The board announced late last month it is looking into purchasing the building, which currently houses Tetra commercial real estate.
The 3,200-square-foot building, which was the Reston Visitors Center from 1982 to 2003, sits on 3.47 acres near Lake Newport and several RA recreational spaces.
Ultimately, the decision to purchase the building will depend on results of a community referendum. Public hearings on the subject Feb. 26 and March 26, RA said. The referendum would take place in April. If it passes, RA would like to close the deal in July.
At a special meeting on Monday, the RA Board discussed some of the details of the transaction, including revenue estimates, mortgage terms, potential uses and the exact wording of the referendum question.
The referendum question will read:
Should the Reston Association, acting through the Board of Directors, be authorized to:
- Purchase the Tetra property, inclusive of land and improvements, located at 11450 Baron Cameron Avenue, Reston, VA 20190 in the North Point District as an addition to Common Area pursuant to Article IV, Section IV.10 of the Reston Deed; and,
- Borrow up to $2.65 million on behalf of the association to make the purchase and repurpose the property for future community and recreation uses?
Some other key points to be included on a fact sheet on the issue:
Money — The association will borrow $2.65 million, based on a recent appraisal. RA Chief Financial Officer David Harris said preliminary financial terms include a zero interest down payment and financing of the entire purchase price at 3.45 percent. The term would be a 20-year amortization schedule, but the loan matures at 10 years and would need to be refinanced at that time. Harris said that is standard in commercial deals. There would be $16,000 in loan costs at settlement.
RA will get $650,000 from developer proffers that will cover repurposing costs. RA CEO Cate Fulkerson said she could not name the developer or the project yet, but that the association is close to an agreement. If the referendum passes, RA hopes to close the deal in July.
RA’s Parks and Recreation Department projects $123,000 annually from facility rentals and net income.
Property taxes are $19,500, but once the space is converted to RA common area in 2016 it would no longer be subject to property or real estate tax. Insurance would be about $1,500 annually. Cleaning costs would be $10,000 a year. Estimated repair and maintenance costs are $5,000. Utilities about $15,000 a year. Trash collection, $2,000 a year. Harris estimates those costs would rise by about 3 percent annually.
Tetra will lease back from RA through end of 2015. The company would also pay cleaning and utility costs during that time.
Capital improvements will take place first six months of 2016.
Annual cash flow figures show a positive flow the first four years. In 2019, there would be a negative flow that would result in an impact of just under $3 per member assessment, said Harris. The following year it would be just under $4 per member.
However, assumptions are being made using current association members, including the soon-to-open apartments at The Harrison. There will be hundreds more members coming into the association when Crescent, Reston Heights and other new housing is completed, said Fulkerson.
Potential Uses — RA will solicit member input to determine best recreational and commercial uses of property. Some of the suggested uses, Fulkerson said, could include holiday and break camps, after school programs, event and meeting rentals, extended child care for camps, art and fitness programming.
Fulkerson said the building would not be used for RA staff offices.
“This is for community and recreational space,” she said.
Master Plan Designation — The building is in the current Reston Master Plan as a convenience center, which means it could be used for a variety of purposes, including retail and restaurant.
The original plans for the building approved years ago include a second story addition that could make a 6,930-square-foot restaurant, RA officials said. The restaurant would also be allowed to construct up to 50 feet into Lake Newport.
RA is working to remove the convenience center plan under the ongoing Reston Master Plan Phase 2 draft. RA attorneys are recommending the plan designation be changed to limited office and community use whether RA purchases the property or not.