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Op-Ed: Why I Am Against RA’s Tetra Purchase

by RestonNow.com — April 6, 2015 at 1:00 pm 1,010 47 Comments

Tetra building This is an op-ed by Reston resident Irwin Flashman. It does not represent the opinions of Reston Now.

I have several major concerns about the proposed RA purchase of the Tetra Property. These include: The price for the property based on the appraisal report and RA’s rush to purchase without full information being made available to members and the RA approach on this matter.

The appraisal is said to be the source of the price of $2.65 million for the Tetra Property. The report actually has three different appraisal prices, using two different appraisal methodologies.

The $2.65 million price assumes the so-called highest-and best-use (retail, commercial) and further assumes that a restaurant of some 6,900 square feet would be built over a portion of the property that is under Lake Newport.

These assumptions favor the seller, not the buyer.There is no basis offered in the appraisal to support the feasibility of such assumptions.The basis for the restaurant assumption is the carefully phrased statement: “Building plans were prepared in 1981 indicating that it was possible to extend out into the lake further construction of a restaurant building.”(Report, p. 13)

While it may have been possible in 1981, it is not legally possible today. The proposed area of restaurant construction is within the Resource Protection Area under the Chesapeake Bay Protection Act, where nothing can be built. (See the corresponding map of the site, Report Appendix.)

So, how can this approach serve as a basis for the price? The use of this assumption as a basis for the $2.65 million in the face of these facts in my opinion is outrageous.

Other statements are presented in an effort to bolster the $2.65 million price. One is that the seller will not accept less than $2.7 million.Another is that the present owner claims two restaurants looked at the property as a possible location. What is not stated clearly is that they both walked away.Moreover, there is no claim that a restaurant is currently considering the property.

Also not noted in the report is that at one time in the past, a restaurant was
proposed to be built at the same spot and the Lake Newport residents successfully defeated it in court.

The appraisal considered the property as if vacant (no restaurant, but projecting use as a retail commercial center with the highest density possible) using the sales comparison approach and the income approach. The first of these yielded a value of $1.45 million. The second produced an estimated value of $1.09 million. Fairfax County’s assessed value for the property for 2014 was $1.25 million.

One should keep in mind that the RA has an easement over the property for parking and there are some 93 parking spots located on the property. Thus, the RA does not need to spend one penny to avail itself of the parking. Since the parking easement covers a very large portion of the property, that portion cannot be otherwise developed. Additionally, part of the property is under water.

Finally, the spillway for the dam of Lake Newport runs across the property and covers just about all of the property, except for the building itself. Nothing can be built within the path of the spillway. These factors do not appear to have been taken into account with the $2.65 million value or any other appraised value and no negative monetary value was assigned to these factors.

Thus, the development of the property to its highest possible retail commercial value is also, in my opinion, a complete fiction.

Other concerns related to the deteriorated state of the building, including a conference room at the center of the building which “exhibited a musty odor” (Report, p. 11) are not considered in the appraisal valuation.

There is no justification that I can see for the $2.65 million price. In fact, there appears to be overwhelming justification for a considerably lower price. The report’s even lower range of $1.09 million to $1.45 million is questionable.

While the County assessment of $1.25 million, which by law is required to be 100 percent valuation, may be reasonable for some potential buyers, for RA the price should be lower, because it already has the use of the parking spaces and should not have to pay for them again. So why has the RA agreed to pay $2.65 million? I can see no basis whatsoever for RA to pay this price.

Why has the RA rushed to have a referendum on the purchase, while preventing members from seeing the appraisal and contract? Why did RA not release those until after public hearings were concluded?

RA may argue that they were in negotiations and sharing this information would have impaired the negotiations. I think they would have impaired the negotiations, but not by giving the seller information it did not already have. The seller already knew of the condition of the building and also was well aware of the impediments to the development of the property. The
appraisal does not disfavor the seller.

The contract, of course, was well known to the seller. Had members been allowed to see the Appraisal Report before the two public hearings, undoubtedly they would have raised the questions I raise above, as well as others, and would have pressured the RA to stop the deal from going forward.

The simple facts of the manner in which the RA has gone about pushing through this deal should raise questions. The proposed acquisition was dropped into the laps of the RA Board (the majority of whom were unaware of the consideration of the matter before then) on Jan. 22. At that time, they were presented with a sales pitch as to why this was a good deal, without any
time for reflection, and asked to vote on a schedule for presentation of the project to the membership, along with a schedule for a referendum.

Although the vote was unanimously in favor of the schedule, many stated that they wanted more information and were clear that they were not thereby expressing their final approval. Even the subsequent vote on the Letter of Intent (LOI), without having all of the documentation available, was based, at least in part, on the fact that the LOI was not binding.

That the facts have not been clear and disclosed up front, is a further indication of the rush with which this proposed deal has been carried forward.

Finally, the so-called RA fact sheet on the Tetra Purchase is now in its 11th version. This seems to
be an evolving project, not well thought out with regard to the presentation of the purchase itself or the end use of the property. The fact of the rush and the lack of a clear plan presented at the beginning of the affair with all of the information does not engender a high level of trust and confidence that this is something on which the RA should spend $2.65 million of your
dollars, plus the financing charges and building maintenance and repair costs.

At this date, with the contract signed, there are two options remaining. Under the contract, RA can terminate the contract at any time up through April 25, 2015, without penalty and with the return of its deposit, upon its determination, in its sole discretion, that the property (including the improvements) and the personal property are not suitable for RA’s intended use. (See, Paragraph 3 of the Agreement.) It should do this without further ado. This will save the expense of holding the referendum — not insignificant — and avoid the disaster of overpaying for a property it does not need and for which it has no real plan.

The second opportunity is the referendum. This is obviously a more uncertain method for stopping the purchase. However, every person who reads the appraisal and the contract can arrive at no other conclusion than that the proposed purchase should be defeated and that he/she should vote against it.

Something on your mind? Send an op-ed to [email protected] Reston Now reserves the right to edit letters for style, spelling and other editorial purposes.

  • MJay

    Thank you for taking the time to provide such an in-depth and credible analysis of this pending sale. Hopefully a pragmatic explanation like this can get out to the RA members to balance what I perceive to be RA’s stilted numbers. Because all of the candidates and incumbents on the RA Board support this deal at the current price, perhaps a candidate or two can provide a counterpoint to Mr. Flashman’s column?

  • Barkley

    At least our outrage stopped them from spending a few grand on Bocce.

    • Sean

      What do Restonians have against a bocce court anyways? Bocce is fun and it gives old people something to do in the middle of the day.

      • Reston Realist

        I prefer naps in the middle of the day.

  • RestonRed

    Thank you Mr. Flashman for this information. I agree that RA should immediately terminate it’s contract to purchase Tetra. Going to referendum is a costly waste of time when it’s clear this purchase has had so many problems from the beginning.

  • JCSuperstar

    Irwin, I see from Reston Now, you demanded and received the voting records of all the Reston members for last year’s election. So, I have to ask. What are you doing with our information?

    • Reston Realist

      Whatever you do, DON’T look over your shoulder!

      • JCSuperstar

        I only worry during a full moon. We may have to get John Oliver to look at this guy.

    • ConcernedDuesPayer

      It would be great to use that info to target the most likely voters in the referendum and give them more complete details about this purchase. I’d be willing to assist.

      • JCSuperstar

        Great, now I have a few pissed off neighbors using everyone’s private voting information for their own purposes. What will Irwin do next, hmmmm.

        • John Farrell

          Who one votes for has only been secret for less than 100 years.

          That one has voted in an election has never been private infornation.

  • Adrian Havill

    It’s one thing to fight for or buy the golf course in order to provide and continue open space. But to speculate on a single building and hoping it will become a successful restaurant is the opposite. Does anyone at RA know anything about the restaurant business? You can’t even see the building from the road, thus no visibility. Will be a loser for sure which is why no food operation will ever make a bid.

    • JCSuperstar

      They said the same thing about Lake Anne Plaza across the street. A few developers disagreed. Remember the first time you tried to find Chez Francois?

      • edgyone

        Lake Ann plaza is a decaying monument to the terrible architecture celebrated in “Brown Town”. In that post modern wasteland more than half the retail spaces are for rent. Why? No draw. Just as there would be no draw at tetra. The deal is as shady as tree covered Reston.

    • Karen Goff

      You have some of the details mixed up. RA wants to PREVENT the space from becoming a restaurant. RA wants it to be community and recreational space + event rentals, not a restaurant (which is a possibility if someone else buys it).

      • Ming the Merciless

        Given the number of failed restaurants in Reston, the RA should be trying to encourage the opening of new restaurants, not prevent it.

        But we know that restaurants have already looked at the Tetra building and said “no thanks” so the “we are trying to stop a restaurant opening there” argument doesn’t really hold much water…

      • edgyone

        There is no reason to stop development of this forlorn property with no viable marketable value. I dare say that something is rotten in Denmark. On the face of it, think about the parcel in question, 3.5 acres, most people don’t even realize exist, hidden in the midst of trees a quarter mile away from the road. If you were in the business of locating a restaurant, why on earth would you chose there? Somebody is getting rich with this deal, stop drinking the Reston kool-aid. We need to dissolve this feudal court and return this area to AMERICA. I don’t get to vote for the CEO of Reston, why the hell do we pay taxes for him to spend as he wills. Wake up!

  • Eddie from Northpoint

    Thank You Mr. Flashman for a very thorough analysis. It seems this purchase doesn’t make sense on a number of different levels as you have aptly pointed out. Rushing into a referendum seems like a terrible waste of our money. At some point, under different circumstances, it might make sense, but not now. There certainly don’t seem to be any other qualified buyers right out there, and any other potential buyer would be facing the same obstacles, that RA is, with out the benefit of a parking easement, so why the rush?
    The RA leadership, specifically the CEO need to be held accountable for this half baked proposal without a proper analysis. I would hope the newly elected board takes this and some of the other recent missteps into account, when her performance and contract is evaluated. We clearly aren’t getting our money’s worth, and maybe a fresh change in the paid leadership is warranted.

  • JMCReston

    I don’t understand why RA is relying on this one appraiser’s opinion of value. I spent the majority of my past life in commercial real estate, including appraisal. It’s very rare that a purchase of this sort relies on just one appraisal; especially when a municipal entity is the purchaser. If RA is serious about buying this property – which for all reasons previously stated by others makes no sense – it is incumbent upon them to perform more due diligence and challenge the existing appraisal’s methodology and conclusion

  • freestylergbb

    Thank you for this analysis, which simply exacerbates my concerns about this outrageously pricey purchase based on uncertainies, other than some people’s grandiose ideas. Please post this on social media as well, everyone — FB, Twitter, etc. The Washington Post might also be a possible forum for another version of this piece.

    • Secret Observers

      ….concerns about this outrageously pricey purchase based on uncertainies, other than some people’s grandiose ideas……

      NOT some people’s grandiose ideas BUT some people’s certainties: $1.4 MIL (2.65-1.25) to secretly profit small group of individuals and publicly get away FOREVER from accountability…… unless somebodies likes Mr. Flashman or Mr. Farrell with good hearts and clear minds are watching closely and share with us publicly :):):) ………

      • freestylergbb

        Well put.

  • fed up

    Outrageous. The CEO acts as if Reston is her personal play-pen. The amount of wasted money is mind-blowing. No wonder our dues continue to ratchet up. Who owns Tetra and who is pushing this deal? Time for a personnel change.

    • Karen Goff

      Tetra partners owns the building – that is where their offices are and that is why we call it “The Tetra building.”

    • JCSuperstar

      fed up. Read, it’s a wonderful thing.

      • fed up

        Why not just join the Board JC? Or are you already on it? Do you think this is a fair market price? What is your assessment of the appraisal? And the density that it is based upon? Why the heck does RA need this property? An answer would be appreciated (I already know how to read).

        • JCSuperstar

          If you would bother reading the facts about this, on RestonNow, you’ll see this referendum has been discussed ad infinitum. I say just let it be the restaurant in the development plan.
          The county development plan states it can only be a restaurant/office.
          The site for the 6900 sq. ft. restaurant looks awesome over the lake next to the existing building.
          The owner of the building wants to sell it, so let the natural course of event take place.
          JC

          • fed up

            Fine with me. Let a commercial enterprise buy it. I sure don’t want to pay dues to purchase a property for twice it’s value and with no reasonable need or use for it.

          • JCSuperstar

            Cool.

          • fed up

            How and why did you edit your reply to me after I had responded to it? You changed your words and added a picture. Cute.
            Inexplicable and indefensible. A blatant attempt to discredit me. What is your purpose here JC? You clearly thought that I would miss the editing? Not Cool.

          • edgyone

            Because JC is getting a cut of the 2.7mil.

          • edgyone

            Except that a photo of a successful location. The exact opposite of the tetra property.

  • JCSuperstar

    This just in, Bibi Netanyahu to give speech regarding Tetra at next Reston Association Board meeting.
    http://drrichswier.com/wp-content/uploads/netanyahu-speech.jpg

  • Pat

    Please go to the Reston Association website, http://www.Reston.org. Click on Development and Future of Reston and then click on Tetra Property Purchase. Not to disqualify one individual’s decision, but it is worth noting that the 11-member RA Board of Directors researched the issue in depth, looked at the long range income potential, and voted unanimously to purchase the property for us all to enjoy – as community and open space.

    • Karen Goff

      They have only voted to put in a conditional contract and have the referendum. The purchase cannot go forward without a referendum by the members. So everyone should vote.

    • Reston Realist

      Actually, they didn’t research anything in depth and they sure didn’t want the public to know anything until they had signed the deal–subject to us mere mortals voting “NO” in a referendum. (How inconvenient!)

    • John Farrell

      Actually, Board member Richard Chew dissented on the Resolution.

      The problem with this Board’s action is that they haven’t done in-depth research, nor looked at long range potential.

      And they’ve made it very hard for the rest of us to do so.

      I would encourage you, Pat, to read the appraisal, the URL for which Karen has posted in an earlier story.

      This RA Board frequently demonstrates poor judgment and this is just the latest example. We cannot simply defer to them just because they hold that office.

      The RA Documents leave this decision properly to the membership.

    • Restonresident

      The board did not vote unanimously. There were two abstentions and one vote against and one absent member. Abstaining is a cop-out, or does it mean ” I just don’t care?”

  • LeftPolitico

    One of the commenters says that “perhaps a candidate or two can provide a counterpoint to Mr. Flashman’s column?” I happen to agree with what Mr. Flashman writes, but, actually, I would like any candidate or current board member to make any kind of a comment. I’m sure that most, if not all, of the current board members and incumbents read RestonNow. Unless there’s some legal reason that prevents a board member from commenting, let’s hear from you. And there is no legal reason that a board candidate cannot respond, so let’s hear from you.

  • edgyone

    WE MUST RISE UP AGAINST RESTON TYRANNY! STOP THIS DEAL OR WE WILL ALL BE PAYING FOR IT FOR YEARS TO COME!

  • Deborah from Southlakes

    This sounds like a poorly researched deal and a bad decision by RA.

    • edgyone

      No. It sounds like fraud. Why pay twice what something is worth? 1. It’s not your money. 2. It becomes your money after the deal is done. Who is the reston nobility accountable to?

  • JCSuperstar
  • fed up

    Vote NO. Ballots are in your mailbox. Tell your neighbors to vote NO on spending twice fair market value for this site. Circulate an e-mail with a link to this op-ed. Take action or see your dues increase for this wasteful, over-priced folly by a disconnected and uninformed Board.

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