederal has breached or defaulted on any of its contractual obligations,” the Tran/ITFederal filing in support of its motion for dismissal states.
But at issue for the EDA as plaintiff is an alleged fraud perpetrated by Tran in conjunction with McDonald in her role as EDA executive director and possibly others, to acquire the loan, gift of property and “Subsequent Payments to ITFederal”. That fraud is alleged to involve a $140 million in purported ITFederal government contract the plaintiff found no evidence exists – though Elledge asserts it does – as well as websites said to create a false impression of financial viability of Tran companies the plaintiff asserts there is no discovered substantive support of, and false representations of Tran’s personal worth and intentions of investment in this community.
“Plaintiff does not allege any cohesive fraudulent scheme here, but rather a series of independent transactions connected only by the involvement of Defendant McDonald … In the portions of the Complaint referencing Mr. Tran and ITFederal, Plaintiff obscures who actually made what representations at issue by repeating the phrase ‘Tran and Defendant McDonald represented, through McDonald (emphasis in context) … Such vague construction fails to establish Mr. Tran’s connection to the alleged misrepresentations by omitting how Mr. Tran managed to represent anything ‘through McDonald’,” the Tran/ITF filing states, adding, “By lumping Mr. Tran together with Defendant McDonald and referencing ‘multiple occasions,’ Plaintiff unsuccessfully tries to create an impression of wrongdoing without articulating who made what statement to whom on which occasion.”
From a different angle, Tran/ITFederal attorney Elledge echoes Jennifer McDonald attorney Lee Berlik’s argument that his client is being villainized for the alleged actions of other defendants and/or bad decisions by past EDA boards.
“Plaintiff suggests every statement by every counterparty it now regrets crediting was a false statement by Ms. McDonald … instead of a false statement to Ms. McDonald (emphasis in context),” Berlik wrote in his April 16 filing on his client’s behalf, adding, “The Warren EDA is looking for someone to blame for every decision it now regrets since new leadership has taken over – and Ms. McDonald is it.”
From Tran’s legal perspective he has simply taken advantage of a series of sweetheart deals offered by the EDA Board of Directors at the urging of friends in high places, including Congressman Goodlatte and the EDA’s then executive director.
What could possibly be wrong with that?
At issue in the wake of the filing of the series of defense demurrers for dismissal of the cases against their clients is will that question in regard to all defendants ever be argued in front of a jury in a Warren County or any other courtroom?
Budget funding, UPS lot permitting, tax deadline and street closure concerns
The Front Royal Town Council meeting of Monday, May 13, saw:
- first-reading approval of appropriations to support its $47,538,060 Fiscal Year 2019/2020 budget;
- approval of UPS’s request for a special use permit to expand its commercial parking area at its 470 South Commerce shipping facility contingent upon nine conditions recommended by the planning commission to protect the habitability of a nearby residential neighborhood;
- extension of the deadline for payment of Town real estate and personal property taxes from June 5 to June 21 this year;
- and the reading of several proclamations into the record.
See these actions and Downtown Bakery proprietor Keith Menefee’s “Public Comments concern about the event-long extent of East Main Street’s road closure during the Family Fun Day event of the previous Saturday on the Royal Examiner video:
Council addresses legal options in replacing Mayor Tharpe
After a closed session at the end of Monday’s meeting, Vice-Mayor Bill Sealock explained that council will meet its legal obligation to appoint a new mayor within 45 days of the resignation of Hollis Tharpe on May 2. The announcement of the intended appointment will be made by May 28, Sealock indicated.
The vice mayor, who has been serving as acting mayor since Tharpe’s resignation following a solicitation of prostitution indictment, indicated he does not want the appointment – “I don’t want to lose my vote,” he said of the mayor’s role of only breaking council vote ties.
Council could appoint one of its own or any town citizen legally qualified to serve as mayor to fill the position.
Council has authorized Town Attorney Doug Napier to petition the court not to have to call a required special election to fill the mayor’s term out before the county’s upcoming municipal elections this November. State code allows such requests to be made when the next municipal election is less than a year away.
See Vice Mayor Sealock address council’s plan moving forward in this Royal Examiner video:
Town Council to consider how to fill the seat of former Mayor Hollis Tharpe
The Front Royal Town Council at it’s May 13th meeting has scheduled a Closed Meeting for filling the seat of former Mayor Hollis Tharpe.
There appears to be three scenarios:
a) the possible appointment of a specific public appointee of Town Council, namely, a citizen of Front Royal or a sitting Town Council Member, to fill the seat vacated by the resignation of former Mayor Hollis L. Tharpe, pursuant to Section 2.2 3711. A. 1. of the Code of Virginia;
b) the possible appointment of a specific public appointee of Town Council, namely, a citizen of Front Royal, to fill a seat vacated by the possible appointment of a Town Council Member, should a sitting Member of Town Council be appointed to fill the seat of Interim Mayor, due to the resignation of former Mayor Hollis L. Tharpe, pursuant to Section 2.2 3711. A. 1. of the Code of Virginia; and,
c) for the purpose of consultation with legal counsel employed or retained by a public body regarding specific legal matters requiring the provision of legal advice by such counsel, specifically, the law regarding filling vacancies on positions of the governing body of the Town, pursuant to Section 2.2-3711. A. 8. of the Code of Virginia.
After the closed meeting, hopefully the Council will have a decision on how this seat will be filled.
See related story: