Tetra/Lake House Summary of Appraisals - Side by Side Analysis
2010 Appraisal
Initiation.
Commissioned by:
Mr. Milton Matthews
CEO of Reston Association
Prepared by: Robert Paul Jones and
Kathleen Moist
Date: March 18, 2010
Delivered: April 22, 2010
Instructions.
Estimate the market value of the
property under three different
scenarios:
(i) "as is" fee simple market value,
assuming continued office use;
(ii) fee simple market value as a
restaurant pad site, assuming expansion
into Lake Newport;
(iii) "as is" fee simple market value of
the excess land, assuming no additional
development is permitted on the parent
parcel and the land is subdivided.
2015 Appraisal
Initiation.
Prepared for:
Reston Association
c/o John McBride
Odin Feldman Pittleman, PC
Prepared by: W. Scott Gudely and
Kathleen Moist
Date: January 23, 2015
Delivered: February 4, 2015
Instructions.
Estimate the "as is" fee simple market
value assuming that restaurant uses are
permitted and that any deferred
maintenance is corrected.
Observations/Comments
Comments:
Members feel RA needs to ensure business deals are more closely managed by RA staff and Board
members. In this case, it appears the appraisal was managed solely by RAs land use attorney. If
there was direction or authorization by staff, committees, or the Board, it is not on record.
Questions:
Who chose the land use attorney as the POC and not the CEO?
At the Jan 22 Board meeting land use attorney McBride says he commissioned the appraisal before
the project was presented to the full Board. Who authorized this? Board or staff? When?
Who was present at the appraisal?
Reston Now reported that, According to documents released by RA, the board signed an appraisal
agreement with The Robert Paul Jones Company in December 2014 that said the appraisal would be
performed by Jan. 12, 2015. The fee for the appraisal would be $5,000. Where in the process was
this documented? Who authorized this? Who approved this expenditure? Why is there no mention
of this in the minutes? Did the full Board know that staff had already commissioned an appraisal
and committed these funds?
The appraisal was released on February 4, 2015, after the January 22, 2015 meeting. How could so
many decisions about this property be made (e.g., decision to move on a referendum, decision to
develop a letter of intent (LOI) with a purchase price and terms before the Board had an idea of
price as they hadnt seen the appraisal?
When did each member of the Board receive the appraisal? When were they given an opportunity
to read it?
Comments:
The 2010 appraisal estimated the value of the property based on several scenarios. This gave the
client a range of values depending on use, and a basis for making a decision for purchasing. The
appraisal provided the value of an office ($1.17M) and of an expanded restaurant ($2.76M). The
2010 appraisal noted that there were differences in opinion on whether the property could be
used as a restaurant
The 2015 appraisal was different. The appraiser was only instructed to estimate the as is fee
simple market value of the subject assuming restaurant uses are permitted. RA already knew
(based on the 2010 appraisal) this would result in a higher appraisal price.
The December 4, 2014 engagement letter signed by RAs CEO does not instruct the appraiser to
assume deferred maintenance is completed. The document states that any changes to the
assignment shall necessitate a new Agreement. It is not clear if this occurred.
The as is instructions in the cover letter of the 2015 appraisal differ from the language when the
value provided which includes deferred maintenance. Additionally the report states, [a]ccording to
our client instructions, a restaurant would have the potential for extending out into the lake and
that the GBA would be 6,930 feet. These instructions do not appear in the December 4, 2014
engagement letter or cover letter of the report.
The highest and best use of the property was consistently identified as an office (both in the 2010
and in the 2015 appraisals) and valued in the $1.2 - $1.4M range. This is very close to the 2010
appraisal ($1.17M), and very close to the County assessment on the property which was about

Appraisal.
The "as is" fee simple market value of
the property, assuming it continues as
office space (including the excess land
valued at $69,000):
$1,170,000
The fee simple market value of the
subject as a restaurant pad site,
assuming potential to expand into the
lake with a total FAR of 7,000,
supporting land for the restaurant us of
40,000 sf and including excess land
value of $59,000:
$2,760,000
Notes highest and best use (where the
owner would get the greatest value out
of the property) is as an office.
Appraisal.
The as is fee simple market value of the
subject, assuming that restaurant uses
are permitted and that any deferred
maintenance has been corrected, as of
January 23, 2015, is:
$2,650,000
Notes highest and best use (where the
owner would get the greatest value out
of the property) is as an office.
$1.2M, and based on 100% of the estimated Fair Market Value of the property. The 2010, 2015, and
current County assessments placed the value around $1.1 - $1.4.
Questions:
Why was the appraiser instructed to value the property as a restaurant when its intended use was to
continue as an office and/or community facility? Did staff or Board members know that these
instructions were given to the appraiser?
Why would the client direct the appraiser to value the property with restaurant uses given the
attorney encouraged the Board to take a position on the Countys Comprehensive Plan for that
building, and ask that the use be changed from office use to office and/or community facility
which the Board did in its February 9, 2015 Board meeting
Were the implications of these instructions ever documented by the RA board or its land use
attorney?
Were the variations in the two appraisals explained to the Board? Were the variations in value
(office vs. restaurant) explained to the Board? If so, when and by whom?
Was the Board aware the appraisal value would not reflect highest and best use?
To RA members, it appears that this process resulted in the highest price for the owners and did not
serve the best financial interests of the RA members.
Was the role of the RAs land use attorney in this transaction appropriate?
Was there a conflict of interest or appearance of a conflict from the attorneys actions/inactions?
Comments:
2010 appraisal provides a range of uses and values, provides an analysis of earlier (2003) discussion
on permitted uses (see Appendix for correspondence between the sellers attorney and the county),
and noted confusion over permitted/restaurant use.
2015 appraisal provides value for restaurant use, but does not note any confusion/disagreement over
permitted use/restaurant use, nor does it include the any of the land use determination
correspondence.
The 2015 appraisal notes that Mr. Bill Lauer, the property contact, reports that there is no limitation
on the amount of restaurant FAR he can do, but that the office FAR cannot be expanded. However,
this may apply to just the existing building.
The 2015 appraisal notes: property owner, Mr. Bill Lauer, reports that the property has not been
listed for sale, and that two (or more) restaurants have expressed interest and then decided not to
make an offer on the property. He tells the appraiser that he has had discussions with Mr. McBride
and the Reston Association about the Associations potential acquisition of the subject. He reports
that his asking price is $2,700,000 and that he would not be interested in selling unless his price is
met. This seems to occur either before the appraisal was requested, or as the inspection occurred.
The 2015 appraisal notes that the The subject is designated as a Convenience Center in the Reston
Master Plan.
Both appraisals note that the highest and best use of the property is to continue as an office, with
an estimated range of $1.17M in 2010 and $1.45M in 2015.
Questions:
Why did the 2010 appraisal contain correspondence regarding FAR and permitted use and the 2015
appraisal did not? Shouldnt this have been addressed by RAs land use attorney?
Why didnt the appraiser check to see if Mr. Bill Lauer (the owner) was accurate in his statements
about FAR? Why didnt the RAs land use attorney address this issue?
Why doesnt the 2015 report include the statement that the appraiser discussed the current market

Condition.
Appears to be well-maintained given
the age of the building. The building is
an above-average quality office building
in average to above-average condition.
Encumbrances.
The property is "encumbered with a
floodplain and storm drain easement"
"According to Fairfax County
Chesapeake Bay Resource Protection
Area (CBRPA) maps, Lake Newport is
shows as a Resource Protection Area
(RPA) and the property directly abuts
and extends into or over it.
The restrictions would not prevent the
parcel from being developed, but would
likely result in higher development or
redevelopment costs.
The presence of the non-exclusive
parking easement and the nature of the
ingress-egress must be taken into
account when planning the size of any
potential project.
The proximity to Lake Newport,
floodplain, RPA and dam spillway may
result in above-average development
or redevelopment costs."
Restrictions, Use and Site Plans
Condition.
Appears to be reasonably well-
maintained given the age of the building.
However:
roof and all wood surfaces clearly in
need of attention
HVAC is scheduled to be replaced
foggy appearance in three windows
conference room exhibited a musty
odor.
Encumbrances.
The property is "encumbered with a
floodplain and storm drain easement"
"According to Fairfax County Chesapeake
Bay Resource Protection Area (CBRPA)
maps, Lake Newport is shows as a
Resource Protection Area (RPA) and the
property directly abuts and extends into
or over it.
The restrictions would not prevent the
parcel from being developed, but would
likely result in higher development or
redevelopment costs.
The presence of the non-exclusive
parking easement and the nature of the
ingress-egress must be taken into
account when planning the size of any
potential project.
The proximity to Lake Newport,
floodplain, RPA and dam spillway may
result in above-average development or
redevelopment costs."
Restrictions, Use and Site Plans
for commercial properties with sellers, buyers and real estate agent in 2015 as it did in 2010? (see
page 6/149 of 2010 appraisal) Did he?
Why would RA ask the appraiser to use a methodology that would yield a higher value?
Why would RA bid a price for a restaurant knowing it would not be able to generate that level of
revenue as a community center?
When did the RA Board discuss whether it could afford to purchase the property at this value?
Questions:
Who instructed the appraiser to appraise as if all deferred maintenance was corrected?
How did RA assess the cost of deferred maintenance identified by the appraiser?
Comments:
Both appraisals note the existing encumbrances, and while there are restrictions, the
restrictions would not prevent the parcel from being developed, but would likely result in higher
development and redevelopment costs.
Both appraisals note that limitations in parking may restrict build-out (FAR) - in essence, if there
is not enough parking to accommodate the expanded capacity, the owner would have to limit
the expansion
Both appraisals note that all the ingress-egress issues, location in a protected area, proximity to
the dam, and easements will make development a challenge and more expensive
The 2010 appraisal includes documentation from the Department of Public Works and
Environmental Services that stated if the property is developed a PRC and site plan would be
required to determine if it was in compliance with RZ-79-C-032 and the Chesapeake Bay
Preservation Ordinance.
The 2015 appraisal stated that the subject is encumbered with a floodplain and storm drain
easement but does not include correspondence. A Chesapeake Bay Resource Protection map is
included in the appendix.
Questions:
Why wasnt there any mention of the March 27, 2003 Zoning Administrators comment included
in either appraisal, that, If the location of a structure is within the floodplain is proposed, the
application would be subject to Sec 9-606 of the Zoning Ordinance which pertains to Special
Exception approval. . .by the Board of Supervisors.
What are the implications of the Chesapeake Bay Preservation Act upon this property?
Did RAs land use attorney or RA seek any land use determinations during this process?
Did the owner provide any proof that there was recent buyer interest in this building?
What development plans and correspondence did the appraiser use in writing the appraisal that
were not attached to the appraisal?
Comments:
2010 appraisal notes that there is confusion/disagreement over permitted uses while the 2015
Contains extensive information about
the propertys permitted use and zoning
restrictions.
The appraiser notes, "...a difference of
opinion existed concerning the
development potential of the property.
. .we have attempted to prepare the
appraisal consistent with Fairfax
County's determinations to the extent
possible.
In 2003 the county concluded that the
FAR for the conversion of the sales
center or a second or expanded eating
establishment, is limited to the FAR of
the initial construction. . .adding an
eating establishment to the site
unrelated to the sales center would not
require an amendment to the
development plan or proffer. An eating
establishment would require approval
of a PRC plan.
We have assumed that the subject will
require substantial renovation,
including gutting and perhaps
demolition in order to accommodate a
restaurant use. (page 25)
Highest and best use if vacant is to
hold for development with a
commercial office or retail project to
the maximum density allowed once a
lead tenant or owner-user has been
secured.
Highest and best use as improved is
considered to be continuation of the
present use as office until the market
warrants expansion or redevelopment
of the site.
Appraisal lacks zoning determination appraisal relies on the word of the owner.
documents as present in 2010 appraisal. The 2010 appraisal includes background information on the zoning discussions while the 2015
appraisal includes none of these appendices and does not provide any assurances that the value
The subject is designated as a which is given is for a use that is currently permitted.
Convenience Center in the Reston Master In 2015 the appraiser says the highest and best use to continue operating the existing building
Plan. The new draft Reston Master Plan as an office following maintenance and to proceed with expansion of the property with a
Special Study recommends that the commercial use (Note: they do not say restaurant use) once a lead tenant or owner-user has
subject be planned for office use at the been secured and when the market permits (indicating that the market will not support a
existing built intensity to maintain its restaurant at this point). Again, typically a retail use would provide the highest return to the
current character. land. (retail - office or restaurant) there are a lot of IFs here.
The 2010 appraisal was conducted in a 1-month window, the 2015 in a 2-week period.
The appraisal notes that the property Questions:
owner reports There is no limitation on Why wasnt the fact that restaurant use would require substantial renovation and possible
the amount of restaurant FAR he can do, demolition included in the 2015 appraisal as it was in the 2010 appraisal?
but that the office FAR cannot be Why did the client instruct the appraiser to assume that a restaurant would have the potential
expanded. The appraiser notes, This for a 6,930 expansion?
may apply to just the existing building. Why didnt the firm include restrictions/county zoning docs in second appraisal?
Why werent the 1981 plan documents mentioned in the appraisal, titled Reston Visitors
Center and Restaurant as prepared by Doug Corkern, Architects, Inc., included in the packet?
The appraiser provided an estimate
assuming the Additional Building
Improvements Could be Expanded into
Lake Newport
We have been asked to assume that,
according to our client instructions, a
restaurant would have the potential for
extending out into the lake and that the
GBA would be 6,930 feet.
Building plans from 1981 indicate it was
possible to extend out into the lake
further with construction of a restaurant
building. Parking spaces have already
been provided to support such expansion
and utilities appear to be available.
Highest and best use if vacant is to
hold for development with a commercial
use to the maximum feasible density
allowed once a lead tenant or owner-
user has been secured. Typically, a retail
commercial use would provide the
highest return to the land.
Highest and best use as improved is to
continue operating the existing building
improvements as an office use with
correction of deferred maintenance and
proceed with expansion of the property
with a commercial use consistent with
the existing zoning once a lead tenant or
owner-user has been secured and when
the market permits. Again, typically a
retail use would provide the highest
return to the land.