FRONT ROYAL – ITFederal LLC has until September 2020 to obtain a certificate of occupancy for a 10,000-square-foot building on the Avtex Superfund site. If that does not happen, the Front Royal-Warren County Economic Development Authority will take back the 30 acres of land that it sold to ITFederal developer Curt Tran.

That land was sold for $1 with the stipulation that a 10,000-square-foot building is constructed and a $2 million investment is made at the site. To begin development at the site, the EDA asked the town for a $10 million loan to allow development at the site.

In September 2015, the Front Royal Town Council granted the EDA that $10 million short-term loan, with a resolution stating that its purpose was “attracting one or more commercial and/or industrial users to the former Avtex site.” In turn, the EDA gave that $10 million Tran.

EDA Attorney Dan Whitten said he did not know why the EDA requested the loan from the town and speculated parties involved wanted money secured by the time of ITFederal’s October 2015 groundbreaking ceremony.

Actual construction, however, did not begin until over a year later.

Whitten said the EDA gave Tran “the whole $10 million” and that he is not aware of any restrictions stipulating that the loan must be spent at the Avtex site.

In December 2015, the EDA secured a $10 million loan from the Winchester-based First Bank and Trust Company. Whitten said that loan was used to pay the town back. In the event of a default on the loan, collateral is the remaining 117 developable acres at the Avtex site. A Town Council resolution regarding the loan states it would be paid off in monthly installments over 30 years by ITFederal to the EDA. The EDA would then give those payments to the bank.

Whitten said the impression he was given from the EDA was that this would be a short-term loan and he never envisioned that Tran would continue making payments for 30 years. He said the monthly payments are $42,160 and Tran has not missed one. If Tran defaults, Whitten said the EDA would retain the 30 acres.

He added that he does not see a scenario in which the EDA loses the 117 acres. He said if a certificate of occupancy is not awarded for the ITFederal building by 2020, that would constitute a default on a promissory note between Tran and the EDA.

In that event, Whitten said the EDA would likely attempt selling the 30 acres to repay the balance on the loan and Tran would still be responsible for any remaining balance. Whitten added that the building remains under construction “and I haven’t been given any impression that he’s not going to come in any form.”

Whitten said he does not know whether putting up the 117 acres as collateral was a bad deal.

“I wasn’t on the EDA board, so I really wasn’t a voting member, so I’m not sure...I think the EDA board members were just all looking to the positives, how many jobs he was going to bring and how big of an investment,” he said.

A 2015 announcement of the impending arrival of ITFederal detailed a $40 million project that would include a data center, 600-plus jobs and three buildings. All that is required, however, is a 10,000-square-foot building and $2 million investment.

The 10,000-square-foot building has not been opened, with Tran recently noting that he has struggled in attracting investors. He said that instead of ITFederal, another company would likely open in the location. He said partial plans for that new business are outlined on the website for Royal-Phoenix Trading LLC. According to the State Corporation Commission’s Website, the registered agent for that LLC., which was formed in June 2017, is ITFederal LLC.

Whitten noted that the deed for the 30 acres is between the EDA and ITFederal. If another business opens, he said the contract would need to be reworked.

While the ITFederal building has not been complete, Tran has conducted other business. According to Alexandria Living Magazine, Tran opened a coffee shop, Java Grill LLC., in Old Town Alexandria, in late 2018. According to the State Corporation Commission’s website, the registered agent of Java Grill LLC. is ITFederal LLC.

– Contact Josh Gully at jgully@nvdaily.com