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Op-Ed: Time to Look at All the Tetra Issues

by RestonNow.com — September 6, 2016 at 2:45 pm 25 Comments

New Lake HouseThis is an op-ed by Reston resident Ed Abbott. It does not reflect the opinion of Reston Now.

In the next week or so, a Reston Association committee will select a consultant to review and evaluate the purchase and overrun expenses related to the Tetra office property, now known as the Lake House. The consultant will review, analyze and make recommendations to the Board on processes to prevent the recurrence of such a fiasco.

One of the steps in the consultant’s review will be to wade through the public record. The record is extensive and includes documents on the RA and Fairfax County websites as well articles in Reston Now and the Connection.

As the record shows, RA made numerous mistakes over the course of about two years. It is useful to enumerate those mistakes to remind everyone what a dismal job RA did in purchasing and managing the Tetra renovation. It might also provide some guidance to RA’s independent review consultant.

Let’s start with the $2.6 million price paid for the property. In reality, paid for two properties; one real and the other hypothetical. The real was the building as an office. That cost $1.3 million. The hypothetical, a restaurant, would cost an additional $1.35 million. The prices were based on a January 2015 appraisal for the property. RA requested that the appraiser include the restaurant.

What was not included in the appraisal is whether or not a restaurant could be sited on the property. However, a 2010 appraisal by the same appraiser goes into some detail on the restaurant question. In 2010, the appraiser said, “there is a difference of opinion” on whether or not the Tetra office-building site is suitable for a restaurant. Not a ringing endorsement of its likelihood.

Finally, and perhaps more importantly, the Tetra property is heavily protected from development by environmental laws and other restrictions. For example, the Tetra property is located in a Chesapeake Resource Protection Area and a flood plain. Both severely limit the expansion of the Tetra property into a restaurant. So whether it is county planning or environmental requirements, a restaurant at the location is very unlikely and certainly not worth an additional $1.35 million.

Next, let’s look at the closing contract. The contract includes a provision to lease back the property to the original owner from July 31, 2015, to the end of the year with two options to lease, each for additional six months. Unfortunately, the seller died in 2015 and his company decided not to pick up the leasing options.  This all seems reasonable under the circumstances. However, RA booked the revenue for the lease for all of 2016 leading to $100,000 unanticipated revenue shortfall.

Unfortunately, this is not the only unanticipated discrepancy.

Next, consider the Tetra Property Referendum Fact Sheet. As you may recall, RA used the fact sheet to convince RA members that the purchase was in their interest. The referendum passed by a narrow margin. The fact sheet included $259,000 for “capital improvements,” Including $250,000 for the interior and $9,000 for the grounds.  RA made the fact sheet available around March 2015.

There is no public record, as far as I can tell, of any member of the RA staff suggesting there was a problem with the “fact sheet” estimate until the end of May 2016, more than a year later.

In the meantime, the RA staff developed bid proposals, signed contracts and obtained work permits for electrical, mechanical, plumbing and interior work. Very little of the original structure was untouched.

The cost of the work totaled to $428,000, nearly double the quarter million dollars RA laid out in its “fact sheet.” I seriously doubt that the referendum would have passed if the real costs were known rather than the bogus costs in the “fact sheet” presented to the community.

But that is not the end. In addition to the extensive interior work, apparently $1.2 million of landscaping work may be needed, not the $9,000 stated in the “fact sheet.” An RA working group developed a list of items that should be completed and an outside company estimated the costs. The working group made it clear that the estimate was not their doing, but presented it to the RA Board anyway.  Let’s hope the RA staff is not seeking proposals for the work.

I have summarized above the major mistakes on the purchase and renovation of the Tetra Property. Many RA members may already know them. The independent review consultants surely will once they review the record and interview the Board and RA Staff. Some on the Board and staff believe the purpose of the review is to improve “process.”  Perhaps.

More importantly, the review must assign responsibility for the mistakes made. If no one is to blame for the Tetra fiasco, then no one, neither the Board or the RA staff is responsible. If that is true, then they should offer their resignation or be removed.

Something on your mind? Send a letter to the editor to [email protected].

  • WaitTheresMore

    Well said, Mr. Abbott. But you do not even mention problems with use of Tetra/Lake House. Despite assurances of all the needs for it during the referendum marketing campaign, there was no plan for its actual use. Another mistake was made when RA effectively let the Newport neighbors set and sharply restrict the hours it could be used!
    And, given the need to make up some of the monster cost overruns in fewer hours, the cost for rentals will be very high. So, community groups, nonprofits, charities organizations likely will be unable to afford to use it! Neighbors happy, but how is RA going to fill even the reduced hours to make a dent in paying the mortgage and cost over runs??

    • cRAzy

      Yet RA’s latest forecast for operating revenues this year is $175,000 and $388K for next year.

      They’ll be darn lucky to reach half of that revenue, meaning losses will be just that much larger than now estimated.

  • Irwin Flashman

    An excellent review of the major issues associated with the purchase and subsequent actions related to Tetra, Mr. Abbott.

    There are a few other issues. They include the following:

    What was the process by which Tetra was brought to the Board and why was the Board asked to act on holding a referendum on the matter with so little time to undertake due diligence? Why weren’t there any negotiations on the price to be paid for Tetra? There were no other bidders and two initially interested restaurants simply walked away after looking at the property. Who requested that the appraisers include a value for the possibility of the construction of a restaurant? In the face of the extremely remote possibility that this could be accomplished, this seems to have been a poorly founded action at best. How much money was expended by RA on pushing a favorable vote in the referendum? Why? Why wasn’t the opposition to the purchase accorded equal time and space on the RA website to state its position in opposition to the purchase? It was requested and denied.

    Why did most of the Board members and staff take any position with regard to the purchase? If anything, the Board should have simply set out the pros and cons of the purchase and let the members make up their minds. Instead, many Board members and the RA actively sought to influence the vote in favor of the purchase.

    These are just some of the questions which need to be examined in detail to have a full understanding of what happened and how the process both before and after the purchase went wrong.

  • JoeInReston

    “RA made the fact sheet available around March 2015.

    There is no public record, as far as I can tell, of any member of the RA staff suggesting there was a problem with the “fact sheet” estimate until the end of May 2016, more than a year later”

    I would like an explanation on why the estimates weren’t released until May 2016. RA elections were held in April. Is it a coincidence that the bad news was released after the election?

    • Greg

      More likely fraud and conspiracy.

  • JackInReston

    I don’t think this is “well-said” at all! It’s full of presumptions and innuendo. I would hope that a review of things would start without an assumption of wrong doing and simply focus on what happened.

    • Overrunhell

      Here, here. This is what I was hoping from day one. Investigate, identify any mistakes, and as importantly, validate what was done appropriately, then inform, and learn from it. Move on.

      This is a community matter, not a matter for the handful of cabal members that have an obvious agenda.

      • Paul

        Your comment makes clear that you are part of a cabal….”investigate, identify mistakes, validate what is appropriate, inform, and move on..” You clearly believe that no person should be held responsible for any mistakes made, just learn from it and move on. Did it ever occur to you that many people paying the ever rising RA fees actually want the Association to be managed well?

        • Overrunhell

          I clearly believe mistakes were made. I clearly believe a proper investigation is merited. I clearly believe the community is interested in an organization capable of continuous improvement. I clearly believe all boards should make their best efforts to set in place good governance policies for future boards to follow.

          But, I also clearly believe there is an obvious bias being demonstrated by a handful of people who don’t care. They have a clear agenda to disrupt, and force their own agenda.

          • cRAzy

            Other than getting rid of the idiots who brought us Tetra financial debacle, what is the “clear agenda to disrupt, and force their own agenda?
            And why would you think these same people wouldn’t do it again given the chance?

          • Overrunhell

            Unfortunately, you missed the point.

          • cRAzy

            …which is why I asked the questions!

    • Paul

      Read it again, facts are stated…documented facts, not presumptions and innuendo. A review from an independent group will likely show at a minimum poor management and decision making and at a maximum something worse.

  • cRAzy

    Oh, but certainly the RA’s “independent” Lake House review committee will detail all the faults, who made them, and call for resignations if not prosecutions.

    What, you don’t think that’s going to be done by an”independent” consulting group whose membership is appointed by an RA Board majority committee, whose work will be overseen by RA staff involved in the original decisions (and second guessed by potentially affected Board members, current and former), who is paid with RA (meaning our assessment fee) funds, and whose reporting will only be what RA tells it to report?

    How cynical of you.

  • Ming the Merciless

    If no one is to blame for the Tetra fiasco, then no one, neither the
    Board or the RA staff is responsible. If that is true, then they should
    offer their resignation or be removed.

    They will have to be removed because they are too arrogant to resign.

    • JoeInReston

      Very simple, come next election, vote for the non-incumbent candidate, the one that reads “This candidate is running unopposed”. Oh nevermind, maybe next time.

      • One Really

        100% percent agree. Come next election cycle vote for a entirely new board. Then they can accept the CEO resignation. An option to onboard would not be on the table.

        • Overrunhell

          The infamous recall petition still has just 22 signatures. The Facebook site just 55 likes. The Community does not care, and will continue to elect those who choose to volunteer.

          • JoeInReston

            The community needs to be given alternatives and more accurate information. This past election, several seats were not contested. This past election, the cost estimate overruns were not yet released. The prior election, the Tetra referendum materials were one sided. Very few people know about the local Reston sites like RestonNow.

          • Karen Goff

            Not necessarily true. Our readership averages abut 75K unique visitors a month, which is 15,000 more people than actually live in Reston.

  • 30yearsinreston

    The fix is in
    Demolishing the white elephant and putting in a dog park is a better option.

  • freestylergbb

    Bravo, keep the questions coming! The outrage continues …

  • Reston Crimewatcher

    Just wait til the numbers come out on leasing this space. They are already offering to waive some fee if you book w/in one week of the upcoming open house.

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