By Greg Ellison
(Sept. 5, 2019) Pointing to a legal opinion issued by Ocean Pines Association Attorney Jeremy Tucker, the Board of Directors voted 6-1 to invalidate a petition seeking a referendum to reduce the maximum spending limit from 20 percent to 12 percent of annual income.
OPA Vice President Steve Tuttle cast the sole vote in favor of a referendum based on a petition containing 808 signatures that was submitted to OPA Secretary Michelle Bennett on Aug. 12.
Tuttle said extensive discussions have occurred among OPA members over the spending limit for individual capital expenditures, which require a simple majority vote of board members.
While in disagreement with Tucker’s opinion that the more than 800 signatures does not represent the required 10 percent of membership eligible to vote, Tuttle argued community sentiment in favor of amending the spending limit probably runs higher.
“The interest in the level of expenditure, in my opinion, is higher than what is reflected by the number of signatories through the petition,” he said. “The referendum would put the decision in the hands of OPA membership.”
Tuttle said the result of reducing the expenditure limit for capital purchases would be to provide direction to current and future boards on spending parameters.
Board member Dr. Colette Horn said she opted against signing the petition when given the opportunity.
“I think what we’re really concerned with here is not … what the spending threshold is,” she said. “What we’re really concerned about is a fear of runaway spending by any board.”
Horn said the issue provides a case study in the amount of time it takes the board conclude what is the best solution for dealing with community assets.
“I don’t think the dollar figure is really the issue,” she said.
To address community concerns about potentially wasteful spending on projects that may not be neede, Horn said a strategic planning approach should be adopted for new capital and also replacement spending.
“That will help put the reins on any unfettered spending that we’ve been concerned about in the past,” she said.
Board member Larry Perrone said the present 20 percent limit seems reasonable.
“I would echo Colette’s comments that it’s not the number it’s the process,” he said.
Perrone said community concern over upcoming capital projects to replace the Golf Course Club House and expand the Administration Building is unfounded.
“I think what went on with the club house … and the other buildings that we’re in the process of doing, the process has been open, and the community has been involved,” he said.
Perrone praised the efforts of the work team compiled by General Manager John Viola to find solutions that provide an economic benefit.
“The petition drive that was done, as our attorney stated, my own reading of the petition really does not comply with what is required,” he said. “If the group that did the petition feels that our attorney’s opinion is wrong, they are perfectly welcome to redo their petition and submit it again.”
Perrone also cited the estimated $10,000 cost of conducting a referendum and noted that the voting percentage in the recent board of directors election was just 40 percent.
“In my mind, this is another area where money would be wasted,” he said.
Board member Tom Janasek, while noting his election platform centered on fiscal conservatism, said he had discussed the situation with elected officials and community members.
“We spend money on the attorney and he gave us his opinion,” he said.
Janasek said he would accept Tucker’s opinion as valid.
“I don’t think the spend [limit] at 20 percent is too high for projects,” he said. “I think it’s a trust issue. Boards in the past have spent extravagantly and the public hasn’t been informed.”
Board member Frank Daly questioned whether the referendum approach would settle the discussion of capital expenditures.
“I am sure if we have a problem, neither this resolution or the [Slobodan] Trendic petition will solve it,” he said.
Tuttle, while acknowledging the motion would likely fail, wanted the community to understand his rationale for presenting it.
“I think a significant number of Ocean Pines residents have expressed a desire to see a referendum on the issue,” he said. “The petition presented on Aug. 12 has the required verified signatures to warrant consideration. They had 808 signatures and that is enough to require a referendum.”
Tuttle reiterated that the question is if the cost of a single capital expenditure exceeds $1 million should approval by OPA members through referendum be required.
“Tucker’s argument hinges on the word, ‘shall,’” he said. “In his interpretation, the petition question asks if the bylaws should be amended but does not propose a specific amendment to the bylaws.”
Tucker issued a legal opinion that stated, “As the petition seeks no referendum to amend the bylaws and does not require motion by the board of directors, the petition does not meet the requirement for an action appropriate for submission to the members on a referendum.”
Tuttle said while the petition could be worded more precisely, it does, from his interpretation, ask that the bylaws be amended to reduce the single capital expenditure limit, which would not require a referendum.
“If this board of directors, or any board, envisions a project that would require an expansion above the threshold, they would have to carefully plan the project, demonstrate the need and importance of the expenditure, and present a referendum to the community,” he said. “This approach demands a strategic plan and careful consultation with the reserve study.”
Tuttle said the associated cost to conduct the referendum could be incorporated into the project.
said board members discussed the topic prior to Saturday’s meeting.
“As a new board, it’s interesting to watch our interaction on a pretty important topic,” he said. “We expressed opinions that differed and feed off each other’s … perspectives.”
Parks said the exercise illustrates the current board’s ability to address challenging issues and share information while embracing varying opinions.
“I want to send a message to the membership that we didn’t just say, ‘Oh good, we can dismiss this petition on a wording technicality,” he said. “We could have taken that approach because that’s what our attorney said.”