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Op-Ed: RA Spending is About to go Ballistic

by RestonNow.com — October 18, 2016 at 1:30 pm 27 Comments

Reston Association/Credit: RAThis is an op-ed from Reston resident and Reston 2020 member Terry Maynard. It does not represent the opinion of Reston Now. Something on your mind? Send a letter to [email protected] The editor reserves to make edits for style and clarity or reject submissions.

The Reston Association Board of Directors is in the midst of considering the RA budget for 2017 and will have a special meeting Wednesday (6:30 p.m. at RA headquarters).

The three key points to take away from the materials presented to the Board in recent months and in the package to be presented to the Board this month are this:

  • There is not one single place where RA has proposed a reduction in next year’s operating budget, much less elimination of a program, position, or activity; only additions of varying sizes need be considered by the Board. Apparently, everything RA is now doing or plans to do is absolutely essential and must be done again next year–with additions for inflation and new staffing, programs, and activities.
  • The proposed $2.9 million appropriation for the Repair & Replacement Reserve Fund (RRRF) is being driven by a simplistic, but reversible, policy prescription in the face of consultant advice that more than $1 million less is needed, the proposed capital spending next year is less than two-thirds of what the policy calls for appropriating to the fund, and existing RRRF reserves far exceed any RA requirement.
  • As a result, RA staff is proposing (and the Board appears to be favoring) a budget that would require Restonians’ assessment fees to jump by 8.3 percent from $657 in 2016 to $712 in 2017, a $55 increase. That’s the largest annual increase in homeowner assessment fees in the history of Reston Association.

How ridiculous!

Not unexpectedly, one of the key drivers of the increased budget is personnel costs. In fact, over the last five years, RA data show added personnel costs have comprised 45 percent of RA assessment fee increases — about $75 per household or $15 per year.

This year’s budget proposal includes the addition of six new staff positions to RA at a cost of $557,000, three of which costing $216,000 were in this year’s budget but dropped to help offset the near tripling of Tetra renovation expenses.

Despite its key role in RA expenses, personnel cost growth has never added more than $350,000 to the RA budget in any of the last five years according to RA. We see no reason that threshold should be exceeded now.

Why do we need to splurge on new RA employees and “merit” raises now? How have other recent personnel increases improved RA’s service to the community as an HOA? Why we need those three full-time positions next year if we could so easily do without them this year?  And why do we need more seasonal hires next year than this unless we can offset that addition by cutting more costly full-time positions?

In addition, why should another quarter-million dollars in added costs would go to cover “merit” (based on what?) and cost of benefit increases? Those additional expenditures will add $27 to Restonians’ assessment fees if approved.

RA’s capital reserve funds (yes, it has two) are the other key driver in the proposed increase in RA spending next year. Let’s start where we are: As of the end of August, there was a total of $6.3 million in the Repair & Replacement Reserve Fund (RRRF) and $326,000 in the New Capital Acquisition Reserve Fund (CAARF) according to the Treasurer’s monthly report.

The Capital Projects Budget for the RRRF for this year is $2.5 million, of which $891,000 had been spent by August, with a $1.9 million repair and replacement capital budget proposed for 2017. That’s $3.5 million in RRRF spending between now and the end of 2017, about 55 percent of the $6.3 million currently in the RRRF.

Despite the fact that the existing reserve RRRF balance will cover all proposed capital expenses through next year and still have $2.8 million in reserve, RA proposes adding $2.9 million or $140 per household to the RRRF in the 2017 budget, bringing the projected 2017 year-end total to $5.7 million after $1.9 million in capital expenditures. (The Finance Committee has suggested that up to $1 million of the RRRF funding could come from moving funds from excess operating account balances rather than totally funding the $2.9 million through assessment fee hikes.)

An investment of $96,000 is also planned for a new RA call management system next year. The key question is whether that is enough, too much, or not enough–and whether operating surpluses should be used.

In fact, the proposed $2.9 million transfer to the RRRF is not based on need. RA is only proposing $1.9 million in its RRRF expenditures next year. The $2.9 million proposal is based on an RA policy requirement for investment for adding 1/10th of the next decade’s forecast RRRF expenditures each year to the RRRF. That policy requirement can be overturned, however, by a 2/3 majority vote of the Board, so a lesser sum could be transferred to the RRRF if appropriate. A very good reason not to invest $2.9 million is that current and prospective RRRF balances substantially exceed all defined reserve requirements (now about $3.2 million).

For example, a study prepared by RA contractor Criterium Engineers last year, a required periodic reserve requirement analysis, said that year-end reserve levels of $4.6 million this year and next would be adequate to meet RA needs. That means RA would have $1.1 million in excess reserves by the end of 2017 if it adds $2.9 million to reserves next year.   To just meet the $4.6 million called for in the reserve study, RA would need to add only $1.8 million or $87 per household.

The fact  is that neither the RA staff nor the RA Board has taken the time to determine whether Criterium’s recommended $4.6 million 2017 year-end balance is sufficient or some larger sum is needed for the RRRF.

The $1.8 million investment in the RRRF called for by Criterium may be sufficient to meet the reserve requirements laid out last year for 2017, but it may not be adequate to meet RA’s longer term requirements.

The $2.9 million in the proposed RA budget appear to be excessive, especially since RRRF reserves now exceed all requirements and the additional proposed sums have not been explained, much less justified.

Neither the RA Board nor staff has validated the studies by Criterium that either the short- or long-term capital reserve levels are correct (or even why they’re different), nor have they examined whether next year’s proposed $1.9 million capital budget is inadequate, excessive, or reasonable.

In short, neither the RA staff nor board know whether next year’s proposed budget and your proposed assessment fee increase are reasonable, but they are moving forward nonetheless.

If you think the proposed budget and homeowners’ assessments are out of line, now is the time to speak up. Otherwise, be prepared for unwarranted spending and a much higher assessment bill next year.

 

Terry Maynard, Co-Chair

Reston 20/20 Committee

  • One Really

    Can I be the first to say I am glad I don’t live in Reston anymore. Just close enough to enough the pools and trails.

    • Scott H

      We are glad as well. Feel free to not comment on a private organization you don’t belong to and feel free to stay off the trails that you no longer help sustain.

      • One Really

        Well, when RA takes over maintenance of the W&OD and the CCT isn’t on the Glade trail. I will stay off I promise.

    • Greg

      You do pay to use the pools, don’t you?

      • One Really

        Sure do!

  • The Constitutionalist

    Can’t say I didn’t see this coming…

  • Jenny Gibbers

    I think is time to privatise Reston, before its too late.

    http://isil.org/the-town-that-privatized-everything/

    Since we are just miles outside the beltway success is guaranteed.

  • Scott H

    I will agree with 90% of this OP-ED.
    RA simply needs to do less. How many residents can say they receive $700 worth of benefit from RA each year?

    That said, it is not reasonable to say that RA employees do not deserve a ‘merit’ increase with a broad brush stroke. Good people who grow in their job will warrant a raise or they will depart.

    As someone who spent a fair amount of time on a cluster HOA Board, I am 100% in support of funding Capital Reserve accounts as we go. Paying a little now will prevent special assessments and large increases in the future. That said, RA appears flush with Capital dollars that it cannot spend and I have not seen a reason that the cash is needed (ie some large expenditure 5-10 yrs from now that must be planned for).

    Just remember this.
    Whether it’s a government, a huge corporation, or a large association like RA, a bureaucracy will also seek to sustain itself first. No one at RA is going to seek to lessen their influence or the amount of people/dollars they command. Left to it’s own devices, RA will always seek to do more and hire more people.

    It is up to the membership to make clear what services we want RA to perform and are willing to pay for.

    • Greg

      RA never listens. They were told, through an expensive referendum, to not include pool and tennis fees in the general assessment. They did so anyway.

      They were told not to hire a money manager or to invest in high-risk investments. They did so anyway and lost tens of thousands of dollars.

      They were told, again through an expensive referendum, they could build a HQ building and cut rent from the budget, but they engaged in a long-term expensive lease for much more space than they need in a terrible location.

      They were told not to put a bubble over a pool very close to homes. They did so anyway and made many unhappy.

      They were told, through expensive consultants, to close lesser used facilities (Shadowood and Tall Oaks pools come to mind) and redevelop others into four-season amenities — rather than the six- to eight-week obsolete, tiny, hidden-in-the-overgrown-trees pools that are barely used.

      They have spent hundreds of thousands of RA member assessment dollars on legal fees for dubious purposes with little, if anything, to show (land use, planning, and related matters beyond the scope of a homeowners’ association).

      They were told to shut down the propaganda piece called the Reston magazine, but still it consumes resources, comes unwanted in the mail and goes straight into the trash.

      And, of course, they mislead and lie of late with the Tetra debacle.

      • Mike M

        All direct hits!

        Meanwhile, what we once knew as Reston is being gutted from the heart outward. What exactly will Reston be in five years? Will RA even be relevant?

        By the way, my neighborhood not far south of Sunrise Valley is getting pelted with mass-produced offers to buy our houses. I have been waiting for the development to creep south and transform those neighborhoods into high density. Looks like the reconnaissance is on.

        • One Really

          How far south (up to Fox Mill Rd)? I’ve been waiting to see when we’re in the crosshairs

          • Mike M

            I don’t know how far south. I am North and east of there. But it seems I recall a proposal by the County to sell the park n ride lot at Reston ParkWay and Foxmill for “workforce” housing. Gag! So who knows what’s in the works. The citizens will be the last.

  • Can’t Take This Any More

    Exactly who among us wants the Reston Association to expand? No one I have ever met, and I’ve lived here for 20 years.

  • Wilson

    The Reston Board is filled with a dangerous combination of ignorance and confidence. It’s well past time to stop this nonsense.

    • ItsRigged

      The RA board is elected by the RA membership. The RA membership complains about the RA board. The voter turnout for RA Board elections is abysmal. Stop blaming the board and go get people to vote.

      • 30yearsinreston

        no onme wants to vote for any of them them
        They are clones of each other

    • BOHICA

      When will they realize that they are a Homeowner’s Association & not a cradle to grave fulfillment center. They are so full of power & don’t care about us or what we think. A 3% raise…social security is giving 0.03%.

    • Rational Reston

      You forgot arrogance

  • Keltic

    Very good points. Reston is not a corporation, it’s a citizen’s association.

    • cRAzy

      Officially, a non-profit corporation.

    • Greg

      Yes it is a corporation.

      RESTON ASSOCIATION
      SCC ID: 01260140
      Entity Type: Corporation
      Jurisdiction of Formation: VA
      Date of Formation/Registration: 4/22/1970
      Status: Active

      https://sccefile.scc.virginia.gov/Business/0126014

  • Ann Youngren

    If the current RA employees would actually do their jobs we would not need extra hires. I am talking about the office staff, not the ground keepers and maintenance
    people.

  • A K

    How do we, the residents, combat the RA? I have lived here my entire life (30+ years) and can’t wait to move because of the expenses. Not only do I pay RA, I also pay a cluster association, which has its own design rules as well. I pay near $1,500 to the cluster annually in addition to the RA assessment.

    How can we take back control of this excess??

    • Mike M

      1) Get candidates who aren’t a part of the problem and are committed to fixing it.
      2) Start campaigning now.
      3) Get funding for the end game.
      4) Get the lefties of Reston to vote their interests and not their hyptothetical and irrelevant conceptual values.

      • A K

        Sadly, it’s easier just to move.

  • 30yearsinreston

    RA should be abolished
    Do they do anything ?

  • james dean

    Ra CEO, staff & board are considering 2017 assessment of $741

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