Reston Spring

Reston Spring
Reston Spring

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,

Tuesday, December 13, 2016

The Peanut Gallery Perspective: A Summary and Comment on the RA Board Meeting to Discuss Continuing Difficulties in Signing a Tetra Review Contract

On Wednesday, December 7, 2016, the 75th anniversary of the surprise Japanese attack on Pearl Harbor, the RA Board of Directors held a special meeting to, as the agenda stated, conduct an “Executive Session to Discuss Contract issues with MediaWorld, the Tetra/Lake House Review Designee.”  During the course of that meeting, Board member Eve Thompson referred to the five community members there as the “peanut gallery.”  She was quickly rebuked by Board member Sherri Hebert, who noted they were RA members whom the Board represented.  Nonetheless, in the absence of streaming or videotaping of the meeting and knowing full well that the minutes will not reflect the full substance of the meeting, we thought it would be useful to present a detailed summary and occasional commentary from the peanut gallery’s perspective.

Those in attendance included five RA community members, the five members of the Mediaworld team selected to carry out the Tetra review, Eric Carr who headed the Board-appointed Tetra Review Committee contractor selection team and committee member Janine Greenwood, all the members of the Board of Directors, and RA attorney Ken Chadwick.  Not present was CEO Cate Fulkerson. 

Maybe most importantly, after the pro forma call to order, opening remarks, and adoption of the agenda, the five community members there all commented on the agenda.  Specifically, they all condemned the proposed use of an executive session (where there would be no community witnesses) to discuss the Tetra review contract issues.  Attached are the comments of Irwin Flashman and Reston 20/20’s statement is posted on this blog.  James Dean focused the need for an open discussion to preserve the credibility of the contracting effort, Ambassador Dennis Hays highlighted the ebbing and flowing of the Board’s seeming willingness—currently ebbing--to conduct a thorough, credible review of the missteps in the Tetra acquisition and renovation process, and Alison Kamat worried that the prolonged contracting process would continue into next year’s RA Board elections unless the contract issues were quickly resolved.  All of them advocated unequivocally for an open meeting that evening to discuss the issues that were preventing the signing of a $1 contract with Mediaworld to carry out the work.

Thereafter, Vice President Mike Sanio moved that the Board move into executive session to discuss the contract issues with Mediaworld.  The motion was seconded by Eve Thompson.  In the ensuing discussion of the motion, only Board member Eve Thompson—looking at Chadwick—said she thought there would be some benefit from an executive session.  Neither President Ellen Graves nor Mike Sanio said anything substantive regarding the merits of the motion.  All the other members of the Board, with varying degrees of enthusiasm, saw little merit in an executive session and much credibility added to the initiative by an open discussion of the contract issues.   The motion to move to executive session was defeated by a near unanimous vote with only Graves abstaining.

Mediaworld and retired World Bank economist Dick Stillson led off the discussion of the issues by highlighting the need for the contractor’s independence to assure the credibility of the product they created.  He highlighted three specific terms in the 17-page contract that undercut this independence: 

  1. Mediaworld's notes and internal communications were to be considered RA's property
  2. RA could decide who could and could not be on the team.
  3. RA had the authority to modify the report the team submitted and publish it.

Thompson responded that the Tetra review product needed to be credible and, therefore, Mediaworld should not be allowed to change its contract team.  Team member John Higgins, 18-year Treasurer for RA and a former Board member, responded that Mediaworld had no intention of changing the team membership although they may need to bring in someone for specialized expertise.  Mediaworld CEO Sridhar Ganesan objected that contract language allowed RA to remove a team member; that should be Mediaworld’s decision.  Stillson highlighted that, if an employee misbehaved, RA could bring it to Mediaworld's attention and they could dismiss the team member--or RA could cancel the contract. But RA can't pick and choose Mediaworld’s team members and still characterize the effort as independent.

Greenwood raised some extreme hypothetical examples of potential misbehavior by a team member (e.g.—misogynistic comments to RA staff) and suggested RA should be able to terminate their involvement in such cases.  Mediaworld team member Jill Gallagher, a consultant with years of experience managing contracts with non-profits both as contractor and client, added that there were no scenarios in the contract, just the demand for blanket authority to dismiss team members.  She added that, in her experience, the draft contract was not a statement of trust in Mediaworld.  

In an interlude, Chadwick noted that there had been ample time to work out the issues on the contract, and that he had offered several times to meet with Ganesan.  He had never said there was a line in the sand.  Ganesan responded that a memo Chadwick sent was the “red line.”  Chadwick added that he was here to facilitate the contract, which is why they were having the Board meeting.  Danielle LaRosa, Board Treasurer, added her concern about the time it was taking in a comment to Ganesan.  Thompson later added that RA members are sensitive about the delays in the contract, seeing it as Board-driven, but it is really two-sided.  (Note:  Actually, the delays have been driven by RA’s highly restrictive 17-page draft contract and unwillingness to discuss, much less negotiate, its terms at least until this meeting.)

Ganesan noted that he has a number of other ongoing contracts, largely out of the country, and he is not waiting by the phone for a call to set up a meeting.  He added that he would be glad to share phone and email logs to show Mediaworld hadn’t be dragging its feet. He suggested Chadwick have more flexibility in suggesting meeting times.  He added that he wanted to move forward and, that once signed, the team would have a schedule that it would meet for delivery of the review. 

Hebert, waving a signed RA contract with Quantum Governance (QG) (who conducted a study for RA on ethics), noted that QG contract served the same kind of purpose as the one being negotiated with Mediaworld—and it was only four pages long.  Moreover, all the issues that were being raised in this meeting had been covered in just one paragraph in the QG contract.  In both cases, RA was looking for process improvement, so why shouldn’t the QG contract serve as model for the one with Mediaworld.  She added, the more the Board controls this, the worse the optics.   Her question and comments were excellent, undermining just about every argument for a 17-page contract with myriad restrictions, caveats, and penalties.

Board member Ray Wedell picked up on Hebert’s comment, noting that Mediaworld had been picked after a rigorous review among several qualified competitors, so RA needs to get the contract sign and leave them alone.  Trust them to do their job and deal with any issues as they come up.

Board member Julie Bitzer wondered about the issue of Mediaworld indemnifying RA.  Ganesan responded that MW should be indemnified by RA.  Hebert noted that the QG contract had one sentence on the matter indemnifying QG except in cases of gross negligence and willful misconduct. 

Following up on a question from Graves, “What do you mean by internal communications?,” the discussion then turned to whether the Mediaworld team’s internal notes and communications were their property or needed to be turned over to RA.  Stillson noted this meant communications within the team.  LaRosa turned to team member Higgins and asked, “Are auditor’s notes and communications their property?”  Higgins responded that the notes were the auditor’s.  Hebert asked the same about legal notes to Chadwick, who responded they were the attorney’s.   In fact, no one in the room could identify a contract in which a contractor’s internal notes and communications were the property of the client. 

Gallagher then took up the issue of confidentiality.  She noted that the contract needed to note (a) that the team was working with confidential documents and (b) that those should not be shared.  But this contract called for individual members of the team to be personally libel for any mishandling of RA’s documents, an unprecedented demand.   Ganesan followed up by noting that the team members are quite willing to sign a confidentiality agreement.

Gallagher added that she has never before received a 17-page contract in her extensive contracting experience.  She said it felt as long as an inter-agency agreement established for with four US departments.  It took her two days to read the document thoroughly and redline the areas needing changes.  Moira Callaghan, another Mediaworld team member, asked rhetorically whether RA’s “standard” contract was 17 pages long. 

Thompson responded that “we were clear that the team needed to have credibility.”  She expressed specific concern about former RA Treasurer John Higgins’ role on the team.  “What I’m hearing is that you are not going to be like a contractor we hire.”  She added, “My concern is we need a real deal report at the end of this.”  Her remarks followed a statement she made early in the discussion that Mediaworld must meet all the requirements of a “standard” RA contract—“the same contract used by RA on every occasion”—triggering Callaghan’s query above--and, yet, it also must meet special requirements to be credible because the team is comprised of RA members.  We find the two comments remarkably inconsistent. 

In response, Hebert noted that the members don’t care about the contract.  Thompson responded that Mediaworld shouldn’t get special treatment.  (Yet that is exactly what the draft contract does by imposing numerous unique restrictive clauses.)  Ganesan asked that RA just give Mediaworld a standard contract.  Moreover, Stillson responded, if Thompson had any doubts about their professionalism, she should look at the time they took to review and comment on the draft contract.   He had noted earlier that, while RA owned their product, the team members’ names and reputations would be on it.

In wrapping up the discussion, Sanio expressed concerned about the failure to meet the deadline, the need to provide a credible product, and he thanked the Mediaworld team for stepping up.  He then moved for the Board to go into executive session.  Board member Lucinda Shannon questioned whether they could give guidance to counsel in open session.  Graves said no.  Bitzer said the executive session should be to give RA attorney Chadwick guidance so RA could move forward, a comment seconded by Hebert who added that it shouldn’t Chadwick’s opportunity to give the Board guidance.  The motion to move to executive session was approved with three “nay” votes and the public session ended.

Sunday, December 11, 2016

County Transportation Department will recommend Transportation Service District tax Option #12 to Board Transportation Committee

In its planned presentation to the Board of Supervisors acting as the "Board Transportation Committee" this Tuesday, December 13, FCDOT will recommend that the Board adopt Option #12, a Transportation Service District (TSD) for Reston's station areas with a tax rate of $0.021/$100 valuation.  This tax will apply to all property owners in the station areas, including residents.

Below is the full FCDOT presentation.  The recommendation is highlighted on p. 16.

Although the initial tax rate would be set at $0.021/$100 valuation, there is absolutely no restriction on the Board raising that rate (just like property tax rates) as transportation improvement costs rise.  Moreover, as assessed property rates rise, the cost to residents will increase with appreciation.  (Note:  As we documented just last month, early estimates of major roadway improvement costs routinely double and triple in a very short period of time.)

Despite FCDOT's assertion of broad endorsement of this tax, no community representative from the Metro station areas has served on the Reston Network Analysis Group (RNAG).  The only Restonian who lives in these areas serving on the RNAG is a stakeholder representative who is a paid representative of Boston Properties as Executive Director of the Reston Town Center Association.  This is truly taxation without representation.

Thursday, December 8, 2016

Reston 20/20 Statement on the Need for an Open Session to Discuss the Issues Delaying the Signing of the Tetra Review Contract with Mediaworld

Fairfax County working group finally acknowledges shrinkage in office space per worker.

The following is the text of an e-mail Reston 20/20 co-chair Terry Maynard sent to Board of Supervisors Chairman Sharon Bulova today concerning Fairfax County's first official recognition that the space per office worker is shrinking and the tremendous implications that belated decision has on planning.  

Dear Chairman Bulova,

I was pleasantly surprised in reading the report of the County Board-appointed Fairfax County Building Repositioning Working Group, "Office Building Repositioning and Repurposing:  Fairfax County Building Repositioning WorkgroupReport," the brief section (p. 9) with the subject title.  It specifically states,
A significant trend occurring nationally and affecting the office market in Fairfax County is that the average amount of leased space per employee is shrinking.  This is attributed to more efficient office design, increased ease of teleworking, and hoteling, all of which result in many types of work being done in locations other than the traditional office environment.  Average footprints are anticipated to shrink from 225 usable square feet (USF) per person in 2010 to 150 USF per person by 2017, a reduction of 40 percent.
This is exactly the message I conveyed to you several times more than three years ago in questioning why Fairfax County planners continue to use 300 gross square feet (GSF) for office space planning purposes.  (These letters and related articles are available on the Reston 20/20 blog.)  By our calculation, Usable Square Feet (USF) used in this report is approximately two-thirds of the value of GSF.  In this case, the County's implicit planning assumption is that there is about 200 USF/office worker--slightly lower than the 2010 average laid out above, but 25% higher than the expected USF/worker next year. 

To be consistent with that expected average next year, the Fairfax County GSF/office worker planning assumption would have to drop to no more than 225 GSF/office worker.  This is, in fact, the planning metric used by Arlington County, which dropped its space per office worker planning assumption from 250 GSF/worker to 225 GSF/worker a couple of years ago.  With office space per worker continuing to shrink, you might even want to use a planning assumption of 200 GSF/office worker.

The County's continuing failure to address this reality has critical implications for planning the associated infrastructure, none possibly more important than transportation planning.  Right now, the FCDOT is hard at work in its Reston street planning effort (RNAG) and using the 300 GSF/office worker as one of its guidelines for calculating future traffic on Reston's station area streets and beyond.  This includes calculating office-driven traffic for the 29.7 million GSF of office space planned in these areas. 
  • At 300 GSF/office worker, that's 99,000 potential office employees.
  • At 225 GSF/ office worker, that increases to 132,000 potential office employees, a one-third increase.
  • At 200 GSF/office worker, that increases to 148,500 potential office employees, a 50% increase.
The one-third (33,000) increase in the number of prospective office employees at 225 GSF/employee will have a tremendous impact on traffic, transit, and other transportation means in Reston's station areas that is not now being considered.  So while FCDOT is planning to reduce Reston station area traffic standards from LOS "D" to an urban standard of LOS "E," the fact of the matter is implementation of the current plan will result in a massively gridlocked LOS "F."  Indeed, just as there will be one-third more potential employees, the potential costs of meeting any reasonable traffic standard are also likely to increase by at least one-third--actually substantially more as marginal costs tend to rise.

No doubt similar consequences will be felt in Tysons and other urbanizing areas of the County, aggravated by the recent passage of the FAR 5.0 ZOA.  Quite simply, the County can't afford to meet the infrastructure requirements the continuing use of this inaccurate planning assumption will create.

The Board, the Planning Commission, and Fairfax County's Department of Planning and Zoning need to step up to the adoption of realistic planning assumptions, probably also on dwelling unit size (increased to 1,200 GSF from 1,000 GSF in the Tysons and Reston planning efforts).  Otherwise, the County will experience gridlock nearly county-wide, inadequate school facilities, crammed public parks, etc. 

While you (and certainly not I) will not be around to see this massive planning failure occur, it will happen in the absence of sound planning.  I strongly urge you to take action now to assure that this doesn't occur for the sake of those--including our families--who will be living here long after we depart. 

In the meantime, I wish you the best of the holidays with family and friends and a happy, prosperous, and productive New Year.

Terry Maynard, Co-Chair
Reston 20/20 Committee

BCC:  Reston community leaders and local news outlets