The Front Royal-Warren County Economic Development Authority claims the town reneged on cost-sharing deals for several projects.

The EDA filed a civil complaint in Warren County Circuit Court last month alleging that Front Royal has failed to reimburse the authority for its expenses related to the construction of Leach Run Parkway and other projects. The EDA asks the court to enter a judgment in the authority’s favor in the amount of at least $930,000 plus interest. In the alternative, the EDA asks the court to order Front Royal to reimburse the authority for expenses associated with the West Main Street extension, the town’s share of payments on loans for Leach Run Parkway and other projects listed in the complaint.

Staunton attorney Rosalie Pemberton Fessier, with TimberlakeSmith, filed the complaint on the EDA’s behalf. The town attorney’s office had not been served the complaint as of Wednesday, according to court information.

The plaintiff claims that the town committed breaches of contract — implied and expressed — by failing to pay its share of the expenses for projects under a deal with the county using a fair-funding formula. The agreement calls for Front Royal to cover 34% and the county to pay 66% of the cost for some projects.

The EDA acquired property on behalf of the town needed for the parkway construction. Front Royal, the EDA and Warren County entered into a cost-sharing memorandum of understanding in 2011 in which the town and the county make contributions to the authority’s capital budget to fund the property acquisitions. Parties agreed to use a funding formula in effect since 1995 by which the town pays 34% and the county pays 66%.

The town, the county and the EDA entered into an amended cost-sharing memorandum of understanding for the parkway project. The town and the county agreed to continue funding the loan payments on the EDA’s acquisitions under the same terms. Front Royal also agreed to request an additional $2.5 million in matching funds from the Virginia Department of Transportation, added to the $6 million already awarded to the town by VDOT to assist in the repayment of costs for acquiring rights-of-way, engineering and construction of the parkway.

The town and the county also agreed to fund the debt service on additional financing obtained by the EDA up to $4.25 million. The agreement called for the EDA to submit payment requests to the town. The town would need to pay the EDA within 30 days of each receipt. The town then would seek reimbursement from the county and VDOT for their share.

Front Royal entered into a memorandum of agreement for the New Markets Tax Program on May 8, 2017. The town reaffirmed its obligations to support and fund the parkway project according to the terms of the fair-funding formula.

The EDA financed the Leach Run Parkway project through loans with First Bank and Trust and First Bank Strasburg. The EDA confirmed draws from principal on the First Bank and Trust loan in excess of $850,000 for the project, approximately $290,000 of which is the town’s 34% share. The EDA also has confirmed draws from principal on the First Bank Strasburg loan in excess of $1.3 million for the project, approximately $450,000 of which is the town’s share.

The Leach Run Parkway project was completed on June 26, 2017.

“On June 22, 2020, the Town advised the County and the EDA that it would not meet its contractual obligations to support and fund the Leach Run Parkway projects,” the complaint states. “As of August 1, 2020, the Town’s unpaid share of the debt service owed to the EDA was in excess of $80,000. The amount of unpaid debt service owed to the EDA is ongoing and continues to grow.”

The EDA claims Front Royal also refuses to pay its share of the costs for several other projects the authority financed and administered on behalf of the town. The complaint cites the town owed money to the EDA as of July 31, 2020, on the following projects: West Main Street extension through the Avtex Fibers/Royal Phoenix site; the Happy Creek Technology Park; the Stephens Industrial Park; Success Industrial Park; and the Baugh Drive extension.

The complaint is among several active litigations involving the town and the EDA. The town filed suit against the EDA on June 21, 2019. The court continued the case generally on July 21, 2020, without setting another hearing date. The EDA filed a lawsuit against the town on Sept. 17, 2020. No hearings have been scheduled for this case.

– Contact Alex Bridges at abridges@nvdaily.com

(1) comment

Darrin Gifft

Act like Front Royal stole it because we know nothing happens to anyone who steals from the eda

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