The Front Royal-Warren County Economic Development Authority has decided not to claim a property tied up in its legal battle with its former executive director.
The EDA Board of Directors voted at its regular meeting Friday to release its claim on a Virginia Avenue property known as Little Rugratz Daycare LLC.
Chairman Jeff Browne, Secretary Marjorie “Jorie” Martin and directors Greg Harold, Scott Jenkins, Dr. Thomas Patteson and Jim Wolfe attended the meeting via Zoom. The directors voted in favor of a resolution to consent to the conveyance of the Virginia Avenue property in return for the release of a claim on the property by Atlantic Union Bank. EDA attorney Sharon Pandak explained that the authority will benefit from this action.
Browne commented on the resolution.
“It is an equitable way to deal with this issue,” Browne said. “It’s also a way to save attorneys’ fees — so (it’s) a win-win for the county taxpayers, simplifies our ability to recover assets in this case.”
Browne explained by phone after the meeting that the EDA would not benefit from keeping a claim on the property that he said is "mortgaged to the hilt" and "under water." The EDA would see little to no monetary benefit from the sale of the property, Browne said.
The EDA sued former executive director Jennifer McDonald over claims that she used authority money without permission for her own benefit through multiple real estate schemes. The lawsuit claims that McDonald bought the Virginia Avenue property through such a scheme. McDonald’s mother Linda Hassenplug ran Little Rugratz Daycare. The lawsuit named the daycare center and Hassenplug as defendants.
The EDA attached the Virginia Avenue property to its lawsuit in order to potentially obtain some of the value of the asset, Pandak explained. With the recent action, the EDA will remove the property from its list of attached assets in the lawsuit and, in exchange, Atlantic Union Bank will release its interest in the property in McDonald’s ongoing bankruptcy case, Pandak said.
McDonald filed for chapter 7 bankruptcy protection in late summer of 2020. The Virginia Avenue property was listed as one of her assets as part of the liquidation process.
Warren County real estate records show that Little Rugratz Daycare LLC bought property at 620-624 Virginia Avenue in February 2012 from Jeffrey Schwartz and Sally Anderson, and from the William M. Biggs Revocable Living Trust for a total price of $369,800.
Also at the meeting, the board voted to approve a resolution authorizing the Front Royal-Warren County Congregational Community Action Project to use space rent-free in the EDA’s 400 Kendrick Lane building for storage. C-CAP must provide proof of insurance to protect the nonprofit organization and the EDA from liability.
Warren County Board of Supervisors member Walter Mabe and County Administrator Edwin Daley also attended the meeting. Supervisors-elect Jerome Butler and Vicky Cook attended the meeting. Directors also allowed Butler and Cook, who will assume office in January, to attend the closed session.
At the beginning of the meeting, directors met in closed session for about 2 1/2 hours to:
- Discuss and receive legal advice related to the disposition of real property in the Avtex redevelopment site, Stephens Industrial Park, Happy Creek Industrial Park, 1321 Happy Creek Road, 426 Baugh Drive and 400 Kendrick Lane.
- Consult with legal counsel about actual or probable litigation, specifically EDA v. Jennifer McDonald, et al; EDA v. Town of Front Royal; and Town of Front Royal v. EDA.
- Consult with legal counsel about the First Bank & Trust refinancing and a draft policy related to the disposition of EDA property.
- Discuss a personnel matter related to the employment of certain EDA staff.