By Josh Davis, Associate Editor
(Jan. 31, 2019) Although the proposed fiscal year 2020 Ocean Pines budget released on Jan. 4 did not include an assessment increase, the more recent “recommended” budget published on Friday did include one and, if it survives, would represent the second-largest in association history.
The $127 increase to the $951 basic annual assessment would second only to the $150 increase approved by the board of directors in 2008.
From 1971-1977, Ocean Pines assessments remained flat at $50. The first increase, by $10, occurred in 1978.
After that, assessments grew steadily, hitting $103 in 1980.
The annual fee was $215 in 1983, $305 in 1986, $435 in 1994, $515 in 2002, and $575 in 2007, before jumping to $725 the following year.
Assessments during this decade were $763 (2010), $808 (2011), $843 (2012), $873 (2013), $914 (2014), $909 (2015), and $921 each year from 2016-2018.
In an executive summary of the recommended budget published Friday, General Manager John Bailey said the fiscal package would “accomplish many things that will be new to the association’s budget and very good for the long-term health of the Association.”
“That’s the upside,” Bailey said. “The downside is that to fund those items, there is now recommended to be a significant increase in the annual assessment. In order to understand these major considerations, and to generally understand the entirety of the budget, one must look strategically at what the recommended budget accomplishes and how it creates a foundation for a healthy future – financially and for an improvement in the maintenance, and thus value, of the community’s assets.
“It should be noted that this budget includes the full, properly calculated reserve contributions; updated and current depreciation calculations; funding of over $600,000 in new capital (for the Police Department/Admin building; and a room addition at the Sports Core pool); deferred operational maintenance; and drainage.
“It does not arbitrarily attempt to avoid addressing OPA issues in favor of assessment calculations. This approach provides the community with the opportunity to participate in the decision process and allows the Board of Directors to specifically identify which areas will not be funded, if any, and why, in the next fiscal year.
“The budget development process is one of collaboration – by many of your fellow members, in addition to the OPA staff. The Budget & Finance Committee members, those who are specifically dedicated to helping manage the financial affairs of the community, have spent many hours of volunteer time reviewing the operating budget and the reserves.
“The B&F Committee conducted three days of intense and detailed budget meetings. Their effort was followed by two days of budget discussions by the Board of Directors. Those five work sessions yielded a lot of modifications and questions that created further significant changes to the Proposed Budget and have now led to the Recommended Budget.”
Bailey said the $951 assessment in the Jan. 4 proposed budget was increased $31 “As a result of many review meetings and discussions with the Budget & Finance Committee” and presented during a public budget hearing Jan. 12.
Of the changes that factored into the initial increase was $10,000 added to marina revenue, which subtracted $1.18 from the assessment, as well as four items that added to it: a $133,000 increase to the fire/EMS capital replacement contribution ($15.74), a $50,000 increase for legal services ($5.92), a $40,000 increase for deferred maintenance ($5.37), and a $50,000 increase for “IT Redundancy, Depreciation” ($5.90).
“Conversations and discussions have continued over the last two weeks at the Board level and with additional input from the General Manager, the B&F Committee, the Treasurer, and the Assistant Treasurer. As a result of everyone’s collaborative effort, we have made some additional recommended changes to the budget as of January 24, 2019,” Bailey said.
Of those were $650,136 more for the capital reserve contribution, $237,038 more for deficit recovery, and $25,000 for new capital debt service.
Included in the $650,136 capital reserve contribution additions were $400,000 for road reserves, $160,000 for bulkhead reserves and $89,548 for replacement capital reserves.
Related to new capital debt services was $400,000 to expand the police and administration building, borrowed from reserves at a 3 percent rate, and a $200,000 room expansion for the sports core pool, to be borrowed from a third party at a 6-percent interest rate.
The recommended budget also includes $337,098 toward the remaining $1 million deficit.
Total proposed drainage spending is $915,000 – a nearly $800,000 increase over the previous year. Total deferred maintenance spending is $465,000, said to cover among other things the beach club parking guard shack, small playground equipment, playground mulch, additional stone dust for trails, basketball goals and backboards, and “many exterior signs throughout the community.”
Bulkhead collections of $19 for all homeowners and $465 for waterfront lot owners, previously waived in the proposed budget, was put back into the recommended budget.
Additionally, “The Recommended Budget fully funds the pay adjustments identified in the Pay Study,” Bailey said. “The study found that we had 35 positions that are currently under funded, thus the Recommended Budget includes approximately $128,000 to bring those positions into better alignment with the competing marketplace.”
Bailey said the adjustments include a 2-percent labor pool increase “to be distributed based on merit achievement,” and medical benefits budgeted to increase 10 percent “based on the advice of the insurance professionals.”
Also in the recommended budget, as in the two previous drafts, most amenity user fees would increase about 3 percent.
“As the budget schedule indicates, this is a process, a collaborative one,” Bailey said. “We started with staff and the General Manager to create multiple drafts leading to a Proposed Budget. We have had three Budget & Finance Committee budget work sessions, a member hearing on the Proposed Budget, two Board of Directors budget work sessions, and lots of effort by many members, committees, and staff. We now have a Recommended Budget.”
Bailey said the board would conduct a budget hearing on Saturday at 10 a.m. in the Assateague Room of the community center on 235 Ocean Parkway.
“The Board of Directors will hear your comments and will then take two weeks to provide the General Manager with budget adjustments they would like to consider,” he said. “Amendments to the Recommended Budget will be voted on by the Board on February 16, at which time the Board of Directors will adopt the Final Budget and set the annual assessment for the next fiscal year. Please do share your thoughts with the Board by attending the member hearing and/or by email at firstname.lastname@example.org.”
To view the recommended budget, visit www.oceanpines.org/forms-docs-cat/budget-for-fy-2019-2020.