Autumn on Lake Audobon

Autumn on Lake Audobon
Autumn on Lake Audubon, Photo by Alison Kamat

Monday, January 9, 2017

Review of Mediaworld Contract Negotiations with RA on the Tetra Review, Mediaworld LLC, January 9, 2017


This is the text of a Mediaworld review of its recent negotiations with RA to develop a contract to review the purchase of the Tetra property.

             In 2014, the Tetra Partnership, then the owner of the property on Lake Newport which had been the Reston Visitors Center, approached the Reston Association with a proposal to sell the property and the house.  In January2015, the RA board authorized Cate Fulkerson, the RA Chief Executive Officer, to negotiate terms for the sale and to hold a referendum for the membership to approve the purchase.  An outside appraisal gave the value of the property at $1.3 million as office space and $2.65 million as a restaurant, assuming that the seller made needed repairs, estimated to cost about $275,000.  The condition of the building and necessity of repairs was confirmed by an engineering consultant to RA.  RA estimated it would cost an additional $256,000 to renovate the building and $9,000 for basic landscape improvements.  On February 9, 2015, the Board authorized the CEO to proceed with a letter of intent for the purchase and prepare the referendum.  After considerable public discussion, much of it critical to the purchase, the Board approved the purchase for $2.65 million.  In May the referendum passed and in July 2015, RA closed on the purchase, $275,000 was held in escrow to pay for needed repairs, and a group was formed to make recommendations on the use of the property.  In May, 2016, the staff informed the Board that the renovation costs were about $687,000 ($428,000 higher than previously announced) and that the income from the proposed use of the property would be significantly less than previously estimated.

            Given the significant cost overruns and revenue shortfall, the Board approved an independent review of the Tetra purchase and renovation, what processes and controls were in place, and whether RA procedures for major purchases should be changed.  A Request for Proposals was prepared in July 2016.  A committee was formed of Board members and outside RA members to review 12 submitted proposals.  One of the proposals was submitted by a team of Reston citizens with the appropriate professional backgrounds formed by Mediaworld Ventures, a Reston corporation headed by Mr. Sridhar Ganesan, also president of the Reston Citizens Association.  The Mediaworld team offered to do the study for $1, essentially volunteering their time and expertise.  On September 8, 2016, the Mediaworld team met with the selection committee, as did other firms submitting proposals.  The committee recommended acceptance of the Mediaworld proposal and on September 22 the Board approved this proposal.

            On October 5, the group received a draft contract from RA’s legal counsel, for the review.  The draft was 17 pages long and contained provisions that required Mediaworld to hand over all notes, communications and internal written memorandum to RA, which would own this material.  It gave RA the right to remove or replace any of the team members.  The team’s final report would be owned by RA and the draft contract gave RA the explicit right to modify the report and publish the altered report.  Mediaworld would not be allowed to convey or disclose anything with regard to the work.  Each member of the team would be required to sign a confidentiality agreement that basically made everything involving the work confidential, indemnify RA from any and all damages RA might suffer as a result of the team’s work or for breach of the contract, and the team would be jointly and severally liable for any breach by any team member.  That meant that each of us would be liable to pay damages for any breach of confidentiality by any of the team members.  The confidentiality conditions would last indefinitely.

            To say that we were shocked by such a contract would be an understatement.  It was as if we were entering a contract with the Defense Dept. on a review of national security.  Such a contract would rob the team of independence, a key element of our proposal, and it would put each of us and our families at considerable risk. The confidentiality and punitive clauses went far beyond any consultant contract RA had previously employed and were very inappropriate for private RA members volunteering to do the study at no cost.

            After reviewing and discussing the draft contract and consulting an attorney used by Mediaworld, who also volunteered his time, the group redlined the draft contract and sent our changes to RA’s counsel on October 24.  We agreed that each of us would sign an agreement to hold our work confidential; we would be individually responsible to uphold confidentiality but not be jointly and severally responsible for breaches of the contract by others.  We also eliminated clauses that would substantially reduce the group’s independence.  We would own our own notes and materials and RA would have unlimited license for its exclusive use of the final report but not be allowed to alter it and make the revised version public as our work.  Three weeks later, on November 10, we received a note from RA’s counsel basically rejecting all of our substantive changes.

            A Board meeting was set for about one month after that, on December 7, to discuss the contract.  We explained our problems with the original draft contract and insisted that any final contract could not impair our ability to conduct the work independently, would not have onerous punitive clauses that would put our families at risk, and would not allow RA to alter the report and make the revised version public as our work.  One board member produced a consulting contract that RA had recently signed with Quantum Governance that was four pages long and did not have the punitive clauses of the 17 page draft given to us   The Board then went into executive session to provide further guidance to its counsel.

            December 16, 2016, we received a revised draft contract that ameliorated many of the clauses to which we objected but still had problems from our point of view.  Confidential material was redefined as essentially everything not in the public domain; Mediaworld would own its notes, documents and communications but they would be considered confidential; RA would own the final report and the copyright; individual team members would no longer be responsible for breaches by other team members but Mediaworld would be responsible for any damages to RA caused by the work and breaches of confidentiality by any team member; RA would pay for liability insurance up to $1 million, but a liquidated damages clause required Mediaworld to pay $2,000 for each breach of confidentiality by any team member plus any other available remedy.  Basically, the new draft eased the punitive burdens on individual team members but increased the risk to Mediaworld.

            Mr. Ganesan was not willing for Mediaworld to assume such risk and other team members felt that the revised draft was still over-reaching, beyond what was normal for a consultant contract, much less a pro bono project.  Perhaps more importantly, several of us felt that the rather extreme adversarial approach that RA was taking to the contract, and the time it had taken, indicated a lack of trust in the group which would make it very difficult to do the work objectively and independently.  So, on December 22 Mr. Ganesan wrote to the RA Board that we could not accept the contract although we might consider a shorter less punitive version such as the contract RA signed with Quantum Governance.  Not hearing from RA, Mr. Ganesan withdrew from negotiations on January 4, 2017.

Friday, January 6, 2017

"The Absurdity of a New Reston Road Tax," Terry Maynard, Reston Connection, January 4-10, 2017

The following is the text of the subject op-ed written by Reston 20/20 Co-Chair Terry Maynard.

On December 19, while most of us were getting ready for the holidays, a bare quorum of the County’s Reston Network Analysis Group (RNAG), a group appointed by Supervisor Hudgins, met and voted by a narrow majority to endorse a new tax on Reston station area homeowners to help pay for future street improvements there.  The vote was literally no more than an endorsement by a developer-dominated group of a totally unwarranted tax that will subsidize for profit development without a single community representative from the Reston station areas affected by the prospective tax.   
 
The RNAG vote specifically endorsed a proposed Tax Service District (TSD) that imposes added property taxes of $.021/$100 valuation on all property owners—including residences—living near Reston’s Metro stations.  As laid out by the county transportation department (FCDOT), residents will end up paying about 40% of the $350 million in TSD taxes over the next 40 years—some $140 million under a set of assumptions that grossly understate the likely costs residents will pay.

Absurd County Assumptions

And why?  Because the Board of Supervisors directed FCDOT to find a new revenue source to pay for improvements of the streets in and around Reston’s station areas, of course, without asking if a new funding source were needed.  Then FCDOT generated a phony $350 million “gap” in Reston road funding over the next 40 years that could only be filled with some new tax revenue source—as directed by the Board. 

The funding “gap” is based on a number of bogus assumptions.  First, at the heart of this tax scheme is the absolutely incredulous assumption that the County is unable to re-allocate any of its current $4 billion in annual County General Fund tax revenues to improve Reston’s streets in and around the station areas.  The amount that needs to be diverted each year is less than $9 million, a sum that barely rates as a rounding error in the County budget. 

Second, if for whatever cockamamie reason the County seriously believes it can’t divert funds to improve Reston’s streets to support massive development, it could ever so slightly raise the tax rate on any of several existing County-wide tax mechanisms to generate the needed funds.  In a more perfect world, the Board could even twist developers’ arms to have them pay for all the road improvements since they alone will profit to the tune of more than one billion dollars per year over the next four decades.  Another special tax on Reston homeowners (on top of the existing community-wide special tax district charging $.047/$100 valuation to fund the Reston Community Center) or any part of them is totally unwarranted; the street improvements are merely a fabricated excuse.

Third, the TSD proposal ignores the order of magnitude growth in the taxable value of planned Reston station area development over the next four decades.  Right now, Reston’s station areas are valued at about $6 billion.  Four decades from now they will likely be valued at more than $60 billion, and maybe as much as $90 billion, based on long-term area experience.  Even without a rate increase, that means the County will collect over $11 billion in basic property taxes from Reston’s station areas over the next 40 years, an average of more than one-quarter billion dollars in Reston station area taxes per year even without the TSD.  Surely three percent of those $11 billion-plus revenues could be used to fund Reston’s road improvements.

Fourth, don’t fool yourself into assuming those new TSD tax funds will just be added to Reston’s current transportation funding level.  The bulk of the added tax revenue generated by this TSD tax stream will most likely be offset by the County’s diversion of much of its current Reston station area transportation funding to other areas of the county.   

And, once the tax is approved, station area residents will be stuck:
  • This tax doesn’t require a referendum approval, just the approval of the tax-ravenous Board of Supervisors, backed by the pre-holiday endorsement of the phony RNAG group.
  • There is nothing to keep the Board of Supervisors from raising the TSD tax rate—and residential tax burden—just as it has with a similar TSD in Tysons.
  • Finally, there is no sunset provision on the TSD proposal.  When that initial roadway investment is completed, station area homeowners will continue to pay the TSD tax indefinitely.  
Stop the Scam:  Restonians Pay while the County Collects Forever

And there you have the massive scam of the alleged “gap” in Reston station area street improvement funding.  There really is no “funding gap.” There is just another County scheme to pick homeowners’ pockets.  It reflects the Board’s refusal to put an additional penny into Reston streets despite billions of existing and future tax dollars sources.  At the same time, Restonians will face worse traffic by virtue of the County’s explicit intent to lower traffic flow standards such that intersection delays will nearly double during rush hour.   

The notion of a Reston station area “funding gap” is a swindle perpetrated by the Board to justify the creation of another tax revenue stream unrelated to any legitimate new tax funding need.  As a Restonian, whether or not you live in a Reston station area, you need to oppose this preposterous County tax scheme. 
  • You can do so by contacting Supervisor Hudgins’ office (Catherine.Hudgins@fairfaxcounty.gov) and telling her that you are against the Board’s imposition of this unnecessary and unfair tax. 
  • You can also sign the petition on Change.org (https://www.change.org/p/fairfax-county-board-of-supervisors-stop-the-tsd-road-tax-on-reston-metro-station-area-residents) calling for the defeat of this absurd tax.  
  • And you can testify at the upcoming RNAG community meeting in January (date & place TBD), the Board of Supervisors public hearing on the RNAG funding plan (February 28, 2017), and the Board’s public hearing on the specific TSD tax rate proposal in March (date TBD). 
Please step up and help stop this unwarranted additional special tax on Reston station area homeowners.

Terry Maynard, Co-Chair
Reston 20/20 Committee

Wednesday, January 4, 2017

GGW provides a good look at the expansion of Rt. 7 from 193 to Tysons

Route 7 is getting new trails and a tunnel that connects communities

Roads

Plans to widen Route 7 (also called Leesburg Pike) in Fairfax County between Tysons Corner and Reston also include new trails that would run on both sides of the road. There will also be a tunnel connecting park land that the road intersects.

Formally called the Route 7 Corridor Improvements Project, the plan applies to a seven-mile stretch from the Dulles Toll Road to Route 193. It should be finished in 2025. Virginia’s Department of Transportation (VDOT) is overseeing the project since Route 7 is a state road. . .

With the redevelopment of Merrifield, Tysons, and Reston, Fairfax County is starting to embrace walkability and multi-modal access. The transportation section of the 2013 Comprehensive Plan states that “it will be impossible to meet travel demand solely by roadways,” so, accordingly, the Connect Route 7 plan includes adding 10-foot wide paths on both sides of the road. In addition, the project will put more displaced left turns, crosswalks, and pedestrian countdown signals at intersections along this stretch.

A tunnel at a key intersection will connect trails and park land

In one section of the corridor, VDOT’s planners have decided that a tunnel under Route 7 would be safer than the current crosswalk. The underpass will reconnect the north and south areas of Colvin Run Mill Park, which Route 7 bisects. . . .

Click here to read the full article. 

Monday, January 2, 2017

After no response, Mediaworld terminates Tetra audit contract discussions with RA.

The following is the text of an e-mail Sridhar Ganesan, President, Mediaworld Ventures LLC, sent to the RA Board of Directors and others today.  The letter he references is available here.  
 

From: Sridhar Ganesan <sridhar@mediaworldventures.com>
Subject: Re: Emailing - Mediaworld Letter to RA Boad, Dec 22, 2016.pdf
Date: January 2, 2017 at 10:04:35 AM EST
To: BoardOfDirectors <boardofdirectors@reston.org>, "Kenneth E. Chadwick" <kechadwick@chadwickwashington.com>, Tetra Review Committee <TetraReviewCommittee@Reston.org>

Good Morning.  It has been about 10 days since we sent the last letter to you and have had no response.  Please consider this email as termination of our contract discussions.  Wish you all a Happy New Year.

Sridhar Ganesan
+1-202-409-2722
sridhar@mediaworldventures.com
Skype ID:  sridharganesan

Mediaworld Ventures, LLC
PO Box. 2061, Reston, VA 20195
USA

Thursday, December 22, 2016

Another RA Tetra fail: Mediaworld informs the RA Board it can not come to terms with RA on the independent Tetra review.

As the letter from Mediaworld President Sridhar Ganesan below indicates, Mediaworld has not been able to negotiate a reasonable $1 contract with RA to review the Tetra acquisition as approved by the Board months ago.  The letter highlights Mediaworld's continuing willingness to carry out the work under less restrictive and risky terms as discussed in the last Board meeting, but so far RA has been unable to present such a contract.

RA overshoots May Tetra budget for 2016 by $29,000.

After finally admitting that renovations for Tetra were over budget by $430,000 in May, RA put in place a new budget--new revenue stream, new cost estimates, top to bottom, and six months later RA expects to be another $29,000 over its new Tetra budget--an additional seven percent in seven months, including nearly $6,000 over its renovation budget.

In the end, Tetra's $902,000 net cash flow loss cost each RA member household about $41 this year alone.  

At its December 19th meeting earlier this week, the Fiscal Committee received its November financial report on Tetra (see p. 11) mandated by the RA Board.  What it shows when you cut through all the details is that RA will spend more than $29,000 over the 2016 budget it set for itself just seven months ago.  Here's a spreadsheet that summarizes that report:

Several observations are possible by looking at this table:
  • RA was absolutely horrible at budgeting program revenues for Tetra with revenues coming in at less than half the $175,000 budgeted.  This was clearly not a serious effort at budgeting, merely an exercise at calculating revenue potential assuming virtually every open minute of every day was scheduled with some revenue generating activity.
  • Tetra's net operating loss was more than five times greater than had been budgeted in large part because of the horrible revenue forecast.  The cost underruns are roughly proportional to the revenue underruns.
  • RA clearly had a contract with the general contractor for interior work because there is no variance in cost over the year.  Given that the first expenditures under this contract were made in February 2016 and completed by July, RA knew that this $504,000 contract was more than double the $250,000 forecast in RA's voting guide a year earlier.  Still, it chose not to disclose this huge cost overrun until after the 2016 RA Board elections in March--a huge assist to incumbents running for re-election (Eve Thompson and Dannielle LaRosa)--as we suggested in our proposed independent audit agenda.
  • All told, RA spent nearly one million dollars on Tetra this year ($984,929) which was actually under budget, but only because the lack of program revenues meant a lack of program costs.  This is hardly anything RA should be proud of.  
Aside from the horrible mishandling of the Tetra purchase and renovation, this cash flow analysis suggests that RA can not put together a reasonable budget for a new activity over even a short period of time.  Clearly, more work is in order to straighten out RA's house--as well as Tetra.  

Friday, December 16, 2016

Independent Review of Reston's Lake House Questioned, Reston Connection, December 14, 2016

The Reston Connection has a good article on the continuing saga of the Tetra review contract negotiation in its latest edition.  Here's how it begins:
The Reston Association Board of Directors met on Dec. 7 to discuss contract issues with the company that was selected to review the association’s handling of the Lake House, a property acquisition and renovation that went over budget and has yielded revenue shortfalls ever since it was purchased in July 2015 for $2.6 million.
"We are trying to get this done as soon as possible,” says Sridhar Ganesan, CEO of MediaWorld Ventures, LLC and president of the Reston Citizens Association.
His company agreed to conduct the review for a $1 fee and was selected in September by a special committee that solicited and screened proposals for the RA. The contract is still being negotiated two-and-a-half months later. . . .
Click here to read the rest of this article,