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RA Members, Directors Have Questions on Tetra Purchase

by Karen Goff February 27, 2015 at 9:30 am 38 Comments

Tetra Building in Reston/Courtesy of Tetra Reston Association staff envisions a remodeled building on the shores of Lake Newport that can host anything from yoga classes to camp aftercare to a lovely wedding reception.

More importantly, it will be the missing link in nearly 100 acres of RA open and common space in North Reston.

That’s the picture that emerged Thursday as RA’s Board of Directors held the first of two public hearings on its intended purchase of the former visitors center.

RA is seeking to buy the 3.48-acre property that features a 3,128-square-foot building currently used as offices for Tetra commercial real estate. The purchase price will be $2.65 million, based on a recent appraisal, said RA CEO Cate Fulkerson.

See more details on the Letter of Intent to purchase, which was approved by the board on Thursday.

Fulkerson said there are no plans to repurpose the land as an indoor tennis center, which had been under consideration (and ultimately tabled due to cost and mixed community reaction) at adjacent land twice since 2009.

Adding the parcel, which is surrounded by other RA properties such as Lake Newport Tennis and Brown’s Chapel Park, would give the association 98 contiguous acres of open and community space, said Fulkerson.

RA President Ken Knueven said acquiring the Tetra property is a unique opportunity, both to ward off outside development and offer options for members.

“Our master plan effort for Phase 2 is to re-designate the area [which is currently zoned convenience center],” he said. “However, as it is zoned and according to the development plan in place today, an owner can come in and build 50 feet into lake and double its size. … even if we get a zoning change.”

“This is an opportunity to get total control in ownership over a piece of property that will give us one contiguous piece of land for use by the members,” said Knueven. “That is the intangible we have to continue to tell ourselves.

RA plans to put the issue to community referendum in April. There will be an additional public hearing on the subject March 26. Only 10 percent of households voting (or 1,751 in a pool of 17,506 eligible households) are needed for the referendum to pass, according to RA’s fact sheet on the topic.

The referendum question will look like this:

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

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?

Still, many of the directors, as well as the five members who spoke during the public hearing portion, had questions that remain to be answered.

Most of the concerns are financial. RA’s appraisal came in more than $1 million more than the county assessment. RA land use attorney John McBride explained that an appraiser is looking at one property while an assessor is looking at a county full of properties — in this case, small offices, which will not be the “highest and best use” for the property.

McBride said an appraisal done in 2010 valued the property at $2.7 million — and the current owners originally wanted that price.

The fact sheet draft further explains the difference between the appraisal and the assessment in this case, as well as outlines a five-year financial forecast.

Some financial details from RA CFO David Harris: RA intends to borrow the full $2.65 million at 3.45 percent. The loan is amortized over a 20-year period. The loan will mature in 10 years, at which time RA can pay the principal in full, pay part and refinance the rest or refinance it all. There is a $650,000 pledge from an unknown developer.

Settlement charges will likely cost $16,000. Projected revenue from camps and rentals is $123,000. It will cost RA about $250,000 to repurpose the building, and those costs are not expected to have a significant impact on repair and replacement reserves. The current owner will replace the roof and HVAC systems.

RA will lease the building back to Tetra at least through the end of 2015, but could extend for as long as 18 months. When the building becomes common property, RA will no longer have to pay taxes.

The financial estimate says there will be no impact on member assessments until 2019 and 2020, when $3.64 and $3.68 are estimated. However, those estimates come with the current number of households in the association(21,618 households, including the new Harrison Apartments) and not the 600 new units that are expected to join the association in the next five years.

“On the surface, this sounds like a pretty good opportunity,” said South Lakes Director Richard Chew. “The question, when all is said and done,  is does this deal make financial sense?”

Chew said he would like to know the cost of not doing the deal, if the association has any other projects that are higher priority and what else the developer proffer could be used for if this deal does not happen.

“We just don’t have a bucket of cash sitting around, wondering what to do with the money,” he said.

John Mendonça, a resident of nearby Greenwich Point, said he had concerns with the appraisal as well as the proffer.

“Did RA consider getting a different appraisal?” he asked the board. “The profit Tetra would be making is handsome, and it is not indicative of what is happening in market, where there is a 15-percent vacancy rate. Where is the $650,000 coming from? Is this a certainty or is it wishful thinking? I am also concerned that the programming slated for property could duplicate county and RCC offerings.”

Other members wanted to know how RA would ensure neighbors that noise from parties would not bother them at night and whether RA, essentially a homeowners association, should be competing with hotels for event rental space.

Tammi Petrine, a resident who has been outspoken on many development issues in recent years, said she was also concerned with noise, as well as whether RA had conducted a structural inspection.

She also said she hoped this would not be the return of the indoor tennis issue.

“Will you be able to swear, to ‘cross my heart and hope to die, stick a needle in my eye’ swear that this is not the way to get indoor tennis in through the back door?” she said.

 

  • Lando C.

    Borrow $2.65 million to improve and renovate pools? Yes. $2.65 million to keep someone from building a nice restaurant on Lake Newport? Not just no, but F. no.

    • Greg

      Close, permanently, the very pools that the highly paid consultants (yes, more than one) recommended. Borrow nothing and LOWER assessments.

      • FULL TIME BOJANGLER

        I agree. Borrow nothing and lower assessments. In 10 years the 2.5 million will have to be refinanced. Interest rates will almost surely be considerably higher than they are today. What then?

      • Mike M

        But, but bureacracies must expand until they kill their host. No?

      • Pool_Boy

        Dude,
        Reston is about 3 things, Pools, Schools, and Tennis. It is a nice place for a reason. Want lower/no assessments? MOVE TO HERNDON.

        • Greg

          Underused pools: closed 9 – 10 months of the year yes; Schools: no – Fairfax County. Tennis? Fewer than 10 percent of residents ever step foot on the courts — none of which are indoors, of course. Regardless, if RA is about those things, then we definitely share common ground that this contemplated purchase does not fit with what’s Reston and should not be pursued.

          As to moving, also off topic, we can’t afford to live in Herndon. There’s not enough social housing there. The little they have does not have granite counters and stainless-steel appliances.

        • I feel as if you are biased for some reason pool boy, but I can’t put my finger on why…
          🙂

        • Mike M

          Tennis? Says who?
          Schools? That the County, . . . Dude.

        • Cluster Tycoon

          you cannot play tennis in RA unless you have a permit. even if you just tried to play against a wall, you still need a permit. if you look at leagues etc most of them are outside of RA the same goes for tournaments. i would agree though, RA has a strong, active and competitive swim community but again without a permit its not possible. the enforcer would take you down for questioning and you would get your name entered into a secret database. i would be careful pool boy

    • Mike M

      I know! Let them build the restaurant but bedevil them to pieces over the color of their doors and the tone of their siding! They could take forver to consider their changes then give them recommendations such as “Use the blue brick currently in place” (Yes, I know there’s no blue brick!) Our sensitive artistes at the DRB could grind them down so badly, they’d pay RA to take it off their hands. They would eventually run out and jump off their own peer!

  • I personally saw the purchase of the Tetra Property as an easy way to ensure no unwanted development were to take place at that location, but the price tag does make me take pause. There are alternative ways though RA can try to lower the risk of such a thing happening, but it would require action from the county.

    The main alternative I see is to pressure the county to change the zoning designation from convenience to common area, that way RA would be able to continue renting for the parking without high risk of new development in the area. By pushing the county to change the designation, the building proper would also be limited in what it could be used for, dramatically raising the possibility of it being purchased by someone that ends up renting it out for events anyway. If that were to happen, I would see nothing wrong with RA occasionally renting out the space if it would need it for an event or class.

    That being said, none of that would be possible if the county decides not to change the zoning of the area. Without it we would run the risk of a building twice the size of the current one, with a deck piercing 50 feet into the lake.

    • Lando C.

      What is the tragedy if a deck is built out onto Lake Newport? Why does RA care if this building gets redeveloped? This deal keeps getting worse the more I think about it. Borrow money to fix up the pools, not to benefit the few residents on Lake Newport that might be affronted by redevelopment of the Tetra bldg.

      • The lake is not that large, so with the expansive deck a restaurant would essentially be facing people’s back yards. But i do agree with you that the price is too high. I think the second plan is really the way to go, but it requires the county to do something. I don’t know about you, but I don’t really have as much faith in the county doing the right thing as I used to.

        • Adrian Havill

          Lake? It’s a 12-acre pond.

        • Ming the Merciless

          A small lake with 43 houses around it, most of them less than 10 feet apart from each other, yeah you could see where those folks would be concerned about their privacy and wouldn’t want anything vulgar down there on the far shore of the lake.

          • Lando C.

            But should all of RA pay for it? They bought their homes KNOWING (or should have known) how the Tetra parcel was zoned.

          • Having spoken to someone from that area, they have been fighting the owner on this years prior to the association being involved. Most of them bought the homes when that property was still a visitors center, so there was no way of knowing it would be sold or made into a restaurant.
            The question you posed about if all of RA should pay for it is a fair point, but we must remember that we are a homeowners association first, and the association has a responsibility to keep home prices at a certain level. I personally live in an apartment, but I understand the fear of having the value of someones most prized asset lowered.

          • FULL TIME BOJANGLER

            WTF? “The association has a responsibility to keep home prices at a certain level”? What “level” is that exactly? That is a ridiculous statement. The association can’t control real estate price

          • I understand that, but homeowner associations have traditionally looked out for the housing prices of its members, i’m sorry if you see that as ridiculous. 🙁
            Thats why clusters have rules to keep neighborhoods uniform, and why covenants come break down your door if you repaint it, because when a uniform neighborhood begins to look mismatched, the value of the individual homes lower.
            My statement was also not intended to imply RA has any control of real estate, but in many small ways it does attempt to maintain them at a high level.
            I’m sorry if you misunderstood, you can always email me at [email protected] if you have any other misunderstandings 🙂

          • FULL TIME BOJANGLER

            Charles,

            Thanks for your response. IF they cared about housing prices of its members, they would not push more low income housing every chance they get. They would also let the RELAC customes update their HVAC systems without a doctor’s note. They would care about cleaning the garbage from roadways.

          • FTBJ’sAJerk

            Charles- you’ll learn that Bo Jangler just a hate-mongering troll- go read his/her bio for reference.

  • FULL TIME BOJANGLER

    Karen,

    Do you know if the remodeled building that “the regime” envisions will include a catering kitchen? To host wedding receptions, I think they would need one. Will the tennis players be able to enjoy full use of the courts (which are lighted for night play) during any private events? Who do they plan to hire to do the remodeling? Is that gonna be open for competitive bids or are they just going to choose whomever they like? Will guests at private parties be permitted to smoke (cigarettes, cigars, pipes, or electronic cigarettes) since the bldg is close to tennis courts and paths? Will they have a liquor license? Will there be a mandated closing time so neighbors are not disturbed by drunks after weddings that often go late into the night? How many people will the building hold for events (fire dept. safety) and is there enough parking for guests, caterers, bands, etc?

    My intention here is not to ask you for the answers to these questions, but to ferret out whether they have really thought this through?

    • Karen Goff

      These are all good questions. I don’t think they have gotten those specifics organized yet. Those would likely come if and when the project is a go.

  • Greg

    Why not sell it as a residential house? It’s surrounded, very closely on one side, by high-end housing and faces some of Reston’s most valuable residential properties across the lagoon.

  • Greg

    “There is a $650,000 pledge from an unknown developer.” What does this mean? Pledge for what?

    • Karen Goff

      It is a developer proffer that has been pledged, put not yet received. RA has declined to name the developer as of yet. It is from another project (Comstock?).

  • Adam Petersen

    $2.65 million is to much. They should get 3 different appraisals and not just trust one appraiser. If this property was allowed to hit the market I don’t see a lot of potential bidders. After the property sits a while they could get the property for much less. I don’t see a return on the investment at that price point especially after a large addition and a buildout. If they do buy the property they should just have the owner give them a credit for new HVAC and roof. Why would you ask the seller to replace both when you are planning an addition, reconfiguration, and repurposing of the property? Chances are the HVAC will have to be altered or replaced and the roof line could be completely changed. That money would be wasted.

  • MJay

    In my opinion, our homeowners association is mired in a period where the board is disconnected with its members causing a lack of trust. As such, I am inherently skeptical when they propose spending so much of our money. What in the budget does RA propose to be cut? How much will this cost in future raises to our assessments? Does RA have a plan to keep our assessments in check? Sometimes, I think the board needs to be reminded that RA is a homeowners association and not a municipal government. Until RA addresses how this will directly affect assessments, and develops a plan to cap or significantly limit raising our dues, I am voting “No” on this project.

    • I am currently running for north point director, and one of the things i want to do if I am elected is to implement a new yearly increase cap on assessments. With a cap on dues you would be better able to know what your assessments will look like in the future, rather than having to wait and see what comes out of RA headquarters every year. If you want more information feel free to email me at [email protected], or you can also read my 20 points plan on my #CharlesForReston facebook page!

      • Greg

        Why do the mandatory assessments (not optional dues) have to increase every year? By far more than the cost of living? Why are underused facilities still open and maintained — including pools for which lifeguards cannot be found? Why does RA, as MJay well noted, act as it is a municipal government rather than a POA? Why does the RA have so many staff and such posh facilities for itself?

        I do think that an assessment cap is a good start, and I concur with MJay that the Tetra facility should not be purchased by the RA.

        • Great questions!

          After looking at the 2010 and 2014 RA budget summary, I see that as necessary expenses go up, revenues are not going up at the same rate. by setting a cap, it would force us to look for efficiencies within RA and slow the organizations growth to the same rate of reston.

          About the underutilized facilities, I believe they are kept open because of the expected population boom that we will be experiencing in the coming years as a result of the silver line. To start cutting amenities now, before even the beginning of the new members arrive to their new apartments, i think would not be beneficial for the long term. That being said, when most of the developments are online there should be no hesitation in looking at systemically underperforming facilities for closer or conversion ( such as the new park near the lake anne area that was a pool).

          the last thing you mentioned is a very important point: RA seems to like to act as a municipal government more than a community association. I think this is mainly due to our size, but it is also a commonly held idea within RA that it is their proper role. I think that if reston wanted a municipal government, then we should have that conversation, but we cannot try to make a motorcycle into a family car.

          I hope I have been able to answer your questions alright! If you have anymore, feel free to email me!

      • Cluster Tycoon

        I like your idea of caps but you will likely run into heavy resistance with the board and will be singled out and kept out of loop with respect to whats going on. Its very hard to change the culture at RA and I just want you to be aware of this. Perhaps reconsider, what you promise and how you go about it. There may be other issues, under currents, but these will become more evident over time so lets not speculate.

  • Mike M

    So the self-serving tennis mafia is not behind this? What about those bothersome bocci ball bast-, . . . boys?

  • FULL TIME BOJANGLER

    It may be helpful for RA members to know what the monthly payments on a 2.65 million dollar loan are at current interest rates. And then what those payments will be if interest rates rise to 6 or 7 percent at the time of the refinance?? I do have an amortization schedule but it doesn’t go that high.

  • Ed Cacciapaglia

    Here’s the current county tax info on the property. We
    (RA Members) would be paying over double the tax assessed
    value. I have extreme difficulty believing Fairfax County
    is under assessing the property’s by well over 50%.

    MAP #: 0172 01 0022LAKE NEWPORT LLC1450 BARON CAMERON AVE

    ValuesTax Year2015Current Land$845,840Current Building$358,240Current Assessed Total$1,204,080Tax ExemptNONote
    Values HistoryTax YearLandBuildingAssessed TotalTax Exempt2015$845,840$358,240$1,204,080NO2014$845,840$402,530$1,248,370NO2013$772,550$420,090$1,192,640NO2012$772,550$431,610$1,204,160NO2011$919,150$384,160$1,303,310

  • JoeInReston

    At a little under $650, Reston has maxed out their annual assessments. Therefore, any potential move going forward should consider the impact on the budget. All things being equal, the philosophy, “don’t just do something, stand there” should prevail.

    So its disappointing that the RA is willing to spend so much money on a project that they haven’t thought out very well. They still don’t have an answer on what exactly they are going to do with the property. Its just something they think has great potential. That’s not good enough. Come back when you know what you want to do with the place, then we can assess the merits.

  • Constance (Connie) Hartke

    I’m listening to today’s Board of Supervisors meeting (streamed live on channel 16) and they are discussing some properties elsewhere in the county . . . and why the assessments are so much lower than the appraisals . . . and now questioning whether the Dept. of Tax Administration is assessing too low (and thus leaving money on the table the County should be receiving).

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