After a one-hour closed meeting convened at 10 a.m. Friday morning, December 21, the Warren County Board of Supervisors voted unanimously to authorize a $90,000 expenditure to pay for three months of work by an outside consultant working on the audit of town-county Economic Development Authority.
The money will come from the County’s Contingency Fund in its current fiscal year budget. Board Vice-Chairman Dan Murray explained the EDA does not have adequate funds in its operating budget to cover the expense. Murray added that due to the county government’s larger annual budget ($107.8 million FY19) its contingency fund for unexpected expenditures is significantly larger than the EDA’s contingency fund.
A Contingency Fund of $136,299 was approved in the County’s FY 2019 budget.
Friday’s closed meeting was attended by the full board of supervisors, County Administrator Doug Stanley, County and EDA Attorney Dan Whitten and EDA Board Chairman Gray Blanton and Treasurer Tom Patteson.
The open session motion to approve the funding was made by Murray, seconded by Tom Sayre.
Following adjournment of the special meeting shortly after 11 a.m. the board of supervisors released a brief statement regarding the funding authorization:
“In order to proceed to complete the audit of the EDA, the outside consultant has requested to be paid for their services over the past three months. Due to the uncertainty still of the various EDA accounts and loans, the Board of Supervisors is stepping up to provide $90,000 at this time. We are hopeful that the consultant can wrap up the audit process in the next month which will include specifically what is owed to the Town and County.”
Following the meeting Attorney Whitten explained that the “outside consultant for financial services” is a separate entity from the auditor or the EDA’s new accounting firm. He also explained that the name of that outside consultant remains protected under attorney-client privilege until completion of the audit report.
“Basically it’s an outside eye coming in outside of your normal accountant and normal auditor … They do fact-finding, intrinsic review – that type of thing. It’s just basically they’re looking for indicia of any improper activities,” Whitten said.
Whitten also said he, Board Chairman Blanton and Treasurer Patteson would participate in a closed meeting conference call with the new EDA accounting firm Hottel & Willis Friday afternoon to discuss the parameters of their work. Hottel & Willis was hired following the announced retirement of former EDA bookkeeper Josie Rickard earlier this year.
Town, County, EDA join forces with commercial realty community
At 8 a.m. Wednesday morning, February 19, members of the local real estate brokers community gathered at the Kendrick Lane Front Royal-Warren County Economic Development office for a “Commercial Property Open House.
After some breakfast snacks provided by the EDA through the Shenandoah Valley Golf Club’s catering service and a briefing by EDA Executive Director Doug Parsons on economic incentives available locally and through the state economic development partnership, the group representing 10 realty companies, accompanied by EDA, Town and County officials began the tour close by.
First to be viewed of 28 properties were two vacant offices in the EDA office complex at 400 Kendrick Lane. Then it was on to the Town Trolley for a foray into the adjacent Royal Phoenix Business Park’s 117 vacant acres before heading into the Route 522/340 North Commercial and Industrial Corridor.
Royal Examiner caught up with Parsons and Administrative Assistant Gretchen Henderson shortly after noon following the Open House tour’s conclusion back in Front Royal. In fact, Parsons noted that of the 28 EDA overseen properties on the tour, all but seven were in the town limits.
On the Town side, Community Development Director Felicia Hart had taken the point, working with EDA Board Vice-Chairman Jeff Browne to propel the Commercial Property Open House forward. Following Hart’s January 29 termination with several other Town staff and department heads as part of the interim town manager’s Fiscal Year 2021 budget proposal, Browne worked with Interim Town Manager Matt Tederick to see things moved forward on the logistical side.
Planning Director Taryn Logan represented Warren County and Chris Brock, who identified himself as Interim Planning and Zoning Director, was present for Front Royal. Parsons and Henderson acknowledged the contribution of town staff in preparation of a properties’ booklet for the open house and the provision of the trolley for the tour.
“Everybody’s working together,” we observed to Parsons of the joint EDA-Town-County driven interaction with local commercial realtors.
“Yes, as always,” the EDA executive director replied.
“Or at least ‘almost’ always,” we suggested of certain litigious efforts of one participating municipal partner. However, Parsons declined to take the bait, preferring to accentuate the positives of the day. So, we asked for his assessment of the day and its impetus.
“The idea behind the event was to bring together the Blue Ridge Association of Realtors members and take them on a tour of 28 properties here in Front Royal and Warren County that we think are good, viable properties for both commercial and industrial development. So, we looked at 21 properties in town and seven outside of town.
“I think we saw a good variety of buildings, vacant ground that could be used for a variety of purposes. I think the realtors appreciated the information, and I think it was a good partnership effort between the Town and the EDA. I want to thank Chris Brock and Alfredo Velasquez for their help in collating and binding the materials. And Chris’s expertise was a big part of the day as he was able to talk to the group about planning and zoning and certain properties in town.
“Taryn Logan was also a very valuable asset to help explain the planning and zoning in the county and some of the history of the properties.
“And a lot of the realtors that were on the tour, they knew a great deal about some of these properties because they’d either bought or sold them before; or had dealt with them in the past, so knew the history. There was a lot of knowledge on the bus which was shared amongst the group and hopefully, it’ll lead to some sales for some of the properties here in town – and out in the county,” Parsons concluded what he believes was a morning well spent.
Apparently the private sector participants agreed. A sign out sheet was punctuated with “Comments” including “Great Event”, “Good Idea”, “Thank you so much!!”, “Wonderful – very informative” and “Next Year?”
We asked Parsons about his pre-tour briefing on some financial incentives available through the Town, EDA and the Virginia Economic Development Partnership (VEDP).
“I know a lot of times the real estate community in states across the nation may not be as in tune with the local and state incentives that these job developers’ programs have to offer. So, I was hoping to make them aware of what is out there for them in that regard … Because if you’re a realtor and you are dealing with someone and maybe there’s a ten or twenty thousand dollar gap in being able to close the deal, if you can bring the Virginia Jobs Investment Program incentive to the table, or the tech zone incentive here locally to the table, it could be a deal closer for someone,” Parsons observed.
And deal closings on some commercial properties are what the EDA, its municipal partners, and private sector realtors are all looking to make happen.
EDA presents budget proposal to Board of Supervisors; delinquent taxes from contractors
On Tuesday, February 11 at the evening work session of the Warren County Board of Supervisors, the EDA Board and staff presented its budget proposal to get through the final 3 1/2 months of this fiscal year and to continue into FY 2021.
Also included on the agenda was a discussion with Building official David Beahm and Commissioner of the Revenue Sherry Sours on the payment of delinquent taxes and business license fees by contractors prior to issuance of building permits.
County Administrator Doug Stanley discussed the Department of Environmental Quality Financial Assurance requirements. Also, Stanley, along with County Attorney Jason Ham, discussed the management and lease agreements of the Front Royal Golf Club.
See the presentations, including discussion of the Town’s $8 million-plus debt to the EDA on the new police station and the status of the Front Royal Golf Club in this exclusive Royal Examiner video:
EDA report to County – long-time annual auditor withdraws from lagging 2018 audit process
During one of six operational updates from entities with which it is either directly or indirectly involved at its Tuesday, February 4 meeting, the Warren County Board of Supervisors got what Front Royal-Warren County Economic Development Authority Executive Director Doug Parson called “bad” and “very disappointing” news.
That news was that long-time EDA auditor Yount-Hyde-Barbour had withdrawn from the EDA’s 2018 audit process. That process is running considerably behind as the EDA tries to get to the bottom of the final year of a number of years during which a contracted financial investigation by Cherry Bekaert, known for its forensic audit discoveries of criminal financial behavior, alleged a number of years of financial improprieties within EDA operations.
The Cherry Bekaert investigation conducted from mid-September 2018 into the spring of 2019 has resulted in a $21.3-million EDA civil litigation against what currently stands at 14 human and business entity defendants and multiple financial felony indictments by a special grand jury empaneled to investigate potential criminality tied to the EDA civil litigation. At the center of both the civil and criminal cases is former EDA Executive Director Jennifer McDonald.
It was Yount-Hyde-Barbour that was contracted by the EDA to conduct its annual audits during most, if not all of the years during which the EDA financial scandal is believed to have occurred. In recent months retired Warren County Finance Director Carolyn Stimmel and Heather Tweedie of the auditing firm Hottel-Willis have been pouring through the EDA’s 2018 financial records trying to ascertain what EDA assets went where, how, to what purpose and most importantly, were those purposes legitimate and authorized by the EDA Board of Directors.
Yount-Hyde-Barbour had been expected to take the result of Stimmel and Tweedie’s work to belatedly conduct their annual audit for 2018. Completion of that audit has been termed crucial to the
EDA’s future ability to function as it attempts to traverse the operational aftermath of the financial crimes alleged to have occurred under McDonald’s decade of executive leadership of the EDA.
One EDA civil case defendant’s attorney wondered aloud during a past motions hearing that if their client was a defendant for the financial actions alleged against them, why the EDA auditor that had rubber stamped the EDA’s finances annually through the years of alleged embezzlements and misdirection of assets, wasn’t also a defendant.
Could Yount-Hyde-Barbour’s withdrawal from the 2018 audit process be an indicator of potential legal issues between the auditor and the EDA? In response to media questions Sands Anderson attorney Dan Siegel, present with lead EDA civil case attorney Cullen Seltzer for a closed session discussion with County officials of the EDA’s civil case landscape, said only that EDA counsel continues to explore potential legal liability in many directions.
VDOT Revenue Sharing
In other business Tuesday, after a week’s delay to allow new supervisors to gather additional information, the county board unanimously approved the County’s contribution to the Virginia Department of Transportation (VDOT) Revenue Sharing Program. It was explained that the program that runs through multiple municipal fiscal year budgets allows involved municipalities to get a 50% revenue match from the State on needed and desired road improvements throughout the county.
Numbers presented projected the County’s contribution in the coming FY 2021 budget at $250,000. It was a number projected to remain constant in FY 2021 through FY 2024. Six total involved road project costs were cited at $2.9-million over a number of years, with a 25% County contribution total of $753,312.50 and a 25% contribution from involved Sanitary District and POA fees at $703,313.50.
Short-term rental permit
By a 3-2 margin, a divided board approved a short-term rental Conditional Use Permit (CUP) for Stephen J. Aron Jr. despite some objections from neighbors in the gated River Ridge Property Owners Association. Tony Carter and Archie Fox cast the two dissenting votes.
Carter cited neighbor concerns about security issues tied to the applicant’s efforts to recoup some of his residential property improvement costs in purchasing what he said at the earlier public hearing was the run-down home of what he described as the less than conscientious previous occupants. In explaining her vote for the CUP, Delores Oates noted that renters wouldn’t be given the code to the gate, but would utilize a locked key box key to activate entry to the gated community.
Carter replied that, that solution still allowed entry and access of strangers to a community that many residents may have located to for the additional security provided by locked access available only to residents and their guests.
During the January public hearing it was noted in favor of the request that many short-term rental operations do quite a bit of vetting of guests. The applicant indicated he intended to be conscientious about those allowed to stay at the residence he and his family plan to spend a great deal of time at themselves.
In addition to the EDA, other operational updates the county received were from VDOT, RSW Jail, the Virginia Cooperative Extension Service, Department of Social Services and the Town of Front Royal.
See a related story on the Town report; and see the full Warren County Board of Supervisors meeting – other than the 3-hour-plus closed session – in this Royal Examiner video:
Economic development proceeds amidst legal and Spotted Lanternfly threats
This reporter sat down with Front Royal-Warren County Economic Development Authority Board of Directors Vice-Chairman Jeff Browne and Executive Director Doug Parsons on Friday, January 31, to discuss the work they do amidst challenges they face in the aftermath of the financial scandal that developed during the executive leadership of Jennifer McDonald and a previous EDA board majority.
In what we hope is the first of at least monthly video interviews on EDA business and affairs, listen as Browne and Parsons describe how their time is budgeted as they continue the EDA’s work of business retention and recruitment in an environment of dueling civil litigations. They continue to offer an olive branch to the Front Royal Town Council to work together in good faith to determine exactly what the EDA owes the Town in allegedly misdirected EDA assets generated by Town taxpayers, as opposed to an increasingly expensive attorney-driven civil suit filed by the Town against its existing co-created EDA.
It is litigation, as is pointed out in the interview, in which town taxpayers face the unhappy task of funding both sides, as Town taxpayers for the plaintiff and as County taxpayers for the defendant.
And speaking of olive branches, Browne and Parsons conclude the interview by describing the economic threat presented by the expanding presence of the fruit-tree and grapevine feeding Spotted Lanternfly in Frederick County to our north; and how Warren County citizens and businesses can be on the alert to spot, report and mitigate early signs of the destructive bug’s presence in our county.
Watch the discussion in this exclusive Royal Examiner video:
Judge denies EDA civil suit defendants’ motions for removal from case
In a written ruling signed January 24 and filed in the Warren County Circuit Court Clerk’s Office on January 27, Judge Bruce D. Albertson denied a host of EDA civil litigation defense motions for removal from the case as alleged co-conspirators with central defendant, former EDA Executive Director Jennifer McDonald.
Among defendant attorneys involved in the December 12 motions hearing were those representing April Petty, Jesse Poe, Donald Poe and his Earth Right Energy (ERE) solar panel installation company, and ITFederal and its principal Truc “Curt” Tran.
The basis of those defense counsel arguments for dismissal of their clients from the civil case primarily revolved around the plaintiff’s notion of an overarching conspiracy that somehow links the various defendants to central figure and former EDA Executive Director McDonald; and that there are legally definable contractual breaches making those defendants individually liable for funds that came their way through McDonald.
At the December motions hearing christened “Groundhog Day” by one media rep present (guilty as charged) for the bulk of four-and-a-half-hours of repetitive legal arguments put forth by each defense attorney on essentially identical claims for removal of their clients from the civil case, lead plaintiff attorney Cullen Seltzer’s counter was briefer.
That was because Seltzer’s reply was essentially a one-response-fits-all argument. That response was that there did not have to have to be direct knowledge among all defendants of each interlocking conspiracy McDonald is alleged to having been a party to, for that conspiracy to exist to the benefit of separate defendants in separate transactions. Seltzer scoffed at the idea of McDonald as “a rogue tornado” distributing EDA assets to various defendants without a general common knowledge that something illegal was transpiring to each defendant’s benefit.
“I deny each Demurrer and Plea in Bar for the reasons cited by the plaintiff,” Judge Albertson wrote in his brief, three paragraph ruling.
However, the judge also ruled that a plaintiff claim of “Breach of Fiduciary Duty” against all defendants, cited only McDonald and her former Administrative Assistant Michelle Henry for such action.
“Plaintiff alleges that this count applies to all defendants due to the conspiracy count. The manner in which this count is written, however, names only Ms. Henry and Ms. McDonald as parties that have breached this duty. I find that his count does not apply to the other defendants as written in the Amended Complaint,” the judge ruled.
The judge also continued a decision on Earth Right Energy’s “Plea in Bar and separate Motion for Sanctions” based on other arguments heard December 12. There was disagreement between ERE attorney Ryan Huttar and EDA counsel on the validity of contracts between the EDA and ERE in amounts over $10,000, which is most, if not all involved contracts.
EDA counsel noted that any EDA transaction or contract over $10,000 had to be approved by the EDA Board of Directors, which EDA counsel stated did not happen in the Earth Right Energy cases. However, Earth Right attorney Huttar contended the company’s contracts, including a $27-million one with the Warren County Public School system negotiated while Greg Drescher was both an EDA board member and superintendent of schools, were legally binding.
It appears a decision on those arguments will require additional factual information to be brought to the court.
Economic Development Authority Board of Directors Meeting – January 24, 2019
The Economic Development Authority held their monthly Board of Directors meeting on January 24, 2020.
One of the topics was the sale of the Stokes Market (most recent the Main Street Market) to William Huck, owner of C&C Frozen Treats on Main Street in Front Royal. Huck has been trying to remodel the property he owns adjacent to C&C but because of costs higher than anticipated and issues with zoning and permitting, he has been exploring other options to open his newest business known as My Lagniappe – it’s a Louisiana expression that means ‘An extra or unexpected gift or benefit, such as that given to customers when they purchase something.’ If you know Huck, you know he always offers his customers a little lagniappe.
The solar panels on the roof of the EDA office building was also a point of discussions. The EDA is advertising for any party interested in purchasing the solar electric system currently stationed on top of the EDA Building at 400 Kendrick Lane, Front Royal.
The RSW Jail has said they are not interested in the solar panels. The cost of installation and unknown purchase price makes the project not cost effective.
Discussion also included workforce housing, the 2018 audit, Afton Inn renovations and the big one, running out of money by March.
Watch the EDA Board at work in this exclusive Royal Examiner video: