Autumn on Lake Audobon

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

Monday, June 20, 2016

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. 


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