FRONT ROYAL – Front Royal-Warren County Economic Development Authority Executive Director Douglas Parsons during a Tuesday Board of Supervisors work session provided county officials with a forecast of the EDA’s financial needs.
To survive through the end of this fiscal year, which ends June 30, Parsons said the EDA needs $633,176. That includes $112,646 in monthly debt service payments, $25,000 in capital expenditures and $39,397 in monthly operational costs.
As of Jan. 15, Parsons said the EDA’s cash balance was $374,766. To stay afloat, the authority will need county funds.
The county has already assisted the EDA by paying over $1 million for a forensic audit and legal fees for a subsequent civil lawsuit that alleges the authority’s former Executive Director Jennifer McDonald was the driving force behind $21.3 million worth of embezzlement and dubious dealings.
Parsons noted that the scheduled debt service forecast assumes that ITFederal developer Curt Tran, one of the defendants in the EDA’s civil case, continues making payments on a $10 million loan.
Parsons added that the budget assumes the EDA does not sell or lease property, “and I hope to do a lot of those things.” Making those same assumptions, Parsons said the EDA would need about $1.7 million to make it through the next fiscal year.
Meanwhile, the EDA is attempting to locate a firm to perform audits of its last two fiscal years after its long-time auditors withdrew from the process. Parsons said the Auditor of Public Accounts, a state office, declined to perform the EDA’s audits.
Parsons said the EDA will seek auditing firms through a two-week advertisement. Once the audit begins, he said it is hard to say when it will be completed.
Parsons noted that the EDA’s accountants have finally worked through the “nebulous entanglement” of finances surrounding the Leach Run Parkway project. Now, he said, the authority can properly bill the county and town for debt service.
He explained that the county owes the EDA $235,319 for debt service while the town owes $97,007. He added the town or county has not yet been billed as the EDA would like to review how much is owed one more time.
Parsons said the county’s payment will go a long way “toward floating our boat” and provide about a month and a half worth of operating and debt expenses.
Regarding what the town owes, Parsons said: “I’m not gonna hold my breath” for the payments. The town has filed a $15 million lawsuit against the EDA for alleged monetary losses. The town has also refused to make payments on a loan for the Front Royal Police Department’s headquarters due to a disputed interest rate.
Parsons said every day that the town does not pay adds another $526 in interest “that the taxpayers will ultimately have to pay.”
Parsons explained that the police department loan is in the EDA’s name but terms also include the town’s “moral obligation.” While he is unsure of exactly what that “moral obligation” entails, Parsons said there would likely be negative ramifications for both the EDA and town if the authority opted to stop making payments.
He reiterated a previously expressed desire to work with the town outside of court to reach an agreement with the town. EDA Chairman Ed Daley noted that town residents — who are also county residents — will fund both sides of the potential lawsuit.
The EDA has been paying a 3 percent interest rate on the headquarters while the town believes it was promised a 1.5 percent rate. The $8 million-plus owed for construction, however, is not disputed. Parsons said the EDA offered a 2.25 interest rate as a compromise and the town declined.
Daley said the EDA’s concern is that anything the town does not pay results in the EDA relying on county financing for the project.