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Berlin, Ocean Pines News Worcester County Bayside Gazette Logo Berlin, Ocean Pines News Worcester County Bayside Gazette


Reservations on reserves

The question of how much money the Ocean Pines Association should keep in reserve to cover the major expenses of maintaining its assets such as buildings, roads and bulkheads continues to haunt its budgetary discussions.

It has done so again, as the administration, in concert with the budget committee, prepares to ask the OPA Board of Directors for a $30 increase in assessments over the next five years to restore the $1.4 million taken from the reserve fund it to cover big losses in the last two years.

The question, again, is whether that $1.4 million really needs to be restored via the $30 increase, given that the reserve fund, not including the bulkhead fund, stands at about $4.4 million.

The obvious answer, as General Manager John Bailey recognizes, is yes it does. Proving that to property owners, however, is not so easy, as was evidenced by the last board’s inability to agree on how to respond to the reserve fund study it commissioned in 2015 and debated for a year.

That study, performed by a highly reputable firm, found that Ocean Pines had roughly $17.4 million in assets and only about 20 percent of that set aside to deal with depreciation, deterioration and unforeseen problems that could occur in the years ahead. The principle that firm and others preach to homeowners’ associations is that it’s easier on property owners to put something aside on a gradual basis to build this fund than it is to impose a special assessment should some urgent need arise.

Even though the optimum size of the reserve fund has not been defined, it’s a safe bet that $4.4 million is not it.

The losses OPA experienced these last two years aren’t likely to be repeated, as this administration appears to have adopted a more pragmatic and conservative approach to operations.

That additional $30, however, is a hedge against unexpected problems, the financial surprises that would come with them, and the most dreaded words of all, “special assessment.”