FRONT ROYAL — As the Front Royal-Warren County Economic Development Authority continues attempting to recover from an alleged multi-million dollar embezzlement, the Town Council during its Monday work session explored the possibility of creating its own EDA.
This comes as the EDA has filed a $21.3 civil lawsuit alleging theft or misappropriations against 15 individuals and companies. Meanwhile, the town has sued the EDA for $15 million, an amount Town Attorney Doug Napier has said could rise.
Napier explained that the state code stipulates that each locality with an EDA is allowed to have one authority. Since Front Royal and Warren County jointly formed the EDA, he said the General Assembly must grant permission for the town to create its own.
While the town and county jointly formed the EDA, the town stopped providing operating funds to the authority and gave up its ability to appoint EDA board members in 2008.
Since then the EDA has been involved with projects in town limits such as ITFederal, a workforce housing project and redevelopment of the Afton Inn. None of those projects were ever finished and all are cited in the EDA’s lawsuit as avenues the authority’s former Executive Director Jennifer McDonald allegedly used to steal money or make questionable deals.
According to previous reports, a March 1991 agreement states that if the EDA is dissolved, “the Town and County shall receive an equal division of all IDA (the EDA was previously titled the Industrial Development Authority) property.
Napier said if the authority does dissolve, the town’s right to half of its assets could be in jeopardy if the town created its own EDA without the General Assembly’s permission.
“That could be quite a bit to walk away from,” Napier said.
Officials have previously noted that the EDA’s dissolution is impossible if the authority has unpaid bonds.
According to previous reports, the EDA has about $40 million worth of debt, about $8 million of which is represented by costs for the Front Royal Police Department’s headquarters. While the town was supposed to pay the authority back for the headquarters, the town has refused due to a disputed interest rate.
Meanwhile, the EDA’s current coffers will last only about four months if the authority does not offload some of its property or find other revenue sources.
Napier also notified the council that the town has not been following its own code regarding the installation of taps that connect new homes to water and sewer lines. He pointed out that the code states that the town “shall provide” water tap installations and “may provide” sewer tap installations.
Since 2008, the installations have been completed by private contractors.
Councilman Chris Holloway said a builder may file a lawsuit against the town regarding the matter, but he did not provide any more details. Interim Town Manager Matt Tederick noted that the council “will be briefed on the legal liability” in an upcoming closed session.
Holloway said the town should begin installing taps because there could be more lawsuits. The council opted to follow the ordinance, and the Public Works Department will immediately begin installing taps at property owners’ cost.
With many recent discussions surrounding tap fees, Councilman Jacob Meza wondered how this was not noticed before.
“It doesn’t make sense...it’s kind of embarrassing,” he said.