A Front Royal Town Council member said Monday the town would not pay off the debt for the police department headquarters and called the loan fraudulent.
Councilman Chris Holloway read a statement at the Town Council meeting Monday night. In his comments, Holloway accused the Front Royal Warren County Economic Development Authority and Jennifer McDonald, its former executive director, of causing “significant economic and financial harm” to the town, Warren County, the EDA and the taxpayers.
“So I just want to take a few minutes to discuss the town’s position in these matters and clear up any misconceptions that may exist due to in part of the EDA either directly or indirectly making statements that are entirely inaccurate,” Holloway said.
EDA Board of Directors Chairman Jeff Browne responded by phone Tuesday to Holloway’s comments.
“If the town and the EDA can’t figure out how to work together and they just go about suing one another, the townspeople pay for it on both sides,” Browne told The Northern Virginia Daily. “They pay for the plaintiffs; they pay for the defendants.
“I mean, the first question I would ask is when has he tried to reach out to talk with us?” Browne went on to say.
The EDA board chairman said the board has accepted responsibility for what he called a “catastrophic failure.”
“What we ought to be doing is figuring out how better to work together and to put these lawsuits and other issues behind us,” Browne said. “The last time that we really tried to work with the town the mayor almost got censured by the council.
“We’re convinced that despite all the issues between the various parties that the town and county are a single, economic unit and we should be embracing the same vision for the future because we’re connected,” Browne went on to say.
Interim Town Manager Matt Tederick provided information Tuesday pertaining to an Aug. 8, 2016, resolution to obtain funds from First Bank and Trust for various projects. The resolution called for obtaining $9 million for the police department headquarters, $10 million for Leach Run Parkway, $2,500,000 for the extension of West Main Street and $350,000 for sidewalks along Main Street. A memorandum of agreement dated May 8, 2017, states that the town anticipated paying an interest rate of 1.5% for the first seven years at which time Front Royal would need to secure refinancing for the unpaid balance on the town projects from another source.
Tederick said Holloway’s comments were not made on behalf of the entire council or the town.
Charges related to an investigation into the EDA’s finances against McDonald and several former board members of the authority have since been dismissed. Lawsuits against the EDA alleging misuse of funds by the authority and its former director remain active in the Warren County Circuit Court.
Holloway stated that the EDA Board of Directors, appointed by the Warren County Board of Supervisors, is responsible and accountable for all actions taken by the authority and its executive director. Holloway claimed that the EDA’s “negligence” led to the town losing millions of dollars.
“The town has made repeated attempts to work with the EDA to troubleshoot and resolve the issues the EDA negligence created but merely has ... largely been either ignored or somehow blamed by the EDA for the EDA’s own failings and misdeeds,” Holloway goes on to state.
The councilman then brought up the ongoing dispute over the financing of the town’s police department headquarters.
“Perhaps the best and most pressing example of the EDA’s failure to acknowledge the responsibility concerns the construction of the town of Front Royal’s police department headquarters,” Holloway states. “The town does not dispute that it agreed to fund construction of a new headquarters for the town police department. Nor does the town dispute that it knew the construction would require the EDA to obtain financing.
“The dispute centers on the promises made by the EDA to the Town Council that it would obtain financing for the police department according to the specific and favorable financing terms,” Holloway continued. “Town Council accepted the promise and authorized the EDA to move forward with the project only in accordance with the EDA’s promised terms.”
The loan obtained by the EDA to build the police department headquarters differed from the terms authorized by Town Council, Holloway said. The loan obtained by the EDA would result in the town paying millions of dollars more in interest, Holloway said.
“Accordingly, since the loan was obtained without authorization or consent of the Town Council, the town has of course refused to make payments on the fraudulent loan and has explored other means of resolving the issue,” Holloway stated. “The EDA knew that the loan it was obtaining to build the police department was materially different from what Town Council had approved. Rather than go through the process of another public hearing as required by law, the EDA chose to proceed outside of the process and obtain the loan without Town Council approval.”
The EDA makes statements to the local media that include the idea the town is obligated to repay the loan, Holloway said. Since the loan was obtained by the EDA in its own name, without Town Council approval or public participation, it is the EDA’s sole responsibility to repay, Holloway said.
“I want to make it clear: the town will not pay any financial obligation incurred by the EDA for the benefit of the town that was obtained without the approval of Town Council as required by law,” Holloway read from his statement. “The town has no obligation – legal, moral or otherwise – to repay these unlawful debts but instead has a duty to the taxpayers of the town to reject them.”
At the same time, the town would continue to pay any and all debts incurred by the EDA on Front Royal’s behalf that the council has authorized, Holloway said. The town is willing to make payments to the EDA for the police department that are equal to the amounts the council has authorized, he added. The town offered by way of a letter of intent, signed by council members, to pay a portion of the excess interest payments through its funding of the EDA, to settle the lawsuit between Front Royal and the authority, Holloway notes. The Warren County Board of Supervisors rejected the town’s offer without further explanation or comment, Holloway said.
Mayor Eugene R. Tewalt, Vice Mayor William A. Sealock and council members Jacob L. Meza, Gary L. Gillispie, Letasha T. “Tasha” Thompson, Lori Cockrell and Chris W. Holloway attended the meeting.