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Op-Ed: Vote to Put an End to the Growing Tetra Mess

by RestonNow.com — January 11, 2017 at 10:15 am 40 Comments

Terry MaynardThis is an op-ed submitted by Terry Maynard, co-chair of the Reston 20/20 committee. It does not reflect the opinions of Reston Now.

Two years ago this month, under the leadership of former RA Board President Ken Kneuven, Reston’s homeowner association announced its deal with a local developer to purchase his property, the Tetra office building, for over twice its county-appraised value of $1.2 million. Thus began a long slide of Reston Association into bad governance and mismanagement.

How did this happen? We don’t know for sure, but we understand Kneuven and another former RA Board President, Rick Beyer, who lives on the shore of Lake Newport opposite the Tetra property, have been friends for some time. Beyer, who was active in supporting the RA Tetra purchase, and other Lake Newport homeowners were no doubt concerned that something untoward would happen to their view and, as a result, also their property values. It is not clear whether Beyer asked a favor from Kneuven in eliminating this risk by having RA pursue the purchase of the Tetra property, but what is clear is that after Kneuven left his RA post, he ended up working as a senior consultant in the company managed by Beyer.

As for the rest of us, RA and its Board justified paying $2.65 million in part by pointing out that a proposal had been drawn up to build a costly restaurant there twice the size of the Tetra building. RA didn’t bother to note, however, that the restaurant was never approved, nor would it have been given environmental restrictions and 14 easements on the property. Moreover, RA’s appraiser put the property’s “as is” value at just $1.1 million using the Income Approach, even lower than the county’s valuation. In fact, the Tetra property had been on and off the market with little interest for most of a decade.

Nonetheless, to sell the deal in a community referendum, RA “projected” that renovations, inside and out, would cost RA members just $259,000. To date, interior repairs alone have cost Restonians $692,000 — not counting $925,000 in seller contributions and a Comstock proffer to RA which could have been used for much better purposes — and an RA consultant projects proposed exterior improvements will cost $1.2 million.

On the other side of the ledger, RA projected rental income from a rent back agreement with the Tetra owners of more than $140,000 through 2016. Unfortunately, the sloppily written agreement allowed Tetra’s former owners to walk away at the end of 2015, resulting in an immediate $100,000 loss in RA revenues. RA scrambled to make up the shortfall, but — as of November — expected year-end cash flow losses reached $902,000, some $515,000 more than RA projected for 2016 during the Tetra referendum.

If publicly known at the time, these massive misstatements, mistakes, expenses and overruns would have doomed the purchase’s narrow community approval.

Indeed, the massive renovation cost overruns were not revealed until May 2016, although RA financial data indicated RA and presumably some Board members knew there would be huge overruns as early as February. Thus, RA members were denied that important information as they cast their ballots for RA Board members in February, including the re-election runs of two Board members who strongly supported the Tetra initiative, Eve Thompson and Danielle LaRosa. Of course, they won re-election in the absence of public knowledge of the huge cost overrun.

When the cost overruns were disclosed, even the complicit RA Board found this revealed reality a bit much. Under significant community pressure, it agreed last summer to contract for an independent review of the purchase and renovation.

After choosing to sign a pro bono $1 review contract with Mediaworld LLC, using a team of Reston volunteers expert in financial matters, a few members of the Board sabotaged its own by insisting on excessive RA control and contractor liability in multiple, lengthy contract drafts. A special Board meeting with the Mediaworld volunteers in December couldn’t salvage the negotiations — another obstructionist draft resulted — and the volunteers withdrew last week, explaining the multitude of reasons why.

The increasingly urgent question is: What are some members of RA’s Board and senior staff trying to conceal about the Tetra acquisition and renovation — and why? Did they engage in illegal, unethical or just plain stupid behavior? Unless there is a criminal investigation, the chances are dwindling Restonians will ever know who, how, why and when all this financial mischief occurred as the Board and staff continue to hide the truth any way they can. The future of honest, open, prudent governance in Reston has never looked more uncertain.

The RA Board 2017 election a month away is an opportunity to reverse the Board’s recent gross misbehavior. There are four openings and, if filled with candidates who seek to reform the RA Board and the way it does business, the Board could actually represent the interests of the community rather than the guilty. Pay attention to what candidates file and what they say about the handling of Tetra, including the need for an audit, the development of an RA ethics policy with teeth and openness in RA decision making. It could be your last chance in years for meaningful change in how our community is governed.

Terry Maynard, Co-Chair

Reston 20/20 Committee

  • TheRealODB

    I’ve said it before and I’ll say it again… When it comes to matters at hand in Reston, the first question one should ask is: WWTMD?

  • Areyou

    Outstanding OP-ED. Thank you for spelling it all out. It makes me sick to think the a RA Board president would put his own needs and desire above the association. To take a lucrative job with the homeowner who publically supported the purchase is ABSOLUTELY DISGRACEFUL! Should someone take legal action?

    • Reston Realist

      I think I may have missed something: Who was it that took a lucrative job from whom?

      • cRAzy

        Looks like Knueven from Beyer, maybe in exchange for pushing the purchase, I dunno

  • Wings!!

    I agree with Mr. Maynard 100%, but would also like to add that this could have been a Hooters.

    • cRAzy

      Even Rich Beyer might have liked that option!

    • Dong

      Bummer that would have been so much better

  • Nyla J.

    Other communities seem to manage just fine without an overarching association controlling the color beige citizens can paint with and eliminating leaves from walking paths.

    Why, exactly, do we need the RA, again? And how do we take them down? Whoever is willing to do that can have my vote for board.

    • Greg

      The magazine! That’s what we need!

      • vdiv

        You mean the propaganda mouthpiece that is telling us why we can’t put our broom closets on Air BnB or that we should just shut up about the unrestricted development?

        • Greg

          Yup—that’s the one — free advertising for the incumbents!

          I salute my burning bushes and English ivy every time that POS comes in the mail — which, of course, are always copiously stocked at Reston’s Home Depot!

  • Goyo Gallardo

    Another factor that hasn’t been raised is the utility of the renovated Tetra facility. As it is currently laid out it does not allow an acceptable flow for a single large event, but the glass walls preclude having multiple small events. That is, the interior renovations have not made the facility into a useful facility for the Reston community.

    • Clean the RA house

      Interesting points. How long has it been open, and can we as members request a report on how they are doing? Is the place sitting empty most of the time, or is it getting booked, and by whom?

      • Terry Maynard

        RA has been keeping the Board informed since May when the renovation budget overrun hit the public fan. In fact, program revenues have been running slightly less than half (-53%, -$93K) of what RA projected in May, so there is clearly some mix of disuse and underpaid from what was anticipated. Overall, cash losses in 2016 were more than a half-million dollars greater than forecast by RA in the Tetra referendum.

        Reston 20/20 took a quick look at the situation as of November and reported it here: http://reston2020.blogspot.com/2016/12/ra-overshoots-may-tetra-budget-for-2016_22.html

        • Clean the RA house

          Wow. I get angrier with each passing moment. Since, as outlined in another response above, legal action, criminal or civil, would in fact cost members even MORE money because we would have to pay the legal bills for the accused (perhaps thats why this sort of thing happens) and is therefore unlikely, what do we do? Can we, the members, force the sale of this money pit and cut our losses?? Is there some sort of process there?

  • Reston Realist

    Excellent statement Terry! My family and I appreciate the effort you have put forth helping to open up the community’s eyes to this debacle. There is no doubt in my mind that this was not a true arm’s length negotiated transaction. The benefit of the community was displaced for the interests and the enrichment of a few. Let’s vote the bums out and get a board whose priorities are in the right place.

  • Maybe all members of the board at that time should resign and then there could be a non personal interest decision made. A totally new board could do the job right.

  • Jimmy D

    This seems like quite a stretch. First off if it couldn’t become a restaurant as you contend why would Beyer collude to have it purchased? Not to mention that it’s a heck of a lot of pieces that had to fall into place to make this happen. Beyer has to convince Knueven who in turn has to convince Faulkerson and the entire Board and then the community. Sounds about as likely as having a tornado go through a junk yard and ending up with a Maserati.

    • Greg

      It was not that hard to do.

  • dudewe

    RA’s actions run deeper than just bad behavior, bad governance and mismanagement. RA was so intent on purchasing this property that they even monitored the voting to see if 20% of the RA membership would vote. (Without 20% voting the referendum would fail.) When they saw that the numbers would probably not meet the 20% criteria needed for the vote to count, they “beat the bushes” to get RA friendly members to vote. Even then, the referendum just passed.

    It is easy to blame the purchase just on bad judgment, mismanagement and gross misbehavior. It borders on criminality and it should be investigated as such by law enforcement officials….

  • Greendayer

    This was at best massive stupidity. At worse – gross negligence, malfeasance, and self-dealing. Someone needs to get to the bottom of this debacle and find out who and why.

  • Scout

    Ok – so here’s a stupid question – why haven’t criminal charges been pursued against the RA Board? Malfeasance at best – certainly the intricacies and relationships involved spell out criminal behavior – what does it take and how would we proceed to invoke criminal charges against this board.

    • Guest

      Criminal charges are brought by the Commonwealth Attorney, Ray Morrough. He could convene a grand jury to investigate.

      Maybe someone should ask him to do that.

      • Greg

        Based on what? Conversion? Unjust enrichment? Conspiracy? Fraud?

        White-collar crime rarely gets prosecuted.

        • guest

          Defalcation

          Diverting the assets of a not for profit to benefit an individual.

          • Greg

            Perhaps, but the defense is that the board (and voters in this case) approved the actors’ acts, no?

            Not so much the cost overruns, though.

          • Mike M

            Gadzooks! I just learned a new word!

      • Bohica

        If RA has nothing to hide why would they not allow an independent review by Mediaworld? RA coerced the appraiser to overvalue the property. The lender would not have approved the loan if the true value was stated. RA is out of control!!!!!!!!!!!

  • Greg

    Fulkerson has to be fired and the rest of the RA cleaned and disinfected down to the expensive floorboards. It’s infested with incompetents and a feckless board.

    Years and years of enriching Chadwick Washington to the tune of hundreds of thousands of dollars per year? Madness and doomed.

  • RoadApples

    Curious ? directed to the RA Board President/ Members at the time and also Kate Fulkerson (sp.):
    ‘Is there a rat in the woodpile?’

  • Clean the RA house

    Excellent, yet infuriating op ed. The whole thing is truely sickening when you see it all laid out like that. I’m ised to hearing of this sort of behavior at higher levels of gvmt, but it’s shocking (yet not really) to see it at this local level.

    So everyone keeps saying sue, prosecute. My question is, why has it not happened already? What would need to happen to get the ball rolling on either or both of those actions?

    • Greg

      Suing on the civil side requires money, lots of money. Someone or some group would have to mount the funds to initiate an action. Rescue Reston is one such group, but its focus is (or was) much more limited. For all we know, RR may have supported this boondoggle and might defend RA.

      Also, the remedy would be challenging to define. What are the financial damages? Is there an equitable (non financial) remedy that would be better suited? Keep in mind that if financial damages are awarded, it is the RA assessment payers who will pay…so, even if insurance covered the losses, it would be much like suing yourself. Likely, either the RA’s insurance would be terminated or the rates increased, and the assessment payers will pay for all of it.

      Individual directors could be sued for things like breach of fiduciary duty, waste and similar things, but the RA would almost surely pay their legal defense fees, and the case would likely take at least a year to conclude. Discovery is always time consuming and very expensive — and with RA’s wasteful, but expensive IT systems, it’s likely that the evidence may be missing, garbled or otherwise unavailable.

      On the criminal side — the Commonwealth’s attorney would have to initiate the case by, among other things, convincing a grand jury there’s a case.

      Most criminal cases do not cost the initiator of the case, but RA (the same assessment payers) would have to pay to defend the case. The good news here is that calling the police and reporting the alleged crime is all that it takes to initiate a case.

      I do believe that the VA statutes governing RA have class-action and cost-recovery clauses, but the up-front fees still have to be paid or credited by some legal firm. I’ve rarely seen a case in circuit court, regardless of the outcome, cost less than $25,000 — and that’s just on side’s costs.

      • Terry Maynard

        According to some RR leaders, RA leaders essentially blackmailed RR into supporting Tetra in exchange for RA’s support for protecting RNGC.

      • pc

        RR did support the Lake House purchase

  • Puzzeled Reston Homeowner

    If you ask RA they will tell you yes they are meeting their budget and costs from the supply and demand with their after school program. However what that answer, they will not tell you that since opening the Lake House they now have hired full time bus drivers Mon – Fri. at $18.00 per hour to pick up students at all the Reston schools. In addition there is the costs for the RA fleet of buses/vans, insurance and gas. Why as a Homeowners Association are they in the business of after school childcare which entails additional headcount for bus drivers and teachers in addition to maintaining a fleet of transportation vehicles? Most importantly why are Reston Association members footing these bills and overhead for a so called “Lake House”?

  • Bohica

    RA needs to be held accountable for the lies they spread concerning the purchase of the Lake House. Why are they against the independent review by Mediaworld? They are hiding lots of negative info or they would agree to the review. Call the Commonwealth Attorney. And now photo pool ID’s.

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