New Board Member Orientation Reston Association April 2013

 About the Reston Association  Board Member Duties & Responsibilities  The Budget Development Process Agenda 2

About the Reston Association Reston is known as a “common interest” community, with four distinguishing characteristics: 1.All owners are automatically Members of the Association; 2.The Governing Documents – Deed, Articles of Incorporation, Bylaws & Resolutions --create mutual obligations; 3.Mandatory fees (assessments) are levied against all owners and are used for the operation of the Association; and 4.Owners share a property (Common Area) interest in the community. 3

About the Reston Association continued …  The Reston Association (RA) is a not-for-profit corporation 501(c)4.  RA serves a community of over 58,000 people and is one of the largest community associations in the United States; and is the largest in the Commonwealth of Virginia.  RA sustains and protects the community’s quality of life by caring for Reston’s natural environment and recreational facilities, and administering architectural and maintenance covenants.  Within Reston there exist many other common interest communities or sub-associations. 4

About the Reston Association continued …  These “sub-associations” govern the common property, covenants, and maintenance associated with a given housing Condominium, Cluster and/or type.  While these groups operate independently of RA, the Association provides general oversight, support, and assistance – in fact, a full-time staff position at RA is charged exclusively with providing outreach support to Reston’s “sub- associations.”  Currently there are 162 of these sub-associations in Reston. Of these, 30 are Condominiums; and 132 are Cluster associations.  The vast majority of detached, single family housing in Reston is not a part of a sub-association; their only membership obligation is to RA. 5

About the Reston Association continued …  Currently, Reston’s membership is comprised of 21,262 residential units.  All residential property owners and renters subject to the Reston Deed are automatically Members of the Reston Association.  With membership come certain rights and obligations, including the right to elect the Association’s Directors, the right to serve as a Director and/or Officer, and the right to use Association property – Common Area.  Property owners also have the right to vote on certain matters that might potentially affect the value of their property.  As well, Members are required to uphold protective covenants and regulations, comply with Association rules, and pay an annual Assessment that funds most of the Association’s operations. 6

About the Reston Association continued …  The Board sets RA policy in matters related to budgeting and finance, governance and Member use of Common Areas.  The Assessment rate for 2013 is $590.  Reston Association Revenue and Expense Budgets (Capital And Operating) for 2013: 2013 Revenues$14,951,146 Operating Expenses$13,193,395 Capital Expenses$1,623,250 * As approved by the RA Board of Directors on November 17,

Number of Dwelling Units by Type and Location Reston – 2013 APARTMENTCONDOTOWNHOMEDETACHED – PATIO HOME TOTALS Hunters Woods – Dogwood 1,3801,1071,5471,4915,525 Lake Anne – Tall Oaks 1,4361,9471, ,532 North Point ,0891,4064,989 South Lakes 01,3952,2351,5865,216 Totals3,5775,1827,7044,799 21,262 8 About the Reston Association continued …

1.Deed of Dedication - Defines the rights, responsibilities, limits and obligations of the Association and its Members. 2.Articles of Incorporation –  Identifies the name of the corporation.  Defines RA as a non stock corporation 501(c)4.  Designates governance of the Association by a Board of Directors.  Specifies reasons for removing a Director.  Indemnifies officers, directors, and members of the DRB and committees. 3.Bylaws -- Are the governing regulations for the administration and management of the Association 4.Board Resolutions, Rules & Regulations –  Assessments & Finance  Design Review & Covenants Administration  Use & Maintenance Standards  Covenants Enforcement & Insurance  Common Area Rules & Regulations  Elections & Referenda  Board & Association Operations  Member Rights  Committees The Governing Documents

About the Reston Association continued …

As set forth in Reston’s Deed, the Purposes of the Association are to: Interpret, administer and enforce the protective covenants and restrictions of the Deed of Dedication in such a manner as to conserve and protect the value of all property subject to the Deed. For the benefit of the members, acquire, own and lease property (real or personal) and to improve, administer and maintain such property in neat and good order. Assess, collect, and disburse the assessments and charges authorized by the Deed. Promote the peace, health, comfort, safety and general welfare of the Members. Do any and all lawful things and acts that it, in its discretion, may deem to be for the benefit of the property and the owners and inhabitants thereof. Exercise powers now or hereafter conferred by law on VA nonstock corporations as may be necessary/desirable to accomplish the above stated purposes. 11

About the Reston Association continued … As set forth in the Bylaws of the Association, the Policies of Association are to: Foster the fullest usage of the lands and facilities managed by it and serve the leisure time needs of the Association residents by establishing and seeking actively to have established leisure time programs in the Association facilities and lands. Encourage the involvement of other organizations and agencies in promoting the peace, health, comfort, safety, and general welfare of Reston residents. Represent its interests, where appropriate, before public and private organizations. Encourage maximum volunteer member participation in the affairs of the Association. Utilize professional management necessary to assure attainment of Association purposes and these and other policies as may be established by the Board of Directors. 12

About the Reston Association continued …  Unlike other sizable community associations across the country, RA does not include local businesses in its membership, and thus does not collect assessment income from that source.  The Association’s policies and practices; however, do have considerable impact on the business community.  Reston's attractiveness and the amenities provided by the Association play an important role in attracting and retaining environmentally friendly commercial enterprises.  In the summer months, the full-time staff of 80 is augmented by over 300 seasonal employees who maintain outdoor facilities, provide services and conduct programs.  As the community’s steward, RA is responsible for maintaining the quality of life in Reston, chiefly by caring for and administering the community's most precious asset -- its real property. 13

About the Reston Association continued … As a steward, RA has three major roles: 1.RA provides parks and recreation facilities and amenities like those of a city or town – maintaining and operating a vast array of recreational facilities, including 15 pools, 49 tennis courts, 55 miles of paved pathways, ballfields, playgrounds, multipurpose courts, picnic areas, garden plots and a variety of rental facilities for public meetings and gatherings. In addition, it provides Members with a wide variety of opportunities to participate in many educational and recreational leisure programs. 2.RA seeks to preserve property values in Reston through a system of covenants and restrictions -- that govern the design, maintenance, and use of property, as broadly spelled out in the Deed; and 3.RA seeks to protect Reston’s natural beauty and environment – by maintaining and nurturing over 1,300 acres of open space, including 4 lakes, 3 ponds, streams, wetlands, forests, and meadows, as well as a 72-acre nature education center and Nature House. 14

Board Duties & Responsibilities  Different people come to the position of director of an organization with varying degrees of experience and varying qualifications. Some have served on the board of a non-profit organization or association before and understand fairly well what is expected of them; others may have only the most general ideas, or perhaps none at all.  The RA Board, unlike many nonprofit boards, does not expect its individual members to go out and raise money for RA; the Assessment takes care of that. At the same time, however, the members of most non-profit boards don't have to run an organization that hires upwards of 300 seasonal employees every summer.  As an elected Director of the Reston Association, Board members are responsible to the membership for seeing to it that the purposes and policies of the organization are followed and the strategic objectives of RA are accomplished. 15

Reston Association Vision, Mission, Core Values & Strategic Plan Vision – Leading the model community where all can live, work, play and get involved. Mission – To preserve and enhance the Reston Community through outstanding leadership, service, and stewardship of our resources. Core Values – Service. Collaboration. Stewardship. Innovation. Leadership. Strategic Areas of Focus –  Change & Opportunity  Community Leadership & Engagement  Programs & Services  Sustainability & Community Viability  Technology

Board Duties & Responsibilities continued … When working as a full board, all Directors: Determine long-range mission and goals; Establish RA policy and procedures; Hire a person to serve as the Chief Executive Officer (CEO), to oversee the operation of the Association - with no voting authority; Monitor finances, approve budgets, set the Assessment; and Approve Association programs through the budget process. 17 In addition to receiving daily assistance from the CEO and the operational staff, the Board is supported by Legal Counsel, who helps guide Directors and the CEO into legally acceptable conduct and serves an important “loss prevention” role for RA.

Board Duties & Responsibilities continued … When working as individual members, all Directors: Attend all Board meetings, special events, and board work sessions; Prepare thoroughly for Board meetings; Serve as committee liaisons, members and/or chairs; Offer counsel, suggestions, and opinions; Assume leadership roles when called upon; Keep the Board and the CEO informed of community concerns. 18

Board Duties & Responsibilities continued … In carrying out its duties, the Board looks to the following committees to advise on important aspects of community life and the management of Association recreational facilities, open space and other assets:  Board Committees -- Board Planning, Fiscal, and Legal.  Board Advisory Committees – Communications, Reston Neighborhood, Environmental, Parks & Planning, Pedestrian & Bicycling, Seniors, Tennis, and Transportation.  The RA Board of Directors relies on the Covenants Committee and Design Review Board for design, use and maintenance issues.  Only the Design Review Board has the power to interpret, administer and render decisions involving design covenants and guidelines as provided in the Reston Deed and Association Bylaws. 19

Board Duties & Responsibilities continued …  Section IX of the Association’s Bylaws authorizes the Board of Directors to establish and appoint individuals to Committees to assist in the work of the Board.  Committees do not have the authority of the Board.  Committees may not speak or act for the Board except when formally given such authority for specific and time-limited purposes. Such authority is to be carefully stated in order not to conflict with authority of the Board or the authority delegated to the CEO.  Committees are to help the Board do its job, not to direct the work of staff.  Committees assist the Board chiefly by preparing policy alternatives and implications for Board deliberation. Committee Rules & Guidelines

 The CEO is responsible for developing a biennial (two-year) budget for consideration by the Board of Directors.  The biennial budget is comprised of three parts: 1.Operating 2.Repair and Replacement – Current Capital Assets 3.Capital Asset Acquisition – New Capital Assets The Budget Development Process

 A detailed budget calendar is developed by the CEO, approved by the Board of Directors, and posted on the Association’s website and made available at the Association’s offices.  A Budget Suggestion form is developed and made available for Members, Board, Committees and Staff to suggest projects or spending and revenue recommendations for consideration by the Board of Directors. This is made available on Association’s website and at the Association’s offices.  All budget suggestions received will be forwarded to the Board of Directors for consideration. Budget Development

 The CEO conducts a work session with the Board of Directors to discuss the overall budget process, and provide a summary of the budget suggestions received including a initial prioritization of the suggestions.  The Board of Directors will then determine which of the budget suggestions will be considered for inclusion in the CEO’s budget proposal.  The CEO will present other important factors the Board will need to consider for inclusion in the biennial budget including: Salary/Benefit Expenses Program Fees Reserve Funding Levels Budget Development

 After receiving feedback from the Board, the CEO will develop a biennial budget proposal for the Board’s approval.  The Association will hold public hearings on the proposed biennial budget to allow Members to understand the assumptions used in preparing the biennial budget proposal; understand the drivers of any assessment increase or decrease; and comment on the budget process.  Finally, after adopting the budget, the Board will set the Assessment rate for the first year of the biennial budget. Budget Development