April 2018 progress by Ocean Pines Progress

April 2018

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THE OCEAN PINES JOURNAL OF NEWS & COMMENTARY COVER STORY

LAUNCH OF THE ORTT ERA Main entrance to Yacht Club first floor restaurant and bar moved to side of building

bar, the deck area between the building and the swimming pool has never had any seating. The main front entrance into the building has always been a challenge, because its use required patrons to walk through the vaulted entrance foyer, to open an interior door and then walk down a long hallway -- now called Tuffy’s hallway because of a small bar by that name added there last year -- to the restaurant and bar. With a main entrance from the side of the building, the Ortt organization obviously concluded that it wants its customers to find the restaurant without having to navigate an obstacle course. The front entrance area will be repurposed as the primary access to the upstairs banquet facility. The company has recommended an awning at the new main entrance at an estimated cost of $8,000, probably as a way to attract the attention of patrons used to entering the building from the front. In a March 26 email to the Progress, OPA President Doug Parks said that the proposed awning “would require a county permit and the GM has indicated we are

To Page 43

FIRST LOOK AT THE DETAILS

Contract incentivizes Ortt Companies to exceed Yacht Club, Beach Club budgets ~ Page 41

Abi’s DINER

The Board of Directors has hired a full-service certified public accounting firm with expertise in fraud auditing to conduct a forensic audit of OPA departmental operations, starting with food and beverage. The Board voted unanimously, with Director Colette Horn absent due to a schedule conflict, at a special board meeting on Thursday, April 5, to award a contract for forensic auditing services to Gross, Mendelsohn & Associates. The actual audit could start as soon as mid-April.

~ Page 21

Hill critiques OPA for excessive levels of inventory

Almost $90,000 in estimated improvement costs recommended by Bailey cut dramatically By TOM STAUSS Publisher he Board of Directors accepted some and modified other requests by the Matt Ortt Companies and General Manager John Bailey in anticipation of the reopening of the Yacht Club in May. Perhaps the most significant change recommended by the Ortt Companies has been accepted. It would address one of the most egregious design flaws in the building’s original configuration. As recommended by the Ortt organization even before a two-year management contract was approved by the board March 29, there will be a new main entrance into the downstairs restaurant and bar. What had been an auxiliary entrance into the building on the east side facing the swimming pool will become the new main entrance. Originally, this side entrance was conceived as a way for restaurant staff to serve patrons sitting out on the deck or around the Tiki bar. While the Tiki bar has limited seating, and restaurant staff in the past has carried hot food from the Yacht Club kitchen to the Tiki

Board selects firm for forensic audit, start imminent

Inventory in three crucial supply areas is approaching the $300,000 mark, an exceedingly high amount for the Ocean Pines Association, according to Brett Hill, a former director and interim general manager. Hill approached the Board of Directors with a list of questions about OPA finances during the public comments segment of a March 29 meeting, but his biggest concern was excessive inventory on the books.

~ Page 13

Mediacom adds new fiber as contract expiration looms Ocean Pines residents began noticing Mediacom crews along Ocean Parkway burying what appeared to be new fiber optic cable in late March. While the current multi-year contract with Mediacom expires in June and then could go month to month, Mediacom’s contractual relationship with the OPA was not directly tied to the work that residents have noticed.

~ Page 5

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OCEAN PINES BRIEFS Board votes unanimously to renew legal contract

Apparently well satisfied with the services rendered by Association Attorney Jeremy Tucker of the Lerch, Early and Brewer law firm, who replaced long-time OPA attorney Joe Moore’s law firm in the fall of 2016, the Board of Directors March 29 unanimously voted to renew the contract with the law firm On a motion offered by Director SlobodanTrendic, the directors voted to instruct the general manager to renew the contract “for one more year” and to negotiate rates “for agreed (upon) services that are not to exceed the rates under the current contract.” Trendic noted that the Lerch, Early contract negotiated after a competitive procurement process in the fall of 2016 has an expiration date of April 30. “The purpose (of this motion) is to maintain the Association’s relationship with Lerch, Early & Brewer for one more year. This will enable the Association to benefit from their historical knowledge of the work they did on matters that are still pending and of high importance,” Tren-

dic said. There was no opposition to Trendic’s motion.

Board adopts ‘single source’ mosquito contract

One month after delaying a vote on the annual Maryland Department of the Environment’s mosquito control program in Ocean Pines, the Board of Directors stepped up and voted for it, at a cost not to exceed $19,000. During the board’s March 29 monthly board meeting, the directors unanimously adopted a motion by Director Ted Moroney to accept the state’s “single source” proposal for mosquito control. Last month, apparently thinking mosquito season doesn’t start until fall, the Board of Directors delayed approval of the contract pending additional information. The Ocean Pines contract is a part of county-wide mosquito control program that provides spraying for mosquitoes during the summer months, when they tend to be prevalent. General Manager John Bailey had presented the contract for board To Page 4

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approval during the board’s Feb. 25 monthly meeting, but didn’t seem to know what it was really for or why it was treated as a capital purchase every year. He said it “doesn’t make sense to me,” but because that’s what has always been done he “just added it” to the agenda for that meeting. Moroney suggested if the program is something that occurs in the fall, then the board should delay action on the contract. By the March meeting, Moroney and his colleagues seemed to be more knowledgeable about hat they were voting on.

Board approves hefty fee for non-resident parking

After Ocean Pines Association President Doug Parks at one point said he was “not going to worry about non-members” having to fork over a hefty fee for a seasonal parking pass to the OPA’s Beach Club in Ocean City, the Board of Directors voted 6-0 with one abstention to adopt a $2800 parking pass for non-association members. The action was taken on a motion

offered by Parks during the board’s March 29 monthly meeting. Parks said that parking must be offered to the public, in accord with IRS and U.S. Tax Court rulings. Parks said the rates for Beach Club were included as part of the just approved 2018-19 budget. What he didn’t say is that the published rates don’t appear to include a specific seasonal parking pass rate for non-members of the OPA, an omission his motion probably was designed to fix. Parks said that $2800 for the season was in line with other public parking lots in the area and therefore “appropriate.” Director Slobodan Trendic suggested otherwise, noting that the daily and weekly rates for parking at the Beach Club for non-OPA members is $30 and $55, respectively. He added that he “would like to suggest” that General Manager John Bailey review the rates for access to the Beach Club parking lot and come back to the board with possible revisions. He said the OPA could be accused of “gouging” non-members by charging $2,800 for a seasonal pass when daily and weekly rates are set

where they are. Director Ted Moroney responded that rather than lower the $2,800 season pass, he might be more inclined to increase the daily and weekly fees. Bailey didn’t offer any comment on whether he would look at the non-resident rates and come back to the board with suggested revisions. After Director Colette Horm noted that some daily and weekly passes have already been sold at current rates, making it difficult to change them for other residents, Parks noted that the $2,800 seasonal fee had been “vetted” by the OPA attorney. His motion passed, with Trendic abstaining.

Bailey slapped down on purchase requests

If there ever was any honeymoon between the Board of Directors and General Manager John Bailey on purchase requests he submits for review and action at monthly board meetings, evidence suggests it’s more or less officially over. For the second consecutive month, directors made it clear during the regular monthly board meeting March 29 that he’d best not assume that the

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board will rubber stamp whatever it he presents for approval. In February, the slapdown occurred with a single bid proposal for a replacement sprinkler system for the Beach Club. At the March 29 meeting, the board rejected -- officially it was tabled, perhaps to take the sting out -- a proposed motorized sand rake at a cost of $17,375. Director Slobodan Trendic began the slapdown by noting that the proposed purchase didn’t have the required sign-off by the department head, in this instance Director of Golf John Malinowski, or Bailey. Trendic also said that the since the sand rake had been designated as a replacement item, to be paid for out of the OPA’s replacement reserve, it should have appeared on the OPA’s reserve study asset list. Trendic said he couldn’t find it anywhere, and asked for evidence that in fact another sand rake indeed is an item already in the OPA inventory, along with data such as original purchase price, the amount of depreciation, and how many years of depreciation remain. He advised Bailey in the future to always include such data in purchase req

4 Ocean Pines PROGRESS

OCEAN PINES OCEAN PINES BRIEFS

April 2018 Ocean Pines PROGRESS

Mediacom adding fiber optic cable along Ocean Parkway, OPA confirms

quests if he wanted Trendic’s vote of approval. What Trendic didn’t say is that the sand rake might not be a replacement item, in which case the replacement reserve would not be an appropriate funding source. It would be considered a new capital item, with funding from the operating fund. Director Tom Herrick also questioned a Tri-plex mower purchase, which he said were designated as tee mowers on the agenda but in the bid specs showed up as green mowers. He said the board approved a new green mower last year for $19,000 but this year showed up on the bid sheet at $35,000. There were several golf-related purchases on the agenda that were all withdrawn on a suggestion by Director Ted Moroney and OPA President Doug Parks. Moroney said the purchases could be brought to the board in a special meeting if there was urgency in buying them. In addition to the sand rake, the items include the Tri-plex mower mentioned by Herrick, a trim mower, five golf utility carts used by golf course maintenance staff, Ventrac mowers, and a golf fuel system. All items were included in the 2018-19 capital budget approved in the February.

Directors approve committee picks

The Board of Directors approved a number committee appointments in a single motion adopted unanimously during the board’s regular

By TOM STAUSS Publisher

cean Pines residents who began noticing Mediacom crews along Ocean Parkway burying what appeared to be new cable, probably fiber optic cable, in late March were correct in that assumption but wrong if they thought that the Ocean Pines Association was somehow involved in that work. While it is true that the current multi-year contract with Mediacom expires in June and then could go month to month, Mediacom’s contractual relationship with the OPA was not involved with the work that residents have noticed. That word comes from OPA Director Cheryl Jacobs, a member of the ad hoc Information Technology work group, which has been toiling away on technology-related issues for roughly a year and a half without much to show for it so far. Former OPA President and Director Tom Terry was recently appointed to chair the group by OPA President Doug Parks, who remains a member. According to Jacobs and confirmed during discus-

sion at the Board of Directors’ March 29 monthly meeting by Parks and General Manager John Bailey, Mediacom is making upgrades to its community-wide cable system independently of any encouragement or involvement by the OPA. Nor is the work directly related to improvements to the OPA inter-department connectivity that the IT working group has had on its agenda. Bailey said the new fiber cable is directly related to Mediacom’s ongoing efforts to improve service to its Ocean Pines customer base as demand for Internet bandwith continues to grow. He also mentioned E-911 service without providing any detail. Jacobs said the IT working group has had discussions with Mediacom and two other major Internet service providers, Comcast and Verizon, about “opportunities” in Ocean Pines. She said there would be a special meeting scheduled with the “full board” to hear about those opportunities. She did not indicate whether the opportunities to be discussed involve only high-speed fiber optic connectivity between OPA departments, a high q q

From Page 4

monthly meeting March 29. The appointments included Steve Habeger as chair of the Elections Committee; Frank Daly to the Golf Advisory Committee, first term; Geraldine Fasulo, golf, first term; and John Noonan, Aquatics, first term. Also approved were Matt Groves as chairman of the Parks and Recreation ommittee; Leah Fuller, Parks and Recreation, first term; Tim McMullen, Parks and Recreation, third term; and Jim Wahl, Parks and Recreation, third term.

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Mediacom From Page 5

priority of the IT working group, or whether they also involve providing new high-speed services to homes throughout Ocean Pines. Under the current contract, Mediacom has exclusive television cable rights only. Programming via satellite is available from other companies. With a Mediacom high speed Internet connection, there are lots of ways to obtain the same programming available through Mediacom cable or the satellite companies. If the OPA wants to deny a more or less automatic extension of the current contract in June, it must cite substantial default and have it upheld in a court of law. It must also purchase, or arrange to have purchased, the installed Mediacom fiber optic cable system at fair market value. Even with frequent service disruptions and complaints about the high cost of full service Internet/cable television services offered by Mediacom, there has been no suggesis included. in substantial umtion polethat andMediacom flag bracket

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Bailey yet to identify new home for pirate ship playground OPA seems to be struggling with finding new location By TOM STAUSS Publisher he “pirate ship” playground equipment removed from the Yacht Club outdoor deck in mid-February remains homeless as of early April, despite a statement by General Manager John Bailey in late February that a decision on a new home for the donated equipment was imminent. Tim McMullen, an Ocean Pines property owner who donated the equipment to the Ocean Pines Association in January of last year, said in late March that he was awaiting word from Bailey on where the equipment would be reinstalled. The equipment had been donated in memory of McMullen’s late wife,

Mary, who founded the OPA’s summer recreation program back in the 1970s. The equipment is currently is being stored at the OPA’s Public Works facilities pending a decision on a new home. Bailey told the Board of Directors at its Feb. 25 monthly meeting that he removed the equipment for safety reasons, specifically that a fencing enclosure was installed too close to the equipment and posed a danger to users in the event of a fall from the equipment. He did not say why the perimeter of the fencing could not have been pushed back from the equipment or removed altogether as alternatives to removing the equipment.

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In January of last year, after some community pushback, the board voted 4-3 to ratify the decision of then acting general manager Brett Hill to install the equipment on the Yacht Club deck not far from the outdoor pool, which at the time was an adults-only amenity. Initially, the equipment had been installed without board approval, resulting in a call by Director Slobodan Trendic for a board vote. A year later, Bailey went ahead and removed the equipment without first obtaining board approval or community input. This year, there was no director who stepped up to call for a board vote on whether to remove an amenity that had been available to the membership, with no reported accidents or incidents that would give rise to safety concerns. McMullen told the Progress last month that he never had pressed for the installation of his donated equipment at the Yacht Club and was OK with its relocation. In late March, he said he was confident in the ability of Bailey and Parks and Recreation Director Colby Phillips to find a new home for the equipment.

He was just awaiting word from the general manager. McMullen is currently a member of the OPA’s Recreation Advisory Committee, recently serving as chairman. Last month. Bailey seemed to be leaning against moving the equipment to the OPA’s Manklin Meadows recreational complex off Manklin Creek Road, which is already well equipped with a new playground installed last year. “There may be a better place somewhere,” he said, without naming any possibilities. He specifically excluded the area between the Yacht Club and the nearby Mumford’s Landing pool, which some opponents last year had recommended as an alternative to the pool deck. Bailey said he had been made aware of issues related to the pirate-themed Yacht Club equipment not long after arriving in Ocean Pines. Saying he had not been pressured by any directors or opponents in the community, Bailey said he independently reviewed the site and decided that it posed safety hazards, specifically the close proximity of the equipment with the fence that surrounds it. He did not claim, as some have, that the equipment interfered with the nearby “Oasis” pool, a one-time an adults-only amenity that last year was converted into a pool open to all ages.

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OPA seeks nearly $757,880 in county grant funds

Bailey makes a case for money to help cover costs of the police department, roads and bridges maintenance, tourism, and recreation and parks programs argued that Ocean Pines contains 8,452 properties with a year-round population of about 12,000, and thus represents a significant percentage of the overall county population. In addition to the county residents who live and own property in Ocean Pines, the association shares the use of its physical assets with thousands of guests who come to the area to visit each year, he said. These physical assets include 82 miles of road and associated bridges, five pools, golf course, restaurants, and multiple parks and playgrounds. There are also many services that the association provides to the residents of the county when they are in Ocean Pines – public safety services, and parks and recreation programming, including dozens of classes for physical fitness and wellness, as well as educational forums. “The aforementioned are the un-

derpinning support pillars of our request for funding. Ocean Pines has historically received less financial support from the county than other population centers. However, we believe that the county can recognize the association for the asset that it is to the county through its consideration of funding for this next year and beyond,” Bailey said. To better relate the funding request to the county’s budget structure, the OPA broke its requests into four categories: public safety, roads and bridges, tourism, and recreation. In the area of public safety, the association is seeking $500,000 from the county coffers, a 7.6 percent increase in county funding. Bailey argued the funding is necessary to assist the OPA in meeting the current and increasing demands on its police force.

The county has provided an annual grant funding for the dedicated purpose of supporting the Ocean Pines Police Department, with $464,500 allocated in FY18. “We appreciate this financial support and trust that the county will be able to continue to provide a strong level of funding for this public safety service,” Bailey said, Last year, the OPPD answered the call of duty 12,277 times, with 401 instances of providing mutual aid assistance. Continued growth on the Route 589 corridor and the unfortunate rise of the opioid crisis had contributed significantly to the number of OPPD’s response needs in the last couple of years. “Your help in providing much needed funding is imperative to meet the related and growing demands on manpower, training, and time,” Bailey told the commissioners. To assist the OPA in meeting the infrastructure needs of its portion of the county, the association is asking the county for funding of $100,000

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By ROTA L. KNOTT Contributing Writer rguing that the community has the largest year-round population in the county, the Ocean Pines Association is asking the Worcester County Commissioners to provide $757,880 to help cover the cost of its services and programs. The OPA is requesting funds to support its police department, roads and bridges maintenance, tourism and recreation and parks programs during fiscal year 2018-19. OPA representatives on March 6 presented the association’s requests for funding to the commissioners as part of the budget development process for Worcester County for the coming fiscal year. The OPA’s request includes $500,000 for public safety, $100,000 for roads and bridges, $25,000 for tourism, and $40,000 for recreation and parks, $36,000 in a restricted fire grant and another $56,880 in street grants. In a letter to the commissioners, OPA General Manager John Bailey

April 2018 Ocean Pines PROGRESS 11

OCEAN PINES County grants From Page 10

for maintenance of its roads and bridges. There are eighty-two miles of roads in Ocean Pines that provide vehicle passage for thousands every day. Ocean Pines has four bridges and 387 pipes that cross under roads; 16 are currently in dire need of replacement, according to Bailey. Additionally, the OPA must maintain the thousands of driveway pipes throughout the community. â&#x20AC;&#x153;Ocean Pines needs to be more proactive in maintaining and repairing our roadways and enforcing proper roadway cuts for new housing and piping replacement. Furthermore, OPA is pursuing a much more aggressive posture in dealing with drainage problems,â&#x20AC;? Bailey said. He argued that a developer could not build a community like Ocean Pines today, especially with regard to drainage and runoff issues, as the legal requirements of handling such matters are very different today than they were when Boise-Cascade was originally granted permitting.

The OPA has more than 200 miles of drainage ditches, a high-water table, very little incline/decline to create appropriate drainage. â&#x20AC;&#x153;We need new pipes to replace old, as well as new piping where we have none; however, if funding were available, these projects could be done and thus alleviate significant problems impacting hundreds of property owners,â&#x20AC;? Bailey said. As a side note, Bailey said Ocean Pines is very interested in participating in any discussions the county has regarding the issue of the casino funds from Ocean Downs and the impact of table games. To assist with executing high-quality events and programming for the community at-large and visiting guests to the county, the OPA also requests tourism funding of $25,000 and recreation and parks funding of $40,000. Tourism is a vital part of the economic engine of Worcester County and the assets of Ocean Pines play a key part in helping the county achieve its tourism goals, Bailey argued. He said thousands of tourists stay or play in Ocean Pines

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throughout the year, not just during the summer. They are drawn by its proximity to the beach as well as by the many amenities - marinas, pools, golf course, parks, racquet courts. In addition, they are drawn to the many programs, sporting events, and special events. One of those events is the OPAâ&#x20AC;&#x2122;s annual Fourth of July celebration. â&#x20AC;&#x153;This celebration includes a firework show that is one of the best in the area and draws over 20,000 spectators, many from other parts of

Worcester County and beyond,â&#x20AC;? Bailey said. â&#x20AC;&#x153;Our Recreation & Parks Department operates seven days a week, year-round, to meet the needs of our residents, visitors, and tourists. It offers many no-fee amenities and activities, including concerts and movies in the park, holiday events, basketball courts, soccer fields, playgrounds, a skate park, walking trails and other special event programs that are open to the public All are costly to maintain, Bailey said.

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12 Ocean Pines PROGRESS

OCEAN PINES

April 2018

Trendic unhappy with way funding request was handled Parks doesn’t respond to inquiry about whether he authorized general manager’s letter, presentation on behalf of the OPA

any insight into his thinking. into hiOPA President Doug Parks did not respond to an email inquiry from the Progress explaining why the matter was not brought to the board for discussion. He also did not respond to a question about whether Bailey made the funding request without first checking with Parks, whose has said he meets weekly with Bailey on Monday mornings to discuss issues of concern. Only Trendic among the seven directors responded to email about the subject, which suggests that the other directors are choosing to close ranks around Parks in the way the matter was handled. “Speaking as a individual director, I was not aware of the GM’s plans to ask the Worcester County government for more funding. I q

By TOM STAUSS Publisher pparently the Board of Directors was not notified in advance of this year’s funding request to Worcester County. It was in a letter to the county commissioners and a presentation to the commissioners by General Manager John Bailey that the Ocean Pines Association’s wish list for additional funding was made public. The usual board discussion that takes place before the OPA’s request is forwarded to the county did not happen this year. Why the usual process was short-circuited is murky. Bailey’s unfamiliarity with precedent may have been a factor. He was on vacation the week prior to publication of the April Progress and was unavailable to provide

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OCEAN PINES

April 2018 Ocean Pines PROGRESS

Hill critiques OPA for excess inventory

Trendic push-back From Page 12

Supplies of chemicals, food and beverages at record highs, former GM says By ROTA L. KNOTT Contributing Writer nventory in three crucial supply areas is approaching the $300,000 mark, an exceedingly high amount for the Ocean Pines Association, according to Brett Hill, a former director and interim general manager. Hill approached the Board of Directors with a list of questions about OPA finances during the public comments segment of a March 29 meeting, but his biggest concern was excessive inventory on the books. “Our inventory numbers are at near record highs, particularly, chemicals, food and beverages,” Hill said. He said he made his conclusions by reviewing the February financials released last month. In February of 2017, a purchase of golf chemicals was double entered into inventory in the amount $76,416.50. Hill said that required an adjusting entry during the association’s annual audit of $65,297.59 to be entered on July 20, 2017, to correct the golf chemical inventory. Hill said “essentially the February

number last year had double the actual inventory on hand” at $146,855. That being the case, Hill asked if double the actual inventory was on hand at that time, then how does the OPA have $180,000 in inventory now. “That’s more chemicals than are budgeted to be used for both aquatics and golf in the next fiscal year,” Hill said. He wanted to know if the OPA had pre-purchased chemicals this year, as has occurred in the past. If so, he questioned whether there were rebates and incentives for the pre-purchase applied to the inventory costs, or elsewhere in the budget. “I don’t know where the list of questions begins on that,” he said. Hill said that “someone needs to take a very hard look at our actual inventory, and make sure it’s actually here, given the issues found in the audit last year. And if it is here, figure out why we bought so much stuff we aren’t using.” He said $180,000 in chemicals is more than is included in the 2018-19 budget.

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only learned about the GM’s request three weeks ago” from an article in an Ocean City newspaper, Trendic said, adding that “I would have expected / insisted this topic first be vetted by the board. This type of request for external funding needs to be supported by a convincing justification and based on a board-level discussion.” Trendic said he did not know “if our new GM discussed this or got advice from any other board member” about the request. But he said that “what troubles me even more is the timing of this GM’s funding request. With an active WCBI (Worcester County Bureau of Investigation) investigation over alleged theft and allegations of large sums of missing funds, the optics are bad. “ He said his “individual preference would have been to first focus on completing the Association’s forensic audit and then, based on the audit results, take all necessary actions.”

OCEAN PINES

April 2018

Parks under fire for rebuffing document requests via email

Inventory From Page 13 The OPA’s alcohol inventory is unusually high, too, according to Hill. At an average cost of $20 per bottle, the inventory shows 3,140 bottles in-house. He said he can’t imagine the OPA has storage space for so much inventory. “How the heck did we get there? And how is that number so high?” he asked. Hill said that the inventory number for January and February are identical. “Which tells me that you didn’t take inventory.” He said that would be fine if there was also no sales activity during that time period. However, the Yacht Club does show a negative cost of goods sold, which would only occur if inventory increases, but isn’t reflected, he said. “Therefore, there is no way the inventory is exactly the same, so if it is reported that way, it means we reused the inventory from the month prior. And if that is the case, how did we calculate a cost of beverage sales for Tern’s and YC which both post costs, if we didn’t take inventory?” With a value of $58,000, the food inventory is just shy of the amount sold at the Beach Club for an entire summer, he said. “Where is it?” Directors didn’t respond to Hill’s inquiries during the meeting.

OPA president cites homeowner association act and attorney ‘vetting’ for OPA policy By TOM STAUSS Publisher cean Pines Association president Doug Parks is coming under fire for unilaterally setting policy, or perhaps simply maintaining inherited policy, on whether certain document requests can be handled via email rather than requiring Ocean Pines property owners, especially those who are non-residents, to make requests in person at the Ocean Pines Administration building. Parks and Oceanpinesforum.com moderator Joe Reynolds have been engaged in an online debate over the decision not to release requested documents via email and the fact that Parks, as OPA president, has not brought the issue to his board colleagues for discussion and policy-setting. On the latter question, Parks has neither denied nor confirmed that he has consulted with any or all of his colleagues. One director, Slobodan Trendic,

says he is not aware of any consultation. Reynolds recently asked the OPA to send copies of certain documents to him via email, mentioning that he believed all the documents he was requesting were already in an electronic format and could be easily emailed. The Progress also has attempted to obtain copies of documents via email recently, only to be rebuffed and advised that an Ocean Pines property owner must obtain copies of documents in person in the administration building or, on request, documents can be mailed to a property owner at an address on record. In two emails to the Progress, Parks cited the Maryland Homeowners Association Act, Title 11B112 in support of his position. The Act in (a)(1)(i) says “all books and records kept by or on behalf of the homeowners association shall be made available for examination or copying, or both, by a lot owner, a lot owner’s mortgagee, or their re-

OPA President Doug Parks spective duly authorized agents or attorneys, during normal business hours, and after reasonable notice.” Parks in an email to the Progress initially insisted that “only financial statements and meeting minutes can be distributed via electronic transmission,” acknowledging that “while the situation is somewhat inconvenient, I hope you will understand the desire to comply with Maryland law regarding proper disclosure of the Association’s books and records. q

14 Ocean Pines PROGRESS

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OCEAN PINES Parks under fire From Page 14

I want to stress the importance of the desire to establish a consistent method for making all required documents available when requested, and by no means am I trying to make the process difficult or cumbersome.” In a follow-up email, Parks said he would “agree that only providing financial statements and meeting minutes via email is indeed a conservative read of Title 11B-112 of the Maryland HOA act.” He said the policy of not sending documents other than meeting minutes and financial statements via email had been “vetted by our attorney.” Parks did not respond to a question from the Progress about whether OPA attorney Jeremy Tucker had been asked specifically whether that provision of the HOA Act precludes or allows dissemination of requested documents. But in a post to Reynolds, Parks seemed to be backing off from categorically stating that the Maryland HOA precludes the sending of certain documents via email, as he had in the earlier email. He in effect contradicted his earlier email to the Progress. “You are correct in stating that the law does not prohibit sending these documents electronically,” Parks told Reynolds. Parks said that “the Maryland General Assembly specified which documents must be delivered to the owners (financial statements and minutes) which supports the position that the statute does not obligate the OPA to provide any other documents via email. The stated approach has already been vetted by our attorney.” Since Parks has already acknowledged that the HOA Act does not preclude the OPA from sending all requested documents via email, it seems more likely that Tucker was asked whether language in the statute provides some cover to the OPA for what Reynolds and other critics regards as a pointless obstruction in the ability of OPA members to obtain requested documents via email. “As I stated in a previous email to you, the intent is not to be an obstruction to making the documents available, rather is it meant to establish consistency in providing the documents to Association members” Parks said in his Progress email. He added that the office of the

April 2018 Ocean Pines PROGRESS General Manager is keeping a log of all requests for books and records as a means to register the request and ensure the OPA is protecting official books and records from unauthorized disclosure,” Parks told the Progress that “being able to track and report on how these documents are made available and distributed to OPA members puts the Association in a low risk position should any litigation come about in the future.” In a follow-up email to Parks, the Progress asked him whether providing copies of documents via email would be incompatible with keeping

a log of requests or establishing a consistent method of making documents available. Parks did not respond. One OPA director, Slobodan Trendic, has said he would not be in support of the current practice and would argue and vote against it should it be added to a future meeting agenda for the board of directors to review and decide. Other directors have not weighed on the debate so far, although they were provided copies of email to and from Parks. Trendic told oceanpinesforum. com that Parks had not brought

the subject to the board for discussion, prompting Reynolds to wonder whether Parks had acted unilaterally. The policy of not sending certain documents via email probably predates Parks’ tenure on the OPA board and as president. Nontheless, he apparently has opted to defend it without checking with his colleagues on whether they want to revisit it. Whether the issue will be brought up for discussion at a future board meeting remains to be seen. If so, it probably will be Trendic’s familiar role to push the topic uphill.

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16 Ocean Pines PROGRESS

BOARD OF DIRECTORS

April 2018

Board accepts Trendic motion for independent insurance review Director concerned about lack of coverage for bulkheading, swimming pools By TOM STAUSS Publisher he Board of Directors at its March 29 monthly meeting voted unanimously in support of a motion offered by Director Slobodan Trendic that directed the General Manager to recruit an independent industry expert or consultant to help the GM conduct an independent review of the Association’s commercial insurance policies. Trendic accepted a friendly amendment suggested by OPA President Doug Parks and Treasurer Pat Supik to cap the independenent consultant expense at $5,000. The commercial insurance policies referred to by Trendic currently exclude hazard coverage for swimming pools and bulkheading throughout Ocean Pines.

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The approved motion says that the industry expert to be recruited by Bailey should have “no previous relationship” with the OPA and that Bailey and the consultant would provide a report on their findings and recommendations to the board not later than July 2. In offering his motion, Trendic referred to a presentation made to the board by its insurance broker on Nov. 30 of last year. “Subsequently, several concerns (by OPA members) were voiced identifying possible inadequate coverage for some of our physical assets,” Trendic said, adding that “the Board believes it is a good business practice to conduct such independent reviews periodically. The results will enable the Board and our management to ensure the Association’s

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assets have the best coverage at the most competitive price.” Although he voted for Trendic’s motion, Director Ted Moroney expressed skepticism that the OPA would be able to obtain affordable insurance for the extensive network of bulkheading throughout Ocean Pines, but he seemed to hold out more hope for obtaining coverage for the OPA’s five swimming pools. “To obtain damage coverage for bulkheading, we’d go broke,” he said. Trendic told the Progress recently that covering all bulkheading in Ocean Pines might be cost-prohibitive, but he said there may be ways to cover more vulnerable areas, such as direct bayfront property, as opposed to inland canal properties. Kathy Bennett, vice-president of commercial insurance for Avery Hall in Salisbury, the OPA’s Salisbury-based insurance broker, said during the Nov. 30 board meeting that the OPA annually pays $400,000 to $500,000 in total premiums for coverage of up $22.158 million, with deductibles in place at various OPA venues. Despite the costly coverage, Bennett said the association would only be eligible for a fraction of the value of the Yacht Club should the structure be damaged by a flood. She said the swimming pool, bulkheading and docks are not covered at all. Wind and hail damage is insured up to the replacement cost, with a $10,000 deductible in place, she said. Despite its location in a hurricane and flood prone area, the Yacht Club is insured for up to $500,000 for flood damage, Bennett said. That is the maximum allowable coverage under federal flood insurance policy. The OPA has declined to purchase an excess flood insurance policy that would provide coverage beyond that $500,000 limit, she said, suggesting that the OPA might want to revisit that in the future. The only OPA amenity with coverage beyond that maximum federal limit is the Beach Club, Hall said. Similarly, furniture and equipment at the Yacht Club is only covered for $55,100 in damages. However, Bennett said built-in

kitchen equipment would be considered part of the building under the policy. “Flood insurance is actual cash value, not replacement cost,” Bennett told the board. Should the Yacht Club be damaged by flooding, the existing policy would pay out the value of the damage, not what it costs to repair or replace it in the event of a catastrophic event. The OPA has always made the choice not to purchase excess flood insurance for the Yacht Club because the OPA felt it wasn’t susceptible to flooding, Bennett said. However, when a hurricane recently hit Houston, Texas, 80 percent of the properties damaged were not located in a flood zone, she pointed out. When asked about waterfront structures like the bulkheads and docks, Bennett said those aren’t covered by flood insurance, either. The OPA has chosen to “self-insure” for damage to those structures. Essentially that means if disaster strikes, the OPA would have to incur the cost of replacement. General hurricane damage from wind would be included under the OPA’s $22 million blanket building and property damage policy, according to Bennett. “That’s blanket across all properties,” she said. Under that policy the OPA must insure up to 90 percent of replacement cost valuation on its buildings. “So, we should be covered even if we were to lose 80 percent of our properties as long as we’re at 90 percent?” Moroney asked. Apparently the answer is yes, so long as the loss is not caused by a catastrophic flood. To help keep the value of OPA properties accurate, Bennett said an insurance valuation is performed annually for any building over $100,000 in cost. There are separate deductibles for the Yacht Club, Beach Club, and Country Club. At the Beach Club and Yacht Club the OPA has purchased additional coverage to reduce the deductibles to just $10,000 on each of those buildings. Because the Country Club is being remodeled, the OPA declined to do so on that building. The OPA holds a variety of other insurance policies on its assets, including inland marine and watercraft coverage, as well as for other hazards, such as crime, director liability, and storage tanks.

April 2018 Ocean Pines PROGRESS

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BOARD OF DIRECTORS

April 2018

Neighborhood offers support for Sanctuary crabbing pier Board may not eliminate amenity after all By TOM STAUSS Publisher motion offered by Director Slobodan Trendic and unanimously approved by the Board of Directors in a Nov. 29 vote seems to improve chances that the Ocean Pines Association will keep the Whitetail Sanctuary’s crabbing pier rather than demolish it without replacement. It still remains to be seen whether the pier can be repaired. If not, or if can’t be repaired affordably, then the Board of Directors would then have to decide whether to demolish it and replace it. Although the directors did not vote to either repair or replace the pier during the Nov. 29 meeting, no one seemed inclined to simply demolish it without then replacing it. The motion offered by Trendic instructed General Manager john Bailey to conduct an independent inspection of the crabbing pier before any other action is taken, such as demolition. The motion also directed Bailey to solicit homeowners’ feedback about continuing to provide this amenity. Finally, the motion said that, “if determined desirable,” Bailey should “issue a Request for Proposals for its replacement if the pier is found unsafe for usage and the total replacement is the most cost-effective longterm solution.”

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Ten top bidders and 40 lucky raffle ticket holders are the recipients of an official Ocean Pines license plate. Ocean Pines Association held a license plate auction/raffle fundraiser on March 24 to raise money for its police department. The fundraiser brought in $5,050, of which $1,250 will be sent to the Maryland Motor Vehicle Administration as a processing fee for 50 organization license plates. The first license plate, PN0001, was sold for $800 to bidder Gary Clift of Ocean Pines. Cheryl Jacobs, Ocean Pines Association vice-president, outbid others to claim license plate PN0002 for $425. Eight other plates were auctioned off to Ocean Pines residents, including PN0004, which went to long-time resident and business owner Marvin Steen for $500. Proceeds from the license plate raffle/auction will cover the cost of the first annual National Night Out event in Ocean Pines,” said Ocean Pines Marketing and Public Relations Director Denise Sawyer pictured with Ocean Pines Police Chief Dave Massey. The event, scheduled for Tuesday, Aug. 7, from 5 to 7 p.m. at White Horse Park, is free and open to the public. Music, food, games and moon bounces will be available. Marked police vehicles will be on display and officers will meet and greet the public. Certified Child Passenger Safety Technician Pfc. Jennifer DeGiovanni, of Ocean Pines Police Department, will offer child safety seat checks, where parents and caregivers receive education and hands-on assistance.

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The motion seemed to preclude the possibility of demolishing the pier without then replacing it. Trendic told his colleagues that the board has been contacted by homeowners in the Whitetail Sanctuary “who disapproved of the proposed demolition of this fishing pier.” The possibility of simple demolition was discussed as a possibility during the board’s budget review sessions in January and February, with statements made by some directors that the neighborhood residents didn’t much use the pier and objected to outsiders coming in to use it and parking on the street to do so. In describing the purpose and effect of his motion, Trendic said the board in voting for it “concurred with the feedback it received (in support of retaining a crabbing pier) and feels that any action related to this amenity needs further review. The intent is to take all facts into consideration so that an informed decision can be made.” After Trendic offered and explained his motion, Director Ted Moroney indicated support for it but said that if an independent inspection revealed safety problems with the pier “it should be closed immediately” to public access. He said he had visited the amenity and noted loose handrails. Trendic said that he, too, inspected the pier and noticed rusty bolts securing the pier at the waterline. OPA President Doug Parks suggested that once an inspection is done and the results known, the board would be facing another “decision point” on how to proceed. Trendic said that total replacement might in the end be necessary but that the board needs “to listen to homeowners” who want a crabbing pier in their neighborhood. He also said that homeowners with views on the issue should make them known to Bailey. During the Public Comments segment of the meeting, one Sanctuary resident said published reports that neighbors were opposed to the pier and wanted it to go away were not correct. She said no neighbor that she knows of wants the OPA To Page 22

April 2018 Ocean Pines PROGRESS

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BOARD OF DIRECTORS

April 2018

By TOM STAUSS Publisher ith the understanding that there might be some additional tweaks or deletions to a community survey that’s been in the works for a year or longer, the Board of Directors on a motion by Director Slobodan Trendic voted 6-1 March 29 to instruct General Manager John Bailey “to undertake a Community Survey by distributing the questionnaires to the Association’s homeowners no later” than July 2. Voting against the motion was Director Cheryl Jacobs, who said she objected to some of the motion’s wording. She didn’t say what specifically she objected to or how she might change it. Although he did not mention it during discussion, Trendic’s motion would appear to provide Bailey with a relatively easy way to distribute what is a now a 24-question survey. Ballots in the annual OPA election are sent out to property owners in early July, so it would be possible to the survey with the ballot send out materials. Bailey missed an earlier opportu

Board directs Bailey to send out owner survey no later than July 2 nity to piggyback on a mass mailing to property owners when annual assessments were sent out to property owners last month. In remarks supporting his motion, Trendic noted that the Strategic Planning Advisory Committee, to which he is board liaison, made several recommendations to the Board in a memo dated Feb. 6. The committee suggested that the survey be made “available electronically via Survey Monkey and in written form to be mailed by the Association,” with a 30-day deadline for responses. The committee recommended that the survey be sent only to Ocean Pines homeowners, hich seemed to take renters out of the equation. The committee noted that the 24 questions submitted to the board last year have not changed since

then and that “therefore, the Committee requests that the Board and the General Manager add, delete or modify these questions as necessary.” Trendic said the purpose and effect of his motion was to facilitate “the beginning phase of the Association’s effort to obtain valuable feedback from homeowners. The information collected from this survey and other resources will serve as the basis for developing a multi-year strategic plan” for the OPA. OPA Director Ted Moroney, while indicating support for the motion, asked Trendic to ask the strategic planning committee to advise on what percentage of “8,000 property owners” would constitute a “reasonable sampling” to give credence to the survey results. He also said he wanted to know what the committee

“was going to do with it” once results are tabulated. OPA President Doug Parks said that any question that asks for a “narrative,” by which he meant a written response as opposed to a yes-no or multiple choice, should be deleted from the survey. Jacobs said he hoped her “critique” of the survey that she submitted last year would be addressed in a revised version of the survey, which she also said should be limited to check-off responses. Trendic said the July 2 deadline for sending out the survey should give Bailey, working with the committee, adequate time to come back to the board with a final draft for review. “That’s why the deadline is in three months,” he said. The motion by Trendic would appear to be the latest, and perhaps final, effort by the committee to persuade ths board and management to bring the survey to the point where management actually sends it out to property owners. Last year’s board didn’t make it happen. It would seem that the ball is now very much in Bailey’s court.

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BOARD OF DIRECTORS

April 2018 Ocean Pines PROGRESS

By TOM STAUSS Publisher

he Ocean Pines Association Board of Directors has hired a full-service certified public accounting firm with expertise in fraud auditing to conduct a forensic audit of OPA departmental operations, starting with food and beverage. The Board voted unanimously, with Director Colette Horn absent due to a schedule conflict, at a special board meeting on Thursday, April 5, to award a contract for forensic auditing services to Gross, Mendelsohn & Associates. In a statement, Association President Doug Parks said that proposals from five firms were thoroughly reviewed by the board, General Manager John Bailey and Director of Finance Steve Phillips. Gross, Mendelsohn & Associates was the best fit for the requested forensic audit services, according to Parks’s statement. In fact, all directors, Bailey and Phillips ranked the firm as their top choice after reviewing its proposal. The cost of the audit to be provided is unknown, but the OPA earmarled $250,000 in assessment dollars for that purpose in the 2018-19 budfget, In a follow-up telephone interview, Parks said the contract will be based on time and materials, essentially an hourly rate, with top executives charging more for their services than lower ranking auditors. Gross, Mendelsohn was roughly in the middle of the pack in the hourly rates charged for services. In its proposal, the company indicated that it could start work whenever the OPA is ready. The original request for proposals (RFP) called for the work to start by the middle of April, and it would appear that start date is achievable. Bailey is due back to work on April 9 after taking a vacation. Parks said on his first day back Bailey will be tasked with contacting the firm and arranging for what’s called an “entrance interview.” Parks said that he says no reason the audit couldn’t start by the mid-April deadline in the original request for proposals, but that the

actual start date is up to the company and Bailey to arrange. Gross, Mendelsohn & Associates offers complete financial services of both for-profit and nonprofit organi-

zations in Maryland, Virginia and the surrounding area. The firm has offices in Baltimore and Fairfax, Virginia. Led by 18 partners, the firm in-

cludes approximately 125 total professional and administrative personnel, including experienced CPAs and certified fraud examiners. In addition, the firm is licensed as independent certified public accountants, in good standing, in Maryland. Five companies with forensic auditing expertise had submitted bids in response to a request for proposals issued in early March for a forensic audit of potential fraud q

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BOARD OF DIRECTORS

April 2018

Forensic audit From Page 21 and embezzlement in Ocean Pines Association departments, Director Slobodan Trendic announced during the board’s March 29 monthly meeting. Trendic, who wrote the RFP that was reviewed and tweaked by directors, said the OPA had received “five very strong proposals” for the audit, and that the directors individually had begun reviewing the bids, with the objective of “shortlisting” the submissions to two or three finalists. “Hopefully that will happen this week,” Trendic said. Director Ted Moroney said the list should be narrowed down to two, and the finalists should then be invited to meet with the board to discuss the scope of work and other factors involved in helping the board make a final decision on which firm to hire. He said the board “should try to get it (contract award) done by the end of April, later than a timeline originally presented by Trendic in proposing his motion for a forensic audit back in February. OPA President Doug Parks agreed with Moroney’s comment about two finalists and bringing them in to make presentations, adding that there should be “public participation” in the process leading up to a contract award. He didn’t spell out the nature of that public participation. He made

a similar promise with respect to the Yacht Club/Beach Club food and beverage contract which he didn’t make good on, in part because one of the two finalists in the end couldn’t meet one of the board’s conditions for consideration. As it turns out it, it didn’t happen in this case, either. The directors, all of whom agreed with the selection of Gross, Mendelsohn, apparently concluded it was no longer necessary to involve the membership in a decision they were prepared to make and keep within the timelines in the original RFP. After meeting in closed session to discuss the contract, the board voted to go into open session and formally approve it. This is very quick work by OPA standards but par for the course on this particular issue. Less than a week after the board voted during its Feb. 25 monthly meeting to solicit proposals for a forensic audit of potential fraud and embezzlement in OPA departments, starting with food and beverage operations, the OPA posted a notice on its Web site for the audit. The vote had been 6-1 in favor of the audit, after extended discussion during that meeting. Only Director Tom Herrick voted no, because he wanted the motion for the audit that had been offered by Director Slobodan Trendic to explicitly target all OPA departments, something that Trendic was not prepared to do. But the request for forensic audit

proposals made it clear that with, under the direction of the auditors, it’s highly unlikely that the audit will stop at food and beverage. Any department with any suggestion of corruption attached to it, or that handles cash or inventory, is a likely target for scrutiny, sooner or later. Trendic said he doubted that the Ocean Pines Police or Aquatics departments would be high on the list of target departments. He also said he could not in good conscience advocate spending OPA member dollars in auditing departments without a hint of corruption, such as the OPPD. In a cover page announcing the audit, the OPA explicitly indicated that the audit would not stop at food and beverage. “The purpose of this Request for Proposal is to obtain proposals from qualified entities to provide forensic auditing services. It is anticipated that the forensic audit will have more than one phase. As discussed in greater detail in the Scope of Work section, phase one will cover the Food and Beverage Department. The [OPA] intends to continue to conduct a forensic audit of multiple departments. After meeting with the selected proposer, it will be determined if these additional department audits are carried out concurrently or sequentially,” the notice said. That was an explicit indication that the audit would not stop at

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food and beverage or Public Works. “Multiple departments” and the reference to concurrent or sequential audits left the timing and extent of auditing intentionally vague. In an earlier draft of his motion, Trendic had called for a fraud audit, but he subsequently opted for the term forensic audit, his initial inclination. “The key difference between a fraud audit and forensic audit is that a forensic audit involves the investigation and evaluation of company’s financial transactions and information for use as evidence in court. A forensic audit is more appropriate in situations where a company plans to prosecute if it finds evident of fraud and embezzlement,” Trendic said in an explanatory email to the Progress. He later said the intent would be to uncover evidence that could lead to criminal prosecution, as well as civil proceedings aimed at obtaining restitution. The RFP said that auditors will need to be available as expert witnesses in any court proceeding. The approved motion instructed General Manager John Bailey to: • Issue a Request For Proposals before March 1 with responses due by March 16 for forensic auditing services • Focus initial scope of work on the Food and Beverage operations • Provide his selection recommendation and obtain board’s approval including funding by March 23, and • Begin the initial forensic audit work by April 16 or earlier. By any measure, it was an aggressive schedule. The first deadline of March 1 was essentially met, but only because Trendic himself prepared the first draft, with relatively minor changes by his board colleagues. He also kept the issue alive by delivering his progress report during the March 29 board meeting.

Crabbing pier From Page 18

to remove, that it’s especially popular during air shows and that many families use the pier to teach their kids how to crab. She reminded the board that Ocean Pines amenities are supposed to be open to non-residents but that in the case of the crabbing pier, she hasn’t noticed that much use of it by outsiders. Its use is generally confined to neighbors who can walk or ride their bikes to it, she said.

April 2018 Ocean Pines PROGRESS

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April 2018

April 2018 Ocean Pines PROGRESS

By TOM STAUSS Publisher irector Slobodan was five for six in having motions he presented during the March 28 meeting of the Board of Directors successfully adopted. His lone defeat came on a proposal to instruct General Manager John Bailey to require employees, beginning in the 2018-19 fiscal year, to contribute 10 percent of the cost of employee health insurance premiums and 20 percent of the cost of employee’s covered family members. “For many years OPA provided its employees with generous health insurance benefits. According to the market research this workplace perk is becoming extinct. With OPA’s projected cumulative deficit now approaching $2 million dollars, this benefit is no longer sustainable and not in line with the current national trends,” Trendic said. He said the purpose and effect of his motion was to bring the OPA’s health plan “in line with current market trends by adjusting employees’ contributions over a two-year period. The intent is to follow na-

Nov. 1, 2017

BOARD OF DIRECTORS

April 2018

Trendic motion to expedite employee contributions to health plans defeated Board adopts changes in 401(K) contributions, requiring employee matches tional averages by using data from sources like the Society for Human Resource Management, Kaiser Family Foundation and USDOL-Bureau of Labor Statistics. The effect of this change is a more consistent contribution towards health insurance premiums by all Association’s employees regardless of their job type or management status.” This was just the latest attempt by Trendic to coax his colleagues into implementing employee contributions to health insurance premiums sooner than others on the board support. During the just completed 201819 budget process, a board consensus emerged to introduce the employee contribution measures

Apr. 30, 2018

spelled out in Trendic’s motion, or at least provisions close to it, in the 2019-20 budget year. The failure of his motion to garner even a second would suggest that his colleagues believe the issue has been resolved for now and that OPA finances, despite Trendic’s arguments to the contrary, aren’t dire enough to expedite the introduction of employee premium contributions in 2018-19. At the same time, however, a board super majority, with Trendic the lone exception, voted to increase the lot assessment by $30 in the new fiscal year. Trendic had argued unsuccessfully that the board could have avoided the assessment increase by more aggressively implementing changes in employee health insurance plans. As an alternative to introducing premium contribution requirements in 2018-19, the directors are introducing changes in the related health reimbursement accounts (HRAs) that are projected to save the OPA roughly $100,000 in program costs in 2018-19. HRAs are intended to pay all or a portion of deductibles in employee health insurance policies when claims are submitted. The board in the just completed budget capped the OPA’s support for HRAs, eliminating some of the higher tiers in the program.

The intent of the board majority is to phase in the premium contributions in 2019-20 when they can be introduced in the context of overall employee compensation. In a related matter, the board on a somewhat opaque motion offered by OPA Director and Treasurer Pat Supik during the Nov. 28 meeting voted unanimously to make a change in the OPA’s 401(K) employee retirement plans that will no longer have the OPA make automatic payments into employees’ retirement accounts without employees making contributions themselves. The motion, details of which were not included in the board packet posted on the OPA Web site, called for the removal (elimination) of socalled “safe harbor” 401(k)s from the types of 401(k)s available to employees. Safe harbor 401(k) programs do not require matching payments from employees. Under the Supik motion, employees will be eligible only for traditional 401(k)s that require an employee to make a contribution before the OPA will match it, up to three percent of an employee’s compensation. The impact of Supik’s motion only became clear when Trendic pressed her for an explanation. Trendic makes a point of including an explanation of his motions’ intent and purpose as part of the board’s meeting packet, but there was no such detail offered in support of Supik’s 401(k) safe harbor motion, suggesting that she didn’t necessarily want her purpose and intent to be disclosed to employees and membership. After Director Ted Moroney clarified the effect of Supik’s motion, Trendic immediately seemed supq

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April 2018 Ocean Pines PROGRESS

Staff submits, board accepts mold contract recommendation Root Companies of Baltimore to remediate Yacht Club mold first discovered in November of last year By TOM STAUSS Publisher t seemed to some that the process leading to a contract to remediate mold conditions at the Yacht Club first discovered in November of last year was taking longer than it should have. It didn’t really matter, however, as the mold provided a good excuse for closing the amenity right after New Year’s Eve, concurrent with a completely unrelated process of finding and hiring an outside contractor to manage the Yacht Club. The remediation contract was awarded to the Root Companies of Baltimore by the Board of Directors at its March 29 monthly meeting at a cost of $55,092. The work should be done in plenty of time for the reopening of the Yacht Club in May. By then, Ocean Pines Association officials hope the excitement of new management and branding for the Yacht Club will turn the mold issue into a distant memory. Director Ted Moroney offered the motion to award the contract to the Root Companies, accepting the recommendation of General Manager John Bailey and Facilities Manager Jerry Layfield. The motion passed unanimously, with Director Slobodan Trendic initially offering some mild resistance, suggesting that a competing bid submitted by a local vendor, Tower Restoration, of Ocean City might be the better option because, in the event of a mold recurrence or some issue, local crews might be able to respond faster than a Baltimore-based company. Moroney responded that he might accept that argument were it not for

Employee contributions From Page 26

portive of it, as it clearly is consistent with his other efforts to bring OPA employee benefits more in line with those offered elsewhere. He chastised Supik for not making the intent and purpose of her motion more clear. With all the directors having a better grasp of what Supik was proposing, her motion passed unanimously.

the fact that the Harvard Environmental, of Bear, De., the consulting firm hired by the OPA to assist in drafting the scope of work and request of proposals, will also be involved in inspecting the final work product. Moroney seemed to be suggesting that mold issues won’t recur because the job will be done right to begin with. In late November of last year, former Food and Beverage Manager Brian Townsend notified the Public Works Department of his concern that there was a mold issue in the ballroom and upstairs bar of the Yacht Club. An inspection of the areas of concern was performed and it was determined that a mold test was warranted. The OPA hired environmental specialist Darren Voss to conduct an analysis and testing of the Yacht Club and found mold to be present in the ballroom, upstairs bar, ductwork throughout the upstairs and in the attic HVAC room. Harvard Environmental was then hired to preform additional testing and prepare a mold remediation protocol. It was determined that the mold was a result of excessive moisture

created by the excessive heat and humidity in the HVAC room and the attic where the ductwork begins. A request for proposals for mediation was created and posted on the OPA Web site and emailed to companies on the Eastern Shore and the Baltimore Metropolitan area. Seven companies responded to the RFP and arranged to inspect the Facility to prepare a bid for remediation. Remediation will include removal of approximately 112 square feet of drywall, hand cleaning and

treating of 1800 square feet of duct work, and vacuuming and cleaning of all effected surfaces. In addition, to prevent recurrence of mold growth, dehumidifiers in the HVAC room and powered attic vents will be installed, fixtures in bar and ballroom will be sealed, drain pans will be enlarged, and removed drywall will be replaced with new. Four of the seven contractors that responded to the RFP submitted bids, including Global Exterminating of Ocean Pines, ServePro of Delmarva, Root Companies of Baltimore and Tower Restoration, LLC, of Ocean City. The bids were reviewed and compared to the protocol. According to a report to the board by Layfield, q

BOARD OF DIRECTORS

28 Ocean Pines PROGRESS

BOARD OF DIRECTORS

April 2018

Mold contract From Page 27

Spring sports

Two popular sports leagues return to Ocean Pines this month at the Manklin Meadows ball field. Youth t-ball, for boys and girls ages 4-6, started April 7 and will continue Saturdays through May 12. Play begins at 10 a.m. Players learn and practice skills the first three Saturdays; games are played the following three Saturdays. Adults ages 18 years and up can play in Ocean Pines’ adult co-ed kickball league. Friends, coworkers, families, and neighbors are invited to organize teams and kick stress to the sidelines with this classic playground activity. The Ocean Pines Recreation and Parks Department can also help place interested individuals on teams as needed. The league will meet on Tuesdays starting April 17. Games will be scheduled from 6-10 p.m. The cost is $300 per team. Programs are open to the public and registration is required through the Ocean Pines Recreation and Parks Department at 410-641-7052. Pictured is Matthew Walter of Berlin running the bases during an Ocean Pines t-ball game.

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Global Exterminating was removed from consideration because of cost. ServePro was removed because the staff determined the company would be unable to complete the scope of work, as it required construction services he company does not provide. The final two bidders were Root Companies with a bid of $55,092 and Tower Restoration with a bid of $69,853, a difference of $14,761. Both companies covered the scope of the work within the mold remediation protocol prepared by Harvard Environmental and were able to complete the additional requirements beyond the remediation (attic fans, dehumidifiers, and roof repair. “We determined that two factors predominantly affected the cost difference between the companies. These factors are the process in which the remediation is being performed and the product used to patch the access holes,” Layfield wrote in his report. He said that the approach of Tower Restoration would have been to isolate the entire work area in one large containment zone using multiple negative air machines, which results in a significant cost difference compared to Root Companies. Root’s approach will be to contain “each critical area individually as they work,” Layfield wrote, adding that he “contacted Justin Solomon from Harvard concerning these differences and he assured me each

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was effective for our project and the difference was only in the two company’s approaches.” The other significant difference was in the method of sealing the duct work post cleaning, Layfield said. “Tower Restoration was proposing to use a ‘door’ that was sealed using wing nuts so the door could be easily removed and replaced for future cleanings. Root Companies proposed the industry standard patch which can also be removed for future cleanings. It was determined that the upgraded doors from Tower Restoration did not provide adequate benefit for the additional cost,” he said. According to Layfield, both companies are “capable of completing the mold remediation protocol and preventive measures to prevent future growth. Both companies can complete the project in the timeframe required. The differences in cost are items of technique and product but the overall scope of work for each company is the same overall.” The difference in the end came down to price, with the Root bid roughly $14,000 better than Tower’s Layfield said that prior to completion of the work, “the project will be reviewed by Harvard Environmental to certify the remediation is completed to the specifications” in the scope of work.

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BOARD OF DIRECTORS

April 2018Ocean Pines PROGRESS

Second bid solicitation at Beach Club yields sprinkler system at half the cost OPA saves $50,000 and awards contract to Chesapeake Fire Systems of Frankford, De. By TOM STAUSS Publisher f at first you don’t succeed, try getting a second bid. That may very well be General Manager John Bailey’s new motto going forward. Back in February, he tried to persuade the Board of Directors to accept a $100,000 bid from the Ocean Pines Association’s long-time sprinkler system supplier, Surefire Systems of Salisbury, to replace the worn-out system at the OPA’s Beach Club in Ocean City. While Surefire competitors had been asked to submit proposals, none did, prompting Bailey and Facilities Manager Kevin Layfield to recommend Surefire. Oops. The Board wasn’t buying what Bailey and Layfield were selling. In a stern rebuke, the directors in effect told Bailey and Layfield to try harder to obtain at least one more bid before they would be will-

ing to award the contract. Bailey got the message. He and Layfield came back to the board last month with a second bid, roughly half that of Surefire’s. The contract award was scheduled for a special meeting March 21 that was subsequently canceled, leaving the project in limbo for a few days. Rather than wait for the regularly scheduled monthly board meeting on March 29 to vote on a sprinkler contract, the directors agreed among themselves to conduct a vote via email, action that is permitted under OPA bylaws if all seven directors agree. All seven did, and all seven voted to accept the staff recommendation to award the contract to Chesapeake Fire Systems of Frankford, De., in the amount of $52,700. The funding source is the OPA’s replacement reserve. After the board in a Feb. 25 meeting rejected what directors regarded

as a sole source contract to Surefire, the staff issued a new request for proposals for a replacement sprinkler system he following day, with calls to more than 21 companies in Maryland, Virginia and Delaware. In a recent memo to the board, Layfield said that the majority of the companies contacted on the second round declined to bid because of distance, time requirements, or both. The RFP and calls resulted in three companies scheduling site tours for bid preparation. Those companies were Chesapeake, SureFire, and BFPE. Chesapeake and Surefire submitted bids and BFPE declined to bid because of scheduling and scope of work issues. Layfield and Bailey recommended replacing the existing “dry” air-filled system with a glycol (antifreeze-filled) “wet system. In his memo to the board, Layfield said that a dry system is subject to more

OPA hires human resources coordinator Trendic questions Bailey’s decision to dispose of vehicles and to buy new Ford Escape without first obtaining board approval By ROTA L. KNOTT Contributing Writer ith a part-time staffer now on board, the Ocean Pines Association is tackling a variety of human resources projects, including a review of personnel documents and employee benefits. General Manager John Bailey during his March 29 report to the Board of Directors said that new human resources coordinator Nate Downing has already completed a review of the OPA’s personnel handbook. Next, he will be reviewing the job description for every OPA employee and looking at the pay rates for each of the positions. Bailey said the open enrollment period is coming up for employee benefits. That makes it the perfect time to meet with all staff to discuss benefits. Director Slobodan Trendic recommended a review and a presentation to the board that details all current employee benefits, which he has said

in the past are overly generous compared to region. He said the OPA’s bylaws call for a periodic review of employee benefits by the board, suggesting that the boad has not always been vigilant in following this directive. Trendic also called for development of a policy for the sale of OPA assets that have not been fully depreciated. “In essence, we really don’t have procedures,” he said. “It becomes almost a GMs unilateral judgment or decision.” Bailey told the board the OPA traded in two vehicles, a Tahoe and large passenger van, both just a few years old, and purchased a single Ford Escape for staff use instead. The transactions resulted in a net to the OPA of $37,000. The OPA also sold a refrigerator truck and two mowers at auction for $35,200. Overall, the OPA garnered $92,000 for its coffers. Trendic said he doesn’t question the benefit of disposing of the specif-

ic assets cited by Bailey. However, he was concerned about the disposal of new assets that have not been fully depreciated. He called for the treasurer and staff to develop a policy that establishes a process for doing so. Finally, Trendic said the purchase of the new vehicle should have been brought to board for approval. He said, “I think the GM had good intentions,” but the purchase wasn’t pre-approved simply because the OPA traded in other vehicles to get the Escape instead. In his general manager’s report, Bailey said a new drainage workgroup has held two meetings, one with county officials and another to “brainstorm” about stormwater issues the OPA needs to address in the community. “We can boil down it down to five elements that we want to address but then there’s tons of things involved,” Bailey said. The first focus area is emergency response to flooding when the

corrosion on the inside of the piping. This corrosion has resulted in increased repairs over the life of the Beach Club system. “After discussing the two systems with both the Fire Marshall and the installation companies, the decision was made to convert the dry system to a wet system when replaced,” Layfield said. “Both companies provided quotes on replacing with a dry or wet system.” Layfield told the board that Chesapeake can meet the requirements of the RFP “at a cost substantially less than that provided by Surefire Protection,” adding that Surefire protection has been the provider of sprinkler systems and inspections for Ocean Pines for many years. But Layfield then took a not too veiled shot at the Salisbury company. “Recently service has started to decline and at times communication has been difficult. For these reasons staff recommends contracting with Chesapeake Fire Systems to replace the existing system with a wet system at the Beach Club,” he concluded. It apparently didn’t require a lot of convincing for the board to agree.

community receives a significant amount of rain during a short period of time. Chronic areas of flooding were broken into two categories, those that require more effort to access but do not need engineering design and pipe replacement, and those that do. The final two focus areas are preventative maintenance and education, both of which are aimed at keeping stormwater problems from occurring within the community, he said. Bailey said the drainage workgroup is also discussing how to address stormwater in areas such as rental properties, lots owner by nonresident members, vacant lots, and association-owned properties. Other challenging areas that have been identified by the group are roadside ditches, as well as those located along the side and rear property lines of lots where there is no access easement. Tidal and non-tidal wetlands will also receive special consideration. The drainage work group will meet throughout the summer to develop recommendations for consideration by the board as part of next year’s budget process.

Thompson contract terminated

for better-than-budgeted amenity finan- as well as “adjustments already made to their votes as the best deal possible for 30cialOcean Pines PROGRESS April 2018 this year’s budget related to the bonus the OPA given that, at the time, there performance, ended up with a highStevens motion passes 4-3, over Jacobs’ ‘emotional’ objections; Brett Hill named acting GM ly contentious 4-3 vote to terminate the clauses” that would have made it much was a solid majority of pro-Thompson difor Thompson to earn a bonus re- rectors who couldforhave renegotiated the contract and Thompson’s employment easier three options. tors who voted it, Jack Collins, was By TOM STAUSS lated to amenity year. it evenbid more Newly electedperformance director Brettthis Hill, who contract defeatedto in make his election thislucrative summer, with the Ocean Pines Association. Publisher offered the motion to go into closed seswith his contract extension vote a possiHill in his explanation said that the for Thompson. closedBrett meeting Director Hill that was began chosenwith by sion, in prepared remarks explaining his ble contributing factor. the intended purpose of reviewing board an obligation to discuss a Stevens was participating in the the board majority to serve as interim motion“has said that five board members reAlso voting for the extension was General Manager Bob Thomp- more objective measure of bonus calcumeeting via telephone, andonsaid later cently had discovered “many disturbing Dave Stevens, who wasn’t the ballot or acting general manager pending a son’s employment contract, including a notification a (reopened) haveisn’t voted differently had he factors so surrounding the of handling of the he thismight year but known as a Thompson search for director a replacement. what one described as “disturb- lation, GM bonus (for the 2015-15 fiscal year),” fan. Both Collins and Stevens explained contract negotiation would be in the best been at the person to hash out the ingAtfactors” involving a $30,900 bonus a special meeting of the Board as well as “adjustments already made to their votes as the best deal possibledefor for better-than-budgeted amenity finan- interest of all parties but to avoid further is- line tailsinofthe a renegotiation. ofcial Directors Aug. 26, the directors votBoard majority supports issuing request for information, director draws sand for stronger action this year’s budget related to the bonus the OPA given that, at the time, there performance, ended up with a highsues in future years.” Elections have consequences, and ed 5-2, with directors Renaud and ly contentious 4-3 votePat to terminate the clauses” that would have made it much was a solid majority of pro-Thompson diless transparent quiet By TOM STAUSS ineasier voting to hire Legum and NorA decision to revisit the contract the election Hillrenegotiated andsolicitation Slobodan for Thompson to earn a bonus by re- with rectors who could of have the contractJacobs and Thompson’s Cheryl dissenting, employment to go into method employed by Hill inlucrative obtainPublisher man, the company that manages the lated to amenity performance this year. contract to make it even more the Aug. 31 deadline would have opened Trendic it was apparent that Thompson with the Ocean Pines Association. closedcean session to Association discuss Thompson’s proposals. Direc-by Parke community in that South Hill55-plus in his explanation said the ing for Thompson. DirectorPines Brett Hill was chosen aboard two-month window for the board and no longerHerrick had a solid majority ofin supcontract, which had been extended for “has an obligation to discuss a Had his allies figured Stevens was and participating the tor Tom Herrick is aligning Ocean Pines, to manage OPA back the board majority to serve as interim Thompson to renegotiate, something porters on the board. moreaccounting objective measure of bonus calcu- out meeting telephone, and into said their later three yearsgeneral on with Aprilmanager 28. how via to bring Trendic himself sentiment in the a office functions last July. or acting pending lation, so resignations, a notifiprobably cation ofretirements a (reopened) that Thompson would have fold he Indeed, might have had he therevoted wasdifferently an expectation -- instead, they were bitter ricommunity would be Board search for athat replacement. Undisclosed atthe the OPA time the contract contract negotiation wouldhe be have in the not best been atcommunity the personand to hash outgrounds the devals on personal policy welcomed. Back in April, offered to At a special meeting of the Board in the that, at some point, better off outsourcing its financial and replacement directors extension was made public was a pro- interest of all parties to avoid further is- tails of a renegotiation. of Directors Aug. 26, the or directors vot- improved for much ofcontract last year -- Legum and management functions, at least chances of financial manamenity-based bonus incentives in Thompson’s probably wouldand be vision that the “new board” –and in drop sues in future years.” Elections have beconsequences, ed 5-2,consider withallows directors Pat Renaud Norman might running OPA’s should it as part of an efagement outsourcing, but nor is the exchange for a more predictable incenterminated by the new board. In pubdecision to revisit the contract by with the election of Hill and Slobodan this the board that hadtothree new Cheryl Jacobs dissenting, go into ideaAdead. back office today, with the OPA out fort tocase, upgrade its antiquated manthe Aug. 31 deadline Trendic it was apparent that Thompson tive package, but the would board have at theopened time lished accounts, Thompson himself said closed session to discuss Thompson’s members as a result of this summer’s from under the cloud of embezzleagement and accounting software. Director Ted Moroney, an apa two-month window for the board and no longer had a solid majority of contract, which had been for voted 6-1 to extend the contract for an- he was theft expecting the board to operating move supin a OPA revisit theextended contract exand a 2017-18 It’s election not an– toabout-face. Herrick pointed director who is running for ment, Thompson to renegotiate, something porters on the board. three years on April 28. other three years without change. new direction. currently projected at $1.5 was part whether of a board minority or last to the board thiswould summer, tension, renegotiate ter- election that Thompson probably have deficit Indeed, there was an expectation Undisclosed attothe time the itcontract New anointed OPA President Tom Thompson served six years as genermillion. summer that tried to hire a regionhas said he is open to the idea but welcomed. Back in April, he offered to in the community that, at some point, minate it, orwas keep it inpublic force aswas written. extension made a proHerrick during the board’s March al vision homeowner association manageonly if it is carefully vetted. drop amenity-based bonus incentives in Thompson’s contract probably would be Herrick was the only director to vote al manager, and that’s well within the allowsspecifi the “new in The that contract ed anboard” Aug. –31 exchange for a more predictable incenterminated by the new board. In pub29 monthly meeting tried but failed ment company to take over OPA Another director, Slobodan Trenthis case,for themaking board that had three the extension. One of the direc- average time of service for managers of deadline a decision on new the against tivehas package, the board at time to lished accounts,his Thompson said persuade board himself colleagues back office functions, including dic, been but a proponent of the it, but

Board rejects Herrick proposal Afor accounting software, possible outsourcing of ack office functions

6-1 tolike extend contract anhevoted didn’t thetheway the for Herother three years without change. rick-Stevens-Hill triumverant went New anointed OPA He President Tom about it last summer. preferred Herrick was the only director to vote a more transparent request-for-proagainst the extension. One of the direcposal approach in contrast to the

time discussion the made thatboard “absolutely” there at was noMay inThefor press release announcing the tention or expectation 24 board meeting. by the board madecision said onlyofthat the contract was jority Herrick, Trendic, Stevens and In of support his motion, Herrick made for convenience, meaning that Hill contract operating wouldthe be saidthat the Thompson’s OPA “is currently terminated infunctions the session Aug.sort 26. board majority wasclosed not alleging back-office with any software Hehas andbeen otherindirectors an that place fordeclined decades.” ofemail wrong-doing on Thompson’s part that invitation by the Progress to disWhile the edOPA’s Technology would haveand justifi a termination for cuss how why the decision to terWorking Group has explored options cause. minate the contract occurred, citing the for software in the past 18 months, confi dentiality of closed meetings. The termination for convenience “recent discussions of issues with

means Thompson reap a generThethat press release will announcing the improper financial controls and decision said only that the contract was ous severance package, including management necessitate thesalary thormade for convenience, meaning that the ough evaluations ... thealthough options and benefi ts for nine of months, board majority was not alleging any sort being reviewed by the Tech Working apparently he noonlonger will bepart eligible of wrong-doing Thompson’s that Group, inclusive the additional would justified of a termination for for any have bonuses. ancillary costs associated with those cause. Nine months of salary works out to options,” Herrick said. The termination for convenience $123,750 for work that group needreap nothas be perThethat Technology been means Thompson will a generformed. ous severance package,on including focused primarily varioussalary softand benefi tsover for deliberations nine months, in although The veil closed ware packages available for pur-

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apparently he no longer be eligible chase/licensing, with will much recent for any bonuses. activity involving vendor software Nine months of OPA salaryGeneral works out to he support was expecting the board to move a demonstrations. to a “non-binding” RFPinfor Man$123,750 for work that need not be pernew direction. homeowner association “financial ager John Bailey recently indicated Thompson served years as genermanagement and six accounting soft- formed. that the introduction of new softThe veil over deliberations in SM closed al manager, and that’s well within the ware, to include all necessary ex- ware is best pushed off to after the average time of service for managers of

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members as a result of this summer’s providing proprietary software OPA election – to revisit the contractto extension, whether to renegotiate it orby terfacilitate that. The effort failed it, or keep it in forcewith as written. theminate slimmest of margin, HerThe two contract specifi ed an Aug. rick and former directors, Dave31 deadline forBrett making a decision the Stevens and Hill, joining on him

What caught many in Ocean Pines by

Hill that Thompson’s be surprise, however, wascontract the factwould that the BOARD OF DIRECTORS axe fell as soon as it did. The new board terminated in the closed session Aug. 26. reorganized itself with an election of ofHe and other directors declined netan software licensing, hardware, fices in a meeting Aug. 22. H work infrastructure, and labor necemail Progress to disill’sinvitation motion tobygothe into closed session essary implement.” on Aug. 26and after thethe open sessiontomade cuss howto why decision terHis proposal called for the generno mention of possible termination. minate the contract occurred, citing the al Trendic managertold to issue the RFPseveral before the Progress confi dentiality of closed meetings. April 15, with proposals due back days after the decision to terminate wasin

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BOARD OF DIRECTORS Herrick motion From Page 30

summer season, so it’s unclear how soon the working group will present the board with a formal recommendation. Herrick’s motion said that, in addition to evaluating existing software, an RFP should include solicitation of what he called “complete HOA financial management solutions. A RFP will afford the Association an opportunity to gather true costs for a turnkey deployment of a solution lo update our HOA financial management structure, in addition to exploring the option of employing a professional support system to provide the much needed oversight and control, by utilizing advanced security protocols to ensure this tokes place.” In short, using somewhat opaque language, he seemed to be calling for an RFP to solicit proposals for the outsourcing of OPA financial management, which for a board majority at present seems a bridge too far. Herrick said the purpose of his motion was not to commit to an outsourcing solution but to generate proposals that could be evaluated along with whatever the technology working group comes up with in the area of software upgrades. Herrick said the RFP would be “a necessary means to allow other options and information to be presented, not only for the Board of Directors and staff to evaluate, but as information to be provided to our entire Association membership in an attempt to further discussions, elicit input, and evaluate all potential options, before a decision is made on what next steps for the community should be.” During board discussion, directors said that while they could not support the issuance of an RFP at this time, they would be amenable to issuing a request for information, or RFI, which generally solicits ideas for solutions to problems short of formal proposals for specific services with an attached fee structure. Calling an RFI solution an excuse for delay, Herrick rejected an offer by both OPA President Doug Parks and Ted Moroney for a “friendly amendment” to his motion that would have changed the RFP to an RFI. Joining Parks and Moroney in support of an RFI were Trendic and Colette Horn, with Treasurer Pat Supik also indicating she might be able to support an RFI.

April 2018 Ocean Pines PROGRESS Herrick repeatedly argued for an RFP, citing an ongoing criminal investigation, the resignation of six employees in the finance department this past year, tens of thousands of dollars spent on “deep dive” financial audits, and concerns that recommended solutions to identified problems aren’t being followed. He also cited new allegations by former Acting General Manager Brett Hill of up to $200,000 in missing or stolen funds. Earlier during the meeting, Hill pointed out evidence in the latest OPA financials of bloated inventory in various OPA departments, citing excessive supplies in chemicals, food, alcohol and fertilizer. “It’s a little late just to be getting information (in an RFI),” Herrick contended. He said anything less than issuing an RFP “would be a disservice to OPA members” who are looking for concrete actions by the board. Herrick said that RFIs often result in little remedial action. Parks differed in his judgment about RFIs, telling Herrick that in this case a solicitation framed as an RFI would not be tantamount “to dying on the vine.” He said in his view it could lead to a good solution. Moroney also said he was leaning more in the direction of an RFI. Herrick stood his ground, arguing that some management companies already have proprietary software and security protocols in place that would deal with reported problems with cash management and theft. Supik said she could support an RFI option, but not a RFP, which she said the Budget and Finance Advisory Committee had just voted to oppose. She said that in her view an RFP would actually “slow down” the process of combatting OPA financial management issues jump-started by a board decision to solicit proposals for a forensic audit of OPA departments where fraud and embezzlement have been alleged. Trendic, who seemed somewhat sympathetic to Herrick’s motion, nonetheless came down in favor of an RFI. He said the board doesn’t yet have a consensus on solutions to problems and an RFI might be a better way to help forge that consensus. He said the IT working group has been toiling away at software solutions, while an RFI might produce better ways to solve problems and even result in a later decision by the board to abolish the IT group.

He also said he supported an RFI because an RFP could take months to draft. “It would be quite an undertaking,” he said. Director Cheryl Jacobs didn’t seem particularly supportive of either an RFP or RFI, referring to efforts by the IT working group to look at software options. But she said that even with software upgrades, the OPA may still be at the mercy “of human beings who create havoc” and that software won’t “solve all our problems.” She said the board should wait to see what the IT group comes up with, adding that the OPA has only recently hired professional management with a qualified general manager and director of finance. Horn said that while she supported the IT working group’s ongoing activities, she also was in favor of an RFI “as a parallel process in place.” At that point Parks asked Herrick whether he would accept a friendly amendment replacing RFP with RFI. Herrick resisted, telling his col-

leagues that the OPA membership needs to see specific proposals for back office management to compare with software proposals from the It group. “An RFI is just pretending” to get that kind of detailed information, Herrick said. Trendic then said his reading of the Herrick RFP motion is that it didn’t necessarily call for outsourcing “if his ultimate goal is turn-over to an outside (company). His language doesn’t spell that out,” he said, implying that as written it seemed more compatible with language that might appear in an RFI. He suggested that Herrick withdraw his motion and bring it back as an RFI in April. Herrick declined to do that, and his motion for an RFP failed, 1-6. It’s possible another director will bring back the proposal in the form of a motion for an RFI in April, Moroney told the Progress in early April “because most of us seemed to support it.”

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32 Ocean Pines PROGRESS

April 2018

BOARD OF DIRECTORS

Moroney announces candidacy for OPA board Defends assessment increase as justified under current financial conditions

this summer. The most notable exception to his usual presence in any board majority occurred in February, when Moroney joined directors Pat Supik and Cheryl Jacobs in favor of a higher lot assessment increase over what was eventually approved. It was not a huge difference, $30 versus $39 dollars. Had Moroney prevailed, the approved lot assessment for the new fiscal year beginning May 1 would be $960, rather than the $951 that it is. The deficit projection at the time according to Supik, the OPA treasurer, was $1.8 million. It’s now $1.5 million. Critics say that it was no accident that the deficit estimate skyrocketed just in time for the board vote to increase the assessment. Moroney argued that a $960 assessment could “pay off” three years of OPA operating deficits in three years rather than four years at $951. In board discussion, he said that $9 additional on the assessment would not be a heavy burden for property owners and that a higher assessment next year could compensate for unexpected expenses that might still occur this year and that a $960 assessment would make it easier to establish a new capital fund or reduce assessments the following year. In an April 6 telephone interview with the Progress, Moroney said he did not expect his vote for an assessment increase in this year’s budget to be much or any factor in his prospects for election this year. “I don’t think our property votes are single issue voters, even if they disagreed with the assessment increase,” he said. “And I can have a rational discussion with anyone to explain why I felt one was needed this year. Many property owners will agree one was needed.” He added that he did not even consider his votes for higher assessments during the recent budget cycle as reason not to run for the board this year. In the end, he said he has “no clue” about whether his votes will cause some members to oppose his candidacy. He said he could live with the consequences whatever happens. “Don’t get me wrong. I would like to win and be on the board,” he said. In his unvarnished endorsement of an assessment increase as need-

ed medicine for the OPA’s financial woes, Moroney is staking out a position that varies with Tuttle, who said in his announcement interview last month that he was in support of Director Slobodan Trendic’s opposition to any assessment increase this year. Trendic’s position throughout the budget review process was that a board majority had decided early on to raise the assessment rather than take even more dramatic actions to cut operational budgets immediately and continue the cost-cutting in 2018-19. Trendic’s cost-cutting list of roughly $1.5 million for next year’s budget was roughly three times that proposed by Supik. It would appear that Tuttle would be a natural ally of Trendic’s should he be elected to the board. It’s not as though Trendic and Moroney are on opposite sides on every or even most board issues. Of late, Moroney has stepped up in defense of some Trendic’s motions that might have gone to defeat without them. He favored Trendic’s proposal last month for an forensic fraud audit of OPA operations, for instance. “I regard myself as a consensus-builder, someone who tries to bring all of us together,” Moroney said. “I don’t see this board as one with factions, like last year’s. Yes, five of us were on last year’s board, but we don’t have the personal animosity between us now that was evident last year. I’m sure some of it is still there, but it’s been substantially buried as we work through our differences and try to solve our problems.” When Trendic and Moroney agree on an issue, their business backgrounds stand in contrast to some of their colleagues on the board. When they don’t, such as how aggressive the OPA should be in implementing changes in how much the OPA should be asking employees to contribute to health insurance, the fault lines between two directors with business backgrounds are stark. Moroney’s support for the twoyear phase-in of health insurance was perhaps his most prominent role in the recent budget review process. He argued that health insurance needed to be considered in the context of overall employee compensation, and that doing too much too soon could have an adverse impact

Ted Moroney

on employee morale. What the board did essentially was to budget cuts in health reimbursement account contributions by roughly $100,000, a change that would affect only those who file insurance claims this coming year within the uncovered “deductible” portion of their insurance coverage. Trendic argued in support of asking all employees to pay for 10 percent of their personal insurance premiums and 20 percent of their family member’s. He said the OPA’s financial condition demanded more significant action in 2018-19, and that by doing so the board could have avoided any assessment increase on property owners. Moroney doesn’t seem opposed to the percentage contributions, but he, and all of his colleagues except Trendic, want to wait until 2019-20 to implement them. With a parttime human resources professional recently hired, the OPA will be in a much better position to effect phase two of health insurance reform that also takes into account the employee’s total salary and benefit package, he said. The hiring of the HR professional is one area where Trendic and Moroney allign. Trendic proposed the motion instructing the general manager to hire one, and Moroney jumped in quickly to support it. It’s one example of where Moroney says this current board has accomplished a great deal in a relatively short time by working together, compromising and smoothing over differences. “An HR person has been in the budget for the past five years at least,” he said. “This board actually accomplished it.” Other accomplishments he cited including the just completed Matt Ortt contract to manage the Beach Club and Yacht Club, which he described as win-win for both the OPA and the Ortt organization. q

By TOM STAUSS Publisher ppointed Ocean Pines Association Director Ted Moroney has ended the speculation over whether he would try to seek a seat on the Board of Directors this summer. As many expected, he decided to do so, announcing his candidacy in an article published in a local weekly in early April. He becomes the third known candidate to run for the board this summer. It’s still very early, so other candidates will no doubt emerge in the weeks ahead. Last month, former Elections Committee chair Steve Tuttle announced his candidacy. Paula Robertson Gray has reportedly talked to some residents about her candidacy, but has not yet reached out to the local media with an announcement. Some candidates wait for the OPA to disclose an official slate in May. There are two, three-year terms at stake this year, and one one-year term, the final year of what would have Brett Hills’ three-year term as a director had he not resigned from the board in September of last year. Moroney was appointed to the board by majority vote in September, with at least seven directors preferring him over former director Marty Clarke to fill the vacancy. Moroney is essentially filling the second year of Hill’s term. OPA by-laws allow appointed directors to serve only through the next election. By custom or consensus rather than any definitive wording in the bylaws, whoever finishes third in the balloting this summer would fill the remaining year in Hill’s original term. The three-year terms of Cheryl Jacobs and Tom Herrick are expiring this summer, and neither are expected to run for re-election. Jacobs is an announced candidate for Orphan’s Court judge in this fall’s general election. Moroney is running for a seat on the board with a track record of roughly six months on the board. He’s usually part of a board majority on any issue, unable in an interview with the Progress to specify any motion that he’s offered that’s failed. But he noted that most of his motions are on issues which aren’t that controversial, such as approving the state’s mosquito control contract

OPA FINANCES

OPA ahead of budget by $24,010 in February, but $1.19 million behind for year Cash, short term investments improve year over year by $466,000 By TOM STAUSS Publisher hile the Ocean Pines Association might still be on a trajectory to generate an operating fund deficit in the year ending April 30 that could approach $2 million, there are some interpre-

tations of financial data that suggest that final results for the 2017-18 fiscal year won’t be anywhere close to that. The monthly financials for February released by Director of Finance Steve Phillips indicate that the OPA generated a loss for February of

$524,545, which happened to be better than budget by $24,717. For the first ten months of the fiscal year, however, the OPA is still in the black by $584,220. While that is slightly more than $1 million under budget, it’s only $592,200 less than

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“What struck me during our discussions with them was something that Ralph DeAngelus (a co-managing partner in the firm) told us,” Moroney said. “We all know we have a branding problem at the Yacht Club after all these years (of losses and customer service complaints). He said turning the Yacht Club around would be a great boost for his business reputation in the area.” He says the highly incentivized contract with the Ortt company will make it much more likely that results beneficial to both sides will occur. He also cited the decision to award the forensic audit contract to Gross, Mendelsohn & Associates will be an important step in uncovering possible embezzlement and theft within the OPA. He said the OPA is already implementing recommendations from last year’s “deep dive” into OPA financial operations, and, together with the forensic audit, he said the current board is actively working on behalf of property owners. It was this recent record of accomplishment that Moroney cited as the driver of his decision to seek reelection. Implementing phase two of health insurance reform in 2019-20, together with making sure that employee compensation is consistent with the region, is one goal for the coming year. He wants to finish the reserve study update within the next three months, along with an associated capital improvement plan that depends on that. He would like the OPA’s computer and software systems to be upgraded this coming year, and remains open to outsourcing “back office” accounting functions provided its impact on OPA operations is properly analyzed and understood. He actually revealed his openness to outsourcing OPA financial operations last fall, not long after his appointment to the board. It was a headlined story in the Progress. Moroney also made news late last year when he resigned as liaison to the Bylaws and Resolutions Committee, essentially agreeing members that he couldn’t be effective if he couldn’t attend meetings. He says that problems with making meetings in Ocean Pines will disappear now that he’s retired from Superior Foundation, in Northern Virginia, where he was CEO and treasurer from 1982 until last year. Moroney and his wife, Sue, have been homeowners in Ocean Pines since 2016.

April 2018 Ocean Pines PROGRESS

34 Ocean Pines PROGRESS April 2018 February financials From Page 33

the year-to-date surplus of $1.18 million through February of last year, which ended with a deficit of roughly $350,000. If the OPA manages to keep that year-over-year differential constant in March and April, then it seems at least theoretically possible that the actual operating deficit for the year will come in under $1 million. If the OPA somehow manages to keep expected losses in the fiscal year’s remaining two months, March and April, to somewhere close to $550,000 each month, then the actual loss for the year could come in closer to $500,000, well below the projections that have dominated headlines in recent months. Of course, that’s a huge hypothetical. Then again, the negative variance to budget of $1.06 million through February paints a bleaker picture. For the remaining two months of the fiscal year, the OPA would need to operate better than budget by $500,000 to reduce the negative variance to $500,000. By the twelfth month of any fiscal year, the negative variance to budget translates into the actual operating loss for the year. So cues on how well the OPA will do or won’t do financially this year are somewhat contradictory. For what it’s worth, a forecast schedule included in the approved 2018-19 budget posted on the OPA Web site March 26 projects an operating deficit of $1.37 million, with another $217,000 in excess new capital spending, resulting in a projected loss for the year of about $1.5 million. OPA Treasurer Pat Supik, in a March 29 email to the Progress, reaffirmed the $1.5 million deficit for the year. The OPA balance sheet, which some say represents a more accurate picture of the OPA’s finances than monthly financials, actually shows that operating cash and short-term investments this year through Feb. 28 are in significantly better shape than they were at the end of February a year ago. This year’s Feb. 28 operating cash number is $1,749,064, with shortterm investments (CDs, CDARs and money market funds) at $6,113,575, for a total of $7,862,639. A year ago through February, the total was $7,396,224. That represents a $466,415 year-over-year improve-

OPA FINANCES

OPA Operating Results by Department for February, 2018

ment, hardly an indicator of an association awash in financial dire straits. OPA Director Ted Moroney said in an early April interview that the difference can be explained by the fact OPA’s reserve funds are more flush with cash year over year, reflectng reduced capital spending out of the reserves. “Adjust for the increase in the reserve balance, and the balance sheet would look about a $1 million worse,” he said. In his February financial report delivered to General Manager John Bailey and the board late in the afternoon on March 23, Phillips reported results for February that, compared to some recent months, were comparatively rosy, The $24,020 operating fund variance, which is the difference between actual and budgeted results, was based on revenues that were under budget by $34,894, expenses under budget by $59,612, and new capital expenses over budget by a scant $708. For the year through February, the results look scarier. The negative operating fund variance of $1,193,980 is based on revenues under budget by $807,876, expenses over budget by $251,202, and new capital over budget by $134,902. According to Phillips’s February report, every amenity department with one exception performed close to budget for the month, with only the Tern Grille missing its budget

target significantly. Although General Manager John Bailey last month said the winter schedule at the Tern Grille produced an operating close to breakeven, the actual numbers don’t bear that out. The operation lost $8,272 for the month, missing its budgeted loss by $4,874. The Yacht Club, which was closed in February, still managed to lose $22,627 for the month, but that actually outperformed its budget by $95. Apparently no revenues and no staff doesn’t translate into zero wage and benefit expenses, which are listed at $9,729. A closed operation still generated service and supply costs of $4,355, and utility costs of $5,567. Still utility costs of $14,209 had been budgeted, probably with the expectation the amenity would be open in February, so the closure did produce some savings. “The Yacht Club salaries and benefits include some severance payments and an employee that was kept on to do some maintenance and cleaning,” Supik said in her email to the Progress. “The services cost was related to contracts in place and service fees, such as credit card monthly fees.” Golf operations out-performed in February, losing $15,261 but ahead of budget by $11,664. For the year through February, golf is in the black by $18,428 but is behind budget by $42,491. A year ago through February, golf (including Tern Grille operations) was in

the red in the amount of $144,756, so the year-over-year improvement is significant. Aquatics, on a path to a banner year, lost $19,911 for the month, behind budget by a scant $885. But for the year through February, Aquatics is in the black by $221,620, with a negative variance to budget of $14,973. A year ago through February, Aquatics was in the black by only $39,002, That’s an $182,618 year-over-year improvement. All three racquet sports performed close to budget for the month, and all three are in the black for the year. Reserve summary -- The OPA through Feb. 28 had $8.11 million in reserves, a slight reduction from the $8.13 million in reserves at the end of January. The replacement reserve carried a balance of $5.03 million, little changed from the previous month. The bulkhead reserve carried a balance of $2.57 million, a very slight reduction from the previous month. The roads reserve remained virtually unchanged in February with a balance of $511,10. Capital summary – A schedule in the financial report indicates that capital spending through Feb. 28 of $95,772 is substantially more than the budgeted $04,984. The negative variance is $50,788, Balance sheet – The Jan. 31 balance sheet shows total OPA assets of $32,769,714, up from $32,214,897 a year ago.

April 2018 Ocean Pines PROGRESS

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OPA FINANCES

Ocean Pines PROGRESS April 2018

Board votes to shift casino funds back to roads reserve By TOM STAUSS Publisher n a tweak to the 2018-19 Ocean Pines Association budget approved in late February, the Board of Directors in a unanimous vote March 29 voted to transfer casino funds previously earmarked for the OPA’s replacement reserve back to the OPA’s roads reserve, where they’ve traditionally been allocated to pay for road repair and resurfacing. Property owners and the local media hadn’t really noticed that the board, in its approved budget for 2018, didn’t allocate the “local impact” casino funds to the roads reserve, as has been done every year that state gasoline tax funding has not been a significant source of funding for counties and communities in the state. The allocation of casino money to the replacement reserve occurred in plain sight but with no public awareness because, in the iteration of the 2018-19 budget, General Manager John Bailey with the concurrence of the Budget and Finance Advisory Committee had replenished the roads reserve by funding road depreciation, a financing mechanism never used previously by the OPA. It wasn’t made clear in committee

and board budget review meetings that the casino funds were being diverted from the roads reserve to the replacement reserve. There was some discussion to the effect that the roads depreciation was needed as a supplemental source of roads funding because casino funding was unreliable and was insufficient to pay for needed roads repair or resurfacing. In an eleventh hour change to the budget, on a motion by Director Ted Moroney, the directors voted Feb. 25 to divert $26.50 in the lot assessment from the roads reserve related to funded road depreciation to the operating fund, to be used to cover costs associated with a forensic audit of OPA financial transactions. Because of the decision not to fund road depreciation or to allocate it to the roads reserve, that effectively left a funding deficiency in the roads reserve, a deficiency that Director Slobodan Trendic sought to fix with his motion to transfer casino funds back from the replacement reserve to the roads reserve and to continue allocating casino funds to the roads reserve in the future. According to Trendic, local impact casino funds passed through to Ocean Pines by the county government “has certain usage restric-

tions. In previous years the Association placed these funds in the roads reserve.” There has been no push-back from county authorities against use of casino funds for roads-related purposes. Trendic noted that Board Resolution F-03, Financial Reserve Accounts, states that the roads reserve “is for the maintenance of the Association’s road System and associated drainage and other road-related maintenance requirements.” The purpose and effect of his motion, he said, is to have “a well-funded Roads Maintenance Reserve and to accurately record, track and audit how these funds are spent. This will ensure the Association complies with the county’s restrictions placed on Casino Impact Funds’ usage and also provide additional funding for long-needed drainage and ditches repairs and maintenance.” Director Tom Herrick, who initially voiced skepticism about the motion but later voted for it, said he was not sure whether using casino funds for drainage purposes would be consistent with these use restrictions, and he said there “was no plan in place” to repair or resurface roads in Ocean Pines for the next several

years. He suggested that casino funds could be placed in the replacement reserve and then used for the planned expansion of the Ocean Pines Police Department next year. Defending use of casino funds for drainage improvements, Director Ted Moroney said he was sure that Trendic intended those improvements for culverts, ditch and bridge infrastructure improvements alongside or under roads, as opposed to routine ditch maintenance. He also said there would be some road work done next year and that it could deplete the roads reserve to an unacceptable level. “That’s why I’m in favor” of the motion, Moroney said. Jacobs seemed more skeptical, alluding to a newspaper article she said she had read recently that suggested that the county commissioners might reduce Ocean Pines’ share of local impact funds by including Snow Hill and Pocomoke City as recipients. “We can’t count on this (casino funding) continuing,” she said. Trendic said his motion didn’t spell out a dollar amount of casino funds to be allocated to the roads reserve. He then alluded to Moroney’s Feb. 25 motion diverting road reserve money. “We need to build it (the roads reserve) up accordingly,” Trendic said

Operating deficit estimate reduced to $1.5 million

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all it the case of the incredible, shrinking operating deficit. Once projected to be as high as $2 million for the current fiscal year, the operating loss in a forecast included as part of the final version of the approved 2018-19 budget now projects it at $1,375,722. Another $217,000 in new capital spending would bring the total to $1.59 million dollars, hardly chump change but not nearly as dire as some over-the-top predictions earlier in the year. The 2017-18 forecast, not surprisingly, has the Yacht Club drowning in red ink with a projected loss of $618,046, followed by golf including the Tern Grille with a loss of $168,453. The Beach Club is part of the loss trifecta with a projected loss of $72,185 for the year. Racquet sports are close to breakeven, while Aquatics, beach parking and marinas are all projected with healthy surpluses.

April 2018 Ocean Pines PROGRESS

2018-19 OPA BUDGET

Ocean Pines PROGRESS April 2018

Final approved 2018-19 budget projects $600,000 surplus, $12.25 million in revenue Capital budget set at $2.15 million dollars; Yacht Club loss budgeted at $93,000, golf loss projected at $117,872

By TOM STAUSS Publisher t took more than a month after the Board of Directors voted to approve the 2018-19 Ocean Pines Association for the final draft to be posted on the OPA Web site, but it finally made it on March 27, projecting a $600,000 surplus on revenues of $12.25 million and expenditures of $11.63 million. An earlier version of the “final” budget, with a $600,000 mistake in it, appeared briefly on the Web site earlier in the month, showing an $11.63 million balanced budget and the reestablishment of a $600,000 deficit recovery reserve. The revised “final” budget eliminates the unauthorized reestablishment of a deficit recovery reserve and instead retains the projected $600,000 surplus in the OPA’s operating fund. If the surplus materializes on April 30, 2019, General Manager John Bailey and the board will be able to say that they reduced the cumulative operating fund deficit by the amount of the surplus. It remains to be seen whether certain optimistic departmental forecasts will be realized. The Yacht Club, as an example, is budgeted to lose $92,951 in 201819, compared to a projected loss of $618,046 this year. The Beach Club, which is projected to lose $72,185 this year, is budgeted to make $101,308 in 2018-19. Golf, projected to lose $168,453 this year, is budgeted to improve to a $117,872 loss in 2018-19. In addition to $12.25 million in revenues from assessment and amenity operations, the approved budget is projecting $2.14 million in transfers from reserves to the operating fund to pay for $2.154 million in capital spending. When capital expenditures are added to the $600,000 surplus and combined with operations, the final budget actually projects a balanced budget of $14,387,823. [See budget comparison graphic on Page 39.]

The approved budget raised base lot assessments by $30 over the current $921 and retained most amenity rates. from 2017-18. Pickleball rates were restored to those in effect in 2016-17 and cover indoor play at the Community Center gymnasium. There were few changes in user fees for the various amenities, although some fees for non-resident users were increased,

Ocean Pines Association Department Summary

APPROVED BUDGET 2018

Source: Ocean Pines Association Finance Department

2018-19 OPA BUDGET

April 2018 Ocean Pines PROGRESS

HAPPENINGS Thursday, April 12 Ocean Pines Garden Clubâ&#x20AC;&#x2122;s annual Arbor Day memorial tree planting ceremony, 10:30 a.m., Pintail Park, Ocean Pines. Trees planted in memory of loved ones who passed away during 2017. A luncheon at the Lighthouse Sound restaurant follows, $22 per person. Menu choices are: Lighthouse Salad, Turkey Wrap, or Philly Cheese Steak. Cost includes beverages, tax, and gratuity. Reservations, Marian Bickerstaff, mbickerstaff@mchsi.com or 410208-2508. Wednesday, April 18 Posture and pain seminar, presented by Back in Action Physical Therapy, Ocean Pines Community Center, 10-11 a.m. How poor posture can cause pain, headaches, limited motion and muscle weakness as well as what steps can be taken to prevent pain. Free, advanced registration required, 410-6417052. Thursday, April 19 Town hall meeting, Ocean Pines Board of Directors, Ocean Pines Community Center, Assateague Room, 7 p.m. Discussion of community issues. Tuesday through Thursday April 24, 25 & 26 Basic boating safety course, sponsored by the Coast Guard Auxiliary, Ocean Pines library, 6-10 p.m. Piloting in local waters, tying nautical knots, foul weather tactics, legal issues, marine maintenance and common medical issues that can occur while boating. $15 for all three evenings. Registration, Barry Cohen, 410-935-4807, or CGAUXOC @Gmail.com. Thursday, April 26 Candidate information meeting, hosted by the OPAâ&#x20AC;&#x2122;s election search committee, Ocean Pines Community Center, East Room, 7 p.m. Saturday, April 28 Board of Directors meeting, Ocean Pines Association, Ocean Pines Community Center, Assateague Room, 7 p.m. Agenda, board packet normally posted on OPA Web site a few days before meeting. Public comments. Annual Parke garage sale, 7:30 a.m. to noon, in the driveways of residents. Rain date May 5. Clothes, lamps, artwork, household items, electronics, furniture and more. Maps at the main entrance of the Parke Central Parke West and Ocean Parkway, 410-208-4994. Monday, April 30 Osteoporosis/osteopenia seminar, presented by Back in Action Physical Therapy, Ocean Pines Community Center, 10-11 a.m. Bone loss and appropriate exercises to help reduce this condition. Free, advanced registration required, 410-641-7052.

Ocean Pines PROGRESS April 2018

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April 2018 Ocean Pines PROGRESS

Contract incentivizes Ortt Companies to exceed Yacht Club, Beach Club budgets Board, managing partner will share 50-50 in positive variances up to $100,000, then profit-sharing kicks in on a sliding scale By TOM STAUSS Publisher he two-year management contract with the Matt Ortt Companies approved by the Board of Directors on March 29 is aggressively incentivized to reward the company for operating the Ocean Pines Yacht Club and Beach Club in a profitable manner. The company will be able to collect 50 percent of any positive variance to budget generated by one or both of the two food and beverage operation, capped at $50,000 for each facility. If the budget target is reached in one case but not the other, the Orr companies would still be able to reap a performance bonus for the facility that performs better than budget. A second incentive is based not on performance compared to budget but on actual profit generated by the two venues in combination. Once the combined net income for both facilities results in a net profit of more than $100,000, then the management company will be entitled to a profit bonus for each dollar in combined net income above the $100,000 benchmark, on a sliding scale. In the first year of the contract, the company will earn a ten percent bonus on every dollar earned above the benchmark up to $25,000. The bonus increases to 20 percent in the $25,000 to $50,000 range, to 30 percent between $50,001 and $75,000, and 40 percent between $75,001 and $100,000 above the benchmark. If the combined net income for both amenities exceeds the $100,000 profit benchmark by $100,000 or more, then the Ortt Companies will be rewarded with 50 percent of every excess dollar earned.

ment fee of $100,000 for operating both amenities, the Beach Club from Memorial Day weekend through Labor weekend, seven days a week, and the Yacht Club from its opening date in May, not yet announced, through Sept. 30, seven days a week. The Yacht Club schedule then drops to three days a week from Oct. 1 through April 30, presumably Friday through Sunday. The company can set the hours of operation at both facilities without approval from the OPA. The management fee will not be paid out in equal monthly disbursements, but in $12,500 installments issued beginning May 1 and continuing through December. This provision means there will be no management fee on the monthly financials for the Yacht Club or Beach Club in the slowest months of the year, January through April. The contract also specifies that the Ortt companies will earn a commission on banquet business, 5 percent on private banquets such as weddings and 2 percent on events scheduled by Ocean Pines clubs and organizations. There would be no commission paid on community events sponsored by the OPA. Should the Yacht Club dip into deficit territory after Oct. 1, or after Jan. 1, then the Matt Ortt Companies would have the option of recommending changes in the days the venue is open. Bailey and the board would have to agree to the reduced days of operation before they could go into effect. Should the wheels completely fall off one or both restaurant operations under Ortt -- no one is expecting that of course -- the OPA could terminate the contract for “poor economic performance” without penalty.

The same terms apply to the second year of the contract, but the company is rewarded for exceeding the first year’s net profit and penalized for slipping. Any year-over-year improvement earns a 30 percent bonus, while any year-over-year decline results in a 50 percent penalty on the slippage. Under the contract terms, the company is guaranteed a manage-

For instance, should the Yacht Club results come in anywhere close to the projected loss in 2017-18 -the latest estimate is $618,046 in red ink by year’s end April 30 -- then even a healthy surplus at the Beach Club wouldn’t matter. It also wouldn’t matter if Ortt manages to halve this year’s projected Yacht Club deficit. Poor economic performance is

Matthew Ortt

Ralph DeAngelus

defined in the contract as a combined loss in the two restaurants of $25,000 or more. The contract specifies the Jan. 1-March 31 period of next year as a time when the OPA, without cause, on a three-day notice to Ortt, could terminate the contract, with any bonuses owed calculated through Dec. 31 of this year. The OPA could also terminate the contract if, during this same review period, combined losses at the two facilities exceed $24,499.99. In that event, the contract says the OPA can avoid $50,000 in liquidated damages that are due if the contract is terminated early without cause. The agreement can also be terminated by either party in the event of a material breach in the contract terms, provided the offending party is given 30 days to remedy. Upon termination for any reason, the management company would be paid the management fee due through the date of termination, any bonus achieved through the date of termination, and any banquet commissions earned through the date of termination. A payout of $50,000 in liquidated damages is avoidable only if combined losses are $25,000 or more. One provision of the contract agreed to early on in the contract negotiations stipulates that all staff working for these two restaurant venues will be employees of the Ortt Companies, which would be responsible for issuing paychecks to staff. Payroll expenses would be tabulated and the costs passed through to the OPA for reimbursement to the Ortt Companies. Certain liabilities associated with employees would shift to the Ortt Companies under this arrangement.

The contract specifies that all revenues generated by the operations at the two venues will be deposited in a new OPA operating account to be established at the Bank of Ocean City. The contract languge seems to suggest that Ortt employees will be making deposits into the account with no handling of cash receipts by the OPA finance department. The contract says that the Ortt Companies will be authorized to draw funds from this new operating account to pay for various expenses associated with operating these two restaurants, except for the direct payment of salaries and wages, salaries and wages, which is the management company’s responsibility. According to the contract, the OPA will receive a copy of all confirmation statements, or the like, showing any deposit, disbursement, transfer, or withdrawal of Association funds, and the OPA will be given Internet access to the operating account. With the exception of payroll and food, beverage and alcohol, the OPA must approve any single withdraw from the operating account that exceeds $2,499.99. Any withdrawal greater than $1,499.99 must be specifically noted in a monthly report to he OPA. For food, beverage and alcohol expenditures, the OPA must approve any single withdrawal from the operating account that exceeds $7,500. The contract authorizes OPA General Manager John Bailey to approve a change in approval requirement for food, beverage and alcohol. The contract is silent on whether the Board of Directors would have to agree to any change. The management company would be responsible for inventory control. The company will also be directly in charge of ordering food and beverage supplies to be sold at both venues. Ortt will be using existing software in place for years at both venues, including point of sale systems, pending any software upgrades that the OPA will be implementing in the future. The contract prohibits the OPA from hiring away a club manager, or the Ortt Companies from hiring any OPA personnel, during the period when the contract is in effect or one year after its termination. The unanimous board vote approving the contract took place in open session at the end of the March 29 board meeting. The directors q

COVER STORY

42 Ocean Pines PROGRESS

COVER STORY

April 2018

Ortt contract From Page 41 went into closed session after the regular meeting to discuss a remaining issue, details of the contract’s bonus structure. The Ortt group brings more than 25 years of restaurant experience to the Association. According to an OPA press release, the company will manage, control and operate both OPA restaurant venues, including all food and beverage operations, janitorial services, banquet functions (weddings, anniversaries, etc.) and special functions, and any other food and beverage function assigned by the Association. This responsibility is subject to the Association’s right to establish reasonable regulations with regard to the use of the facilities. Co-founders and managing Partners Matthew Ortt and Ralph DeAngelus will be responsible for all day-to-day management and required to provide Ocean Pines Association with a detailed monthly report that includes real-time access to the operating expenses. Expenditures over certain dollar

Even before the management contract with the Matthew Ortt Companies was signed, Ocean Pines Public Works crews were hard at work making improvements to the downstairs restaurant recommended by the company.

thresholds, depending on the expense, will require the Association’s approval. The contract specifies that the management company will hire managers for each of the two venues under its control. In addition, the management company is obligated to conduct ongoing surveys to determine customer satisfaction and provide the results to the Association once per month.

Ortt has operated various establishments, ranging from casual to fine dining, including national chain restaurants such as TGI Fridays and Hooters. Ortt has experience in all aspects of restaurant operations including recruitment, hiring and training of managers and staff, profit and loss accountability, food cost reduction and back of house productivity. He has overseen the development of multiple restaurants from the ground up, working closely with

architects, engineers, and construction teams to bring his clients’ visions to reality. DeAngelus has served as vice president of operations for franchise-operated establishments, as well as an operating partner of elite nightclubs across the East Coast. He has experience in industry operations, finance, bar and mixology programs, menu revitalization, and front-of-house efficiencies in full service and fast casual venues.

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April 2018 Ocean Pines PROGRESS

Yacht Club renovations From Page 1

taking that ... off the list for now.” Parks did not respond to a follow-up Progress email asking whether the awning proposal would be revisited now that the contract with Ortt has been approved. Bailey submitted for board approval a two-phase renovation proposal by the Ortt organization for the first and second floors that proved to be too expensive for the board’s taste, although many of the recommended changes are being done anyway by Public Works, in some cases with the cost absorbed by the department. Phase I of the Ortt proposal focused on first floor improvements estimated to cost $77,600. Phase II focused on the second floor at a cost of $11,700. The proposal anticipated that Public Works would be making some of the improvements as a way to save money, and that’s exactly what’s been happening. “The requested renovations are nothing more than a wish list,” Parks said in his email. “These changes are not being required by the Matt Ortt Companies, nor are they a prerequisite to entering into a contract.” According to Parks, Public Works is reconfiguring the interior of the first floor restaurant to improve access to the bathrooms while adding a new hostess area to serve guests and serving area for staff. “The GM indicated that Public Works can absorb the labor to put an opening in the wall to lead from the restaurant dining room to the bathroom hall so customers do not have to walk around, out, and then through Tuffys,” Parks said, adding that “a six-foot wall will be reconfigured to create a new hostess area” for customers entering from the new main entrance. The Ortt Companies and Bailey recommended new furniture for the first floor at an estimated cost of $28,000, but the directors, at least prior to the approval of the contract, weren’t biting. “The purchase of new furniture is not being considered at this time,” Parks wrote, leaving open the possibility that it might be at some point. Parks did not respond to follow-up question from the Progress asking whether new furniture would be considered prior to the May reopening. According to Parks, Public Works is doing drywall repair and paint-

ing “which must be done regardless. There are spots where the drywall has been repaired or needs repair and painting. “This expense is not new capital or replacement reserves, rather it regular maintenance and we will patch and paint where necessary. However, we will not be wall papering, nor will we be pursuing the painting of bathroom walls at this time” he said. The Ortt Companies had also proposed four mobile walls to create a traffic flow from the bar to the restroom at a total cost of $3000, $750 each. The company’s design staff also wanted to paint over brown wall tiles in the bathrooms. Parks said that Bailey had decided to take the mobile walls off the to-do list “for now,” which again suggests the mobile walls could be added before the opening. Here, too, Parks didn’t respond to a follow-up email asking for clarification. Parks said the minor alterations, repairs and painting “is required work and would be done regardless,” but it’s clear that without input from the Ortt Companies, some of the alternations probably would not have been on anyone’s radar. Parks said overall estimated cost of the work being done is $3,500 and did not require board approval. It was a substantial reduction from the estimated $89,300 in renovation costs contained in the original proposal recommended by Bailey. In another follow-up email, Parks also said that Bailey and staff had checked with county permitting officials and were told that the demolition of a non-bearing wall and other alterations would not require county permits. “I’m told the permit issue was brought before the county (building) inspector and the fire marshal, who both responded that permits were not required for the work that was planned,” Parks said. The original Ortt proposal called for a $5,000 consulting fee to accomplish the renovations, but the Progress has learned that the company never pursued that once it became clear that the board was not going to approve renovations and new furniture costing almost $90,000. The modest renovations taking place reflect board push-back against the renovations that Bailey seemed to be embracing. “Matt Ortt Companies has been working on plans for some reno-

vations to the Yacht Club that are viewed as integral to our rebranding, and more importantly, to the ability to provide a quality setting. A detailed list of the renovation projects is attached, and we are working on a diagram to help communicate the renovations,” Bailey wrote in a memo to the board that was contained in a board packet for a March 23 special meeting that was subsequently cancelled. “Phase One, to be done before we reopen, is estimated at $77,600; Phase Two is estimated at $11,700 and can be done later, or, if preferred, in conjunction with Phase One. The recommendation at this point is to limit the renovations to Phase One, waiting to see if there is more work to be considered for Phase Two,” Bailey wrote. He never did supply a diagram on the proposed renovations to the board. Most of the Phase I improvements are on the Public Works to-do list, having to do with reconfiguring access to bathrooms and building new hostess and serving areas. Phase II second floor improvements include adding doors to the closet area in the gathering area; repair, prepping and painting walls in the bridal rooms, painting bathrooms and removing “awkward” paper towel holders and soap dispensers, adding wallpaper, and painting and repairing the ceiling of the main ballroom. The board has not yet addressed or taken any action on second floor improvements. Even before a contract was approved by the board, Bailey had representatives of the Ortt Companies in the Yacht Club preparing to take over management, underscoring the fact that Bailey has been pushing the Ortt “management partner” option for months. It would have been awkward to say the least if contract talks had fallen through at the eleventh hour. In a March 18 memo to Bailey, Ortt Companies principle Ralph DeAngelus outlined progress made by his organization at the Yacht Club. He said his team had sorted through piles of paperwork, including employee files, invoices, vendor forms, contracts, marketing, and events. The files were categorized and filed and sent to the OPA administration. DeAngelus said his team organized an office supply closet, eval-

uated office computers, related equipment, as well as point of sale systems. His staff met with Ocean Pines maintenance to discuss getting ample power to an office for equipment needs (extension cords were being used), began implementation of a filing system for the operations and evaluated upcoming banquets, arranged to fix communications (the banquet director’s voicemail was not working) and discussed furniture options with Bailey. He said his team had started work on decor changes, met with Public Works to evaluate the facility and repairs, worked with maintenance on pool bar repairs and demolition, and presented a renovation plan to Bailey. He said six team members inventoried bars, disinfected and cleaned, and evaluated equipment, small wares conditions and needs. The Ortt beverage director began work on drink menus, recipes and policies. The team met with the OPA to discuss advertising and social media. DeAngelus’ memo said that his company already had interviewed and hired a Yacht Club executive chef, first name Joel, last name not supplied. An initial draft of a new menu had already been completed. Ortt staff has already started to book bands for Yacht Club weekend entertainment. The memo disclosed that the Ortt banquet staff met with the bride and groom for a scheduled June 2 wedding and had reworked all menus, pricing, contracts and promotional literature. Finally, DeAngelus said the company contracted to steam clean the kitchens from floor to ceiling, inventoried and evaluated all equipment and small wares, inventoried and discarded rotten perishables, began the process of switching back to the Micros accounting system, and evaluated the point of sale system that the company will be working with. All things considered, it was a lot of work for a company that did not yet have a contract with the OPA. In the end, however, it probably will be an initial investment that could yield a lot of benefit, both to the Ortt organization and the OPA. Although a grand reopening and soft opening had not been announced as this edition of the Progress went to press, an expected May opening probably wouldn’t be possible without this early start on improvements.

44 Ocean Pines PROGRESS

OPINION

April 2018

COMMENTARY

Ortt contract fair to both sides

ith forensic audits and criminal investments and now word, courtesy of our former acting general manager that the Ocean Pines Association is sitting on huge stockpiles of inventory (food, beverage and chemicals), an Ocean Pines Association member can be forgiven if he wonders whether the gentle folk running the OPA can do anything right. They can, of course. There’s far more that’s right with the OPA, the services it offers, its panoply of amenities, its safety and security, than wrong. If you don’t believe that, this really is the wrong community to be living in. In the plus column one can add the just completed contract with the Matt Ortt Companies for the management of the Ocean Pines Yacht Club and Beach Club. Contract terms, specifically those related to incentives offered to MOC for exceeding budgeted performance, seem fair to both sides, at least after an initial run-through. With the demonstrated expertise of the OPA’s new food and beverage manager, there actually is hope that these two facilities will deliver a financial turn-around to write home about. To achieve that, of course, the Ortt team will need to deliver consistent quality in both food and service. If staff from other Ortt-managed restaurants in the area are rotated in to serve Ocean Pines’ two restaurant and bar venues, this could be an immediate boost to the Ortt team’s ability to make a first strong first impression.

With recent disclosures by the former acting GM that Ocean Pines seems to be sitting on huge, unexplained inventories of food and beverage produce -- perhaps an early test of the Ortt era will be to see how the company goes about dealing with this. Inventory control is right up there with cash management as challenges facing the new company. OPA General Manager John Bailey seems to be making a lot of stumbles of late, one unforced error after another, but he is to be commended for bringing a contract to the Board of Directors that could then be massaged and tweaked to produce a better end product. He just needs to be more careful in bringing proposals to the board that haven’t been carefully vetted, such as his wish list of almost $80,000 in improvements to the Yacht Club. This wish list, that began as a rather informal proposal from the Ortt team, was whittled down to less than $5,000 by using Public Works staff to make the modest renovations. Bailey really should have started with that. Converting the side entrance into the Yacht Club as the main entrance into the first floor bar and restaurant seems like a well reasoned move. It finally addresses a major design flaw with the building when it opened what, six odd years ago. Attempts to date -- Tuffy’s bar, for instance, or a hostess center in the front vestibule -- were well-intentioned but didn’t fix the fundamental flaw. It was still a long hike and an obstacle

course to reach the restaurant in the back of the building. The Ortt team probably had that one figured out on its first tour of the Yacht Club. The Ortt tream also proposed an awning leading into the new main entrance into the building, but whether that can happen remains to be seen. Short of that, there’s going to have to be effective signage that directs patrons to the preferred way of getting into the first floor bar and restaurant. At the Beach Club, an early test of the Ortt era will be whether the company will at long last be able to obtain something other than a Class B liquor license as a private club. That impediment has long tied the hands of the OPA in tapping the Beach Club’s full potential. There’s always been this “understanding” that as an homeowner association, the OPA would never be able to obtain a less restrictive liquor license. Given their experience in running night club venues in Ocean City, the Ortts certainly know how to navigate Ocean City’s permitting obstacle course. Wouldn’t it be something if the Ortts actually manage to turn the Beach Club into a happening place on summer evenings in Ocean City? Brett Hill tried it last summer, but it didn’t work out. With the right ideas and execution, anything is possible. We await the unveiling of ideas and strategies that will make the difference we’ve all been hoping for. -- Tom Stauss

Draft Yacht Club pool rules remain unapproved (thankfully) LIFE IN THE LIFE INPINES THE PINES

ability. He even laced one email to a critic of the rules with profanity, deAn excursion through the curious cul-de-sacs An excursion through theby-ways curious and by-ways and cul-de-sacs scribing as “bulls---” the fact-based of Worcester County’s County’s most densely community. of Worcester mostpopulated densely populated community. assertion that there had been omisBy TOM STAUSS/ By TOM Publisher STAUSS/Publisher sions in his “report” to the board about the proposed rules. He can deny, dissemble and di“kept at a quiet level.” Seriously, this quiet level” appear to have been late is what these proposed rules say. additions. By whom is a mystery, gress all he wants, but in fact he This is not fake news or an Onion but it appears not to have been by did not do a very good job of informanyone on the Aquatics Department ing his colleagues that doubts exist satire. The rules would require users to staff. This shouldn’t surprise any- on the staff and committee about enter the pool using ladders or by one. This is one OPA department the noise rule’s enforceability. He the stepped entry, which would pro- that’s managed competently and correctly said the committee had reviewed the rules, but implied aphibit diving or jumping in from the creatively. Minutes from the Aquatics Advi- proval and endorsement, omitting side of pool, or even easing into the sory Committee’s February meeting the key fact (as reported in the Febpool from a sitting position. Quiet level is not defined in the say that members suggested revi- ruary meeting minutes, posted on rules, nor is it clear at what point sions to the rules, with one member the OPA Web site) that members conversations and noise level exceed later telling the Progress there is had suggested revisions. Parks was what would be deemed permissible. concern among members and staff the one slinging B.S. Deflection is An early draft of the rules by the that noise rules in particular are es- not Parks’s strong suit, but it is one of Parks’s three Ds (along with disAquatics Department made no ref- sentially unenforceable. erence to noise levels. Unfortunately, the committee’s sembling and digressing). For those who may not underThe language defining the Yacht board liaison, Doug Parks, still Club pool as a “quiet oasis pool” and hasn’t admitted to his colleagues stand the reference to Parks’s three a requirement that “conversations that there are staff and committee Ds, he has on occasion referred to and other noises must be kept at a concerns about the rules’ enforce-

cean Pines Association director Slobodan Trendic recently said the proposed new rules for the Yacht Club “Oasis” pool need board approval before they can be implemented. If no board vote of approval or disapproval is taken, in accord with OPA governing documents, then the special “quiet pool” rules for the Yacht Club pool as drafted, even if posted on site, are little more than suggestions. To some, they will be treated with scorn and disrespect, each fake rule an engraved invitation to be ignored if not egregiously violated, just for the sport of it. For those who haven’t been following this latest example of Ocean Pines absurdity run amok, the proposed Yacht Club pool rules would prohibit throwing of balls, intentional splashing, back floats, bubbles, rings, one-sided flotation devices (noodles are permitted), jumping or diving into the pool and conversations and other noises that aren’t

OPINION them -- debate, decide and one other forgettable word that starts with D. There is a pattern here of Parks, unlike some committee board liaisons, of doing less than an exemplary job of representing committee concerns and long-held opinions. For instance, during the just completed budget cycle, Parks at one point seemed to be arguing in favor of eliminating the bundled parking and pool passes at the Beach Club, which would have resulted in eliminating the win-win revenue-sharing between the Beach Club and Aquatics departments. He even seemed to suggest that the Aquatics department likes that bundled package and revenue-sharing because it pads the Aquatics bottom line, an offensive suggestion that Aquatics Director Colby Phillips subsequently rejected in her meeting with the board, gently, of course, but courageously because Parks is the OPA president and is someone who sometimes interprets honest disagreement or a critique of his job performance as an attack on his integrity. The bundled package options and a fair allocation of revenue generated by it has been a consistent objective of the Aquatics committee over many years, dating back to the Bob Thompson era, a fact that Parks made no effort to acknowledge during board discussion of the bundled rates. He didn’t embrace this particular objective, so apparently he felt no need to promote it, as is his right as a director. But he can’t then pretend that he’s adequately performing his duties as a committee’s board liaison, whose primary job is to accurately convey a committee’s position and/ or recommendations on an issue under consideration by the board. Later, Parks went along with retention of the bundled package, accepting the reasonable argument of Phillips and General Manager John Bailey that eliminating it risked losing revenue overall. He also went along with Phillips’s proposal for a new no-frills parking pass of $150, which gives OPA members, who might have felt coerced into buying a bundled option without swimming privileges, an alternative. That was a legitimate objection to the bundled rates in effect during the summer of 2017. So, in the end, no harm was done. The correct outcome was reached. In fairness to Parks, he embraced it. He’s not hopelessly immune to reason. Still, in his initial inclination to

April 2018 Ocean Pines PROGRESS

unbundle the parking and pool passes, he ignored the Aquatics’ committee’s long-standing support for bundled packages and revenue-sharing. Contrast this with the enthusiastic support of committee objectives by other board liaisons. Slobodan Trendic was a stalwart supporter of the Election committee’s two-year campaign for announcing board election results on the same day as the vote count. Ditto with his support for the Strategic Plan committee’s proposed community survey. Cheryl Jacobs, liaison to the Recreation committee, gamely lobbied on behalf of the committee’s recommendation for new exercise equipment for the South Gate pond’s walking trail, despite its inclusion on the GM’s “unfunded” capital items list for 201819. Both Trendic and Jacobs deserve high marks for representing their committees or at least conveying their opinions and recommendations. In the matter of Yacht Club pool rules, Parks much more effectively represented the views of a group of OPA members who were highly incensed when they lost their illegal adults-only pool last summer. He elevated these critics into a “working group” who came up with the quiet pool concept. He warmly embraced it. Come to think of it, his decision to elevate the group to the status of an ad hoc committee was unilateral, never discussed by the board. An OPA president isn’t a dictator who just announces the creation of a working group unilat-

erally and without a formal board vote of approval. Once he fully understands this, Parks will be doing himself and the OPA a huge favor. The problem with all of these “disparate impact” rules aimed at families with kids under 18 is that they can create a false expectation among some older pool patrons that what was once an adults-only pool can be recreated through rules. Perhaps there is a hope among some older patrons that families with kids under 18 will be so turned off by the rules that they will go elsewhere. Some might. In other cases, though, families with kids under 18 will show up to the Yacht Club pool with every intention of enjoying and using the Yacht Club pool as they would any other pool in Ocean Pines. That means no unnatural attempts to restrain the natural exuberance of their offspring in a summer, outdoor setting where noise, splashing, jumping or diving and throwing of Nerf balls are all expected and typical behaviors. So there very plausibly will be intergenerational clashes on what constitutes proper pool behavior, incentivized by rules that at least in one instance can’t be enforced. The best result: Just scrap these proposed Yacht Club pool rules, explicitly. Have rules that apply equally to all five Ocean Pines pools. They already exist. Second best solution: Don’t vote to approve them. That leaves the status quo ante. And the issue fades as people get used to the

new family-friendly normal. If special rules for the Yacht Club pools are imposed, as a board majority might want to do without a ormal vote, then parents looking for a place to celebrate their kid’s eighth birthday should consider the Yacht Club pool as the best choice available. Don’t forget to invite Marco Polo to the party, speaking unintelligible vulgar Italian, very loudly.

The Ocean Pines Progress, a journal of news and commentary, is published monthly throughout the year. It is circulated in Ocean Pines, Berlin, Ocean City, and Captain’s Cove, Va. Letters and other editorial submissions: Please submit via email only. Letters should be original and exclusive to the Progress. Include phone number for verification. 127 Nottingham Lane Ocean Pines, MD 21811

PUBLISHER/EDITOR Tom Stauss tstauss1@mchsi.com 443-359-7527

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CONTRIBUTING WRITER Rota Knott InkwellMedia@comcast.net 443-880-1348

April 2018

Cove receives proposal from firm that can find Internet providers Alpha-Omega Communications submits plan for three-phase project, with first phase capped at $25,000, not including travel expenses

By TOM STAUSS Publisher he Captain’s Cove Board of Directors is following through on a pledge made n February that it would be looking for alternatives for high speed Internet in Captain’s Cove. Board member Jim Silfee has obtained a proposal from Alpha-Omega Communications of Sarasota, Fla., for the delivery of broadband Internet and related services for residents and other property owners in Captain’s Cove. It is not a proposal to provide those services, but an offer of assistance to the Cove association in finding companies that can. The board will be reviewing the proposal at its spring meeting, not yet scheduled, no doubt with partic-

ular focus on the fees the firm would charge for its services, set at $295 per hour with a cap of $25,000 for a first phase, excluding travel expenses, of what could turn into threephase project. The company is asking for a retainer fee of 50 percent of the phase one cap, or $12,500, with the balance to be paid upon completion. It’s possible that Silfee will come up with additional firms for the board consider, though that is far from certain. At the board’s Feb. 23 meeting, the directors voted to authorize the hiring of an engineering firm to assist in the drawing up of a request for proposals from companies who could deliver broadband Internet to the Cove. The vote did not come with instructions to Silfee that he seek out

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multiple firms or that he bring back a proposal or proposals for board consideration. Depending on how the motion is interpreted and applied, it’s possible that Cove association President Tim Hearn could authorize Silfee to proceed with the hiring of Alpha-Omega without additional board involvement. That could carry some political risk, however, especially since the proposal is vague on travel expenses, which conceivably could involve air fare, car rental fees, lodging and even meal expenses while company executives are visiting Captain’s Cove. The proposal does not offer a cap or an estimate on those travel expenses. The first phase of the Alpha-Omega proposed scope of work includes

CAPTAIN’S COVE the establishment of broadband service objectives, identification of potential technologies and service provider/partners, preliminary discussion with these provider/partners, preliminary analysis and evaluation of various technologies and service provider alternatives. The first phase also calls on the company to identify and confirm Captain’s Cove legal constraints, financial constraints, and existing agreements regarding rights-of-way and utilities. The phase one scope of work would conclude with the selection of technologies and service provides and solicitation of formal proposals from them. Phase two would include obtaining and then analyzing, evaluating and ranking the proposals relative to risk and financial impact on Captain’s Cove. The company would assist the Cove association in selecting the technology and service provider and would assist in negotiating a contract. Phase three would include the monitoring, guiding and inspection q

46 Ocean Pines PROGRESS

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Fiber optic From Page 46

of the technology and service buildout. The company would issue periodic written reports on its findings, analysis and conclusions. The estimated time of completion for phase one is three to six weeks. Phase two and three costs would be determine depending on the direction of the project. Prompting the board action n February was the fact that to date Think Big Networks, which has been prospecting for potential customers in Captain’s Cove to justify a large capital expenditure, has been unable to secure the commitments from 350 homeowners it said it needed to begin installing the infrastructure needed to provide high speed Internet in the Cove. Hearn said the company recently asked the Cove board if the Cove property owners association would be willing to “fill the gap” between the number of commitments it’s been able to secure and the 350 needed to make the project financially viable. Hearn said while a case could be made for some sort of financial aid to help bridge the gap until such time as Think Big is able to sign up 350 households, the Cove property owners association is not in a good enough position financially to be able to do so. He said the only possible source of funding would be the Exhibit X revenue stream provided by formerly delinquent properties that are now paying annual assessments, but that pool of money is currently committed to financing the Marina Club debt service and new road construction. Hearn said the Cove has suggested that perhaps Think Big could target its roll-out in areas of the Cove where the largest number of subscribers exist. Short of that, he said that perhaps companies other than Think Big might be able to submit proposals that would allow them to begin laying cable with a threshold of customer commitments less than 350. He said some companies might be able to assume greater risk on the premise that once fiber optic, high speed Internet is actually available, residents who might have been reluctant to commit to signing up in advance of availability would do so. As Hearn said, there really is no other reliable source of high speed Internet in Captain’s Cove.

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Dolphin 2012

Tarpon

Ranch Style Home Two-Story Contemporary Home 3BR / 2BA 1496 Sq Ft • $169,200 3 BR / 2.5 BA 1607 Sq Ft • $177,200

Marlin

Barracuda

Two Story Contemporary Home Two Story Contemporary Home Two Story Contemporary Home 3 BR / 2.5 BA 1818 Sq Ft • $200,100 3 BR / 2.5 BA 1874 Sq Ft • $202,700 4 BR / 2.5 BA 2050 Sq Ft • $222,700

J&A Builders specializes in spec home sales and new home construction. All of our models are “stick built” and feature a first floor master suite with standard appliance package, and Low-E windows. These are a few of our models we can build on your lot. Prices DO NOT include the cost of clearing a lot OR the lot. Homes are of similar design and may have upgrades. Prices good for Captain’s Cove, Greenbackville, Va. Only. MHBR #4790

PRICES SUBJECT TO CHANGE

CINDY WELSH - REALTOR Berkshire Hathaway HomeServices PenFed Realty 4323 Captain’s Corridor • PO Box 28 Greenbackville, VA. 23356

302-381-6910 (cell) • 757-854-1604 (office) 757-854-1606 (fax) • Email: candhwelsh@aol.com ©2018 BHH Aﬃliates, LLC. An independently owned and operated franchisee of BHH Aﬃliates, LLC. Berkshire Hathaway HomeServices and the Berkshire Hathaway HomeServices symbol are registered service marks of HomeServices of America, Inc.® Equal Housing Opportunity.

48 Ocean Pines PROGRESS

April 2018

Cinc de Mayo BOAT SHOW Friday, Saturday, & Sunday

May 4, 5, & 6 @PARADISE GRILL

27344 Bay Rd - Millsboro, DE 19966 paradisegrillde.com

Three Days of Fun You Can Only Find in Paradise! A PORTION OF THE PROCEEDS WILL BE DONATED TO THE TUNNELL CANCER CENTER

A FUN IN-WATER BOAT SHOW! COME TAKE A RIDE IN THE BOAT OF YOUR DREAMS!