Reviewing the draft governing documents again Monday, May 23, the Reston Association board spent time considering commercial property assessments if they voluntarily entered RA — a provision which was added to the current draft.
Monday’s session was another in a long series of meetings the board has held over the last three months to revise the association’s governing documents, which will go to referendum for approval in October. The documents codify the powers, rules and regulations that govern the association.
Inserted into the current draft is a statement that would open the door for commercial properties to pay dues to RA, and therefore vote in RA elections and referendums.
“A Commercial Lot shall be assessed annually one Assessment Unit for every @5,000 square feet of Gross Floor Area on such Lot@$100,000 of Assessed Value@,” says the draft, which includes both possible calculations for assessing commercial properties.
The commercial property would also receive commensurate votes in RA for each unit of assessed value paid. The board is set to decide whether that assessment would be based on square footage or an arbitrary unit of assessed property.
The rationale for their entry into the homeowner’s association is to potentially build a commercial revenue base, said Ray Leonhard, RA’s chief financial officer. “There is no incentive to join, so I don’t think that they would join, but it keeps the door open,” Leonhard said.
“I’d want to believe [commercial properties] would want to be part of the association,” said Milton Matthews, executive vice president of RA. “We hope the things we do as an association would be incentive enough, but there has to be an incentive.”
“Any [revenue] you get from commercial is gravy,” said Bob Diamond of ReedSmith LLC, the attorney who prepared the draft for RA.
“We want something that is not too high for them to enter,” said Douglas Bushée, vice president of the board, referring to a level of dues that properties would be willing to voluntarily pay. “We want to fine tune that a bit so that it will attract commercial users.”
At-Large Director Robert Poppe, partially playing devil’s advocate, said that commercial properties could take over the association.
“They [the commercial properties’ votes] are very insignificant,” said Jenn Blackwell, president of the board. Others on the board dismissed the voting potential of commercial properties because the properties, they said, are unlikely to voluntarily agree to pay the assessment.
THE CURRENT DRAFT suggests that commercial properties would pay $425 per $100,000 of assessed property value, which would give the commercial entity one vote. According to this scale, if a property valued at $10 million joined the RA, it would pay $42,500 in assessments and receive 100 votes. However, the board has yet to agree to any of these figures.
Staff recommended that dues be based on a smaller assessed unit of $25,000 or $50,000, which would also give the commercial property more votes.
The board did not make any final decisions on this issue, agreeing to send the issue to the fiscal committee and resume discussion on June 13.
The board also spent time Monday night further discussing other possible changes to the draft.
The board agreed to newly-included language that would make the process for termination of RA virtually impossible. “The Association may terminate this Declaration only by a vote of the Owners entitled to cast at least 80 percent of the total number of votes,” says the draft document. This means that to terminate RA, 80 percent of voters would need to vote, and 80 percent of all voters would need to vote ‘yes’ for the initiative.
The board delayed final decisions on other matters, including quorum levels for “material” and “extraordinary” actions and issues related to RELAC air conditioning units.