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Highlights from first day of OPA budget hearings

Ocean Pines Budget and Finance Committee Chairman John Viola speaks during a fiscal 2020 budget hearing on Monday.

By Josh Davis, Associate Editor

(Jan. 10, 2019) Day one of public hearings for Ocean Pines’ fiscal year 2020 budget was rocky for General Manager John Bailey, as he tangled with several association members over many of the details of his proposal.

To start, Budget and Finance Committee Chairman John Viola, who ran the meeting, began his remarks by saying Bailey’s $100,000 deficit reduction did not go far enough.

Viola said his committee would recommend paying $333,000 toward the remaining $1 million deficit balance. He said the change could affect the basic annual assessment, which initially projected to remain flat at $951.

Bailey said he back-loaded the deficit reduction on purpose, but if the committee wanted to increase the payments “that obviously means we’ve got to find another $233,000 in the budget somewhere – unless you want to raise the assessment.”

Viola immediately said he would not tolerate “that kind of rhetoric.”

“If we make a change here … I don’t want to hear that it was the committee that raised the budget,” he said.

Bailey attempted to clarify his statement, but was interrupted.

“I’m not finished!” Viola said. “I will not allow that kind of rhetoric to start today … we will come up with a budget that’s right. It won’t be you increasing it, it won’t be me increasing it or decreasing it. Let’s stop with that rhetoric right now.”

“It is a collective process. This is part one,” Bailey said. “It’s not the GM and his wizard hat dreaming up his budget. It’s not the budget and finance committee in of itself, it’s not the board members in of itself … it’s a process by everybody.”

Several minutes later, budget and finance committee member John O’Connor asked about the $125,000 cost mentioned in the budget draft as the annual price for an organizational restructuring project ordered by the board of directors.

The figure was not included in the proposed budget’s bottom line and an executive summary added, “Because the organizational restructuring involves changes to the existing personnel structure, the Board will be discussing the restructuring proposal in closed session.”

“Exactly what is that?” O’Connor asked.

“It’s not included in the budget and, based upon other discussions that I’ve had with the board, I do not anticipate it will be put [into the budget],” Bailey said.

“But, what is it?” O’Connor asked. “They asked you for an organizational structure. From my viewpoint, just make up a chart … am I missing something?”

Bailey said he could not comment further because it impacted “existing personnel.” Pressed for more details, he replied sternly, “It’s personnel.”

“It’s speculative. It doesn’t need to be an issue to be discussed,” Bailey later said. “It’s speculative, so, it doesn’t matter.”

Resident Joe Reynolds countered, “If this person doesn’t exist, it’s certainly not a personnel issue.”

“Does it exist? No, it doesn’t!” Bailey said. “Don’t create a ruckus out of something that doesn’t need to be created a ruckus about.”

Bailey also became aggravated when asked for details about the Matt Ortt Companies contract to oversee food and beverage operations – particularly, how the bonus structure works.

Several committee members and others attending the meeting said it appeared certain expenses were not included in the profit and loss figures the Ortt Companies would be held to, potentially including rent, marketing and facility renovation fees.

At the yacht club, Reynolds said, it appeared all utilities were excluded from the bonus calculations, adding, “I find that rather disturbing.”

“The net result of moving all utilities out of the cost of operating … could result in giving them $50,000 in association member assessment money,” he said.

O’Connor later singled out refuse fees as also being excluded.

“We don’t charge them for that? We’re eating that expense?” he asked. “Garbage, especially, is even worse than utilities. If you’ve got a restaurant, you’ve got garbage.”

“I want to remind everybody where we were – because everybody’s forgetting that,” Bailey said. “Look at the 2018 actuals … negative $677,000! We’re operating in the black, for crying out loud. What is the problem?” he added.

Finance Director Steve Phillips said the Ortt Companies profit bonus is “calculated off a different number than what the [profit and loss] actually shows here,” adding the budget forecast for the current fiscal year was “pretty much break-even” for food and beverage operations.

Viola then asked Bailey to prepare “a straightforward example, so that’s clear for everybody” on how the bonus is calculated under the current Ortt Companies contract.

“That’s what I’m asking,” he said.

Members of the golf advisory committee also confronted Bailey, with committee Chairman Larry Davies saying he was “really disappointed with this budget” and that Bailey had been unresponsive to his requests.

“We’ve asked questions [and] not gotten answers, and we pretty much feel we’ve been ignored,” Davies said, singling out Bailey.

“Have you not gotten answers, or are you disappointed in the answers that you got?” Bailey asked.

“John, you don’t even answer emails from me,” Davies said.

“I beg to differ,” Bailey said. “If you want it in five minutes since you sent it to me, no, you’re not going to get a response from me. You might not get it the next day, depending on what I’ve got going on.”

Davies said he didn’t “bring this up to piss [Bailey] off.”

“Well, the way you said it, you did!” Bailey said.

Davies later apologized, but added, “we don’t feel we’ve been heard.”

Also notable during the meeting, Bailey said the majority of the nearly $800,000 proposed increase in drainage spending, $620,000, would go toward the replacement of four pipes underneath association roadways.

Viola said costs for legal, information technology and overall administration were going up and questioned if enough had been budgeted for each.

He also said there was no working plan for road depreciation and, if one was not presented, that item would likely be excluded from the final budget.

Phillips said the latest fiscal 2019 forecast showed a roughly $15,000 loss for the year. A prior forecast released last month was for a $10,000 loss.

On the golf and country club, Bailey said planned renovations there would likely not have a significant impact on golf operations during the next fiscal year, but would affect revenues at the Tern Grille.

There was, however, discussion on how overall uncertainty with the golf amenity had harmed the operation. Last year, one board member mentioned temporarily closing the course and another briefly proposed outsourcing golf operations.

Golf Director John Malinowski said he’d received several phone calls asking if the course would be closed, while Bailey said restoring or replacing the country club could only help.

“I think the biggest change will be impacted when we have done something – I don’t care what anymore – but something [done] with that building,” Bailey said. “We’ve got to make an impacting difference to how the people view Ocean Pines Golf.”

Bailey also said the budget process was just beginning.

“We’ve got three days – today and tomorrow and the next day [with the budget and finance committee] – then three days with the board of directors next week,” he said. “In between, on Saturday, we have a member hearing for everybody. And then, after the board’s budget meeting, they’ll have another member hearing.”

He said all of the meetings would be streamed online and broadcast on television, and homeowners who could not attend the meetings would “have an opportunity to weigh in by email.”

Additional meetings with the budget and finance committee were scheduled on Tuesday and Wednesday.

A proposed budget hearing hosted by Bailey and Viola is scheduled this Saturday, Jan. 12, at 10 a.m. in the Assateague Room of the Ocean Pines Community Center on 235 Ocean Parkway.