Town to vote on agreement to make FRPD debt service payment

According to an agenda summary distributed to the media for tonight’s June 30^th Special Meeting, the Front Royal Town Council is poised to vote to approve an agreement with the Warren County government and the joint Economic Development Authority to make a scheduled July 1^st payment on construction of the new Front Royal Police Department headquarters.

Thus far the now $8.7 million debt to the EDA on principal payments has been publicly referred to, without contradiction from town authorities, as “undisputed” with the dispute over that debt revolving around the amount of interest the Town asserts it is obligated to pay based on verbal promises of former EDA Executive Director Jennifer McDonald.

Perhaps appropriately, this June 22 photo of council is without Mayor Tewalt, who has been a lone Town voice against litigation with the EDA amongst his council colleagues. Tewalt has unsuccessfully sought acceptance of the EDA’s offer of ‘good-faith negotiations’ to determine exactly what the EDA owes the Town in misdirected assets.

It is believed the county supervisors and EDA board have discussed stopping covering what they believe is the Town’s “moral obligation” debt on the town police construction project as of the end of Fiscal Year 2020, which is today, June 30. The specter of which entity, the EDA which has been covering the payments on a contracted agreement on bank financing of the project it oversaw for the Town, or the Town itself, which up to now has had an uncontested and implied “moral obligation” to cover that debt upon completion of and receipt of the FRPD headquarters, will suffer the most credit-wise upon non-payment has likely been a HOT TOPIC of conversation behind closed doors of council, the county supervisors who fund EDA operations, and the EDA board as July 1 approaches.

The June 30 council meeting agenda summary states:

“The County of Warren has asked the Town of Front Royal to make a good faith payment for the disputed July 1, 2020 payment for a loan incurred by the Economic Development Authority (EDA) in constructing and financing the construction of the Town of Front Royal Police Department and the Town has agreed, subject to the terms and conditions stated in the Reservation of Rights Agreement. Council is requested to approve the Reservation of Rights Agreement as presented.”

Whose police headquarters is this – the EDA’s or the Town of Front Royal’s? – Is likely to be an early question if Town civil litigation against the EDA reaches trial.

Contacted, Town Administrative Assistant and Acting Town Clerk Tina Pressley explained a copy of that Reservation of Rights Agreement would not be made public until it and the payment have been approved, if they are, by council. However, by the above wording it appears an agreement in principal between the three involved parties has been reached, rather than to continue a tenuous legal gamble on whose credit reputation will suffer the worst if payments stop being made by anyone on Wednesday.

But on exactly what terms that agreement is poised to be reached will remain a mystery until it is, if it is, reached and that consequent July 1 payment made.

Background

As eventually came to light, the FRPD headquarters capital improvement project did not even qualify for the New Market Tax Credit Program (NMTC) 1.5% rate McDonald purportedly told town officials was secured on the police headquarters construction. A phone call or appropriate question to the program’s administrator, Brian Phipps of People Inc. with whom council met several times would have revealed that fact.

Phipps even advised council during late 2017, early 2018 discussions, including at a January 2018 work session, to take a 30-year 2.65% interest rate guaranteed by a private sector bank because the Town was competing with multiple other municipalities for a limited amount of NMTC funds. It was advice also recommended by then Town Manager Joe Waltz and Finance Director B. J. Wilson.

However, led by Jacob Meza’s stated desire to hold out for the chance at nine years of interest-free payments on a long-term NMTC loan, council ignored the advice of its staff and the program administrator. Consequently, council continues to assert in its subsequent civil litigation claiming $20-million-plus in damages against the EDA that the gap in actual versus verbally “promised” interest payments are part of those damages.

A now pandemic masked Jacob Meza held sway over his colleagues in pre-pandemic times in gambling the new FRPD headquarters would qualify for NMTC funding designed for projects creating jobs, rather than just moving them from one place to another. Below, hard to miss that EDA-overseen in-town redevelopment initiative next door to Town Hall.

Despite the overwhelming amount of EDA projects centered inside the town limits on behalf of the town government, council is also claiming it had no oversight responsibilities regarding EDA activities during McDonald’s decade-long term as EDA executive director during which alleged misdirection of EDA and municipal assets occurred.

Tonight’s vote and the content of that Reservation of Rights Agreement may be an indicator of how long council intends to hold the course on that double-edged legal gamble.

The smart money is on “until after the November election” – depending of course, on the results of that election. Several candidates, most notably Bruce Rappaport and Betty Showers, have aimed pointed criticism the current council’s way regarding their actions toward the existing EDA, and the Town’s planned new unilateral EDA.

As he has on more than one occasion, council candidate Bruce Rappaport, at podium June 22, makes a case against the current council’s actions regarding the EDA – both the existing and envisioned new and totally Town-funded one. But council appears committed to a legal gamble that $20-million in civilly awarded assets from the old EDA would help that new start-up project.

It has been noted by public critics of the County Republican Committee-dominated council and recent austerity moves initiated by Interim Town Manager and long-time County Republican Committee official Matt Tederick, aimed at reducing governmental functions, particularly regarding Tourism, that the Town alone will be responsible, not only for debt service incurred by its new EDA, but operational funding as well. Since an agreement several years ago on double taxing of town citizens, the County took over full operational funding responsibility of the existing joint County-Town EDA.

That new EDA operational funding will include an anticipated six-figure executive director’s salary one Town critic, Linda Allen, recently publicly asked council if it might be considering directing the current interim town manager’s way once his six-figure interim manager’s salary is gone. As captured on Royal Examiner’s video of that June 22^nd meeting, Tederick reacted with laughter at that notion.

Properly social distanced, the interim town manager and town attorney during June 22 regular council meeting. Tederick was left laughing at the suggestion he was poised for a third council appointment, though without an ‘interim’ attached to it if council’s new EDA gets off the ground.

Speaking of the interim town manager, the other primary agenda item on tonight’s special meeting of council involves extending Tederick’s interim town manager agreement beyond its current termination date of June 30, until a permanent replacement is named. In that regard, council has also scheduled a work session for Thursday evening to adjourn to closed session for town manager interviews. The field appears to have been narrowed down to a few candidates called in for in-person interviews.

And so the wheels of town government turn as Fiscal Year-2021 approaches tomorrow with the calendar’s turn to July and an election just over four months away.