In the debate over Reston Association purchasing the Tetra property at Lake Newport, a major source of frustration has been RA’s refusal to release the Feb. 4, 2015 appraisal until seven weeks later.
RA released the report only after two public hearings were held, the referendum question and fact sheet were finalized and approved by the RA board, and the $2.65 million dollar conditional sales contract was signed on March 27.
Appraisals like this are prepared to aid in assessing the value of a property, its condition, and any constraints its use or development may face. They can be an excellent tool in deciding whether a purchase contract ought to be signed and at what price, but Restonians did not have the opportunity to see this appraisal until the sales contract was already signed.
Had the Tetra property appraisal been made public immediately, thus providing RA members with a meaningful opportunity to comment before RA signed the sales contract, I believe we would not be having this debate or a referendum. There are so many major problems identified in the appraisal even RA’s single-minded board would probably not have decided to move forward.
The $2.65 million valuation is the obvious place to start. As RestonNow reported, based on comparable sales, the County assesses the value of this property at $1.25 million, less than half the sales price. The appraisal obtained by RA explains the large discrepancy: Their $2.65 million valuation is based on an RA-directed assumption of its “best and highest use” as a lakeside restaurant extending into the lake, which, of course, does not reflect the current state of the property.
Yet the appraisal also includes two “as is” Tetra property valuations, one based on comparable sales ($1.45 million) and one based on an income approach ($1.1 million). Both of these prices reflect the true current market value of the property and the price Restonians should be willing to pay. Moreover, they are consistent with the county’s assessment.
Assuming that there is a lakeside restaurant is only one of dozens of assumptions in the appraisal that led to that high valuation. There is a list of 18 assumptions in the appraisal and variations on the word “assume” appear in more than four dozen places in the 26-page appraisal, many of them by RA instruction. For example:
- “The purpose of this appraisal is to estimate the “as is” fee simple market value of the subject assuming by client instruction that restaurant uses are permitted.” (p.1)
- “We assume that there are no environmental conditions that would negatively affect any development or value of the property.” (p.10)
- “It is our understanding that the subject has deferred maintenance, but by client instruction, we have been informed to assume that any and all deferred maintenance currently existing at the subject as of the effective date of appraisal has been corrected . . .” (p.11)
The appraisal is also clear on the scope of the many easements on the property. Besides the non-exclusive RA easements referred to in the RA “fact sheet,” the appraisal describes eleven other easements (pp. 8-9). These easements generally preclude redevelopment of the site except for the current building’s location and a small area west of it that obviously reduce its value.
Most important, however, is a major environmental restriction on the property’s development. The appraisal states, “According to Fairfax County Chesapeake Bay Resource Protection Area (CBRPA) maps, Lake Newport is shown as a Resource Protection Area (RPA) and the subject directly abuts, and extends into or over it.” (p. 9)
The Virginia Department of Environmental Quality (DEQ) says that, in an RPA like this, the lake and the shoreline area within 100′ must be kept as is or restored to its natural condition if changes are made to prevent polluting runoff. The Tetra property cannot become a restaurant no matter how much RA’s Board wants to assume that one is there.
Had the RA Board shared this information with the community in a timely manner, many Restonians would have quickly pointed out the flaws in the property’s valuation and the impracticality, if not illegality, of a restaurant being located there. That’s why restaurants did not buy the property earlier.
Instead of transparency, however, the RA Board of Directors chose secrecy again in a move that discredits them, costs us, and undermines the community’s trust in its leaders.
Now it is up to all of us to vote “NO” on this ill-advised Tetra referendum question.
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