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Reston Association Pays Off The Lake House Loan

by Fatimah Waseem January 5, 2018 at 11:30 am 22 Comments

Reston Association has officially paid off its million loan for the purchase of The Lake House. The board of directors elected to pay off nearly $2.42 million of the remaining balance.

Formerly Tetra, The Lake House has been hit with financial difficulties since it was purchased for $2.6 million — about twice its assessed value — in 2015. RA showed a cost overrun of $430,000 last spring, due in part to a six-figure expected rent back from former owner/tenant Tetra that did not happen. Renovations on the property to transform it into a community building have cost three times more than expected. An independent audit was requested.

RA is looking into new ways to make the facility a reliable source of income — a concern that was raised in previous RA meetings where some board members expressed dismay that RA was losing money on the project.

This year, the facility is expected to produce $224,000 in rental income. According to an RA statement, paying off the loan early will allow each member to save $8.66 on their assessment. If the facility produces target rental incomes, members can receive another $6.17 in savings, according to RA.

  • cRAzy

    “This year, the facility is expected to produce $224,000 in rental income.”

    There is absolutely no legitimate basis for this forecast. It’s as phony as the pro forma spreadsheet RA offered Restonians in its pursuit of the Tetra purchase.

    Those who put that forecast forward should be fired at the end of the year if this revenue number isn’t reached. And those responsible for the Tetra purchase fiasco should be fired NOW.

    • Bah

      If it’s true, then it will take us 13.5 years to break even on this stupid purchase. Yay! The legacy of Cate Fulkerson’s incompetence will live long (but we will not prosper).

      • Mike M

        With an infinite timeline, 13.5 years is not bad.

        • Mike M

          Hi, fake Mike M. How pathetic are you to mimic me and say things that you know I wouldn’t. Your mentality is that of those who are desperate to generate the impression of a reality where your unsustainable ideas seem reasonable. But it’s not real. Neither are you. You are pathetic.

    • John Higgins

      Indeed, credit is due. Who else would have thought of using the $120 due back to each member to save us $8.66 per year?

      • 40yearsinreston

        RA is a one way cash flow
        Out of our pockets into theirs
        They would never dream of refunding a cent

    • I’d rather post as a guest

      Those who voted “Yes” on the original referandum are those responsible for the Tetra purchase. Not doing your due diligence when voting is bad, but we live in a democracy and that’s how it goes, like it or not.

      • Pack of Lies

        Why do you lie so much? If that’s your definition of democracy then maybe you should move, I can help pack.

      • cRAzy

        Well, partially. I put the principal blame on the now largely gone RA Board (only Mike Sanio & Julie Bitzer remain) and RA CEO Cate Fulkerson who pushed this horrible deal like crazy. Those who voted for the purchase thought (quite wrongly) that our leaders had the community’s best interests in mind.

        They didn’t.

    • 40yearsinreston

      It was that financial wizard and spreadsheet jockey, Ganesh

  • Good Job

    Especially thanks to Ganesh Srinivasan, Finance Champion of the Year 2018.

    • 40yearsinreston

      see Mr Higgins comment above
      This fellow cant even do simple arithmetic

      • John Higgins

        Whoa, let’s not lay this at the foot of one person. This was a board decision, supported by RA staff and the Fiscal Committee. Absent a discussion of alternative uses for this cash, I disagree with their conclusion, but hope to do so respectfully.

      • cRAzy

        I think that when you look at this loan buydown, you will find it was the right thing to do. The discounted cash flow cost of the mortgage over 30 yrs (requiring re-borrowing on current 10-year loan) is substantially greater than a current payoff, especially if you anticipate greater inflation (& higher interest rates) in the future.

        • John Higgins

          Yes, that seems to have been the back-of-the-matchbook analysis supporting payoff. What it ignores is the earnings potential of the $2.4 million (now sitting idle) that is being given up. What might that be? We don’t know because the question was not asked. For a clue, look at the reserve investment – a similar amount – which has averaged over 6 percent these past three years. In 2017, its earnings exceeded $300,000, almost four times the cost of this loan’s interest. My concern is the depth of analysis that preceded the decision.

          • 40yearsinreston

            Bingo

          • I’d rather post as a guest

            Off course all kinds of financial.shenanigans can be built into this misgyided purchase, but that is exactly what galls outside of the mission and definition of is what a “home owner association”

            Qiestion back, have you been to and/or wat hex the RA community meetings? You know that these board members and volunteers are not from wall st.

            There are other hoa stories, some of which are not up for discussion but lets just say we have a process in place now.

          • John Higgins

            Yes, I have attended a few RA meetings.

  • 40yearsinreston

    Now we have [paid off the loan, can it be replaced by a dog park?
    It would pay for itself

  • Reston Realist

    We should immediately put that property on the market and sell it for what ever we can get for it. This entire debacle needs to be put to bed once and forever…. We need to cut our losses and try to recoup whatever we can. If we can’t sell it, then knock the building down and turn it into a dog park.

    • 40yearsinreston

      It was a trailer for land sales and should have been razed once NorthReston was built out
      No one but RA would be stupid enough to buy it
      It was a giveaway to the adjacent property owners

      • Reston Realist

        Yep….. I remember. I also remember when Bill Lauer was trying to sell it. He wan’t able to get an offer over $900k. To your point – the sale to RA was conjured up to protect the “valuable lake front” properties owned by the Byers and others…

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