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On the Docket: Public Hearing on RA Property Purchase

by Karen Goff February 24, 2015 at 4:30 pm 43 Comments

Former Reston Visitors Center

To buy or not to buy? That is a the question Reston Association’s Board of Directors is asking members in regards to RA’s potential purchase of the former Reston Visitors Center.

The first of two public hearings will take place Thursday at 6 p.m. at RA Headquarters, 12001 Sunrise Valley Dr.

This is a chance for RA members to speak up on whether RA should spend about $2.65 million to buy the 3,200-square-foot building at 11450 Baron Cameron Ave.  A member referendum is planned for April, and the RA By-Laws say the board cannot make the purchase without the approval of a majority of RA members.

Here is what the referendum will ask:

Should the Reston Association, acting through the Board of Directors, be authorized to:

  1. 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,
  2. 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?

The board announced last month it is looking into purchasing the building, which currently houses Tetra commercial real estate.

The building was the Reston Visitors Center from 1982 to 2003. It sits on 3 1/2 acres near Lake Newport and several RA recreational spaces. RA is not yet certain what the building would be used for, though CEO Cate Fulkerson says it will be “community and recreational space” and not RA offices.

Here are some main points to consider:

RA says it will borrow $2.65 million, based on a recent appraisal. However, the 2014 county tax assessment values the building at $1,428,370.

Financial terms would likely be a zero-interest down payment and financing 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, says RA CFO David Harris. There would be $16,000 in loan costs at settlement.

RA is planning on $650,000 from developer proffers that will cover repurposing costs. Fulkerson says she could not name the developer or the project yet, but that the association is close to an agreement.

RA projects $123,000 annual income 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.

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 in order to protect it from becoming a large commercial venture.

There will be a second public hearing on the topic on March 26.

The board has approved a fast-track schedule to get the deal done (pending member approval) by this summer. Here is the timetable:

  • Feb. 26 — First public hearing
  • March — More community discussion at four already planned district meetings
  • March 26 — Second public hearing; board to consider conditional contract pending referendum
  • April 13 — Ballots mailed out to member. Only property owners (and not renters) would be eligible to vote
  • May 8 — Deadline to return ballots
  • May 11 — Election results announced

RA CEO Cate Fulkerson said previously the reason for the quick schedule is “this sets us up for 2016-17 budget cycle, so we know what to plan for.”

“I have been a Reston resident for 36 years,” said Fulkerson. “I remember when [the building] was a visitors center. I watched the movie with my parents when they were curious about North Point. It is gorgeous, and I would like to add it to RA’s portfolio. The building itself has a wide range of opportunities.”

  • guest

    Is there a map available that shows the parcel? 2 1/2 acres seems a tad large.

    • Karen Goff

      here is all i have right now.

      • guest

        Thanks! It appears to include much of the parking area and the roadway. This helps inform my decision on how to vote.

        I think I’d still rather see money being spent by RA on updating maintaining its current portfolio of properties rather than taking on more property.

  • Constance (Connie) Hartke

    This is an opportunity and we members of RA must make an informed decision! Visit the property. Park and walk up the wooden steps to the RA path along the dam. You’ll have great views of the building, lake, and surrounding open space that extends over to Baron Cameron Park. Start imagining what sorts of activities RA could host there. RA wants to hear your ideas. Get a feel for the views from inside the building by looking at photos under “about us” at the Tetra website at http://tetrapartners.com/about-tetra-partners/headquarters.php

    Hope to see lots of you Thursday evening.

  • Ed Cacciapaglia

    2 BIG questions for me here: Should RA be in the commercial real estate business? Can someone clarify why this is such a good deal for RA homeowners?

    • FULL TIME BOJANGLER

      A good deal for RA homeowners? That is not relevant to this board. If they could do it with ZERO dues increase that would be easier to take. Another three dollars here, and another four dollars there, and the next thing you know our dues go up to 650, 700, or 750 eventually. Where does it stop? RA members should stand up and say NO MORE. If they still want to buy this parcel or any other parcel in the future, they should put it in writing that our fees are not going to rise. Charge more to rent the facility. Charge those outside of RA wanting to use our pools, and tennis courts more. Lay off some employees. Withhold new IPADS. No performance bonus for our leader, Cate Fulkerkson. Whatever it takes. NO TO HIGHER ASSESSMENTS.

    • Constance (Connie) Hartke

      Ed, I attended the special meeting on February 9 where RA introduced the information they had at that point. David Harris, CFO thoroughly covered the financial analysis they’d done to date. Thursday’s meeting (2/26) should provide even greater detail. I’m going to attend to get the facts so I can make an informed decision. For those who can’t attend, I’m sure there will be lots of analysis afterwards. Members of the Reston Citizens Association will attend both public hearings and will share information at RCAreston.com

  • jvb11

    I think that it would be a good investment by the RA. I jog on the paths around the property. The land is situated nicely for recreational and other purposes and I would much rather have the RA own it and make something nice out of it given it’s perfect location than have a commercial developer come in.

    • Oooh la la

      What would be wrong with commercial development of that parcel? Might be nice to have a cafe there.

      • Greg

        A restaurant there would be ideal, as is the original plan. Moreover, it makes no sense for the RA, with it’s imaginary maintenance and profit numbers, to take this property off the tax rolls.

    • FULL TIME BOJANGLER

      Problem here is that RA is not (supposed to be) in the business of investing. Good investments mean profits that are realized. Who will profit from this good investment? Is RA gonna sell the building and share the profits with the homeowners ? No. Will buying this property attract new paying members? Probably not. The “good investment” question is really not relevant.

  • Cluster Tycoon

    It’s a done deal, no detractors will show their face at that meeting anyways. What an investment, buy high sell low, a speculators dream, let’s make it realty.

    • Karen Goff

      The public hearing is more about suggesting uses for the building. Under RA Bylaws, the purchase cannot go forward without a mailed referendum to the membership. So vote if you have strong feelings either way. It is not a done deal unless the membership says it is.

      • FULL TIME BOJANGLER

        Karen,
        Do you know if a certain number of members must cast a vote for the results to be binding? A quorum, if you will? I feel like there is such a rush to move forward that Cluster Tycoon is correct. Its a done deal. The uninformed masses won’t cast a vote and the RA groupies (Hartke for example) will lobby the other groupies for their votes. I say this as someone who has no real preference as to buying the property or not. But I want no dues increase. Ever.

        • Karen Goff

          Yes, there is a quorom requirement. I need to look it up though. In the last referendum – the RELAC issue – it was 2/3 of the voters in order for it to pass, so that would likely be the same rule. Like it or not, though, assessments are probably going to go up every year, Tetra building or not.

          • FULL TIME BOJANGLER

            Yes and Cate, an Ken and Eve and the rest will all get new IPads soon I’m sure. Fulkerson will continue to get a performance bonus. I’m curious. How much is too much for assessments? 700? 800? 1000?

          • YourSoLame

            Bo– surly even you could figure out that the IPads COST LESS THAN THE STAFF TIME NEEDED TO PRODUCE THE PRINTED DOCUMENTS right?! Geez you are so pathetically predictable!

          • FULL TIME BOJANGLER

            Hey Surly,

            I surely do know how to spell. I also know that we pay the staff regardless. And its about OPTICS. I’m sure all RA Board members already had laptops or other devices that they could have used.

          • YoureSoLame

            Oh so you’d rather it look good instead of actually being good? Brilliant. How do you know that board members aren’t using their own devices. The original IPad purchases were years ago. Face it Bo- you’re just looking for something to hate-on.

          • FULL TIME BOJANGLER

            I admit that I love Reston but I do hate RA.

          • FULL TIME BOJANGLER

            I have another question if you don’t mind. Can we find out if any brokers are involved in this potential transaction? Listing broker? Is RA using a broker to represent them (and therefore us)? Thanks!

          • Karen Goff

            That is a good question and I do not know but I will ask.

          • FULL TIME BOJANGLER

            thanks karen….

          • Karen Goff

            I am pretty sure their land use lawyer, John McBride, would do the contracts and negotiations, rather than a broker. But double check I will..

          • Julie2020

            At tonight’s Board meeting 2/26th, Cate F. outlined what was needed for a referendum – to spend this amount of $$ requires a majority vote of members entitled to vote. there’s 17,506 residential property owners eligible to vote. the quorum requirement for a successful referendum is 10% of those voters – so at least 1,751 must cast a ballot .

      • Cluster Tycoon

        Its ironic that, according to rumours, RA is quick to shoot down a referendum on an indoor rec center citing cost (~20K) yet the speculative purchase of a dilapidated property proceeds at a rapid pace.
        I am actually surprised that none of the RA board members has the courage to step forward and voice their concern over this ill conceived plan.

        Also, the referendum does not spell out any details with regards to the following scenarios:

        Questions/possibilities:

        (1) (2) Y Y – property will be bought?
        (1) (2) Y N – ???
        (1) (2) N Y – ???
        (1) (2) N N – property will not be bought?

        • Karen Goff

          This is what is planned for the referendum (see below). If enough people vote no on it, that constitutes “not be bought.”

          1) Purchase the 3.47 acre 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;
          2) Borrow up to $2,650,000 on behalf of the Association to make the purchase; and,
          3) Renovate and repurpose the existing building and land for future community and recreation uses?

  • FULL TIME BOJANGLER

    What if interest rates are much higher (a probability) when this loan is refinanced in 20 years? Did the current owners try to sell the property on the open market to see how much they could get? Or did they offer to sell first to RA because they know that RA would make it a total misery for any other buyers to get their plans approved? If RA is the only likely buyer , then they should negotiate hard on the price/terms. Appraisals are arbitrary. Tax assessments mean nothing as far as true market value goes. This rush/hurry up and buy plan smells bad.

    • JoeInReston

      The fact that RA has to go through several public hearings and a referendum would seem to put it at a disadvantage in negotiations. (This is not to suggest that I am against public hearings and referendum’s to review these types of actions) All that effort up front exposes to the seller that the buyer is very interested in the property and has already incurred upfront cost just to make an offer. It will be much harder for the RA to walk at this point and look elsewhere than it would be for a normal buyer. I don’t see how the RA would have the leverage to negotiate hard on price/terms.

      • FULL TIME BOJANGLER

        What do you mean by “look elsewhere”? What are they looking for? RA makes everything a huge burden for developers. Therefore, no other buyer may step forward. Eve Thompson is a highly knowledgeable real estate professional. I’m sure she will agree that any property is worth “what someone is willing to pay”. I think before we commit to purchase, we should insist that the property be listed on the open market for 120 days and see what happens. If no one else offers 2.65 million, then we can negotiate. If someone else offers more, then so be it. I think the fact that Tetra is not seeking other offers tells us something.

        • JoeInReston

          By look elsewhere, I mean walk away from the purchase and look elsewhere for another property to purchase. The RA can’t easily do that, it would look bad politically. That certainly gives the seller an edge.

          The suggestion that the RA can coerce a better deal by bullying and intimidating other buyers and/or the seller is a) very bad governance and b) would likely not work. 1) Developers have lawyers, they are less bully-able than residents. So long as seller and future buyer are following RA regulations, the RA has little power. 2) As this purchase is done in public, any bullying would out in the open and reflect poorly on the RA.

          • FULL TIME BOJANGLER

            Joel,

            They can walk away. Its not like a buyer purchasing a home who needs a place to live. RA does not have to purchase anything. Look bad politically? I have no idea what you mean by that. No one mentioned bullying or intimidating the seller, or other potential buyers.

          • JoeInReston

            “No one mentioned bullying or intimidating the seller, or other potential buyers.”

            Sorry if I misunderstood, I got that from your comment, “RA makes everything a huge burden for developers. Therefore, no other buyer may step forward.” Properties are bought and sold in Reston all the time. I am not sure why this would be an issue that would scare away potential buyers.

            “Look bad politically? I have no idea what you mean by that”

            You don’t think the RA would look foolish if the RA goes through all the effort to hold public hearings and a referendum only to have the seller walk away because they couldn’t agree on a price?

          • FULL TIME BOJANGLER

            You did misunderstand. Why would any seller, of any property, only offer the property to one prospective buyer? If you were selling your house, would you accept one offer from one buyer, without seeing “what the market would bear”? The seller knows that this property is encumbered somewhat by the fact that any potential buyer will be tortured by RA in order to get plans approved. And without these approvals already in place, what fool is going to spend millions and waste time dealing with RA. Therefore, it seems to me that RA is the only likely interested party. And that means they should try to negotiate. I don’t mean to be combative. And for what its worth, RA looks foolish all the time in my opinion. Examples to include trying to regulate electronic cigarettes on the paths and being obsessed with English Ivy and Garlic Mustard growing in the woods, but not caring at all about garbage lining our streets and vagrants loitering at our village centers.

  • Charles P. Dorfeuille

    quick correction: I think the address for RA is wrong on the second line.

    • Karen Goff

      good eye. It’s been fixed now. Thanks

  • Robert Pew

    I notice that no mention has been made that this property includes the parking for the tennis courts and for overflow parking for Lake Anne. There is at least one festival held here. Where will the tennis players park if the property is sold?

  • east297

    RA doesn’t need any more property too maintain..PERIOD!!!

  • Terry Maynard

    Let me run through the arithmetic that is presented above so Restonians understand what the real cost to them will be.
    –A 20 yr. mortgage of $2.65MM at 3.45% per year will cost Restonians about $184,000 per year.
    –The balloon payment at the end of the 10-year life of the mortgage will cost about $1,551,000.
    –The various operating costs described above will cost about $33,000 the first year and escalate due to 3% inflation to about $43,000 in Year 10, totaling about $350,000 over the decade.
    –The preceding assumes no property tax payments for the property.
    –It also assumes no capital improvements on the property–which is not realistic unless we want to extend its purpose as an RE marketing center. And that gets us to the lack of any reasonably declarative stated RA purpose for the building as it exists, might be modified, or might be replaced by, say, an indoor tennis center.

    All tolled, the above will cost each Restonian household about $150 over the ten years–an added $15 per year on average (probably starting at $13 and escalating to $17 over the decade). If we include a million dollars in capital costs for major renovations and repairs to the facility, that could cost about an additional $1,000,000 and add another $40 over the decade or $4 per year to your HOA fees. So are you ready to pay an additional $15 to more than $20 per year for at least a decade in your HOA fee to make this an RA property?

    And these are only the costs that RA has acknowledged so far. It will be important to follow-up on these at the February 26 and late March meetings to make sure we all know exactly how much this acquisition will at to our HOA fee and what purpose spending it will have.

    • Greg

      No, we are not ready to pay extra for this unneeded facility.

      Moreover, there is an existing, underused, RCC facility right across the street at Lake Anne.

      • novaer

        Keep in mind, Reston Association does not own or operate RCC whatsoever.

        • Greg

          Thank you; however, I still find the two entities (RA and RCC) redundant, each with underused existing facilities, and both cost us dearly. With talk of a new rec center on the way, we feel that way even more so.

    • Terry Maynard

      With all due apologies, RA has now published a “fact sheet” on its website (see http://www.reston.org/NewsCenter/NewsReleases/RAReleases.aspx?qenc=if7nvhr4VveFT6v2iBsqJQ%3d%3d&fqenc=HzT9ACzZbNs%3d ) that provides a more complete picture of the anticipated costs, revenues, etc. Using the same approach as above (i.e–including inflation, forgetting some of the one-time expenses, etc.), my revised estimate of the ten-year additional cost to Reston homeowners is $77 or about an additional $8 per year. And there is still probably something missing.

      I recommend that you all take a look at the “fact sheet” which really is a “pro forma” spreadsheet.

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