(Jan. 18, 2018) Ocean Pines Association General Manager John Bailey joked that this was “not his first rodeo” as he talked last Friday about developing a budget for a large-scale homeowner’s association.

He previously managed several large associations in Virginia and recently turned in his first Ocean Pines budget proposal. His draft of the fiscal year 2019 financial package included a $60 assessment increase to cover $1.4 million in losses in the last two fiscal years. The increase broke down to $27 more in the general assessment and a separate $33 fee each year, spread out over five years.

“It was my first time here and I wanted to take a really pragmatic approach to it,” he said. “I think people would love to not have any assessment increase. I know that people would love to have revenue get back to what it was overnight. But, I just didn’t think that was real practical.

“This is sort of a righting of the ship year,” he continued. “It’s a restructuring year and then nothing but rosy futures, I think, going forward.”

Bailey expects the budgetary blossoming to begin becoming apparent in 2020.

“Then, I think, we’ll be moving in the right direction,” he said. “It’s a gradual fixing of things and resetting of the expectations that everybody should have. Certainly, I think in the last year the expectations were just not achievable, the way we had it structured.”

He said public feedback on the proposal, so far, has been light. That’s not because of a shortage of open meetings.

Review sessions were held with the budget and finance committee last Wednesday, Thursday and Friday, and a final budget recommendation meeting was held with the committee on Tuesday. All of the meetings were open to the public, streamed live online, and continue to be available on the official association YouTube channel.

Bailey will present an amended draft to association members on Jan. 20 and then meet again with the budget and finance committee on Jan. 22. His formal budget presentation to the board will be on Jan. 27.

Directors’ work sessions are scheduled for Feb. 5-7, a public hearing for membership is set for Feb. 10 and a board vote is scheduled for Feb. 25.

“I think everybody knows that this is a process that we’re going through,” Bailey said. “It’s a very different approach from prior years of just saying, ‘here are the recommendations’ and leaving it up to the board to make all those changes.”

He said specific line items would be changed from the original draft, based on recommendations from the budget and finance committee, before the board members weigh in.

“That leaves policy decisions – the big picture stuff – for the board,” Bailey said. “That’s not to say they can’t dig in the weeds as much as they want to and change other things the finance committee didn’t discuss, but it will eliminate some of those smaller issues and allow the board to focus on the things that most impact members of the association.”

Bailey admitted selling an assessment increase is never easy, but said this one is necessary.

He said last year’s deficit was about $369,000. Deficits from the current fiscal totaled more than $1 million.

“That’s separate from any of the operations corrections,” he said. “Then, you’re dealing with a budget that was $1 million off, both revenue and expense wise – how do you fix that?

“You’re really looking at cutting a ton of stuff out, but I thought that would be too draconian,” he said. “So it was a balance of trying to be pragmatic, rather than cutting everything under the blue moon [or] raising the assessment over $100. Neither one of those, I thought, was really practical or should have been expected.”

Not that he’d like to make a habit out of it, but Bailey said association members have seen assessment increases resulting from deficits before.

“I knew it wasn’t an unusual thing – people may not have liked it, but at least they were familiar with the concept of the deficit-recovery program,” he said. “And then, we’ve got to correct a broken budget. And we did that for less than 3 percent.

“Is it perfect? No. I’d like to waive the magic wand and say, ‘ta da!’ but I didn’t think that was realistic either,” Bailey added. “I hope people will look at it as, we may not like it, but we understand it and at least it’s a viable discussion topic that we can massage. That’s what it is – a process.”