(Feb. 1, 2018) The Ocean Pines Association Board discussed the following items during a regular meeting at the Tern Grille, last Saturday.
Director Pat Supik, the association treasurer, said the current negative budget variance was about $921,000. She said that number was projected to be about $1.2 million by the end of the fiscal year.
She said payroll costs at the yacht club were 56 percent and 45 percent at the beach club. The industry standard, she said, was 35 percent.
Supik said the current reserve balance was more than $8.1 million.
Association President Doug Parks, during opening remarks, recognized three former residents who recently passed away.
They included former U.S. Navy Captain Andrew Serrell, 94, who died on Jan. 15 at his home in Ocean Pines. Serrell served in the military for 32 years, including during World War II. Parks said Serrell took all of the aerial photos on display in the administration building.
James Philip Mills, 86, died on Jan. 20 at Peninsula Regional Medical Center in Salisbury. He was a career analyst for the National Security Administration and served during the Korean Conflict. He and his wife, Carol, attended nearly every board meeting and Mills was responsible for raising the flag at the North Gate, Parks said.
Also recognized was Dan Stachurski, 73, who died on Nov. 20 in Port St. Lucie, Florida. A U.S. Army veteran who served during Vietnam, Stachurski worked in advertising and public relations. He was a former Ocean Pines board member and association president.
“Those three individuals – we just want to make sure that it’s recognized that their contributions to Ocean Pines were certainly well received,” Parks said.
General Manager John Bailey said he would meet with engineers on Tuesday to discuss renovation plans for the second floor of the country club.
Once construction documents were finished and approved by the board, the project would go out to bid “so construction can begin as quickly as possible and we can see how much we can get done upstairs by this summer.”
On drainage, Bailey said a long-defunct advisory committee would be reformed, meet in February, and work toward presenting a drainage improvement plan to the board by May.
As it stands, he said, drainage improvements in Ocean Pines were exclusively reactive. Bailey said there were “a lot of ditches to figure out … we have 82 miles of road, that’s 164 miles of ditch line.”
On reserves, Bailey said staff was nearly finished scrubbing data for more than 200,000 items included in a Design Management Associates Inc. commissioned in 2015 and delivered in 2016. A special meeting with the board and budget and finance committee was likely in February or March, Bailey said.
Bailey ended with “a good note,” announcing a $12,000 sponsorship by Peninsula Regional Medical Center for 50th anniversary activities in Ocean Pines.
Bailey formally presented the recommended fiscal year 2019 budget to the board, which includes a $30 increase in assessments to address the more than $1.4 million operational deficits accumulated during the last two years.
“I went real conservative on revenue numbers. Last year’s budget was broken, particularly when you look at revenues,” Bailey said.
The recommended budget includes a 3-percent merit raise for staff, although staffing was cut by about 12 full-time equivalent positions, Bailey said.
The original budget draft included a $60 increase in the basic annual assessment, but that number was cut in half during an extensive series of meetings with the budget and finance committee.
Bailey had originally proposed a five-year approach to recovering operational deficits, but that has since been abandoned.
“We’ll review it annually. If we don’t need it next year, great,” he said. “It wouldn’t be presented as a five-year plan.”
The board will hold budget work sessions on Feb. 5-7, followed by a budget hearing for membership on Feb. 10 and a meeting to adopt the budget on Feb. 24.
To view the budget presentation online, visit www.oceanpines.org/wp-content/uploads/2018/01/Budget-2019-First-Hearing-January-20-2018.pdf.
The board approved, with one change, a motion to direct Bailey to issue a request for proposals for auditing services.
Several directors said it was too late in the process, this fiscal year, to make a change from the current auditor, SC&H Group from Sparks, Maryland.
Director Ted Moroney offered a friendly amendment to change the resolution to require release of the request for proposals “no later than Sept. 1, 2018.”
The amendment and the original motion as amended were passed unanimously.
During an extensive presentation on bulkhead repairs, Facilities Manager Kevin Layfield said seven waterfront properties would be addressed by April 30 at an estimated cost of more than $204,000.
Under the worst-case scenario, more than $6 million in bulkhead repair or replacement could be required by April 30, 2022.
Layfield said the long-term strategy was to “eliminate [the] piecemeal approach” of repairs, bring the bulkhead program up to date, including bidding each project separately and using multiple contractors to complete multiple projects, and to streamline the process overall.
The entire presentation is available online at www.oceanpines.org/wp-content/uploads/2018/01/Bulkhead-Powerpoint-Final-draft.pdf
Supik motioned to allow Bailey temporarily use of reserve funds to pay for operating expenses because of recent operational deficits.
She described the allowance as “a temporary inter-fund borrowing of cash,” to be paid back when assessments from fiscal year 2019 arrive, starting in March, and not to continue into the next fiscal year.
However, when board members could not agree on the addition of a not-to-succeed dollar amount, Supik withdrew the motion. Parks asked Bailey to come up with a firm number and the directors agreed to continue the topic during a special meeting later this month.
The directors unanimously approved a motion, by Moroney, to dissolve the reserve study work-group and direct Bailey to provide an updated version of items covered in the study to Design Management Associates Inc. by April 1.
The motion also required Design Managements to make a presentation to the budget and finance committee “to include various funding options available to OPA based on industry best practices and guidelines” and required the board to “determine the number and type of reserve funds and set parameters/formulas for each fund.”
In order to use the study as intended, as a reliable tool for planning, Moroney said it needed to be completed.
“Regardless of your belief regarding reserve balances, the time is now to tackle the part and finally address the type, funding and number of reserves,” he said.