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Reston Association CEO Will Sacrifice Raise, Potential Bonus

by Karen Goff — June 15, 2016 at 2:45 pm 82 Comments

RA Money Savings/Credit: RA Reston Association CEO Cate Fulkerson says she will forgo $15,000 of her own salary raise and potential bonus as part of cost-savings measures to help make up for the $430,000 deficit caused by the Lake House renovation project.

That move is part of more than $355,000 in money-saving moves Fulkerson presented to the RA Board at an operations and budget meeting Saturday. Fulkerson said Wednesday she expects to find an additional $75,000 or more in permanent variances by the end of the month.

RA purchased the Lake House, then known as the Tetra building, for $2.65 million in July 2015. But costs soon began mounting, and RA’s Board of Directors voted in late May to move $430,000 from its operating fund to cover the Lake House overrun.

The deficit was caused by several factors, including the previous tenant opting not to rent back through 2016 and renovation costs that were far more expensive than forecast.

Fulkerson says there was $900,000 available in RA’s Operating Fund prior to moving the $430,000. She says it is her intent to put the $430,000 back in the fund without sacrificing any level of service for the organization.

Among some of the expected cost savers (see chart attached to this post for more specifics):

  • An open accounting manager position will not be filled. The previous employee, who retired after 35 years with RA, was paid $104,000 in salary and benefits.
  • A $62,000 land use position RA was to create will not happen in 2016 or 2017.
  • Condensing or leaving open some seasonal positions.

Fulkerson said some of the $40,000 in legal savings can be found by working with members to make repairs rather than referring violations directly to the legal department.

“That has resulted in far fewer cases going to court,” she said. “That saves money.”

Fulkerson said RA found more than $15,000 by selling four vehicles and one mower after newer models were purchased.

Fulkerson has previously said she would be working to find efficiencies and redundancies to have a more streamlined (and money-saving) way of doing business.

She said she expects to find further variances for savings by RA’s June 23 meeting.

Meanwhile, the RA Board will also discuss at that meeting how best to organize a task force — either community volunteers or a paid consultant — to do a thorough investigation into how the Tetra/Lake House cost spun out of control so quickly.

  • Robert Mowbray

    Looks like some of these “savings” are from items which should not have been included in the first place: unnecessary positions, unnecessary legal costs, efficiencies and redundancies to be identified. Sale of vehicles and mower should have been include in the income side of the original budget.,

    • Robert Harris

      This seems like a responsible response to a bad situation, would you rather RA just go on as if nothing needed to be done?

      • Guest

        Robert–RA is pretty much just going on “as if nothing needed to be done.” We’re still spending money on Tetra. We will incur massive additional costs using a consultant to examine the pathetic performance of RA and the Board in getting us into this mess. And the list could go on.

      • Robert Mowbray

        Certainly not, but the fact that funds are available in the approved budget suggests that those responsible for preparing and approving the budget were not as careful with our money as they should have been.

      • Why do you bother?

        She should forfeit her salary for the rest of her term – as should the other board members.

        • LC

          Aren’t board positions voluntary?

          • Why do you bother?

            Not the CEO

          • LC

            I didn’t say the CEO. I was referring to your comment of “as should the other board members”….I don’t think they get paid.

  • Thomas Day

    Thank you, Cate.

    • cRAzy

      for what?

    • Scott H

      Did she resign?
      If so, then Yes, Thank you Kate for doing the right thing in the wake of your miserable handling of the money we are forced to pay you so you can oversee obviously bad real estate deals.

  • Break even now

    If worse comes to worse sell the lake house for 70k, break even.

    • 30yearsinreston

      Or demolish it

      • Dodge

        That will cost $2.6mil by RA’s estimate…

  • Sue E

    I think this is a bit of progress. At least it shows some awareness of community concern and addresses current budge issues. That said, if this project was my responsibility at work, I would not receive a salary increase or bonus, and it would not be my “sacrifice” to forego part of my incenive pay.Presenting this as a sacrifice just makes it sound like the CEO is not really being asked to take responsibility. I hope the independent task force really is independent and staffed by members qualified to conduct a thorough review.

    • LakeNewportLady

      Well to be fair I’m not sure Cate said it was a “sacrifice”…it may be the term Reston Now chose to use.

      • Karen Goff

        Yes. completely my word.

  • John Lovaas

    I commend RA CEO Cate Fulkerson for standing up and taking a personal financial hit to help deal with the Tetra cost overruns. This is the second time she has acknowledged a role in the fiasco.
    While she no doubt had a role, it seems clear that she certainly was not alone in getting RA into the Tetra deal nor the rehab cost overruns. It is likely some staff did less than great work, and it is abundantly clear that Board members involved iin the purchase decision and oversight on the rehab process failed in those roles somewhere along the way. Yet, not a one has acknowledged any culpability.
    Ms. Fulkerson is setting the right example, a lonely one thus far.

    • Robert Mowbray

      Of course some of the board members most responsible are no longer there.

      • John Farrell

        But they’re running next Spring

        • Robert Mowbray

          I wasn’r aware of that. Hope someone will run against them.

    • Guest

      I will commend her only if she steps down voluntarily after the waste she has imposed on RA members.

    • John Higgins

      Agree

    • 30yearsinreston

      RA take culpability ?
      On what planet is that

  • Guest

    Wait a minute, folks! Raises are earned. Fulkerson has not earned one so how can she budget it, and then take it away from herself. This is pretty indicative of the voodoo budgeting done at RA.

    And, as someone else says, what about the other culprits in this Tetra financial lie?

    Why not hire the land use guy for $62K? Not to do so means we’re paying the RA land use attorney to do most of this work–at a much higher price. Another false savings.

    And why is $900,000 just lying around in the Operations Fund that isn’t budgeted/committed to some use? Shouldn’t it be in some RA reserve somewhere?

    When will this pathetic financial management stop?

    • Overrunhell

      $65K for the land use guy. Yea, he’ll sign up for that.

  • Visionary

    Yeah…On behalf of all of Reston I think its fair to say they need to be giving up their jobs, not their unearned bonuses and salaries. RA is horrendous, the sooner they go, the better.

  • Reston Realist

    One thing that I still cannot understand is how RA negotiated a contract with the seller which included a $100k leaseback by the Seller and then not withhold that $100k from proceeds at closing? If the Seller agreed to leaseback the premises for one year for $100k — then that rent payment should have come out of Seller’s proceeds at settlement rather than 12 monthly payments of $8,333. Especially when you consider how much RA overpaid for this albatross.

    • 30yearsinreston

      Ask the President who ‘negotiated’ the deal
      She has years of real estate ‘experience’

    • Why do you bother?

      There was no contract.

      • Reston Realist

        why do you say that?

        • Why do you bother?

          Because there wasn’t. Former owner said he would. That was the entirety of the “agreement.”

          • Reston Realist

            That’s even more insane….. So RA counted the $100k as revenue based on the unwritten “promise” of the Seller?

          • Why do you bother?

            Yeppers.

          • John Higgins

            Minor correction: there was, indeed, a contract. It can be read on the RA web site. ( at the site, do a search on the phrase “Conditional purchase contract for Tetra”) The contract obligated the seller to lease the facility from the closing date until Dec 31, 2015. Thereafter, the seller had the option, but not obligation, to renew the lease for two six-month terms. The seller met his obligation and RA received all rent it ws due.

  • EliteinReston

    Please tell us the CEO’s current annual salary, when the next planned raises for RA are scheduled and what percent the average raise will be.

    • Scott H

      The magical Google says she earned $180K. I think I see a place where some of the remaining $75K shortfall could come from.

      How is it that everyone of the ‘stupid’ reston residents on this website instinctively knew Tetra was a bad deal, but the people paid to figure this out could not?

  • jvb11

    These are good moves and appreciated. I think, in the end, that the purchase of the Lake House will be a plus to expand the children’s programs. Glad that the RA is starting to streamline other areas to pay for any overruns.

    • Guest

      Why is RA competing with any number of commercial (profit & non-profit) after school programs? Why should my RA fees be used to subsidize a personal expense for parents of kids?

      • jvb11

        I am glad they are. I have run into situations where summers can be a real problem when private and non-profit centers have run out of space.

        • Scott H

          and you think the Lakehouse has an unlimited amount of space that will always magically have room for your kid?

      • Overrunhell

        Actually, the competition which is taking a lot more of your hard earned dollars is the County’s Reston Community Center, not RA. Ever see how much you’re paying into Special Tax District # 5, on top of your regular county taxes?

        • John Higgins

          Just to keep us talking about the same things, the proposed Lake House program is seen as supplementing the School Age Child Care (SACC) program offered by Fairfax County (not RCC). That program is generally at full capacity. It is fair to question whether RA ought to be in the child care business.
          Some of that child care will take place at Brown’s Chapel, and will represent a net revenue for RA. Likewise, there is a net revenue from the Lake House portion of the program, but that point is lost is the parallel discussion of the high cost of owning and improving that facility.
          I was not a fan of the acquisition, but now that we have it, it’s good to see concrete plans to help pay for it.

        • Scott H

          Don’t justify bad behavior by pointing to other bad behavior…and why would you promote wasting more hard earned dollars at Tetra because we are already wasting hard earned dollars at RCC?
          SMH

          • Overrunhell

            Words must confuse you.

          • Scott H

            the logic of yours do.

    • Greg

      Nonsense. There are plenty of tax-paying child-care services available. The last thing that the RA should do is provide child care at the expense or assessment payers.

      • jvb11

        Greg, no worries. We can disagree. Take care.

    • Scott H

      “Think of the Children”…when something stinks, just say it’s for the children. Then anyone that disagrees can be vilified as hating children.

      Also, your theses is incorrect. VERY rosy projections of revenue were used to justify the purchase and ridiculous price paid. The Lake House will never be a net financial plus for RA.

  • Guest

    Just to help out here, I will give my $250MM MegaMillions jackpot to RA to defray the cost overruns of Tetra, just as soon as I earn it.

    • Dodge

      Ask the board, they will fund your endeavor as well. It’s a solid investment for Reston.

  • Greg

    How is it that the RA has $900k in the operating fund that is, apparently, not budgeted?

    And why does the RA need to spend a penny on land use?

    Does the RA have a legal department? Or is that outside counsel?

    • John Higgins

      RA has a very (perhaps, overly) robust supply of cash as workiing capital. Last year the treasurere pointed out to the board that this surplus cash could be used in lieu of an assessment increase. At the time, the surplus was estimated as $1.5 million to $2.4 million. RA used $1 million to offset expenses in 2016. The remainder could have been used to pay operating expenses in 2017, but it looks like the board will use most of it for Lake House.

      Outside Counsel. One firm that provides day-to-day legal services plus bill collection (yes, many of our neighbors are less than faithful in paying their assessments) and another firm to track and advise on significant development in Reston that indirectly affects all of us. That’s the land use part of your question.

  • Overrunhell

    There are many issues that need to be resolved with regard to the Tetra purchase, but to accuse this CEO of malfeasance is beyond me. She has continually demonstrated fairness, honesty, and ethical and legal awareness in her personal and professional relationships and activities while with RA.

    Focus on reforms, lessons learned, and policy changes that will help future boards avoid scenarios like this.

    • Chuck Morningwood

      She has also demonstrated incompetence by her inability to stop this obvious boondoggle.

      • Overrunhell

        Regarding Tetra, the board approves and tells the CEO what actions to take. Read the Bylaws, which is where we need to focus some of our attention.

        • cRAzy

          Well, apparently the CEO can commit to spending all she wants without Board approval–until she has to write the checks: http://reston2020.blogspot.com/2016/06/did-ra-spend-hundreds-of-thousands-of.html

          • LC

            Has anyone wondered why the Board doesn’t ask for frequent updates on the project and where it stands? Seems to me they only ask for updates every few months at a Board meeting. If they are in charge of overseeing a big project like this you’d think they would have set up weekly reviews of budget/schedule as most people would do when overseeing a big construction project.

          • Overrunhell

            Not how I interpret the spreadsheet. I see approved budget items and actuals. Not getting to the heart of the matter.

          • John Higgins

            I’m in general agreement with your call for a forward-looking approach to this whole situation. But an occasional glance in the rear view mirror is useful. I’m looking at the capital budget approved by the RA board last November. It shows $2,485,977 for capital expenditures, $219,668 to increase the reserve for future expenditures, and $131,000 for new capital asset purchases. That total, $2,936,645, does not include so much as a dime for the Lake House. To compare “approved budget items” to actuals, you have to begin with zero being approved. I can’t imagine, much less explain, how a basic thing like approving a budget escaped everyone’s attention. But it might suggest a starting point for reform.

          • Overrunhell

            John, you would certainly know best.

            It’s just that I’m seeing so many people with pitchforks out right now, using prefered data to their benefit, pushing harsh agendas to the likely outcome — failure to make meaningful changes. This is sad, as something serious has taken place, and it will never be addressed in the appropriate, professional way.

            I’m a strong believer in building a collaboration with the ones that may have done wrong. I need to see the documents, sit down with the board, staff, attorneys, property owners representatives, etc.

            I’ve done this many times, and like you (I suspect) have seen ad hoc watchdog groups and task forces fail because they did not have the power to make changes — only recommendations and noise. They didn’t think things out, rather they went into reactionary mode with no real mission.

            What a shame.

      • Tom

        Exactly, responsibility begins at the top.

    • 30yearsinreston

      Even the dogs in the street knew that this Tetra purchase was going to be a disaster from the start
      We haven’t seen the end of it yet

      • EliteinReston

        Same with the dogs at the Baron Cameron dog park. They have been barking incessantly about this purchase and it is driving a few people in Longwood Grove nuts.

    • Scott H

      We’ll Overrun, if you think Ms Fulkerson is of the highest ethical standards, then you must believe she is incompetent. There are no other options – you choose.
      From the start, RA members pointed out the ridiculousness of the Tetra purchase. RA, seemingly blind to reason, told the appraiser to base their assessment on false characteristics and then used the appraisal to aggressively sell the purchase and exorbitant price paid. And, as has been pointed out, if the purchase included an agreement that Tetra would lease the property for another year, how did RA manage to NOT protect that significant amount of money either through an enforceable contract or having that rent prepaid out of the proceeds from the sale. Furthermore, the revenue projections from the property were always rosy….I could go on.

      When you are making $180K in an elected position to manage a $16 Million budget funded by the personal money of members, you don’t get to make $3 Million dollar mistakes and say, “Sorry, let’s focus on reforms, lessons learned, and policy changes.”

      Nope. You get fired. The next CEO gets to focus on lessons learned and reforms.

      • Karen Goff

        One thing: CEO is not an elected position. It is a staff position.

        • Scott H

          Thank you for correcting me Karen. That should means it is easier to remove the CEO for poor performance. Unfortunately, the elected board is also culpable so they will never do it and with them still in power, it won’t matter anyway. Good times Reston! Enjoy the pools and make sure you only install the ugly $18 globe light, approved in 1990, on your front porch so that RA doesn’t have to refer you to legal department so they can save money wasted on the purchase of Tetra!

      • Overrunhell

        Actually, I don’t have to choose anything. When you propose some viable ideas regarding future governance, perhaps I’ll take interest.

        • Scott H

          You were the kid that took your ball and went home when you didn’t like something, weren’t you?

          Here’s an idea for governance. Don’t hoodwink the RA membership into wasting $3M.

          • Overrunhell

            No Scott, I was actually the guy who set out to complete the task at hand, win, and then bask in the sense of achievement. You should try it sometime, it’s a wonderful way to go through life.

          • Scott H

            oh..so you’re a poor winner who nobody likes. Makes sense. Funny that such an arrogant ‘winner’ would be so tolerant of the incompetence and questionable actions of RA staff. They deliberately misled the RA membership about the condition and value of Tetra. They didn’t protect the interests of the organization to secure the $100K in rent that was part of the justification, and now with an additional $400K shortfall, their answer is to under-staff and the CEO graciously forgoes her 8.33% raise and bonus.
            Let me tell you something, if, after the Tetra debacle, RA would have awarded Ms Fulkerson $1 of bonus or raise, then we have a serious mismanagement problem at RA.

  • John Farrell

    So General Fulkerson is taking a 6% cut in compensation?

    • 30yearsinreston

      ‘Future compensation’
      Not now

      • cRAzy

        “Future compensation” that she has not and would not earn.

  • 30yearsinreston

    No more ‘consultants’
    They borrow your watch to tell you the time

  • 30yearsinreston

    This reminds me of Wimpy in the Popeye cartoons
    ‘ I will gladly pay you tomorrow for a hamburger today’

  • 30yearsinreston

    Where do I get a job where pay raises are a given

  • james dean

    good day…from last nights lake house working group meeting…ra is considering spending another $1.2 million for exterior, parking & landscape renovations…the tetra/lake house money pit continues to grow…& then theres the $2 + million for the central services renovations & what the pony barn has gone from $30k all the way up to $300k+… & what $100k-$200k or more to investigate what ra board, ceo & staff did wrong on tetra/lake house….ra board & staff don’t seem to have any hesitation on spending other people’s money….our ra members money

  • Eric Carr

    The Tetra property is fast becoming the beast that ate our budget. The Lake House Working Group wants another $1.2 million to make it look nicer on the outside. That brings the total rehab bill to over $2 million. For a property worth $1.2 million. So, in fact, this property really was worth nothing when we started, which is somewhat less than the $2.65 million we paid for it. With these new proposed changes, the total money spent on this thing will be almost $5 million!

    This is a black hole. It is sucking up all our resources. Let’s face it – our Board and CEO were suckered by Ken and his developer friend. I reiterate my plea from the 14 June BGC meeting: stop digging now. Pause. Develop a business plan for the property. Based on that plan, decide what the best option is for the property, to include bulldozing it, selling it, or eating the money and turning it into an actual community center that doesn’t cost $250/hour to rent. Any option should be on the table. Time to admit defeat.

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