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RA Board Treasurer Proposes Moving Cash to Offset 2016 Assessments

by Karen Goff — October 5, 2015 at 9:30 am 19 Comments

Reston Association North Point Director Dannielle LaRosa is suggesting the Board of Directors to take a look at an operating fund surplus to see if it can be used to offset a member assessment increase for 2016 and 2017.

Member assessments for 2015 were $642. The board is currently holding a series of meetings to determine budget priorities for 2016 and 2017. The final budget will be voted on by the board — and the annual assessment amount set — in November.

According to the first draft of the biennial budget, the board is looking at a $675 assessment (a 5-percent increase) for 2016 and a $692 amount (3 percent over 2016) for 2017.

LaRosa made a presentation to the board on at its budget planning session on Thursday that looked at using available cash to possibly offset the rise in assessments.

LaRosa, the board’s treasurer, said she worked the numbers to “see if RA can limit our assessment increase.” She said she is looking only at operating cash flow, and not money already earmarked for various projects.

La Rosa pointed out that the cash balance in the associations’s operating fund was $2.9 million in 2010 and grew to $5.7 million at the end 0f 2014. The reserve balance was about $4 million the last several years, then shot up to $5.2 million in 2014.

“The cash available is about $2-3 million each year for the last few years,” said LaRosa. “If you took that money away, nothing is really going to change within the organization. But you can’t take the balance down to zero. That is kind of like flying without a safety net.”

RA CEO Cate Fulkerson says the increase in funds in the last few years are due to board resolutions that said there needed to be more money put in reserve and operating funds.

“We didn’t spend all we said we would, and we put more in,” said Fulkerson “We didn’t complete some of the work.”

LaRosa estimates that at the end of 2015, there will be $1.4 million available that could be used to offset a rise in assessments.

“Right now, as of today, the total cash we have is $13 million,” she said. “$6.2 million is for reserves and we can’t touch it. $4.4 million leftover estimate. That leaves us with with $2.5 million roughly in our accounts. $1.4 million has not been earmarked for use.”

“We still need to be very prudent. …. let’s look at how much assessment will go up; let’s look at how we can offset that.”

The board directed the fiscal committee to review LaRosa’s findings and report back by the Oct. 22 board of director’s meeting.

To see LaRosa’s full presentation, watch the budget session on You Tube. The presentation begins at the 1:50 mark.

  • Greg

    Inflation is 0; why do we need assessment increases at all? Tetra already? The taj mahal RA oversized offices? That money should be returned to the assessment payers and the assessment reduced. #smfh.

    • Zzzzz

      Tetra, lavish holiday party, performance bonuses, pay increases, etc.

    • Ming the Merciless

      The FCPS school board and Fairfax County are the RA’s role models. Ever known them to return “excess” tax money to the taxpayer and ask for less the next year? Never happens. There is always some creative new way to spend, spend, spend.

  • reston realist

    Not a bad idea in the short term.
    However is the expense side that has to be cut. Salaries are why too high because many of the staff are long term veterans who keep getting annual increases for do the same job and in some cases a lousy job.
    Cut programs. We need to scale back the Tennis program which benefits a few hundred people and has a budget of nearly $1m. Don’t duplicate what RCC does e.g. offering bus trips and outings.
    RA is HOME OWNERS association yet it tries to act as a community organizer and social services organization.
    Now with Tetra it wants to get into the day care and party/events venues

    • Mike M

      Agree with RA fees are too high, I would blame DRB and request turning this job over to the county (or outsourcing to Ireland perhaps, to frame cultural boundaries also). Dublin is a nice city even in its dumpy neighborhoods.
      That brings me to the next, why nobody cares. And that is because most people are more concerned about high cost of transportation service fees in this area. So maybe Reston should have its own toll gates, starting with the metro non-locals. All we need is a committee to get this started, I will be the lead on this.

  • Terry Maynard

    Over the next decade, the Tetra acquisition will require $1.9 million in mortgage payments alone and have a net operating loss of $700K–and that’s using RA’s grossly optimistic “fact sheet” assumptions about revenues. Over 20 years, the building will have a cumulative negative net cash flow of $2.0 million, again using RA’s assumptions.

    I think we know where most of that cash reserve generated by our assessment fees will go to limit RA assessment fee increases, especially in the next few years when the Tetra building is being renovated and not generating any income. And then what if RA has a real emergency for which those cash reserves were intended?

    The purchase was a horrendous financial decision by the Board and sold like a panacea to a trusting Reston public, totaling disregarding any semblance of balance in discussion or papers and rejecting criticisms from the public..

    • Reason8

      Agree with your comments regarding Tetra. All the more reason to not facilitate the RA’S avoiding accountability in the future.
      LaRosa is spot on. No one has asked (although your comment implies the answer)…where did all this excess cash come from? Were there program cut-backs? Were extraordinary cost savings identified? Or did the RA over-estimate how much they needed to assess members in the past?
      This cash was collected from members because they were told it was needed to operate RA. That was done in good faith, but it proves to have been wrong. The options now:
      1. Leave it in the bank for no purpose (Note, this is not a “reserve” it is simply a growing bank balance. LaRosa’s proposal addresses cash over and above the normal cash cushion the RA holds.)
      2. Use it to pay for programs beyond what the board would otherwise prudently approve. (The technical term for this is “bait and switch.)
      3. Return it to members by check or by way of assessment decrease.

  • vachamp

    RA is considering raising assessments by $33 for 2016 & another $17 for 2017.

    RA can make wise investments to preserve & improve RA without those
    type of assessment increases. RA’s budget & expenses can certainly be trimmed back. Assessment increases like those being proposed will be difficult for our young families, our senior citizens, our disabled neighbors, our low income families & more. There are plenty of budget line items that could be cut in order to keep the assessments lower.

    Some areas of concern… RA spends approx $120,000.00 for a
    glossy quarterly RA magazine. They print approx 85,000 copies &
    mail out approx 70,000. Does it have to be a glossy magazine? Do we
    really need to print 85,000 copies & mail out 70,000 copies.

    Some additional info, based on 2014 tax returns …Legal fees totaled:
    $645,448 in 2014. Chadwick Washington was our highest paid contractor
    (legal): $430,683; & an additional Odin, Feldman & Pittleman
    (legal- land use ) $139,731. Do we really need legal counsel to attend
    the RA board operations committee meetings? Do we really need legal
    counsel to attend all board meetings? & or perhaps we should
    explore hiring an in house legal staff person/people in order to
    minimize our legal expenses.

    Salaries for 2014: $6.5 million

    Top base salaries at RA were paid to CEO Cate Fulkerson ($180,000);
    Senior Director of Parks, Recreation and Community Resources Larry
    Butler ($129,076); CFO David Harris ($116,846) and Director of
    Communications Kirsten Carr ($108,039). Harris and Carr both left the
    association in 2015.

    There are plenty of ways for RA make wise investments in Reston to preserve
    & improve Reston while saving money & holding assessment
    increases down. You can review the budget info for yourself. I
    encourage you to do so & to contact the RA board.

    links to the RA budget docs are below

    https://www.reston.org/Portals/3/2015%20GENERAL/100115%20Meeting%20Materials_web%20version%20with%20Director%20questions.pdf

    https://www.reston.org/Portals/3/2015%20GENERAL/091615%20Work%20Session%20Meeting%20Materials.pdf

    https://www.reston.org/Portals/3/2015%20GENERAL/082414%20Meeting%20Materials.pdf

    https://www.reston.org/Portals/3/2015%20GENERAL/073015%20Meeting%20Materials_updated.pdf

    • LakeNewportLady

      Are you saying the RA magazine doesn’t make any money? I see tons and tons of ads in it….is it $120K more than whatever they collect in advertising?

      • Greg

        Very few print publications, including world-class ones, make enough money on advertising to survive today. Especially those that are (over) printed on expensive paper and mailed. It’s hard to imagine, let alone believe, that the publicity piece RA prints and mails for the liberals (artfully and imaginatively named Reston magazine) makes money for the RA. Worse still, many of those ads are for RA itself — pushing rentals of its underused facilities. What’s believable is that the magazine surely charges the RA for those very ads.

        • LakeNewportLady

          Interesting…could just be mailed out or at least give an option to receive an electronic copy (I realize not everyone in Reston is technology based)

  • Steve

    I do not know LaRosa or have anything against her desire to hold down assessments. I do believe that reserves should be tapped for emergencies only. That means the only way to check the rise in assessments is by focusing on the cost side. Most of us have no idea what those costs are; that’s why we elect a board to look out for us and make the tough decisions. I’ve often wondered how RA salaries compare to other homeowner associations or to local governments of similar size. I also have no idea whether RA’s pension plan is a defined benefit plan or a 401(k)-style plan and whether those costs have been rising. I have lived in Reston now for 28 years and the assessments long ago reached a tipping point for me. No one at RA has convinced me that the rising assessments are justified. I want to be on RA’s side but they do not do a good job of defending themselves. After all, these are the same folks who have the poor judgment to mail out a $600-plus bill a few days before Christmas.

    • Chuck Morningwood

      I’m on my cluster HoA. I can guarantee you that any salary getting paid to any RA Board Member is more than I’m getting paid by my community.

      • John Higgins

        You will be pleased to learn that RA board members are not paid a dime. Each director spends a substantial number of hours each month on board and committee meetings and supporting community events. It is a virtual part time job. Not once in the 18 years I have been following closely the board activities has anyone do much as suggested compensation. We won’t always agree with their actions, but the membership should respect and appreciate what they do for us — free.

        • Greg

          I thought they get free iPads, no?

          • John Higgins

            No, Greg, they are issued an iPad for RA business use. It must be returned to RA at get end of their term. By policy, they are not permitted to use it with personal email accounts.

        • Steve

          I was referring to RA employee salaries. Morningwood confused that with RA board salaries.

  • Greg

    While the slums of Reston, in the RA’s hidden, overgrown backyard, fester and decay. Take a drive through Pinecrest, or Woodwinds I and II or Shadowood, or along Valencia Way or in the dilapidated and failed Tall Oaks village center and judge for yourself. What, exactly, do RA’s highly compensated covenants administrators administer? How often does Ms. Cate Fulkerson, who costs RA about a quarter million dollars a year, tour these communities and note the decay?

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    Trail maintenance has been suspended and snow shoes will be on sale along with our new Halloween outfits. So come on down and check these deals out – buy one shoe, get second for free!

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