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 A Preliminary Report on Key Issues in RA’s Mishandling of the Purchaseand Renovation of the Tetra Property
Prepared by a small team of Reston Association membersMarch 13 !"1#1
 
$ore%ord
The release of the &toneTurn 'roup independent revie% of the Tetra property ac(uisition and renovation on $ebruary !) !"1# has provided the Reston Association members %ith important ne% information on the timeline of actions leading to the e*cessive price paid for the property and its huge repair costs+ This is a vital first step in understanding fully %hat transpired in this unfortunate venture for RA and its members+This preliminary report prepared by a small team of RA members %ith e*perience in ac(uisitions finance and program management ta,es the first steps in moving for%ard in the effort to identify %hy the events described in the &toneTurn 'roup report occurred and %ho is responsible for them+ It is based on ne% details provided the &toneTurn 'roup report information RA has released on its %ebsite as %ell as in response to information re(uests and to other documents ac(uired by the team+ This preliminary report prepared in the last t%o %ee,s intends to serve as a launching point for a more complete investigation of the Tetra debacle that %ill enable RA to ma,e the necessary changes so that nothing li,e it %ill ever happen again+ -e believe RA needs also to identify those people %ho may be culpable of nonfeasance misfeasance or even malfeasance in the Tetra matter and held to account+ To ma,e those determinations %ill re(uire substantial additional investigation of the activities and decisions that occurred by the ne*t RA .oard of /irectors through a special RA committee+!
 
Preliminary $indings
0Reston Association RA2 paid !+45 million for a property that had an appraised 6as is7 value of 1+"81+9 million in :anuary !"15+ RA’s !"15 appraisal puts the 6as is7 value of the Tetra property at 1+3 million assuming it %as in good condition+ A subse(uent engineering report indicated the Tetra property needed !99949 in repairs putting the current mar,et value of 1""5534 not the !+45 million purchase price+ 0The available information indicates that RA staff and;or attorneys may have %or,ed %ith the seller very early on to reach a price agreement near !+# million %ithout the ,no%ledge or approval of the RA .oard %hich impacted every decision thereafter+ 0&pecial instructions to the appraiser in !"15 appear to suggest that RA crafted the !"15 appraisal to meet the seller’s !+#M as,ing price and to <ustify this price to the .oard and members+ The !+45 million valuation generated in the !"15 appraisal %as based on inaccurate hypothetical assumptions that a2 the property included a large restaurant and b2 it %as in good repair assumptions reported in the appraisal+0/espite the need for e*tensive critical repairs noted in the appraisal and the subse(uent engineering report documenting needed repairs costing !99 RA did not initially see, to ad<ust the sales price holding the seller responsible for repairing the roof trusses and =>A? system+ &ubse(uently the seller agreed to create a !#5""" escro% account to cover a longer list of needed repairs but RA %aived the right to demand seller pay for any further repairs of %hich there %ere many+ 0RA spent 4@193! to repair and renovate the a,e =ouse in !"14+ Bot until May !"14 %hen the ?CD re(uested 9!)""" for Tetra’s repairs did RA budget for a,e =ouse’s repair and renovation+ &ome documentation for these costs is missing or not yet publicly available+ &ome purchase decisions may have violated RA’s bidding procedures+0RA shared critical documents %ith the seller prior to their full .oard revie% and approval+ Moreover these documents %ere not made available to the public in a timely manner+ 0RA did not specifically tell its members that the loan to pay for Tetra %as tied to their assessments not a mortgage on the Tetra property+ 0&everal individuals associated %ith the purchase of the Tetra property appear to have had conflicts of interest or other%ise acted contrary to the interest of RA members+3

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