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Reston 2020 Has a Host of Questions on Lake House Deficit

by Karen Goff July 12, 2016 at 1:00 pm 18 Comments

New Lake HouseAs Reston Association gets ready to hire a firm to conduct an independent audit of how the Lake House project incurred a $430,000 cost overrun, advocacy group Reston 2020 has an eight-point plan it wants the RA Board of Directors to keep in mind.

The purchase of the former Reston Visitors Center and office space for Tetra Partners commercial real estate was approved by voter referendum in May of 2015. RA told members renovation costs for the 33-year-old building would be about $259,000. That number quickly grew to more than $600,000 as RA made improvements to turn the office space into flexible community space.

While RA’s Board of Directors has moved money from its operating fund to cover the deficit, it has also voted to discover exactly what went wrong — but that independent investigation may cost an additional six figures (depending on the length of the audit and the fees charged by a professional firm).

Meanwhile, the Lake House is now open for business. Renovations are complete and RA is charging rental fees for community events, as well as getting ready for an after-school care program this fall. All of those things will earn revenue for the project, RA projections show.

But Reston 2020 says that is too little too late.

“The issues begin with disclosing the details of discussions that led to the secret deal with Tetra Properties to the near tripling of the property’s renovation costs in 2016,” Reston 2020 officials said in a statement.

Reston 2020 says the capital cost overruns associated with the purchase (at about twice the building’s assessed value) and renovations (if more than the $1 million in grounds improvements are implemented) will put RA in the hole for about $2.9 million.

That will result in a cost of about $130 per RA household, according to 2020’s analysis. RA CEO Cate Fulkerson has said that members will not see an impact in their assessment due to the Tetra/Lake House project until 2018. Even then, RA estimates the impact for members will be less than $5 annually in 2018-2020.

Reston 2020 officials say they are concerned that RA spent more than $650,000 on renovations without passing a budget for them.

“Our list of key issues is based on RA documents available to the public as well as critical gaps in the availability of information essential to understanding RA’s decision making,” said Terry Maynard, Reston 20/20 Co-Chairman. “Without understanding the reasoning behind the decisions leading to the production of these documents and the hiding of others, we will be unable to prevent the waste of RA member assessment fees in the future.”

RA’s Board Governance Committee will meet Tuesday night for more discussion on on the independent contractor for the review. RA is currently seeking members with expertise in construction management, auditing and other areas to serve on the committee to hire the auditing firm.

See Reston 2020’s full report on its website.

  • Reston Crimewatcher

    Request all of the emails. Fulkerson’s, and all board members, committee members etc. Fulkerson has always reminded me of Hillary Clinton, so if she won’t give over ALL of her emails, you’ll know whether they are hiding anything other than gross imcompentence.

    • Guest

      Including the ones from their private servers and e-mail accounts.

      a mini-Hillary-gate

  • Chuck Morningwood

    Ms. Fulkerson has said earlier that she accepts responsibility for this. Please send my bill for $130 to her.

    • Bienvenido al barrio

      .

      • Chuck Morningwood

        Oh, look. I have my own personal Troll. Aren’t I special?

  • james dean

    every restonian should read the reston2020 piece….hopefully ra will appoint independent, qualified restonians to conduct this review…ra’s own cfo stated at a recent ra meeting that hiring an outside consultant to perform such a review could cost $80k or more….others have suggested that outside consultants performing such a review could end up costing ra members another $100k-$200k or more….at recent ra meetings the room has been full of ra members willing to voluntarily serve on such an independent review committee…these are ra members w/the knowledge, skills & experience to perform such a review…further ra also is discussing plans to pay outside consultants another $6k to $14k for ra member input/feedback on a proposed ra code of ethics on top of whatever ra already paid…in previous restonnow articles, ra members have commented on how easy it was to find a code of ethics on the internet that could have been revised for ra purposes….when is the ra board, ceo & staff going to stop wasting ra funds? whatever happened to the ra district meetings? couldnt ra circulate the proposed ra code of ethics & have district meetings to get ra input/feedback? ra has its own community engagement committee…but ra board & staff certainly dont seem to be engaged w/ra members. heres hoping ra members read the reston2020 piece on the tetra/lake house…also, please attend upcoming ra meetings to make your thoughts known…thanks

    • Greg
    • tmw313

      Very good observations. RA members are fortunate to have folks like you who stay involved. The RA spending 100,000 to pay for an investigation on why they spent 600,000 on renovations makes no sense. It is almost laughable. Spend, Spend, Spend.

    • Overrunhell

      Nobody reads the 2020 blog. Take your own unofficial survey, as I have, the next time your out and about in Reston. Nobody knows what it is, or why it exists. Nobody knows about Tetra, or Pony Barn, how the budget process works.

      Reston issues will only be resolved when the 98% decide they need to get involved. The recall website has shown just 21 signatures for several weeks now, 1000 is the goal.. The Facebook recall site still has around 50 likes, and I suspect half those people have no idea why they hit “like.”

  • Guest

    My verdict is already in regarding this controversy, that Ms. Fulkerson needs to resign and the board members who failed to conduct the appropriate level of due diligence before supporting this debacle should also stand down, with a new board elected by Reston residents. This state of affairs is unconscionable. I am certain that numerous RA assessment payers agree.

    • MonkeeSeeMonkeyDo

      Numerous RA assessment payers did not do their own due diligence and voted yes to purchase this debacle, hence we have a money pit and lots of finger pointing on whom is to blame. Take a look in the mirror to find the real culprit.

      • Greg

        Sorry. Buck stops with Fulkerson — and she needs to resign or be fired.

  • John Higgins

    I know this is a boring detail, but it must be understood to get the point I make below. There has never been a transfer of funds from RA’s Operating Fund to pay Lake House costs. Except for repair and replacement money and a small sum for future capital asset acquisitions, ALL of RA’s money is in its Operating Fund. It i nonsense to say money was transferred from the Ooperating Fund to the Operating Fund, and it obscures what is reay taking place.

    The RA finds itelf in a cash-rich situation. It has substantially more cash than needed to run the organization. That’s a good thing. Last year the board took part of that surplus and used it rather than further increase assessments. The remaining surplus is available to do the same in 2017 or a future year, unlesss, of course, it is used to pay Lake House costs, as the board voted to do. Thus, some $430,000 of potential assessment reductions are gone. That’ a very real impact on assessments, approximately $20 per member.

    To her credit, the CEO has identified savings of $400,000 in the current year budget. The board would do well to look at its 2017 budget before declaring these savings a “restoration of the surplus cash”. The budget calls for a $57 assessment increase next year. Even if the $400k is used to offset 2017 expenses, the RA will be looking to increase assessments by $800,000 ($40 per member). Add to that further Lake House losses and the cost of the independent review group. James Dean seems to be on the right track in his posting today.

    • Greg

      “The RA finds itelf (sic) in a cash-rich situation. It has substantially more cash than needed to run the organization.”

      Then why does the RA keep raising the assessment? In excess of inflation, no less? With at least $400,000 of fat in the current budget? $57 increase next year? Outrageous.

    • Overrunhell

      Thanks John. This pertains to the Pony Barn as well, which by-the-way you appeared supportive (your comment below). I believe you were on the when the new land use resolution was passed for additions, improvements, correct?

      “…The RA budget for the next two years has not been developed and won’t be approved by the board until the last quarter of this year. The board set up a reserve for new spending like this. So, either they will draw down the reserve or put aside $175,000 in 2016 and again in 2017 for this purpose (if this is the high priority on their spending list.) I think reserving for new investment is a great idea, but that plan shouldn’t be confused with an actual budget.

      The project has, indeed, morphed from a renovation to a reinvention. That’s not necessarily a bad thing. Can we afford it after the major investment in Tetra? As others have pointed out, it comes down to priorities. Note that RA ended 2014 with revenues in excess of expenses of $913,000. And that’s after deducting non-cash expense (depreciation) of $1.6 million.

      That comes close to a “wow”. And it makes a $350k investment sound quite affordable…”

      https://www.restonnow.com/2015/07/31/ra-approves-pony-barn-concept-but-must-find-350k-to-implement/#disqus_thread

      • John Higgins

        ORH, I was not on the board when Land Use Resolution 2 was adopted. My role as treasurer (a non-voting seat at the table) gave me some perspective and limited input. The resolution itself lays out a reasonable process to address changes to common area land use. I would be interested to hear if you have a different view of it.

        My comments on Pony Barn were directed to a decision that had not, at the time, been taken. A proposed budget item would allocate an additional $175k in 2016 to this project. I pointed out that RA had the money if (repeat, if) the board decided that using it for Pony Barn was higher on its priority list than other uses. It seems to me that there was no ranking process…using it for the Barn became an unspoken “given”, and that was, in my view, an error. I was not at the table to express that view, but as you note, I put it out there pubically for consideration. BTW, affordable should not be translated to wise or desirable.

  • Mike M

    I’m bored. Just another case of Democrats running up unsustainable bills in pursuit of dubious goals. This is interesting? New? It’s laughable that all the L-words in here are surprised and angry. Don’t look now, but the county is about to start a new program of re-allocating their profligate spending toward bad neighborhoods!

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