Find out about new road taxes at the RNAG Community meeting next week.

Next Monday, June 27, 7PM, North County Government Center, FCDOT will present a community meeting on funding the proposed re-shaping of the roadways in and around the Dulles Corridor to accommodate the massive growth planned there over the next 40 years.  We anticipate two key elements of the FCDOT presentation (although we do not have the presentation). 

• First, an update on the scope of the mitigation efforts that will be required to handle the traffic expected as density mushrooms along the Dulles Corridor.   So far, FCDOT has gone through two of the three tiers of mitigation (from easiest/cheapest to most difficult/expensive).  According to  in late March, even with these Tier 2 improvements, 31 station area intersections will still be operating at Level of Service (LOS) “F” during the peak AM or PM or both hours.   

Second, in a presentation to just the Advisory Group this week, FCDOT noted that it has found unexplained $223,000,000 in savings for the “grid of streets,” which were always planned to be paid for by developers only.  However, no explanation is provided on how all this money is to be saved.  

We are perplexed by how FCDOT managed to reduce the cost of the “grid of streets” for developers by nearly a quarter-billion dollars (22%) without significantly lowering County expectations for these roadways.   We don’t know what features (number of lanes) or amenities (bike lanes) might have been cut to achieve this savings.  In short, it sounds too good to be true. 

On the other hand, FCDOT is proposing that station area residents pay a new property-based tax.   It described two new funding options (new #6 and new #7) that would entail a new Tax Service District (like the one all Restonians pay for the Reston Community Center) for station area residents that would cost them $0.015/$100 valuation to fill an $85-$110 million funding gap depending on the option selected.   Please see the footnote below that says New Option #6 would actually need to have another $0.005/$100 valuation—or a total of $0.020/$100 valuation—to cover cash flow needs.  Always read the small print.  FCDOT says this would add $75 to $100 to each taxpayer’s bill (depending on the option) for a property valued at $500,000.

 

At the risk of repeating ourselves, we would make the following points on the proposed taxation of Reston station area residents to fund these roadway improvements:

• Station area residents will derive no benefit from these roadway improvements; in fact, just the opposite.  It is the stated intent of FCDOT to degrade to intersection Level of Service goal for these streets from LOS “D” to LOS “E.”  More broadly, this degraded service intent extends specifically to the through streets—the ones Restonians beyond the station areas use to travel from one side of Reston to the other—even though they do not intend to go to or from the station areas.    
• At the same time, developers will likely earn nearly $6 BILLION over the next five years from their existing and new Reston station area construction.   The roughly 6,000 homeowners in the station areas will not receive one extra dollar in income because they live in the station areas, yet they will be taxed an added $85-$111 million over the same five-year timeframe.   If that tax cost were paid by the developers, it would represent less than two percent of their net operating income in the same five-year period.

And please note that:

• The $.015/$100 valuation (or the more likely $.020/$100 valuation) tax is almost certainly a “teaser rate” introductory tax.  Tysons’ Tax Service District tax rate went up one full penny per $100 valuation in one year, and will likely continue to rise.  We can expect the same in Reston.
• Property appreciation will have its usual impact on property taxes:  As the property value rises, so will the Tax Service District tax—even if the rate doesn’t change.
• Tax Service District will never go away.  Just because the construction cost gap is closed in five years doesn’t mean there won’t be maintenance costs forever that will be paid by this residential tax.  And it is not at all clear that the money will even go to Reston or to roads.
• Forcing residents of the station areas (or all Reston as previously proposed) to pay an additional tax for roads that will be less passable than at present is nothing less than massive and grotesque corporate welfare served up by the County to appease developers who are already making billions in profits each year.

Moreover, if $233 million FCDOT cut in the “grid of streets” cost can be cut from developers’ contribution to the grid, why couldn’t the developers easily pick up the $85-111 million FCDOT wants the residents of the Dulles Corridor to pay?  After all, to do so would still mean a savings of $122 million or more for them—and presumably decent streets.

All these are observations and questions Reston attendees at next week’s RNAG community meeting may want to pursue with FCDOT.  Again, that meeting is next Monday, June 27, at 7PM at the North County Government Center.  

Come and learn about the cost and financing of future streets in our station areas and how much you may have to pay for them.  

RA is counting pennies while spending millions on Tetra.

Among the agenda items for the RA Board of Directors meeting this week is an item (Item I) to review whether RA should answer RA members’ requests for information about Tetra or refer it to the not-as-yet approved “independent” task force already on the agenda.  The topic arises because three Restonians, including myself, have asked for information concerning Tetra.  
 

For the record, Cate Fulkerson has been very good about answering our questions (and we presume questions asked by others).  But within the last week, Eve Thompson—a maniacally obsessed supporter of all things Tetra—asked Cate to keep the Board informed about these inquiries.  Danielle DeLaRosa and President Ellen Graves quickly endorsed Ms. Thompson’s query.  Here is what Eve & Dannielle said and Ellen concurred in:

• Eve:  “given the scope of this request for information would you please provide the Board with an estimate of man-hours it will take to assemble this data?”
• Dannielle:  “I have a similar question to Eve.  Can you tell us the cost of those man-hours?  . . . some of this will take a lot of staff time.  The accounting department is already down a full time person.”

Cate said she would compile the information requested by the Board (but not the answers to the questions).  

As readers can see in the Board packet, the queries the three of us posed are pretty straightforward.  They are most definitely the kind of questions a thorough “independent” task force will be asking of RA staff if one is approved by the RA Board of Directors and appointed. 

One of our highlighted questions, in fact, will be answered at this month’s Board meeting:  What is the specific source in the Operating Budget of the $430K the RA Board so easily transferred without knowing (or even asking) what RA would need to give up to shift funds to cover the huge Tetra cost overrun?  Ms. Fulkerson has now prepared a “Permanent Variance” spreadsheet that will be discussed at this month’s meeting (Item G, p. 100). 

For the record, Reston 20/20 discovered an error in the “Permanent Variance” spreadsheet in reviewing this month’s RA Board agenda package.  We informed Ms. Fulkerson that there is an error in the estimated impact for the January-May 2016 timeframe in the Permanent Variance table.  The total should be $255,650, not $225,650 as printed, a $30K shortfall.  A typo no doubt, but then who’s proofreading the documents sent to the Board?   

Please note that we did this on our own initiative without having Ms. Fulkerson fill out any forms or charging RA for the cost of time and materials to make her record correct.  We have not been thanked yet for our correction.

 

The other of our “questions” is not really a question, it is an offer for RA to review a cash flow spreadsheet we prepared on the amount RA has spent on Tetra and the associated revenues.  RA has not responded, but others discovered an error in my calculations (actually favoring RA) that we corrected.  We have since published the revised spreadsheet with a blog post.    

The bottom line of that post is that RA has spent more than $687,000 of Restonians’ money to repair and renovate Tetra (about $28/household), the total Tetra R&R costs, including Tetra Properties’ $275,000 to make exterior improvements, have skyrocketed to $962,000, and the total net cash flow loss through the first two years will be $911,000 (or about $41 per RA household).  And that doesn’t include the $1.2 million the Tetra working group has proposed to spend on the Tetra grounds.   

You’d think RA would appreciate the opportunity to comment on these massive cost overruns, but apparently not.

A pair of questions we asked separately and are not on the agenda here concern how RA arrived at its new forecast of $175K for program revenues (not profits) this year (May-December 2016) and $389K next year—both of which are much higher than forecast earlier in the year (notwithstanding the previously expected $100K rent from Tetra Partners this year).    We can't help but observe that suddenly the prospects for program revenues look so much rosier in the face of the huge renovation cost overruns.  

We simply wanted to know how these large figures were calculated.  What fees/rates were used?  What assumptions were made about usage rates (market demand)?  What percentage would be RA vs. non-RA usage (presumably at higher rates)? etc.  In fact, we believe the new program revenue forecast vastly overstates the program revenues Restonians will see generated by Tetra through next year and, therefore, will require added RA assessment fee increases or more program cuts. 

More importantly, we find this sudden visored “tsk, tsk” bookkeeping cost-consciousness by RA’s Board disingenuous and hypocritical in the extreme.  This cost questioning comes from some of the same Board members who:

• Purchased the Tetra property at more than twice its market price, costing Restonians and extra $1.3 million;
• Stated that Tetra Partners would pay the cost of exterior repairs at $275,000, and still ran over budget costing Restonians more than $30,000;
• Stated that the cost of renovations and re-purchasing the interior of the facility would cost $250,000 when the cost is now nearly triple that at $687,000; and
• Stated that exterior repairs and renovations would cost $9,000 in their financial statement supporting the referendum and a consultant now tells us it will cost $1.2 million. 

Suddenly the RA Board is all atwitter about three information requests when it failed abysmally to carry out any kind of fiduciary responsibility in getting the costs somewhere near correct in selling the Tetra purchase to RA members.

And now we even have a cost figure for one of the requests as prepared by RA, which—in the end—highlights both how overstated it is and how the referendum vastly understated the costs of renovating Tetra were going to be.  According to RA (see the document below), the cost of answering one of Mr. Dean’s questions will be $1,231.  Yes, that is $1,231 for 27 hours of work by 3 people!

Using that same average hourly rate ($1,231/27 = $46/hour), all the work RA proposed needed to be done on the interior of the Tetra property ($250,000) could have been done by the same three people in 45 weeks. 

Do either of those outcomes make any sense at all?  NO, they are both imaginary numbers to make a point:  How cheap it was going to be to fix Tetra and how expensive it’s going to be to answer a simple question.    

This is your RA staff and Board trying to mis-lead Restonians again, just as they did a year ago, to save a few pennies while spending millions more on Tetra. 

Did RA commit to spending hundreds of thousands of dollars on Tetra without Board authorization?

Below is a spreadsheet provided by Reston Association showing RA costs it has budgeted and incurred ("Actuals" in green) on Tetra as of May 2016.  As we all think we know at this time, the RA Board of Directors authorized $259,000 towards the renovation and re-purposing of the Tetra office building to RA uses in 2016.

What the table appears to show by way of the green cells extended across the calendar year is that RA committed to spending $625K on Tetra before the May 2016 meeting at which the Board added $430K to cover cost overruns above the $259K budget, including $504.5K to the general contractor for interior work.  The single line, covering actual and expected payments to "Construction--General Contractor, Interior" suggests that RA knew by March (when the first payment was made) that it had a contract or other agreement with this contractor to pay nearly double what the RA Board had budgeted for work on Tetra.  Actually, RA had made payments on eight of these contractual arrangements before the May RA Board meeting, all pointing to contracts or agreements reached months in advance of Board approval to commit to this spending.  In fact, the RA staff had to get the RA Board of Directors' approval at the May Board meeting because more than $249K was due in that month--which would have blown up the budget--alone on top of the $139K spent already this year. 

If we are reading this spreadsheet correctly, it appears that RA staff committed RA and Restonians to spending some $366K that the Board had not approved and, in fact, may not have even been aware of.  Of course, this all occurred in RA Board election season, so it would have been impolitic for RA or the Board to let the public know of these known large cost overruns on a timely basis.  It could have been very costly to incumbents trying to be re-elected.

If the above is true, shouldn't those RA staff who were not authorized to commit these funds be removed from their positions for this egregious breach of trust?   And if members of the Board of Directors knew about these unauthorized financial commitments before the May Board meeting, shouldn't they be removed from office?

Planning Commission endorses higher density for redevelopment areas, Annandale Blog, June 16, 2016

The following is a re-post of an article by Allie Ashford posted on the Annandale blog.  Please note that the Board of Supervisors' hearing on this proposal is next week--June 21, 2016.  This train is rolling!

Planning Commission endorses higher density for redevelopment areas

This mixed-use (residential and retail) building planned for a 2.6-acre site at 301 W. Broad St., Falls Church, has a FAR of 3.33, states a report by Fairfax County Planning and Zoning staff on the zoning ordinance amendment. The FAR would increase if the building had more stories. [DPZ]

The Fairfax County Planning Commission voted to endorse unanimously a zoning ordinance amendment Oct. 15 that would pave the way for higher density in revitalization areas like Annandale, Bailey’s Crossroads, and Seven Corners.

The Board of Supervisors has scheduled a public hearing on the amendment for June 21.

The measure would set a maximum floor-area ratio (FAR) of up to 5.0 in all 20 of the county’s transit station areas (TSAs), community redevelopment districts (CRDs), and commercial business centers (CBCs). 

A FAR of 5.0 would allow a developer to build structures with floor space that is five times greater than the area of the parcel of land on which it sits. That’s significantly greater density than currently allowed in older commercial areas – or anywhere else in the county. The current plan for the area at Reston’s Town Center Metro station, for example, calls for a FAR of 4.0 (with a bonus of 0.5).

Several activists from Mason District spoke out against the amendment at a Planning Commission hearing  last month. They argued a 5.0 FAR would encourage inappropriately high density next to residential areas that are not within walking distance of Metro.

During the Planning Commission discussion June 15, Commissioner James Hart (at large) proposed an amendment to allow a FAR of 5.0 in TSAs but lower the maximum FAR to 4.0 in CRDs and CBCs. That amendment was defeated 4-7.

Commissioner Julie Strandlie (Mason) said she opposed Hart’s amendment because limiting the FAR to 4.0 could prevent redevelopment in Seven Corners and Annandale as envisioned in the comprehensive plans already adopted for those areas.

Raising the FAR to 5.0 doesn’t mean all redevelopment areas will end up with that much density; it just provides for more flexibility, said Commissioner Frank de la Fe (Hunter Mill), who supports the original amendment.

Commissioner Timothy Sargeant (at large) said raising the allowable FAR to 5.0 would not exempt a developer from compliance with any state or county regulation and would not eliminate the need for a traffic management analysis or any other existing requirements.

Every application will be reviewed on a case-by-case basis, said Hart, who joined the commissioners in supporting the original amendment. “If  it’s ridiculous or inappropriate, we’re  capable of making that decision.”

 

Tetra to cost another $1.2 MILLION for grounds work.

At last night's Lake House (Tetra) Working Group (LHWG) meeting, the working group members were told by RA's consultants Kimley-Horn that the work they planned to have done on the "exterior" (the grounds, not the building) would cost $1.2 million.  For those who don't recall, the official RA Pro Forma Financials put forth as part of last year's Voter's Guide had the cost at $9,000 (on top of the $250K for interior repairs--now at more than $600K).  So the new price tag for the exterior repairs & improvements is 133 times what RA told Restonians a year ago.  The original RA estimate isn't even within the rounding error.

The LHWG made it clear that they wanted nothing to do with the financial aspects of these repairs and improvements.  They argued those decisions needed to be made by the RA Board.  Yet, we can't help but note that the pricing offered last evening was on the repairs and renovations proposed by the LHWG.  Certainly the LHWG didn't expect them to be free, yet the LHWG included a substantial number of unnecessary bells and whistles.  The list of concerns and recommendations they discussed at their April meeting included:

• Increase green spaces
• Install native plantings, raingarden, butterfly garden 
• Add benches/seating areas
• Deck/dock 
• Active area closest to the “lake-side” of the building
• Add wayfinding signage
• Address existing pedestrian and lighting concerns
• Install guard railing to prevent parking on common areas
• Increase pedestrian and parking accessibility facilities
• Reduce impervious surfaces

The recommended exterior plan looks like this:

Kimley-Horn saw this work being completed in four phases:

1. Parking & access: the traffic circle at the entrance to the building. 
2. Site improvements: Grading, roads and walkways, stormwater management
3. Waterfront improvement: walkways, a dock, landscaping
4. Brown's Chapel Park improvements: grading, paving,, walkways ($47,000)

This prioritization was consistent with what the LHWG recommended at its April meeting when it ranked parking and guard rails at the top of its priority list.

The good news, if any, in this story is that the LHWG made it a point to note that the $1.2 million added cost should not be borne in RA member assessment fees.  The idea of some corporate sponsor ponying up the money was raised, but what corporation (most likely a high-density residential developer) would want their name tagged to the Tetra fiasco.  You can bet, however, that RA will press for developer proffers to help pay for these improvements.  Until then, most of this proposed work just may not get done.

And, BTW, the Lake House will be open on June 27.

Total anticipated cost for Tetra renovation so far, including the proposed grounds work:  $2.2 MILLION on a $2.65MM purchase that was double fair market value. 

Statement on Tetra Task Force Terms of Reference and Alternative Approaches

The following is the text of an e-mail sent by Terry Maynard to the RA Board Governance Committee.

Statement to the BGC on the Tetra Task Force

From:   Terry Maynard

To

• Michael R. Sanio
• Eve Thompson
• Ray Wedell
• Sherri Hebert
• Cate Fulkerson

CC

• RA Board of Directors
• Sridhar Ganesan
• John Hanley
• Nick Georgas
• George Kain
• and 10 more...

Message body

Dear Members of the RA Board Governance Committee--

Attached please find my statement on the matter of creating a "Lake House Budgets Task Force" you will be discussing at this evening's BGC meeting.  The statement says that the draft terms of reference do not create an "independent" task force nor is its work scope sufficient to adequately address this financial fiasco.  It recommends alternative approaches to comprising a task force and a series of work steps needed complete the effort in a thorough and timely manner. 

I hope that you find this statement useful in your discussions and ask that you enter the full statement into the BGC record. 

Thank you for your consideration.

Sincerely,

Terry Maynard, Co-Chairman

Reston 20/20 Committee

   Statement to the RA Board Governance Committee on the Tetra Task Force

Reston 20/20 tells County Board, Planning Commission to go back to the drawing board on its FAR 5.0 ZOA.

The following is the text of an e-mail sent to the Fairfax County Board of Supervisors and Planning Commission by Reston 20/20 Co-Chairman Terry Maynard.

Dear Board Members & Planning Commissioners,

FAR 5.0 may be appropriate zoning around one or two of the County's TSAs outside Tysons, such as the area immediately north of the Reston Town Center Metro station (but not even at Reston's Wiehle or Herndon-Monroe TSAs, much less smaller station areas, such as West Falls Church).  FAR 5.0 is absolutely NOT appropriate in any of the CRDs or CBCs which have no access to rail mass transit.

The County has tried to take the easiest possible ZOA route by putting 22 totally different localities and communities with different visions, needs, and capacities to handle high density development into one large FAR 5.0 zoning pot.  This is irresponsible legislative laziness and poor planning at its worst.  And you all know that the local plans for these localities and communities, especially combined with the egregious Fairfax Forward plan amendment railroading process, offer no protection for these localities.

Go back to the drawing board and build a series of ZOAs appropriate to the communities you are suppose to be serving.

Sincerely, but with increasing frustration,

Terry Maynard, Co-Chairman

Reston 20/20 Committee

RA Board Governance Committee to consider Board-dominated task force to study limited aspects of the Tetra purchase fiasco.

Below is the agenda and attachments for next week's Board Governance Committee (BGC) meeting, June 14, 2016, at 6:30PM.  It includes an agenda item called "Lake House Budget Task Force," which is intended to examine the cost overruns experienced in renovating the Tetra office building.

As proposed, the "task force" would include six members of the RA Board of Directors, (a) all of whom  voted to approve the referendum question to purchase the Tetra office building last year, and (b) all of whom (except Ray Wedell and Lucinda Shannon) voted to approve the addition of $430,000 to the Tetra renovation budget last month.  In addition, the task force would have a member from the Fiscal Committee and a community representative.

The agenda for the task force is also quite limited and narrow.  From the beginning, it fails to address why the proposed Tetra acquisition matter was presented to RA in the first place.  Most recently, it fails to address why the Board did not carry out its fiduciary responsibility to understand the causes of the renovation cost overruns before approving the budget increase and determining exactly where the funds to use in that budget increase were coming from.  And there are many other critical issues between that are not covered by this constrained scope of work.

It is a task force designed not to do a thorough job of examining why RA and the Board of Directors moved to buy the Tetra property at twice its market price, misled the public in the process, and did not disclose near-triple cost overruns until the Board was pressed to act immediately, among other shortcomings.  In short, the proposed RA task force is a sham.  

   RA Board Governance Committee Meeting Agenda and Materials, June 14, 2016, including proposed Tetra Funding...

Make the old Marcel Breuer-designed API building the new Reston Regional Library.

Events are moving quickly on whether to save the old API building designed by Marcel Breuer--the only Breuer-designed building in Virginia--or to tear it down for massive residential redevelopment.   It is, in fact, one of the few buildings in Reston that is consistent with Bob Simon's vision for encouraging architectural excellence in our community.

Last week, members of the Fairfax County Planning Commission toured the building and a week from today (June 16) the Commission will decide whether to recommend tearing it down as recommended by the Planning Staff or preserve it as an historic site.  The County's Architectural Review Board, on the other hand, is arguing for its preservation.

Opponents of redeveloping the API building site are circulating a petition to preserve it because of its architectural  significance.  Here is the text of that petition:

The American Press Institute (API) building in Reston, VA, is under the threat of demolition.

It is the only building in Virginia by the internationally acclaimed architect Marcel Breuer, “a master of Modernism” who also designed the Whitney Museum of American Art (now the Met Breuer), UNESCO Headquarters in Paris, and the HUD building in Washington, D.C.

For nearly 38 years, tens of thousands of news media executives — representing a “Who’s Who in Journalism” — attended leadership seminars in the nonprofit’s Breuer-designed headquarters in Reston.

• The API building is historically and architecturally significant.
• It is a crucial chapter in Reston’s rich history.
• It should have a second life instead of being torn down.

That’s why we’re asking you to sign this petition to save the API building.
On June 16, the Fairfax County Planning Commission will make a final decision on a local developer’s application for rezoning the property from business to residential and a demolition permit.

Please sign this petition by Monday, June 13, so that we can submit all of the signatures to the Planning Commission in advance of the June 16 meeting.

If the commission and, soon after, the Board of Supervisors approves this plan, the building will be razed so that single- and multi-family housing can be built on the site.

A growing coalition — local and nationwide — questions this plan given what’s at stake, including:

• Fairfax County Architectural Review Board (ARB)
• Fairfax County History Commission
• Commonwealth of Virginia Department of Historic Resources
• Reston and other Fairfax County residents
• Community leaders
• Architects, historians and preservationists
• Journalists and other news media executives across North America who attended API programs
• Former API staff members
• Those who believe that architectural treasures should be preserved.

During a May 24 special meeting, the Fairfax County ARB passed a motion and sent it with a letter to county officials “urgently” pleading that:

“The Planning Commission, the Board of Supervisors, and County agencies consider further historical and architectural evaluation and specific heritage resource significance of the American Press Institute building, and consider appropriate land usage that could lead to the preservation and/or adaptive reuse of the building … so that informed decisions can be made based on professional analysis.”

This was not the first time the ARB contacted county officials about the API building. In a letter (Oct. 5, 2015), the ARB said that it "believes that the property has a reasonable potential for meeting the criteria for listing on the Fairfax County Inventory of Historic Sites and the National Register of Historic Places.”

Furthermore, the ARB recommended that the Board and Commission "take action to suspend the demolition permit … and to consider the specific heritage resource significance of the API site in particular in regard to the pending rezoning application.”

In a letter (Nov. 6, 2015) to county officials, the Fairfax History Commission “unanimously” concurred with the ARB’s letter.

On May 17, David Edwards, Architectural Historian for the Commonwealth of Virginia Department of Historic Resources, wrote:

"It is our opinion that the API building reaches the level of exceptional importance … and strongly encourages its preservation.

“If the API building were to be demolished, the community and the state would lose the work of a master architect. Additionally, and maybe more importantly, Reston would lose a building that is part of its community’s distinctive architectural history.”

Despite these grave concerns, the Fairfax County Planning and Zoning staff has recommended to the Fairfax Planning Commission its approval of the rezoning application and demolition of the building.

PLEASE JOIN US in stopping the demolition of the American Press Institute building by signing this petition.

Your signature is all the more important because saving the Breuer building may mean finding a new home for Reston Regional Library, a bond referendum-approved task that has been hanging in limbo for a decade.  Here is what the Fairfax Library Advocates have to say about the building and its use as our regional library:

Fairfax County's Architectural Review Board has asked that the county reconsider bulldozing the American Press Institute (API) building on Sunrise Valley Drive in Reston.  They believe the building, designed by Hungarian-born architect Marcel Breuer, has historic architectural significance and should not be taken down and replaced with townhouses.  API is the only building in Virginia designed by Breuer. 

This building at 48,000 sq feet is large enough to house a regional library.  It's in an excellent location.  The $10 million library bond approved by voters is enough to purchase and renovate the building.  Current development plans for the library parcel in Town Center North and for the API site on Sunrise Valley Drive need to be paused to consider an adaptive reuse of the API building as a public library.

Please write the Planning Commissioners and the Board of Supervisors as soon as possible to ask that this option be considered. 

Reston 20/20 strongly encourages all Restonians to sign the API building preservation petition.  Preserving and repurposing the Breuer-designed building as our regional library represents a unique opportunity to solve two problems with one solution that has a chance of not costing Reston or county residents more than has already been dedicated to that purpose.  Alternatively, the architecturally striking building could be torn down and replaced with townhomes while we all paid for a new regional library. 

Tetra just keeps swallowing Restonians' money.

As RestonNow reported, two weeks ago RA CEO Cate Fulkerson told the RA Board of Directors that renovations for the interior of the Tetra building were more than $428,000 over the budget used to sell the Tetra purchase to Restonians in last year’s referendum, nearly tripling the original $259,000 budget allocated for that purpose.   

To add fuel to the costly fire, the RA Board of Directors moved forward approving a $430,000 Tetra budget increase without examining causes or remedies, other budgetary shortfalls, future spending requirements, or likely cost recovery, much less holding those accountable who were responsible for the inaccuracies leading to this gross cost overrun.  

Unfortunately, a more thorough cash flow analysis shows the hole is much deeper than so far reported by RA (and we still lack significant cost information).  For those of you who don’t want to read all 2,000 words of this post, here are the key points:

•  Not counting the Tetra subsidy of $275,000 for external repairs, the Tetra budget will be $624,640 over budget by year-end.  That’s $28-$30 per RA household; not an absence of impact on assessment fees as reported in RA’s Pro Forma Financial statement in RA’s referendum marketing  “Property Purchase Fact Sheet” no matter how cleverly disguised by cuts elsewhere in RA spending.

• As a result, the entire Tetra effort will be in the hole more than $562,000 by year-end versus the Pro Forma Financial statement’s prospective surplus of more than $208,000. 

• Still uncompleted repairs, particularly improvements to Tetra’s grounds, and the need for new furnishings will add to the growing cost next year and beyond.

• By the end of 2020—the final date presented in RA’s Pro Forma Financial in the Voter’s Guide—RA will probably be more than one-million dollars in the hole, costing Restonians $40-$50 per household instead of the $10-$12 projected by RA.

• Beyond that timeframe, a published pre-referendum analysis showed that RA will not operate Tetra in the black until 2048 using RA’s own assumptions and other conservative ones the beyond 2020 endpoint of RA’s Pro Forma Financial statement.

• In fact, it is unlikely Tetra will ever be profitable given RA’s track record of recovering less than 27% of the costs on all the other facilities it operates from swimming pools to the Nature House.  Our assessment fees pay the other 73% of those costs.

• An independent, realistic, and thorough re-examination of Tetra’s costs and prospects should be conducted by some entity other than RA and, until that is completed, work on Tetra should stop.

• Such an examination would probably conclude that the most cost-effective way to cope with this situation is to tear down the building and turn it into a nature area—even if we would still be paying off a promissory note.

Now on to the many ugly details.

As shown in spreadsheet appended to this post (including explanatory notes) based on official RA reports, the Tetragate budget through this year is more than $624,640 over budget, not the $428,000 RA reported to the Board two weeks ago.  That’s a cost of $28-$30 per RA household, not the no impact forecast of the RA Pro Forma Financial statement.  Half of that nearly $200,000 extra expense is the $100,000 in Tetra rental income budgeted for 2016 that disappeared with the previous Tetra property owners in December.  

The rest of the added $200,000 overrun comes from bits and pieces large and small. 

The biggest chunk may be the “unbudgeted cost of $39,467” discovered in a footnote in the unaudited Fiscal Committee 2015 year-end report.  That “unbudgeted cost” may (or may not) include the $16,414 in loan costs and recordation taxes listed as “Acquisition Costs” in the Financial Pro Forma that was used to sell the Tetra deal and was a driver of RA’s 2015 and 2016 Tetra budgets. 

That’s an added loss of $23,035 unless, of course, the “unbudgeted costs” are in addition to the budgeted $16,414 in which case another $40,000 should be added to the overrun.  For the moment, we’ll give RA the benefit of the doubt.  Still, we wonder how much “unbudgeted” RA staff time and money was spent putting together the Voter’s Guide, including its outrageous Pro Forma Financial statement.

For no readily identifiable reason, real Tetra promissory note payments for 2015 appear to have been $15,000 (a month’s payment) greater than shown in the original Pro Forma Financials.  We just read the promissory note. 

The other cost overruns are just chump change with you and me being the chumps. 

The bottom line, as they say, is that instead of being $208,000 to the good by the end of this year as the RA Pro Forma Financials project, the Tetragate fiasco will put RA more than $562,000 in the hole—and the hole will get deeper in the future.

Even with one million dollars spent repairing Tetra by year-end, including Tetra’s $275,000 subsidy, the renovations will not be complete.  What about the property grounds?  An RA-prepared spreadsheet supporting the just approved $430,000 in additional capital expenditures includes an entry early this year of $11,000 for “Property Park Concept Planning.”  (For the record:  It is not clear that RA staff shared this spreadsheet with the Board.  It was not in the publicly-shared “packet” for the Board meeting two weeks ago.)  So we should have a plan soon to improve the grounds that already exceeds the total RA’s Pro Forma Financial originally allocated for a capital improvement of “$9K on initial grounds maintenance.” 

That’s real “initial grounds maintenance”—not a new “concept,” not a new “plan,” not a new “park” as stated in the RA spreadsheet.  As a WAG (the budget-building approach RA’s CEO said RA used in its Pro Forma Financial statement—waving a wet finger in the air), the actual grounds renovation could add another $50,000 - $100,000 to the overall cost of the Tetra property in the next year or so.  When will RA choose to disclose the projected cost of that exterior effort and other needed, but so far deferred and undisclosed, Tetragate costs?

Speaking of WAGs, the same detailed RA spreadsheet used to build the just-approved budget supplemental has an entry of $20,000 for “furniture” purchases this year.  What furniture? The building will need a large amount and diversity of furniture and equipment (electronic equipment is budgeted separately) to serve the multiplicity of uses envisioned for it from weddings to daycare.  $20,000 just won’t get you there.  RA could limit its expenditures on furniture to just $20,000 this year—to get the daycare off the ground with mini-chairs and tables for starters--and spend more, quite possibly doubling that sum, next year and beyond.

Another added cost for this year not disclosed in the Pro Forma Financial statement or the recent capital addition is the cost of utilities this year.  According to RA’s Pro Forma Financial statement, RA shouldn’t be paying anything this year for gas, electricity, and water because Tetra should be paying for these utilities under the lease terminated in December 2015.  Nope, now we are paying those costs which will be about $10,000 this year using RA’s estimating methodology.

With just these added, but as yet undisclosed Tetra costs, the $624,000 shortfall deficit we will find ourselves in by the end of the year, and RA’s forecast cumulative cash flow deficit of $250,000 in 2020, we are likely to find ourselves approaching a cumulative Tetragate hole of one-million dollars by the end of the decade—four times that projected in the RA Pro Forma Financials.  That will require an added $40-$50 in annual assessment fees for every RA member household in Reston over the next four years. 

And that brings us to the greatest unknown about the future:  How much net income will RA actually generate from programs and activities held at the Tetra facility and, in particular, how much of Tetra’s continuing costs will be covered by revenues generated by programs operating the Tetra facility?

RA’s Pro Forma Financial statement projects a rosy future with Tetra programs generating a net operating income of more than $82,000 in 2018 and growing steadily (at the assumed 3% inflation rate) thereafter.  Still, with mortgage payments, the property will operate at a more than $100,000 loss from 2018 through 2020—the far end of the Pro Forma Financial—with that loss shrinking slowly as forecast operating income grows. 

Even if income grows are RA projects, RA will continue to operate Tetra in the red well beyond the time it has to re-finance its mortgage in 2025 at who-knows-what interest rate, plus closing charges.  In a RestonNow op-ed on April 20, 2015, I provided a chart that showed RA would operate Tetra in the red until 2048—and that was extrapolating from everything RA said in its pro forma and using conservative cost forecasts to cover gaps in the Pro Forma beyond 2020!  Presumably, Restonians will make up for that continuing shortfall through additions to their annual assessment fees.   

What is worse is that RA has a horrendous record of cost recovery for all its facilities from swimming pools to the Nature House, much less making a profit.  There is little chance that Tetra will ever pay for itself, much less contribute to RA’s net income. 

In preparing for the most recent RA budget season, Larry Butler, Chief, RA/PRC, presented the Board with a briefing that spoke to cost recovery among RA’s various facilities at its July 30th meeting.  What an ugly picture he presented. 

The bottom line is that RA recovers only 26.9% of its costs for all its various facilities.  The other 73% of the costs are covered by our assessment fees.  In its benchmarking, RA ranked itself second to worst in cost recovery among Arlington County (the worst), Vienna, City of Fairfax, and the FCPA.  Based on this record, why should we believe Tetra will ever even break even, much less be an RA profit center easing our growing assessment fee burden?

How did this happen?  Why is the RA Board in the position now, less than a year after buying Tetra, of realizing suddenly—or at least begin to share with RA members—that virtually everything they and the RA staff told us about the cost and revenue prospects for Tetra is untrue or, at best, extremely unrealistic? 

A number of Restonians, including myself, pointed out the many faults in the pre-referendum financial work RA did, the horrible condition of the structure, the limits on alternative construction and uses, and the grotesque sales price prior to the signing of the Tetra agreement.  Yet the RA Board, staff, and outside legal counsel failed miserably to do their due diligence on assessing and reporting fairly the limited prospects of the Tetra property.   Instead, they turned themselves into a marketing machine of misleading and inaccurate information to sell Restonians on the referendum. 

Reston needs to re-examine every element of its anticipated Tetra facility program costs and revenues (as well as other operating and capital costs) in a realistic and systematic manner.  In so doing it must use explicit and publicly shared assumptions fitting the now limited allowable Tetra hours of use and the planned re-configuration of the Tetra facility.   RA needs to present the results to Restonians and before the next RA budget preparation cycle in a revised and more realistic pro forma financial statement running to at least 2025 when Tetra faces re-financing and including a full report on what has happened and recommendations for handling future such investments.

Such an examination must be thorough, realistic, and independent—which means it must be conducted by someone other than RA, possibly by a committee selected by, say, the Reston Citizens Association’s (RCA’s) Board of Directors.  If such a re-examination of the Tetra purchase and use is conducted, a highly unlikely event in my expectation, I wouldn’t be surprised if its conclusion is that the most cost-effective way to proceed with Tetragate is to tear down the building and turn the property into a natural area even as we continue to pay off the promissory note.  

In the meantime, until the RA staff, the RA Board, and the Reston public knows the true costs of moving forward on Tetra, work on its renovation and programming should stop.  We are just pouring money down a rat hole that we are unlikely to ever recover.  

That is the ugly financial truth of Tetragate.  

   Preliminary Tetra Budget Cash Flow Analysis:  Approved Budget vs. RA Pro Forma Financial Statement, 2015-20... by Terry Maynard