FRONT ROYAL – The county is taking steps to ensure more financial oversight of the Front Royal-Warren County Economic Development Authority, as the Board of Supervisors at its regular Tuesday meeting unanimously voted to become the authority’s fiscal agent.
The EDA requested this arrangement after filing on March 26 a $17.6 million civil lawsuit against nine defendants for a series of alleged embezzlement schemes.
County Human Resources Manager Jodi Saffelle said that serving as a fiscal agent means the county will be responsible for processing the EDA’s accounts payable and receivable.
A memorandum of understanding between the county and EDA states that the arrangement will be in place for five years unless the EDA provides 90 days notice that it would like the deal terminated.
Supervisors Chairman Dan Murray said: “this is an excellent step for fiscal control of the EDA, and it may just be a first step as time goes on.”
Supervisor Tom Sayre said allowing the EDA to exit the deal or giving them the ability to not re-sign the agreement in five years gives him “a little bit of heartburn.” He said citizens are crying out for leadership and the supervisors should listen.
The agreement states that the county will serve as fiscal agent for the purposes of administering payroll and benefits for the EDA’s two employees. Although the EDA will follow the county’s payroll procedures and procurement policies, the authority’s employees do not technically work for the county.
Saffelle explained that pros of the deal include: more checks and balances; that both the EDA board and the county would review financial matters; and that EDA employees would gain the benefits of county employees.
She said negative aspects to the decision include the perception that the county and EDA are too entangled and extra workload for county staff such as being responsible for handling Freedom of Information Act requests.
The EDA will pay the county $7,500 annually for any additional workload taken on by county staff. Saffelle added that the EDA will also be responsible “for any additional costs for annual auditing services under the umbrella of the annual county audit.”
Sayre said the county becoming the EDA’s fiscal agent is “a good first baby step” but there is more the county can do. He said the concern is that, before “all of this came to light” when citizens asked him about the EDA, he would have to say “I don’t know.”
“It was embarrassing...and that’s got to stop,” Sayre said.
He said the county could make the EDA’s executive director a county employee instead of the authority’s employee. He said that would ensure supervisors getting “a straight answer” from the EDA instead of “one sentence things telling me everything’s OK.”
Supervisor Archie Fox also posed a series of questions regarding the EDA that included:
• What is the county’s “exposure and liability” in the EDA’s lawsuit if all of the funds are not recovered?
• Are there any existing or future EDA projects on hold or at risk? If any future projects are at risk, what would the “revenue impact” be to the county?
• What steps are being taken to ensure that this never happens again?
In response to the last question, County Administrator Doug Stanley noted that the county becoming the EDA’s fiscal agent would put an additional review in place, noting the supervisors would approve the authority’s payments every month.
County and EDA attorney Dan Whitten said he would meet with recently appointed EDA Executive Director Douglas Parsons for responses to the other questions.