Community group Reston 20/20 is calling for an independent committee of RA members to be formed to delve deeper into the circumstances surround Reston Association’s controversial Tetra/Lake House deal.
According to Reston 20/20’s recommendation, the committee should be formed after the board’s elections have completed in April. At that time, four new members will join the nine-person board.
“In light of the fact that the current Board majority was immersed in all the events described here and in StoneTurn’s report, it has no credibility in conducting any further actions on Tetra,” said Terry Maynard, co-chair of Reston 20/20. “The new RA Board, installed next month with a majority not involved in Tetra, should tackle the issues we raise here and any others it finds in a deep dive effort by a committee of Restonians.”
The majority of which Maynard speaks will be made up of the four new members plus director Sherri Hebert (Lake Anne/Tall Oaks District) who was elected in 2016, following the conclusion of the transaction and renovations. Hebert has also recently called for more community involvement in the analysis of the report. (Two other continuing board members, Julie Bitzer and Ray Wedell, were elected in April 2015 — after the purchase proposal had been drawn up and scheduled for referendum, which passed with 53 percent of the vote in May 2015.)
In its analysis, Reston 20/20 says StoneTurn’s report provides “important new information on the timeline of actions leading to the excessive price paid for the property and its huge repair costs,” which it says is “a vital first step in understanding fully what transpired in this unfortunate venture for RA and its members.” The analysis goes on to ask numerous followup questions, many related to personal responsibility for decisions made during the process, including:
- “Did RA agree on the price prior to Board approval in January 2015? If so, why? Who made that decision and why?”
- “Who altered the appraisal instructions to assume Tetra was in good repair and the hypothetical restaurant use was large and extended into the lake?”
- “Why wasn’t conflict of interest specifically discussed in the StoneTurn report?”
Reston 20/20 says it wants the citizens’ committee to have “unlimited access to all RA records relating to Tetra; the authority to interview RA employees, contractors and others with possible knowledge about Tetra; and the authority to request records from contractors who worked [with] RA on the Tetra purchase and renovation.”
A group of Reston Association members, working under the name Mediaworld Ventures LLC, had been selected in September 2016 by the Board of Directors to complete a review of the purchase and cost overrun at a cost of $1. The parties could not agree on the terms of a contract, however, and negotiations were terminated in January. The board agreed later that month to have StoneTurn complete the review at a cost of $45,000.
StoneTurn’s review provided 15 recommendations to the RA board for how to avoid a similar situation from happening in the future. Reston 20/20 members say without rooting out more specifics of the transaction, changes to procedure may have minimal effect.
“We believe it is vital to understand the full details of what transpired, including identifying any violations of policy, procedure or the law and the persons involved in those activities. If we do not dig out these details, RA runs a serious risk of repeating many of the same errors in the future no matter what process changes are added.”
The RA Board of Directors has a special meeting scheduled for Tuesday at 6:30 p.m. (weather-permitting) to discuss the results of StoneTurn’s report and the recommendations for the board that were provided within.
Hunter Mill District Supervisor Cathy Hudgins led off her newsletter this month with a two-page article on “misinformation” concerning the proposed Reston Tax Service District (TSD) for homeowners and businesses along the Dulles Corridor, the so-called Reston transit station areas. So far as we know, no one has provided misinformation on the road tax, including Reston 20/20.
What Reston 20/20 has done — and will continue to do — is highlight the vast quantity of vital information about the proposed Reston road tax that neither Supervisor Hudgins nor FCDOT have been willing to acknowledge because, of course, it undermines the validity of having such a tax. Let’s take a quick look.
First, the foundation argument for a Reston road tax is that there is a $350 million gap over the 40-year period of planned station area expansion — less than $9 million per year — in road funding that can absolutely only be filled by another singular tax on Restonians. Supervisor Hudgins doesn’t even mention the “funding gap” in her missive, almost certainly because she knows there isn’t one. The “funding gap” was created by FCDOT to justify creating an added County tax revenue stream (at the Board of Supervisors’ direction) solely on Restonians.
The so-called “funding gap” is the result of a series of FCDOT assumptions about transportation funding that are a fantasy, plain and simple. [This was addressed in an earlier op/ed.]
That’s all not mentioned, much less explained, in Supervisor Hudgins’ letter. And some things mentioned there are less than “the truth, the whole truth, and nothing but the truth.” Some example, her letter states, “To accommodate traffic pattern changes, reduce congestion, move traffic efficiently, and provide convenient connections to transit stations, multi-modal transportation improvements were proposed.” That statement alone is loaded with fallacies.
- Well, yes, multi-modal improvements were proposed in the revised Reston master plan, but the ongoing County transportation proposal addresses only street improvements. Nary a word about more buses, better bike access, improved pedestrian movements, etc. In fact, to the contrary, FCDOT Chief Biesiadny has stated on multiple occasions that no added bus service is required, just a re-jiggering of current routes. Yet, the plan calls for 76,000 new residents and 41,000 new jobs; a total potential of 211,000 people living and working in Reston’s station areas. But no new bus service is needed? Preposterous! And you know that the proposed Reston station area tax will be increased to finance that obviously needed new bus service.
- And, no, the planned street improvements will neither “reduce congestion” nor “move traffic efficiently.” To the contrary, by County policy intent, the goal is to increase congestion by lowering the acceptable level of service for traffic under the County’s new “urban standard.” Yes, you can expect to wait at least an extra half-minute or more at every already gridlocked intersection in Reston’s station areas as this “urban standard” is implemented.
In fact, proceeds from the County’s Reston road tax proposal will be primarily used (87 percent) to finance the construction of the so-called “grid of streets.” This grid is not being built to “reduce congestion” or “move traffic efficiently”; it being built to improve the profitability of the development of the adjoining properties. In fact, the specific grid streets to be financed by Restonians road tax are primarily those streets at the east and west periphery of the station areas, areas that could not be profitably developed without a public tax subsidy. From your pocket to developer profits.
Moreover, the fact that these streets will be built and the areas developed will mean more, not less congestion, in the station areas. For what it’s worth, not even the developers in Tysons are having the “grid of streets” subsidized by taxes on residents; they will be building all of them there out of their own pockets. Yet somehow Supervisor Hudgins and FCDOT don’t mention any of this. No need to fully inform Restonians, they must think.
And two bits of seeming relative good news in Supervisor Hudgins’ commentary are less than they appear.
- First, there is the seemingly low impact of the $.021/$100 valuation impact of the proposed TSD tax on station area homeowners’ tax bill, for example, $105 per year on a half-million dollar property. Sounds OK, but it fails to acknowledge: The tax is based on 2016 dollars and will triple over 40 years at three percent inflation, totally ignores any property appreciation above inflation, fails to mention that the Board can raise the tax rate at any time — as it has already done on a similar tax in Tysons, and assumes construction costs will not exceed inflation. So, no, it will cost much more than Supervisor Hudgins’ letter says.
- Second, Supervisor Hudgins states that there is a new “sunset” provision in the proposed tax without specifying the details. The implication is that the road tax would be used only for construction, not the indefinite maintenance of the streets and intersections. That’s a positive change, but — like the tax rate and adding needed bus service — can be undone by the Board with a simple vote anytime in the future.
So “cui bono?” Who benefits? By our estimate based on an analysis of Boston Properties’ annual report, developers in Reston’s station areas stand to earn $45 billion over the next four decades in 2016 dollars, roughly double that in future dollars, from fulfilling the Reston master plan. And, as stated above, the County stands to receive $11 billion in property tax revenues at current tax rates in 2016 dollars over the same period.
And station area residents? They get a larger property tax bill every year and increased congestion.
What could be wrong with that?
As the late radio commentator Paul Harvey (for those of you old enough to recall) would say, “And now you know the rest of the story.” So you can accept Supervisor Hudgins’ Tetra-esque one-sided sales promotion or you can consider the proposed Reston road tax in the context of this more complete picture. If you believe, as we do, that the TSD road tax is little more than a fraud, please do any or all of the following:
- Join the more than 200 others who have signed Reston 20/20’s petition to stop the Reston TSD tax which we will submit to Chairman Bulova and the Board of Supervisors before the upcoming public hearing on the Reston road tax proposal.
- Share with Supervisor Hudgins your concerns about the proposed Reston road tax by any means you choose — email, telephone, letter, social media, whatever.
- Take the time to attend and even testify at the public hearing at the Government Center on Feb. 28.
There is no good reason that Reston station area homeowners, current or future, should subsidize developer profits or bolster County coffers for basic public infrastructure requirements. Next they will be taxed for schools, parks and more. Tell Supervisor Hudgins and the Board of Supervisors you oppose this misguided and ill-conceived Reston TSD road tax proposal.
Terry Maynard, Co-Chair
Reston 20/20 Committee
By this time, most Restonians are aware of the County transportation department’s (FCDOT’s) efforts to add an additional property tax on Metro station area residents to pay an estimated $350 million for improvements in their streets to accommodate developer growth. The entire 16-month-long process to get Restonians, particularly the Restonians selected by Supervisor Cathy Hudgins to serve on the so-called Reston Network Analysis Group (RNAG), to nod “yes” to yet another Reston tax has been filled with lies and deception well worthy of our new President’s world of “alternative facts.”
We have already detailed a key Reston road tax assumption that is obviously false (p. 5): That the County cannot divert tax revenues from existing or future uses to improve Reston’s urban intersections. The County won’t even address the fact that the diversion of less than $9 million of the more than $4 billion in annual General Fund tax revenues will pay for all the roads it proposes to improve under its cost assumptions. That’s just two-tenths of one percent from current tax revenues, well less than its mid-year budget adjustment. Instead, FCDOT simply refuses to acknowledge this reality.
But there are so many other intentional, incessantly repeated mis-statements, failures to recognize certain obvious truths, and just plain poor County analysis that comprise the entire “big lie” of the need for a Reston road tax. An obvious place to start is the other side of the road improvement cost equation: The grotesquely huge profits of developers and massively increased property tax revenues of the County because of the major development that will occur in Reston’s station areas over the next four decades. Not once has FCDOT acknowledged that reality, much less used it in any analysis of how street improvements could be paid for.
Based on Boston Properties per square foot 2015 profits from continuing operations nationwide, we estimate that filling out the Reston Master Plan over the next 40 years will generate more than $45 billion in profits in 2016 dollars for Reston’s station area developers. That’s more than one billion dollars per year on average — about double that with modest inflation — most of it from the operation of existing office and residential structures. Why can’t $9 million of that more than one billion per year — less than 1 percent — be devoted to improving Reston’s urban area streets?
At the same time, the value of property in the station areas will increase at least ten-fold from $6 billion to $60 billion, and possibly as much as $90 billion, with the growth in square footage and appreciation over the next four decades if the Reston Master Plan is fulfilled. That property value will generate over $11 billion in property taxes for the County without increasing the property tax rate or adding a new Reston road tax. Certainly the County can divert three percent of that massive Reston tax revenue flow to the improvement of Reston’s streets, but you haven’t heard a word about that possibility from the County. Not once.
The County clearly does not want to tie any of this huge increase in Reston tax revenues to expenditures in Reston. Reston is just a County tax “cash cow” — as it has been for decades — to be milked for County expenditures elsewhere.
In fact, FCDOT has gone so far as to create a roadway “funding gap” out of whole cloth that it values at $350 million. The gap is merely a foil based on faulty assumptions about the availability of road funds to generate a reason for an added Reston road tax. It has no basis in the reality of available of County, regional, state, or federal tax revenues for road improvement purposes. But if you don’t have a “gap,” no matter how phony, you can’t justify a new tax. So the County made one up.
Worse is the planned use of the Reston road tax funds. About 12 percent of it ($45 million) will be used to actually improve intersections on Reston’s through streets, the streets that are already clogged with rush hour traffic.
The other 87 percent ($305 million) or so will be used to flesh out the “grid of streets.” The purpose of the “grid of streets” is to create street fronts for commercial development. They have no purpose in improving traffic flow; in fact, to the contrary, the development that will accompany them will actually add to the traffic flow burden on nearby through streets such as Reston Parkway and Wiehle Avenue, Sunrise Valley Drive and Sunset Hills Drive, used to access the rest of Reston, the Dulles Toll Road, and beyond.
Worse, almost all the streets that Reston’s road tax will be used to build are streets that would not be built in the absence of a Reston corporate welfare tax because of a lack of commercial demand. The streets financed by Restonians’ taxes will be at the extreme west and east ends of the station areas, near Centerville Road in Herndon and in the vicinity of the Reston Post office to the east. These locations are too far from any Metro station to be walkable and would not be developed at all unless paid for by the public, specifically Restonians’ tax dollars. In contrast, Tysons’ developers are paying for the entirety of the “grid of streets” there, even those well beyond walking distance to a Metro station. In short, developers will use Restonians’ corporate welfare to increase their profits with no traffic or other benefit to the community.
The entire County assertion of a need for a special Reston road tax, a so-called Tax Service District (TSD), on residents in Reston station areas is nothing more than a massive con built on fraudulent assumptions, half-baked analysis, ignored realities, and the gullibility of Restonians serving on RNAG (none of whom live in the areas to be taxed except an employee of Boston Properties), and even the Reston Association Board of Directors. In fact, the RA Board will be considering a resolution at its meeting this week to support the imposition of the Reston road tax on non-member areas of Reston so long as the rate remains constant at $.021/$100 valuation and the tax has a 40-year sundown provision. The Board of Supervisors will eliminate those proposed constraints with a dismissive wave of its hand if not at the outset, at the first sign that it might crimp its tax collection from Reston’s station areas.
It is time for Restonians, and the RA Board in particular, to quit being the sucker for County taxes imposed on Reston. We already pay an extra $.047/$100 valuation for the Reston Community Center (RCC) which is stealthily moving forward with a plan to build a large regional performing arts center in Town Center North, a mile from the nearest Metro station, and raising our RCC (STD#5) tax rate to pay for its construction and ensuing perpetual operating losses.
It is time for Reston to say not just “No,” but “Hell No” to more property taxes that go to subsidize commercial for profit ventures and county-wide spending initiatives. If a developer can’t pay a few extra dollars per year to cover the cost of the road in front of his property, they simply should not be in the development business in the highly lucrative Reston market. And if the County’s leaders can’t figure out how to do that, then they should be replaced by representatives who can. We, the people of Reston, should not be putting our money in developers’ pockets through added County taxes so they can make even more billions of dollars with no benefits for our community.
Terry Maynard, Co-Chair
Reston 20/20 Committee
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
This is an op-ed submitted by Terry Maynard, co-chair of the Reston 2020 committee. It does not reflect the opinions of Reston Now.
The Transportation Service District (TSD) proposed for Reston’s station areas calls for homeowners there to subsidize developers as they build private roads on their property. With a projected balance in residential and non-residential development in the station areas, that means residents there would be paying between $55-$88 million in 2016 TSD tax dollars to developers to build roads on their properties over the next forty years depending on the initial TSD tax rate and if it remains constant (which it won’t).
In an incomprehensible move, the Fairfax County Department of Transportation (FCDOT) has identified a phony $350 million “funding gap” for Reston road improvements requiring the creation of a TSD. As laid out in its September 30, 2016, presentation to station area developers, the so-called RNAG “stakeholders,” $305 million of the funding shortfall is to pay for the construction of their “grid of streets.” That’s 87% of the total TSD funds and some 30 percent of the grid’s $1 billion total cost.
This “grid of streets” is the network of privately built roads on developer-owned property. They may be turned over to the state upon completion, but that is not at all clear. Station area residents–present and future–just get to pay developers to build them if this TSD proposal is approved. In contrast, the Tysons “grid of streets” is being paid for in its entirety by developers through financial contributions ($304 million) or in-kind contributions ($561 million); not a penny of Tysons TSD tax revenues.
This subsidy to the for-profit endeavors of developers of scores of millions of residential tax dollars suggests that the developers’ effort really won’t be that successful. However, our analysis of scope of profits for developers across the station areas over the next forty years, based on Boston Properties 2015 annual report, indicates they will have a net operating income averaging in excess of $1.1 billion per year in 2015 dollars. That’s $45 billion in profits over the next four decades. And yet the proposed tax suggests developers’ need residents’ financial help for some reason to build their roads themselves. We don’t think so.
The economic question above only accentuates the unfairness, even immorality, of forcing residents to to pay taxes to support commercial for-profit development. We don’t think the idea comes remotely close to passing a decency test, especially in light of developers’ anticipated profits. We recognize we are dealing with politics here, but it still leaves a strong stench.
As we have said here and elsewhere, there is no need for a new Reston road tax of any kind. This is especially so when a large chunk of it is intended to go into the pockets of developers. Moreover, the so-called “funding gap” is a mirage, even a fraud, created by the County to justify creating a new tax gimmick to afflict Restonians.
You can help stop this dangerous Reston road tax idea. First, Reston 20/20 has posted a petition on Change.org calling for a stop to passing this new tax that you can sign. Second, attend and participate in the RNAG community meeting on Nov. 7 at 7 p.m. in the South Lakes High School lecture hall. Third, let Supervisor Cathy Hudgins know about your concerns over the Reston TSD proposal.
Finally, attend and testify at the Board of Supervisor’s hearing on the matter, which has yet to be scheduled.
If we all work together, we have a chance to stop this unfair, unneeded County tax boondoggle.
Terry Maynard, Co-Chair
Reston 20/20 Committee