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January 26, 2017

Dear friends and neighbors,
As you know, we were part of the team that bid on the independent review of the Lake House project. We
are sending this to you with the intent of informing you and the Board how these actions and processes
appeared to members, and to encourage change in the way Reston Association does business, as
stewards of our combined assessments.
While we would have liked to have assessed this with the input of Board and staff (including attorneys) as
part of our independent review, we could not come to agreement on the terms because the contract
prepared by the RA attorney was severely restrictive and contained threatened liabilities and financial
penalties on our project sponsor.
Tetra/Lake House review of public documents. In preparation of our independent review, we reviewed
the public documents online at the Reston Association website, and the videos of the Reston Association
Board meetings on YouTube, and tracked the purchase from start to finish. RA has been good about
posting documents and videos of meetings, however, many critical decisions seem to be made by staff
before presentation to the Board, or matters are handled behind closed doors in Executive Session, so
that it is difficult for members to understand who is making critical decisions about our money, and why.
We feel Reston Association needs to improve its processes starting with examining overuse of
Executive Session. We examined all public documents and videos and had many questions, not only
about the decisions made, but about the processes used and the roles and responsibilities of staff, Board
members, and attorneys. For example, in the first meeting where the Lake House Project was introduced
(January 22, 2015), the RA Board held a 2-hour Executive Session on the project before it was even
formally presented. The Executive Session appeared to be less a contract consultation with attorneys,
than an entire meeting on this project behind closed doors. This seemed to have resulted in very few
questions and concerns raised by Board members in open session (likely because everything was
already discussed in Executive Session). Members were deprived of the opportunity to hear vital Board
member debate.
It appears members are challenged to fully grasp this transaction, to assess who drove the project, who
lead the discussion, who agreed, who did not, and what the pros and cons of the project are and were
when detailed discussions occur behind closed doors.
We elect our Board members because we trust their judgment and we trust they are going to be good
stewards of our money. If we never hear their thoughts, because it’s all protected conversation in
Executive Session, then we miss out on vital insights that our Board members (our representatives)
provide, and lose the opportunity to assess how well RA is managing our money.
Many critical decisions about this project seemed to have been made by staff and attorneys. It
appears that negotiations with the owner, discussion of price, and timeline for purchase were conducted
by staff and attorneys, and were well underway when the proposal was presented to the Board on
January 22, 2015. The appraisal was already commissioned (December 2014). The bank was already
approached. The price was already discussed. There is no indication that the staff had approval from the
Board to move ahead on negotiations and preparations to purchase, when the decision to purchase had
not even been made. However, in an April 2015 article, Reston Now reported that Reston Association’s
CEO first informed the board leadership team (Knueven, Graves and Sanio) of the opportunity to
purchase the Tetra building in the fall of 2014. She was asked by the leadership team to discuss the
opportunity during the January 12, 2015 Board Planning Committee. It was decided the full board would
discuss matters during the January 22, 2015 Board meeting in the executive and open session. While
they were authorized to open the discussion, there is no indication that staff was authorized to conduct
this much work on the project before it was approved by the Board.

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Meeting minutes lack detail. The meeting minutes did not reflect the concerns that were raised at that
meeting by Board members, or note the specific people asking those questions. For example, the minutes
say that the Board went into Executive Session with the attorney/land use attorney. Which was it? The
General Counsel? The Land Use Attorney? Both? In reading the minutes and considering the use of
Executive Session, it is not clear who is doing what and who is in charge of what. Several Board
members raised concerns about the rapid timeline proposed, and this was never entered into record. Only
in the video do we see who is asking.
Below are questions that we would like the Board to answer regarding the January 22, 2015
meeting:
Executive Session Questions
There was a 2-hour Executive Session during the January 22 meeting to discuss potential contractual
issues on the project.


How could the Board be discussing a contractual matter when the project had not yet been
presented to the Board, and there was no contract on the table? Only in the open session, later in
the meeting, did the Board approve the drafting of the Letter of Intent (LOI) to purchase the
property.
Which attorney(s) were present in the Executive Session – the general counsel (Chadwick) or the
land use attorney (McBride), or both?
What was discussed and decided in the Executive Session?

Process Questions
It appears that negotiations with the owner and preparation for purchase were well underway when the
proposal was presented to the Board. The appraisal was already commissioned (December 2014). The
bank was already approached. The price was already discussed. There is no indication that the staff had
any approval from the Board to move ahead on preparations to purchase - there is no indication of
approval in public documents prior to the January 22, 2015 meeting. However, in an April 2015 article,
Reston Now reported that Reston Association’s CEO first informed the board leadership team (Knueven,
Graves and Sanio) of the opportunity to purchase the Tetra building in the fall of 2014. She was asked by
the leadership team to discuss the opportunity during the January 12, 2015 Board Planning Committee. It
was decided the full board would discuss matters during the January 22, 2015 Board meeting in the
executive and open session.


Did the leadership team direct the CEO and staff to negotiate with the owner, and conduct this
much work on the purchase before obtaining approval from the full Board to purchase the
property? Did all Board members know that this much work was being done?
Who commissioned the CFO or staff to conduct the outreach to the bank regarding a loan for
purchase?
Who directed the land use attorney to obtain an appraisal in December 2014?

Financial Questions
The CFO informed the Board, at the January 22, 2015, that he pursued information about securing a loan
to purchase the property.



The CFO assumed a $2 million purchase price when seeking a loan. Why was this price
assumed when the previous appraisal listed the office (its current use) at $1.17M?
Which bank was approached? Was this the same bank that was used in the end?
Critical discussions on IF we should purchase this property were not had, or at least not in public,
nor were critical discussions of cost, price, or affordability. Were these issues discussed in
Executive Session or at all?
Did the Board discuss price? If so, when? Why didn't the Board discuss the price in the open
session? Why didn’t the Board discuss the possibility of negotiating the price down given the

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land use attorney’s description of the restrictions on the property that have discouraged other
buyers?
Why didn’t the board question the urgent time frame created by the property owner given its lack
of buyer interest and land use restrictions? Why didn’t the staff or Board use this to its advantage
to negotiate the price down?
The CFO stated that the loan would be repaid through “Revenue per V.13.E.” This appears to be
a clause in the deed that allows the Board to use revenue from assessments to pay for RA
programs, services, etc. Why not say this in plain language at the meeting - that the loan is going
to be repaid through assessments? Did the Board members understand this term and know that
“V.13.E” is revenue from assessments?
In most of the future publications on the project, revenue from programming is heavily discussed,
but there is very little information stating that the loan would be guaranteed entirely through
assessments (which it is). Why weren't members told in plain language that their assessments
would be used to secure and repay the loan?
On the sale and price, was there a broker? If so, who got the commission from this sale?

Timeline
Red flags were raised by several Board members regarding the timeline during the January 22, 2015
meeting. These concerns were not heeded. Why?




When the Board asked about the timeline, the RA CEO reported that they were moving quickly to
incorporate any future costs into the upcoming budget cycle, but also because it was the “the
preferred timeline of the owner.” Why would the preferred timeline of the owner override Board
members’ concerns about the timeline?
Could the Board require staff to slow the process down? Who is in charge?
Why didn’t the board question the urgent time frame created by the property owner given its
longstanding lack of buyer interest and land use restrictions?
Why didn’t the staff or Board use this urgency of the buyer to its advantage to negotiate the price
down?
The minutes did not reflect the concerns of these members. Why?

Other Important Questions:
It appears that RA’s land use attorney was also Lake Newport residents’ attorney, hired years ago to
thwart expansion of the Tetra property (as he stated in the February 9, meeting). This creates many
questions for members in terms of purpose of the sale, origination of the sale, who benefits from the sale,
who is driving the sale, who is being represented, and who is representing us.
There are many relationships between the Board, the attorneys, the Lake Newport residents (one of
whom is a former Board President), the Board President at the time, and the owner of the property that
creates in the very least an appearance of a conflict of interest that should have been discussed and
dispelled in public, so members were confident that the decision to purchase with public funds was not
being driven by a small group of people and by personal interests. It is not certain that the Board
discussed the potential conflict of interest or an appearance of conflict, which we feel it should have done
on behalf of its members.
These are the questions we have on the January 22, 2015 meeting. There are many more questions to
come on future meetings.

Two Concerned Reston Association Members

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