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Posted on: February 22, 2021

FRONT ROYAL EDA ESTABLISHED

Front Royal, VA (February 22, 2021) - The Front Royal Town Council is pleased to announce plans to establish the Front Royal Economic Development Authority (FREDA) March 15, 2021 and will be naming Town Manager, Steven Hicks as the Executive Director.  The Town is currently seeking applicants to serve as members of the Board of Directors until March 31, 2021.  Last year the Virginia General Assembly authorized the formation of the FREDA.  Since that authorization, the Town has codified the Town EDA in Town Code.  

The decision to move forward with FREDA was not taken hastily or lightly.  The Town’s decision to move forward with its own independent EDA has more to do with the present and future rather than the past.  

The Town has re-development and economic development needs now that Council does not believe the County’s EDA is in the position to perform.  Small businesses have been impacted by the pandemic and are in need of recovery.    In addition, there are many empty storefronts now and Council hopes we can prevent more in the coming years.  Having FREDA will also make it easier and quicker to improve the quality of life and appearance of Front Royal by addressing blighted properties through various tools and resources available to EDA’s.  

 The challenges facing the current County EDA are significant.  For example, on September 25, 2019, the EDA agreed to enter into a Confession of Judgment with The First Bank and Trust.  The Confession of Judgment and supporting documentation appear to indicate the following:

  • The sum for the judgment is $9,015,742 at an annual interest rate of 6%
  • The loan was a line of credit up to $17 million
  • Security for the loan in part stated, “Security agreement granting an interest in all of borrower’s accounts and government payments and programs including but not limited to all present and future payments now or hereafter appropriated and made or to be made by the Town of Front Royal, Virginia and/or the County of Warren, Virginia, to the borrower….”

 Based upon legal interpretation, this Confession of Judgment means all EDA assets not currently secured by another party are subject to the Confession of Judgment or in essence, property of The First Bank and Trust Company up to $9M.   This Confession of Judgment impairs buying property for the County or the Town unless the bank allows it.  If the EDA enters into a lease, lease revenues would go to The First Bank and Trust Company.  Due to the low creditworthiness of the EDA, it cannot obtain bonds, loans or other type of financing without the County and/or Town’s direct involvement.  Couple this Confession of Judgment with the EDA’s insolvency, on-going litigation, lack of three years of audits and low creditworthiness, it will be difficult for the EDA to function as a traditional EDA for many years in order to help our community, specifically our Town.  

 The Front Royal Town Council is committed towards working in partnership with Warren County and its EDA.  By no means should the Town’s initiative to focus on the Town’s re-development be construed as an unwillingness to work with the County.  We just believe from a business perspective; formalizing FREDA is the only way the Town can focus on re-development with real results.  The Town Council would consider joining the County’s EDA in the future once all of the following takes place with the County’s EDA:

  1. It not only has produced missing audits, but previous and future audits need to be clean.
  2. It is solvent.
  3. The Confession of Judgment is released.
  4. All possible criminal investigations and civil litigation has been concluded.
  5. The Town taxpayers have recovered all misappropriated, stolen or fraudulently obtained assets by the EDA or its employee(s).

 As part of the Town’s FY22 Budget, the Town will be able to invest $100,000 without sacrificing services to start FREDA.  Additionally, the Town anticipates receiving over $100,000 from the sale of real estate which will be re-invested into our Town.  

 In conclusion, considering the state of affairs with the County’s EDA and in consideration of the Town’s needs to expand its tax base through economic development and marketing, it is imperative that the Town move towards ramping up its own EDA as soon as possible.

 If any member of the public or press has any further questions, please contact Todd C. Jones, Town Public Information Officer.  

 

 

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