FRONT ROYAL – The Town Council is debating whether it should have any future involvement with the Front Royal-Warren County Economic Development Authority or if its own economic development organization should be created.

While some town projects have been funded in coordination with the EDA, the council in 2008 voted to stop providing operating expenses and forego its ability to appoint authority board members.

Councilman Jacob Meza — a member of the EDA Reform Committee consisting of town, county and authority representatives — said he needs to give the committee some direction on how the town wishes to be involved with the EDA.

Meza said that the EDA “is basically becoming part of the county” and “that’s the move that they are considering.” He noted that the county “is already basically doing that” as money goes through the county before going to the EDA.

During the Reform Committee’s recent meeting, County Administrator Doug Stanley said Supervisor Tom Sayre has expressed interest in the EDA becoming a county department.

“The perception I got was...the county is moving in the direction they want to see it go,” Meza said, adding that nothing seems to be set in stone.

Interim Mayor Matt Tederick responded that the county “is always like that” and “that’s not necessarily a bad thing.” He said that the town could request that the state government allow it to form its own economic development entity. He said that is “not uncommon” in Virginia and many jurisdictions smaller than Front Royal have this arrangement.

Councilman Gary Gillispie said the town “needs to have skin in the game at the EDA” but he does not want the town “to assume any of the financial shortcomings that they have right now” and he is a “little leery” about joining forces.

Tederick said the council needs to further discuss its involvement with the EDA in a future work session.

Gillispie asked: “Can we do that meeting in closed session?” He said that may be necessary due to potential legal questions.

The town has filed a $15 million lawsuit against the EDA for a series of losses that occurred during an alleged embezzlement scheme within the authority.

Tederick said that the majority of the discussion must occur in open session but “when it comes to contractual matters” and the town’s lawsuit against the EDA, it could move to a closed session.

Meza also noted that during the Reform Committee’s recent meeting, discussions included the Jan. 30 $1.1 million loan draw that was put into the EDA’s accounts for the construction of the Front Royal Police Department’s headquarters.

EDA officials have said they never requested the $1.1 million draw, although they intended to request it. According to previous reports, the draw was put into the EDA’s bank account, although about $1.4 million was left from a Jan. 8 draw. EDA officials have also said they did not know that leftover money was in the books.

Meza said that United Bank “made the mistakes by issuing the funds without authorization,” a fact of which the EDA claimed to have proof.

“It’s United Bank’s fault,” Meza said.

Former county and EDA attorney Dan Whitten explained although the $1.1 million was not requested, the EDA kept the money to make payments as needed on the construction of the police headquarters. Of that money, he said about $360,000 remains.

If the bank deposited $1 million into his personal account, Councilman Chris Holloway asked: “If I spent the money, even though it’s the bank’s fault, is that criminal?”

Town Attorney Doug Napier responded that “certainly, you’re not supposed to spend that.”

Tederick noted that the moment the town government learned of the two draws, it was “reported to the proper authorities” because it gave “the appearance of something inappropriate.” He said the matter is in the “appropriate authority’s hands” and the EDA may be allowed to keep the money and “spend it however they choose.”

– Contact Josh Gully at jgully@nvdaily.com