FRONT ROYAL – Town Council at its regular Monday meeting will vote on a resolution allowing Town Attorney Doug Napier to file a Freedom of Information Act request seeking the audit report that delved into the Front Royal-Warren County Economic Development Authority’s finances.
The town’s discovery that it is due at least $291,000 from the authority stemming from overpayments related to debt services led the county to hire a financial consultant, Cherry Bekaert, to examine the EDA’s finances. The audit led the EDA to file a $17 million-plus lawsuit that alleges a breadth of embezzlement and misappropriations against nine defendants. The council at a recent work session expressed exasperation that the town is being left in the dark on the audit’s findings.
The resolution states that town officials “have the right and the duty, as a matter of law and of fact” to see the audit results to determine if taxpayer money is accounted for and whether it will be “promptly returned.”
The county has paid for $460,000 for the audit, which the EDA has said it will attempt to pay back. The resolution states that disregardless of who funded the audit, town officials are entitled to see the results because the EDA “bears a fiduciary relationship” with the town.
The resolution states that Napier will file a FOIA request for a “full, complete, and unredacted copy of said forensic audit as well as all the documentation to support the forensic audit of the finances of the EDA that is being or has been performed...and which has been stated by officials of the EDA to be complete in full by March 22.”
John Anzivino, interim EDA director, however, said on Tuesday that the audit report remains a draft and has not been finalized and will be released when legal counsel determines “the time is right.”
If the EDA does not turn over the audit, Napier said the town has legal grounds to file a circuit court case against the authority.
Town Council on Monday will also take a second and final vote regarding this year’s tax rate.
During a first reading of the tax rate, the council agreed by a 4-3 vote to raise taxes to 15 cents per $100 of assessed value. Last year’s approved rate was 13.5 cents per $100 of assessed value. A recent housing reassessment, however, re-equalized the rate to 12.1 cents per $100 of assessed value. That means that even if the tax rate remains at 13.5 cents, citizens will pay more in taxes.
A potential tax increase has been discussed because the town must find out a way to fund construction on the Front Royal Police Department’s $10 million-plus new headquarters.
Town officials have stated that original plans called for the headquarters to be funded through the EDA and the New Markets Tax Credits loan program.
The loan program would have allowed the town to make interest-free payments of $180,000 for seven years and then refinance the remaining balance. Now, a 30-year loan to pay off the police station is expected to have annual payments of $564,000. The proposed resolution states that former EDA director Jennifer McDonald lied to town officials on multiple occasions that the loan had been closed and taxpayers “are now facing significant” increases that they “absolutely should not have to be burdened with.”
Councilman Eugene Tewalt noted during the work session that a 13.5-cent tax rate would create $516,000 in revenue. That includes $90,000 the council has agreed to re-appropriate from phase two of the West Main Street extension to the construction of the police headquarters.
He noted that leaves $58,000 that must be found to make the loan payments. The council then seemingly agreed to use funding appropriated for a property maintenance program’s implementation to the police headquarters.
The county also had a list of projects it hoped to finance through the New Markets Tax Credits program including Ressie Jeffries Middle School renovations, the new Rivermont Volunteer Fire Department station and renovations at the health and human service complex.
Unlike the town, however, County Administrator Doug Stanley has stated that the county was never believed the loans had closed and thought it was just a possibility that the projects would be funded with the program.