Why Civil War? EDA-related expenses highlight Town Budget discussions

Town of Front Royal staff presented an overview of existing and coming budget year variables, projections and recommendations to the mayor and town council on Monday night, January 13. Included in proposed FY 2020 Budget Amendments and Fiscal Year 2021 projections were $15,000 in winterization costs to secure the 151-year-old brick shell of the Afton Inn as its redevelopment fate remains in limbo; and as much as $400,000 in legal expenses related to the Town’s “up to $15-million” civil litigation against the EDA.

But those expenses were just a portion of the monies approved for allocation or transfer into this fiscal year budget on Monday night.

Prior to having their heads filled with numbers, the mayor and council quorum acknowledged the contributions of long-time tree advocate and departing Urban Forestry Advisory Commission member David Means. Tree Steward President Melody Hotek added to the praise of Means and departed Town Horticulturist Anne Rose for their contributions to this ‘Tree City USA’. Royal Examiner Photos/Roger Bianchini. Video by Mark Williams, Royal Examiner.

Included in the council meeting agenda were motions: 1/ to amend the existing Fiscal Year 2020 budget to allow $11,182,627.66 to be forwarded from the FY 2019 budget to cover purchase orders for unfinished projects; 2/ to approve a $70,000 contract for engineering, landscape and architectural services regarding parking, streetscapes and property acquisitions regarding the Downtown Revitalization Plan to be funded by the Community Development Block Grant awarded to the Town by the State; 3/ to approve a budget amendment of $101,000 to cover a variety of items including payment to a Health Insurance consultant ($21,000), payment to the Town Manager Executive Search Firm ($25,000), allotment of $40,000 for possible land acquisition related to Phase 2 of the Happy Creek Road improvement project; and 4/ the late addition of the $15,000 allotment to cover Afton Inn winterization costs.

The EDA Board of Directors forwarded the Afton Inn winterization bid information to the Town following its January 10 meeting. During that meeting it was stated that a Memorandum of Understanding (MOU) between the Town and EDA regarding the EDA’s ownership and marketing of the Afton Inn property for the Town indicated Town responsibility for such maintenance expenses.

The EDA Board says an existing Memorandum of Understanding between the Town and EDA indicates Town responsibility for Afton Inn maintenance expenses like winterization. However, little seems ‘understood’ about Town financial commitments to the EDA these days.

However, comments by Councilman Jacob Meza indicated surprise at the inclusion of the Afton Inn winterization expense in the proposed budget amendment. Meza said he was surprised council “was ready to move forward” on approval of the Afton winterization costs. Responding to that concern, Interim Town Manager Matt Tederick assured Meza that approval of the budget amendment did not indicate final council approval of those proposed expenditures.

Consequently, all budget items were approved by 4-0 votes, with Chris Holloway absent and Lori Cockrell, who was present but not seated, not voting because she has yet to be sworn in by a judge to fill Mayor Tewalt’s vacant council seat.

EDA suit legal fees
An appropriation of $90,000 for EDA litigation legal expenses was included as a line item transfer forward from the FY 2020 Budget; and a potential total budget impact of $400,000 was cited in Finance Director B. J. Wilson’s work session summary of FY 2021 budget variables. However, Wilson noted a staff recommendation to cap those FY 2021 EDA legal expenses at $200,000.

Town Finance Director B. J. Wilson presents an FY 2021 Budget projection and recommendations to council at Monday work session.

Wilson also recommended an FY 2021 reallocation of $141,400 previously earmarked for Town debt service payments to the EDA to cover the lawsuit legal expenses at whatever amount is ultimately approved by council. Wilson later explained that $141,400 figure has been the Town’s annual allocation to EDA debt service payments dating back to FY 2016 and the transfer of usage recommendation reflected council’s decision to reallocate that payment in the current budget to EDA-related legal and audit expenses.

A Town Council majority’s willingness to pursue an increasingly hostile legal and operational stance regarding the existing EDA and the plan to create a second, independent Town EDA drew criticism from earlier Public Comments speaker Linda Allen.

After thanking Mayor Tewalt for his appearance at a recent EDA Board meeting to offer negotiation as an alternative to expensive litigation to resolve past alleged EDA staff misdirection of Town assets, Allen offered a Civil War analogy.

‘Brother against Brother’ – public comments speaker Linda Allen bemoaned a council majority’s preference for a costly legal ‘Civil War’ with the EDA, as opposed to face-to-face negotiations to a mutually equitable resolution offered by the EDA and favored by Mayor Tewalt.

“I believe that granting worth and respect to the EDA is significant and necessary,” Allen told, not just Mayor Tewalt, but council and town staff present, continuing, “Every time I hear the word ‘lawyer’ connected to the Town and EDA joint issue of the police station, I think of the sign about the brothers in the Civil War on opposite sides – problem solving has turned to lawyers, which means that we can be driven apart, good will destroyed when we can use our words directly with one another to negotiate settlements.”

Allen added that she thought the idea of a second, Town-only EDA was “not necessary” and counterproductive to the long-term goal of presenting this community in a positive light to potential outside business investors.

See these budget and other public discussions, including local builder Chris Ramsey’s observations about a perceived conflict between Town policies and codes as they apply to so-called utility tap fees versus what he termed “water-sewer access fees” in this exclusive Royal Examiner videos:

Watch the Town Council Work Session which followed the regular Town Council meeting in this exclusive Royal Examiner video: