FRONT ROYAL – With the recent revelation that ITFederal will not open at the Avtex Superfund site, the town may have to pay back a $650,000 grant it was given for phase one of the West Main Street extension project, which is nearing completion.
Town Engineer Robert Brown explained during a Monday Town Council work session that the town agreed, at the EDA’s suggestion, to build phase one of a West Main Street extension with the purpose of providing access to ITFederal’s building off Kendrick Lane. Brown said the town was awarded a $650,000 Virginia Department of Transportation Economic Development Access Grant “on the basis of ITFederal’s proposed $40 million investment and their creation of 600 jobs.” That announcement of jobs came from a 2015 news release from then-congressman Bob Goodlatte’s office.
Of that $650,000, ITFederal was supposed to provide $150,000 in return for the town’s construction of a sewer pump station. Finance Director B.J. Wilson stated in an email that $150,000 “was supposed to have filtered through the EDA” but that the town has not yet received it.
Curt Tran, ITFederal developer, along with ITFederal LLC, are two of the nine defendants in the EDA’s recently filed $17 million lawsuit that alleges a series of fraudulent activities occurred within the EDA. Tran announced in early March that ITFederal will not open at the site and he is seeking other tenants for the building, which is still not complete, despite its October 2015 groundbreaking ceremony.
Brown said the revelation that ITFederal will not open at the site presented the town with a problem because the grant was given on the condition that there must be documentation of the company investing at least $3.25 million in capital outlay. He said capital outlay could include land improvements, building costs or the installation of industrial equipment.
If ITFederal does not invest that $3.25 million by Dec. 7, 2021, any money the town has gotten from VDOT must be repaid. Wilson said over the phone that the town has already received over $644,000 from VDOT and will have spent the entire $650,000 by the time construction of the road is complete.
Brown said that “there are still options” as the required investment does not have to come from ITFederal. He said the investment could come from a company that moves into the building that was meant for ITFederal or any other future developers of the Avtex site.
He added that the grant requires that the investment is made by a company that creates a corporate headquarters or jobs in areas such as technology or manufacturing. He said the grant could not be given for roads that lead to “speculative office buildings,” which seems to be the purpose of the structure at Avtex.
The grant also does not qualify for construction of roads that provide access to schools, hospitals, libraries, airports, shopping centers, apartments, hotels, churches and more.
Brown added that the town posted a bond to receive the $650,000, which costs the town about $5,000 annually. He said the money would have to be paid back to VDOT before the bond is terminated.
“The longer we hold out for something, it is costing us to wait and see,” he said.
Town Manager Joe Waltz said the EDA needs to “step up” because “I do believe that they left us holding the bag here.” He said this “is somewhat of an item that we definitely need to keep in the forefront as we move forward with the EDA.”
Town Attorney Doug Napier said any money the town has to pay back to VDOT will hopefully be recouped from the EDA in any potential lawsuits the town may file against the EDA.
This is not the first financial misstep between the EDA and town, as the EDA owes the town at least $291,000 stemming from overpayments related to debt service. Wilson said that the town is still attempting to figure out whether there is more money it is owed.