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Committee recommends increasing reserves

Pete Gomsak last Friday offers his view on the long in-progress Ocean Pines reserve study. Also pictured is Budget and Finance Committee Chairman John Viola, who supervised the meeting on reserves.

By Josh Davis, Associate Editor

(Aug. 9, 2018) If recommendations from the association budget and finance committee mean anything, Ocean Pines homeowners next year could be paying more in assessments because of increased collections for several reserve funds.

General Manager John Bailey said annual assessment collections for reserves currently total about $1.677 million, roughly $200 per homeowner.

Budget and finance committee members on Friday, during a meeting with reserve specialist Doug Greene of Design Management Associates Inc., recommended increasing collections for general replacement reserves, bulkheads, and roads and bridges.

Across the board, committee members recommended using a 3 percent construction inflation rate and 2 percent return on “income from invested reserve funds” be used in calculations.

For general replacement reserves, committee members recommended establishing a minimum threshold of $1 million and a 4 percent annual increase in collections.

Budget and Finance Committee Chairman John Viola said the “minimum threshold” represents “an amount at which the ending balance of the fund should never fall below.”

The recommendation for bulkheads was a minimum threshold of $250,000 and a 4.2 percent annual contribution hike.

Reserves set aside for roads and bridges, said by everyone in the room to be underfunded, were recommended by the committee to increase 3.7 percent.

Additionally, committee members recommended collecting $450,000 for roads and bridges in fiscal year 2020, in addition to the $325,000 received each year in casino impact funds and $50,000 in county and state funding.

Viola said the $450,000 would help the association catch up on road depreciation, which has historically not been collected by Ocean Pines.

The minimum threshold for roads and bridges was recommended at $500,000.

Committee members and Bailey several times during the meeting stressed the reserve study was a planning tool, with some aspects called “very fluid.” The Design Management Associates reserve study would have to be updated regularly as items moved up and down the priority list, Bailey said.

The new board of directors, following the Aug. 11 election, would receive an updated copy of the study and could vote on whether to accept it during a regular board meeting in September, Bailey said.

“In the meantime, we’re good to start plugging in numbers for budget [planning],” Bailey said.

He said the study, once approved, would also be posted on the Ocean Pines website.

Viola, in an email Monday night, said he did not yet know what the impact on assessments would be if the board accepted the committee recommendations.

“I was waiting for the DMA calculations, then we would estimate,” Viola said.