FRONT ROYAL – The Front Royal-Warren County Economic Development Authority is still awaiting the audit from its last fiscal year, Interim Executive Director John Anzivino reported at the board’s regular Friday meeting.

EDA Attorney Dan Whitten said the board’s annual audit is usually completed by December. Complications have arisen as the EDA’s regular auditing firm, the Winchester-based Yount Hyde & Barber, works in conjunction with an outside financial consultant.

The identity of that financial consultant and the exact nature of their work has not been publicly revealed, but the county has so far approved $160,000 for work the firm completed from Sept. 11 through Feb. 5. Whitten said more funds will be allocated to the private consultant, which gets paid by the hour. He said depending on who in the firm is working on the audit, the per-hour rate ranges from $60 to $450. The EDA said it will make its best effort to repay that money.

Whitten said that for a decade Yount Hyde & Barber has performed the EDA’s audit, for which $17,500 is paid.

While exactly what the consultant is investigating has not been revealed, it was discovered last year that the town made at least $291,000 in overpayments regarding debt service to the EDA. Jennifer McDonald, former executive director of about a decade, resigned in December after the board entered a series of closed sessions to discuss loan programs, accounting and her job performance.

No specific reason was given for her resignation, but Chairman Gray Blanton previously said she was compelled to resign after learning what auditors discovered.

Anzivino said that the audit is expected to be completed by the end of the month and that the timeline “depends on the reconciliation” between the auditors and consultant. He said that this means any “differences of opinions” have to be worked out between the two parties before the audit arrives.

Whitten said that the annual audit will be made public, but it only covers June 1, 2017, through July 30, 2018. He said the financial consultant’s final report, which will examine years further in the past, will take longer to prepare. He said the EDA also plans to make that report public.

Budget oversight

Anzivino said he has prepared a draft budget for the board to examine, adding that the EDA’s past budgets did not illustrate standard practices. One mistake he noted is that old budgets have had “capital costs being charged” as operational expenses and vice versa.

For example, he said capital budgets have shown expenditures for grass cutting and utilities.

Anzivino said he has reconstructed the proposed budget to create a simpler and more understandable format while adding “more detail.” He said with “everything that we are dealing with in regard to the auditors and the accountants,” the board needs to become more involved with the budget process at “the initial level” opposed to at a “macro level.”

He also suggested that the board appoint a two-person committee to review the budget before it is formally brought the board.

“I think that makes sense from the standpoint of my short tenure here. We’ve got a lot of fluid information...we need to make sure that this budget is as accurate as possible,” he said.

The board appointed Treasurer Tom Patteson and board member Greg Drescher to the budget review committee.

“It’s a good move to have a higher board involvement in this. It’s not something that we’ve been involved in before,” Drescher said.

Anzivino also suggested the board reactivate its “loan review committee,” which became defunct about three years ago. He noted that the EDA has a loan program with which about 21 small businesses are involved. He said it would be wise to establish this committee so board members can meet with candidates before the loan comes to the board for approval. He said this would allow the board to better grasp the candidate’s business plan and “minimize the potential impact or loss to the board.”

The board appointed Mark Baker and Chairman Gray Blanton to the loan review committee.


Patteson asked how construction is progressing at the ITFederal site because “every time I come by, I don’t see them doing anything.”

ITFederal broke ground on Kendrick Lane near the EDA building in October 2015 with plans of opening a data center. A building frame did not go up until about two years later.

ITFederal is an EB-5 visa program, which allows foreign investors to get green cards. According to previous reports, the EB-5 visa program requires $1 million to be invested and 10 jobs created.

That is compared to the EDA’s original announcement that ITFederal would invest $40 million and employ about 600. According to previous reports, the ITFederal Front Royal site originated with a meeting between Curt Tran, the company’s owner, and former U.S. Rep. Bob Goodlatte.

Anzivino said crews have been putting stucco on the exterior of the building, and “there’s been a little bit interior work done.”

“I kind of keep an eye on it every day to see who’s out there...there is a little bit of activity,” he said.

When asked if there is a projected opening date, Anzivino said “it’s supposed to be” sometime in 2019.

Baker responded “that’s kind of broad,” to which Anzivino said, “yeah, it is.”

Board member Ron Llewellyn said he thinks it is time the EDA brings ITFederal representatives “in for conversation.”

Good news

Anzivino noted that “with everything that’s been going on,” the EDA’s past success in fostering local job growth should not be diminished. He said that “is not being put on hold” and the EDA in the last week initiated discussions with a possible new restaurant and “laboratory” that will be in the “wine industry.”

Contact Josh Gully at