Town Tables Action on Draft Resolution of Dissolution of Once Joint EDA – County Goes Behind Closed Doors for Legal Review

An interesting series of events in recent days may indicate the potential of increased hostile litigation between the Town and County over the jointly created, dating to December 21, 1967, Economic Development Authority the Town withdrew from operational involvement in, circa 2019/2020.

If recalling the timing correctly, during the tenure (Nov. 2019 to Dec. 2020) of then Interim Town Manager Matt Tederick the town council moved unilaterally to withdraw from involvement in that EDA. That withdrawal seemed surprising at the time because initially town administrative discussion appeared to focus on active participation with the County in reorganizing and operationally directing the post-financial scandal FR-WC EDA. But in the wake of its withdrawal from joint EDA oversight the Town also claimed a lack of liability for EDA financial scandal losses. But that is a legal exploratory story for another day.

And while potential and filed EDA-related litigation between the two local municipal governments has been a topic of multiple Closed/Executive Sessions of both municipalities over the past couple of years, escalation may be brewing through a proposed Draft Resolution first added as an action item to the Front Royal Town Council’s meeting agenda of Monday, July 22, 2024, then removed to assemble additional information at that meeting’s outset.

Prior to that meeting a notice went out Monday from the Town Council Clerk’s office about a looming Town-County Liaison Committee meeting scheduled for 6 p.m. the following day: “The Liaison Committee Meeting scheduled for Tuesday, July 23rd in Town Hall has been cancelled due to the Board of Supervisors’ unexpected happenings.”

The primary “unexpected” happening appeared to be the Warren County Board of Supervisors calling of a one-item Special Meeting at 5 p.m. Tuesday. That item was a Closed/Executive Session to discuss EDA litigation, including the above-referenced Town Draft Resolution regarding dissolution of the now-unilaterally County overseen but still legally named Front Royal-Warren County Economic Development Authority (FR-WC EDA, EDA, WC EDA), also sometimes referenced as “Industrial Development Authority” (IDA).

Apparently Town officials didn’t anticipate the County being able to conclude its Special Meeting Closed Session within an hour on Tuesday.

John Stanmeyer, center right of table, reads the WC Board of Supervisors and staff, including legal, into Closed Session Tuesday, July 23, to discuss Town Draft Resolution initiative on EDA dissolution and distribution of remaining assets. ‘What Resolution?’ – Oh, I think that motion into closed indicates you all know, Ed. – Wink, wink. Royal Examiner Photos Roger Bianchini

This reporter went to the Warren County Government Center shortly before 5 p.m. Tuesday to try and get some pre-closed meeting feedback on the added legal specter of the Town’s Draft Resolution on dissolution of the EDA and distribution of its assets. And while the responses were playful — as in “What Resolution?” with a shared smile, it seemed apparent all present knew exactly what resolution was being referenced.

For as the motion to go into the County’s Special Meeting Closed Session read, with particular attention to the writer’s underlined final passage:

“I move the Board enter into a closed meeting under the provisions of Sections 2.2-3711(A)(7) and (A)(8) for consultation with legal counsel pertaining to actual or probable litigation and the provision of legal advice regarding the Industrial Development Authority of the Town of Front Royal and the County of Warren, Virginia (the “EDA”), the Town of Front Royal, the EDA vs. Jennifer McDonald, et al., the Town of Front Royal vs. the EDA, et al., the EDA vs. the Town of Front Royal” — pretty familiar so far, but then there was this addition: “other potential claims and litigation relating to other possible liabilities of the EDA, the recovery of EDA funds and assets, the outstanding indebtedness of the EDA, bank actions and potential actions related to the same, the Forbearance and Support Agreements, rules regarding the dissolution of the EDA, the appointment of a receiver, and Town of Front Royal actions regarding the same.

Seems like after a tight hour-long Special Closed Meeting, County officials, elected and appointed, might have been primed for a Liaison Committee discussion of “Town of Front Royal actions regarding the same.” But alas, such discussion likely would have been behind a closed Liaison-convened Executive Session door as well.

Be that as it may, as the Town ponders the additional information it tabled a July 22nd vote on its Draft Resolution to gather, we will include a LINK below to the full three-page Draft Resolution for readers to ponder as both sides seek additional information and legal advice on what parts of the Town’s EDA dissolution and disbursement initiative may be legally contentious.

Could the Town and County be headed to Court over dueling perspectives on a best path forward in settling the recovery of post ‘financial scandal’ EDA assets?

One may recall at least two past reform EDA Board members butting heads with county supervisors over a perceived rush to disburse EDA assets with what those EDA board members perceived as less long-term reward financially for the County and EDA than could be attained with more patient marketing. Now one may wonder if town officials aren’t suggesting an even more aggressive “fire sale” mentality with even less long-term reward for the involved parties.

Below is the link to the full 3-page Draft Resolution contained in council’s July 22 agenda packet, which action on was removed from the agenda to gather the above-referenced additional information.

Town Draft Resolution