As reported in our overview story on the Warren County Board of Supervisors joint work session and meeting of March 7, in a surprise move the county’s elected officials, not only voted to fill two vacant seats on the seven-member Front Royal-Warren County Economic Development Authority Board of Directors (FR-WC EDA, aka WC EDA), but replaced the two longest-tenured members of that board at the end of their current terms. And currently “longest tenured” means just under one full four-year term.
Both recent EDA Board Chairman Jeff Browne and Asset Committee Chairman Greg Harold sought reappointment to their seats, the terms of which expired on February 28th. Why did they seek reappointment, we asked. Browne and Harold concurred they believed the jobs they signed on for in 2019 are yet to be completed. Those jobs included bringing the FR-WC EDA back from the devastation of the estimated $26-million financial scandal of 2014-2018 (See Royal Examiner website NEWS archives under EDA IN FOCUS for a history of the evolution of that financial scandal and its consequences). In our overview story on the supervisors March 7th meeting at which the EDA appointments were announced, we promised a follow up story as more information became available.
Royal Examiner reached out to all five supervisors for comment on their thought process in creating a four-person (out of seven) EDA Board of Directors majority with no experience of the past four years of recovery of the economic development process and litigation to regain lost assets stemming from the “financial scandal”. None of the supervisors responded, not even with a “personnel matter” disclaimer to avoid comment on even their mindset approaching a decision to significantly reduce the experience and leadership level of the EDA Board of Directors as financial scandal litigations and negotiations continue around the EDA core mission of business and industry recruitment and maintenance. We also sought comment from supervisors-appointed, in-house County Director of Economic Development Joe Petty. However, acknowledging the supervisors’ sole appointment authority of EDA board members, Petty declined comment, noting he had not been included in the review process of applicants.
We did, however, get responses from the two replaced members. During our conversations with those now former members, a question came to mind: Did a quick turnaround “fire sale” debate concerning EDA properties lead to replacement of the two longest-tenured members of the Front Royal-Warren County Economic Development Authority?
Browne told us: “If the EDA starts to sell its properties immediately it’s because it’s bowing to the pressure from the Board of Supervisors and the County Administrator, something both Greg and I told the supervisors was a bad idea. If that happens, you’ll see the bigger properties being sold to companies that aren’t bringing in much in the way of jobs or CapEx.” We asked Browne to elaborate. He explained that: “CapEx is the recurring revenue that is generated from the initial construction, outfitting, and upfitting of a heavy commercial or industrial firm. CapEx is also determined by the amount of gross receipts and machinery and tools tax a company utilizes in the course of their business. Obviously, this can vary widely depending upon the industry sector the company operates in.
“For example, a traditional warehouse brings in very few jobs and almost no CapEx. A data center in the same location could bring in so much CapEx that it would allow a locality to pay to maintain essential infrastructure and keep experienced workers without having to raise real estate or personal property taxes. In other words, a game changer.” Browne elaborated, adding, “The EDA-owned properties at Stephens Industrial Park, the three properties at Happy Creek Technology Park, and the Avtex properties are about all that is left in Warren County for game-changing opportunities to bring in large-scale manufacturing or high-CapEx companies that could significantly help cut into the remaining EDA debt, $12-$15 million after all properties are sold, and still allow the County to afford competitive salaries for teachers, police and firefighters, while investing in needed infrastructure.”
And Harold observed that the Avtex business park presented its own unique variables due to re-development limitations at a former federal Superfund cleanup and restoration site, as well as its location related to road infrastructure and accessibility.
“But if it’s more of a fire sale there won’t be a way in the future to bring in companies looking for larger tracts. There’ll be a one-time boon to debt servicing and little in the way of additional incoming taxes,” Browne continued, “And in a couple of years the Board of Supervisors may sadly tell residents they have to pass a bond issue to pay back the EDA debts, and taxpayers will be saddled with that debt for 30 years with little to show for it.
“Local governments have just a few vehicles to raise revenue. This can be done through taxing local citizens and business and/or through raising general obligation or revenue bonds. Since none of the debt can be attributed to a revenue producing project, General Obligations bonds would have to be sought. Again, the tax man cometh,” Browne observed of a potential outcome of hasty decisions, adding, “These bonds will have to be paid through increased taxes or via a reduction in services. It doesn’t have to be that way if the County takes a slightly longer view on what’s best for County residents. This is just Industrial Development 101.”
But is “Industrial Development 101” a course Warren County’s elected and top appointed officials, not to mention EDA board members, have taken, or passed? If the supervisors, administrative, and departmental staffs interactions with the two Shenandoah Farms Sanitary District Advisory bodies, the Property Owners of Shenandoah Farms and more recently its own appointed Shenandoah Farms Sanitary District Advisory Committee, have shown anything over the past three-plus years, it is that the county’s current elected and involved departmental officials do not seem prone to take the advice of stakeholders with direct experience of their neighborhood infrastructures and financial cost versus benefit analysis.
Could this trend be about to continue in the supervisors relationship with its now in-house EDA?
No consideration of experience?
We also asked Browne and Harold about their pre-replacement interactions with the supervisors. Was there a reappointment interview process and if so, were issues on the timing and method of EDA property sales raised? Browne did say he found his interview process for reappointment somewhat surprising in that it seemed he was being asked the same series of questions that would have been directed at new applicants, with no questions specific to his experience of the past 3-3/4 years on the EDA board and what had been learned from it. We asked Harold if his interview experience was similar.
“My interview process was straight from a script that Chairman Cook was reading. There was discussion prior to the interview if the pre-scripted questions would apply, or if they were going to use a different format. The scripted questions were chosen after general consensus. The questions mainly focused on the future direction. There were no questions about our processes, strategy, ability to work cohesively as a group, or status of current EDA business,” Harold said reflecting Browne’s “scripted” experience.
However, he added that Supervisor Walt Mabe, “asked me a few questions about my desire to serve and ability to serve a full four-year term. I am not sure if those were on the question list or just something he was gleaning during the interview,” Harold said. “After a pondered moment I replied that I absolutely wanted to serve and that I wanted to see several current projects I worked on come to fruition. I had a keen interest in coming to resolution on the Happy Creek Road property sale and seeing Avtex take a firm direction with an agreed upon development plan. I felt that these tasks could take upwards of two years. However, with my current personal and professional commitments, I could not say with absolute confidence that I would be able to serve the full four years.”
Browne told us he was adjusting to not working nearly full-time as Chair of the EDA Board of Directors. “I am proud of what we’ve done in the past 3-3/4 years in the wake of what happened. We put in place safeguards to help prevent misconduct at EDA in the future. We created and followed a strategic plan to recover assets through the civil courts that belonged to the community, while aggressively marketing and selling EDA properties. We secured judgments in court and in confidential mediations for millions of dollars (as reported here approximately $24 million publicly settled on paper to this point). We’ve sold millions of dollars of EDA properties and brought outstanding manufacturing firms to our community.
“We were ready to start the process with the Town to resolve the court cases between the two entities without having to go to the expense of a trial and paying attorneys. Fairly resolving those lawsuits will go a long way to improving the strained relations between the Town, County, and EDA which has been allowed to fester far too long. We righted the ship and I have no regrets,” Browne said of the past nearly four years in the post-financial scandal EDA trenches.
Unlike Browne, Harold did point to one regret — although on the back end of his tenure. “One thing that I would have liked to have changed was my manner of exit from the Authority,” Harold told us, noting his reapplication interview was conducted by only three supervisors, Chairman Vicky Cook, Vice-Chair Cheryl Cullers, and Walt Mabe, to whom he expressed gratitude for showing up. “The other two members of the Board of Supervisors (Oates, Butler) didn’t show up. It is unclear to me why county leadership would schedule interviews with less than a full board. Given this, I feel a higher level of respect should be shown to all advisory board members given the time commitment and difficulty it is in filling these seats.
“Going forward, I hope the EDA and Board of Supervisors continue to realize that the debt burden created by the scandal will not be covered by a quick sell of EDA assets. In the near future, we all may be faced with tax increases in reconciling a multi-million-dollar debt. The best way to mitigate this is to bring the right industry to our community that will pay higher and consistent tax dividends for the next 20 to 30 years and beyond. Being steadfast in this strategy will surely lessen the impact to us all,” Harold said, continuing his concurrence with Browne on the issue of avoiding hurried sales of larger EDA properties to what might not be the best long-term prospects for development of those key economic development parcels.
So, heads up four new EDA board members, and those three remaining — if pressure for quick sales of larger parcels come from county officials, elected or appointed, ask questions of all involved as to whether their recommended course of action is the best course with the best applicant over the long haul for county economic development, and financial recovery from past mistakes.
After all, that’s Economic Development 101.
(Writer’s note: This story is in no way a judgement of any of the four new appointees, or for that matter the remaining three board members. Rather, it is an exploration of why the county’s elected officials chose to eliminate the bulk of experience of the past four years on the EDA board at this particular time.)