Reston Spring

Reston Spring
Reston Spring

Friday, April 17, 2015

A second Beyer e-mail to RA cluster presidents on the Tetra purchase and Maynard's interlinear response

Dear Readers,

Please see my interlinear comments on Mr. Beyer's latest e-mail below. 

Thank you for your time.  And please feel free to contact me with any questions.

Terry Maynard
From: Rick Beyer
Date: Thu, Apr 16, 2015 at 9:58 AM
Subject: Tetra Referendum - Some Context for Voting YES

Reston Members
I would like to offer some context why we should Vote YES on the Tetra Referendum
As you know the RA board voted unanimously to ask the community to ratify its decision to purchase Tetra’s lake front facility and 3.5 acres of property which would permanently solidify  98 contiguous acres of RA member common property. 

The Board did not vote unanimously on the matter.  Three members were absent.  Indeed, most of the Board was unaware that a deal was in the making until months after the triumvirate began negotiating with Tetra properties.  The public wasn't informed until January 23, 2015, when, in one public meeting, the purchase was proposed and a Letter of Intent approved that started Reston down this course before any public hearing. 

The area already has 98 contiguous acres, separated only by a roadway on Tetra property that is controlled by an RA easement.
For those who know me, my positions on many RA and Small Tax District 5 issues are well known for sound fiscal decisions.   I am on record over the years against frivolous spending both small and large. I have had the opportunity to serve as a former RA president and director  helping bring together the community together on important issues.  For those who do not remember back in 2004, as board president, we asked the RA members via referendum for authority to purchase a facility for RA office and while there were people against RA “going into debt”  - there is a difference between deficit spending and borrowing to cover losses versus investment;  That referendum received 87% YES from RA members, who realized their decision is much more about both sound fiscal issues as well as overall importance of RA long term. 

As an investment, buying the Tetra property can hardly be imagined as any worse.  In addition to the near-term need for a quarter-million dollars in repairs documented in the property condition report, Restonians will be paying $3.8 million in principal and interest loan payments in the next two decades.  Even using RA's rosy revenue forecasts, RA will accumulate $2.0 million in losses over that timeframe.  Only after that might it begin to generate a positive net cash flow annually, again using RA's optimistic revenue forecast.
·         Regarding the appraisalRA has two legal appraisals for $2.6 million; plus a $650,000  developer  cash contribution and $200,000 cash contribution from Tetra; plus a another potentially of $200,000 in future revenues to help defray the cost;  The facility will generate revenue easily cover annual interest and other expenses.

The arithmetic here is atrocious.  Even RA's pro forma shows a net negative cash flow through 2020, the latest date they project.  Using RA's own assumptions about inflation (3%/yr), etc., RA will be in the hole $2.0 million in 20 years and will not show a cumulative positive net cash flow until some year after 2050--35 years from now.  The building won't stand that long.

·         Reston Association is one of the strongest fiscally managed home associations in the country. 

Buying a property for two and one-half times its market value per the County's property assessment AND the appraiser's "as is" assessment will not help RA sustain any reputation it has for being financially well managed.  In fact, RA will have a net negative case flow for more than three decades if it buys this property, the difference of which will be made up by increased RA assessment fees.  

·         Just as important as fiscal decision is the attack on RA member common property. We should be taking every opportunity to protect our common property.  RA lost the opportunity in 1998 to purchase this property when it was sold to Tetra.  Now we have the ability to purchase it for the long term benefit of our members.

The property is protected by at least three levels of laws and easements from further development.  These include (but are not limited to):
  • The County's Chesapeake Bay Protection Ordinance prevents construction in the lake or within 100' of the shoreline.
  • County floodplain restrictions and particularly the fact that all the area west and south of the Tetra building is in Lake Newport's flood spillway.  No construction can occur in this area that could constrain the flow of flood waters.
  • RA has easements on the Tetra building parking loop, its own tennis parking area, and the two roads that lead into the property.  RA already controls the use of well over half the property.  That is exactly why RA was included in discussions between Tetra and a restaurant.  RA would have to give up at least some of its easements for anything to be built there--assuming the two preceding restrictions weren't already in place.
  • There are also more than a dozen other easements on the property including utilities, stormwater, and more that would impede further development of the property.
·         We have both fiscally conservative and environmentally concern members on the same side of this decision – YES.

    Given the impossibility of further developing or redeveloping the property, why should Restonians spend $2.65 million?  It will remain green space, it is contiguous with adjoining RA green spaces, and we don't need more meeting space. 

    VOTE NO for a stronger Reston.
Please feel free to reach out to me if you would like to discuss further.
Rick Beyer

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