The Front Royal-Warren County Economic Development Authority Board chairman rebutted some statements the town mayor made Monday about the EDA.
Front Royal Mayor Christopher W. Holloway read a statement at the Town Council’s meeting about the creation of the locality’s own EDA and its formalization set for March 15. The statement, which the town also issued as a news release, cites information about the current EDA to justify the creation of Front Royal’s own authority.
But Front Royal-Warren County Board of Directors Chairman Jeff Browne said by phone Thursday that the town made factual errors in the statement.
“The town’s decision to go ahead with their own EDA, we welcome the opportunity to work with them on redevelopment, tourism and I think that’ll be good,” Browne said.
The statement mentions a confession of judgment that the current EDA entered into with First Bank and Trust in September 2019. A confession of judgment is defined as a written agreement in which the defendant in a lawsuit admits liability and accepts the amount of agreed-upon damages he/she must pay to the plaintiff, and agrees that the statement may be filed as a court judgment against him/her if he/she does not pay or perform as agreed. This avoids further legal proceedings and may prevent a legal judgment being entered if the terms are fulfilled by the defendant.
According to the town statement, the confession of judgment and supporting documents indicate that the sum of the judgment is $9,015,742 at an annual interest rate of 6%. Browne said the sum is $8.6 million at an interest rate of 3%.
The confession of judgment impairs the EDA’s ability to buy property without the bank’s consent, according to the statement. Browne rebutted the town’s claim.
“Part two is that the confession of judgment doesn’t impair our ability to buy property and to work with the county or if we continued with the town,” Browne said. “It’s really the credit-worthiness of the municipality that makes the difference there.”
The town can’t separate itself from the current EDA just yet, Browne said.
“(T)he moral obligations the town has with the current EDA are still in effect,” Browne said. “The town is still part of the EDA and has those continuing obligations.”
Browne mentioned two obligations: the loan with the EDA for the construction of the town’s police department headquarters and the ITFederal project. Browne said he expects the town to pay the principal on the EDA loan soon but will need to work out the amount of the interest payments. The town last fall announced it had received a loan at a more favorable rate and would then use the money to repay the debt to the EDA. The town then would begin paying off the bank loan.
The town statement also noted that Front Royal would consider rejoining the current EDA in the future but only after the authority’s confession of judgment is released; the authority becomes solvent; it produces clean audits from missing years and in the future; criminal and civil litigation has concluded; and the taxpayers recover misappropriated, stolen or fraudulently obtained assets by the EDA or any of its employees.
“The comment I would make there is that they still are a member, a part of our EDA, so it’s not rejoining, it’s deciding to get active again, is really what they meant, I think,” Browne said. “They’re still very much a part of ours and all it is is that they really have two EDAs now and not just their own.
“They need to just be aware of that as they move forward,” Browne added.
More than 60%t of EDA-owned properties lie within the Front Royal town limits, Browne said. The chairman said he doesn’t see the existence of a new town EDA changing the existing authority’s efforts to market its properties and help spur economic growth.
“I can certainly speak for the current EDA ... we don’t see a boundary line,” Browne said. “We’re all part of the same economic unit.”