February-Early March 2013 Progress by Ocean Pines Progress

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February-Early March 2013

Vol. 8, No. 11

Casper Golf fills dining void by Yacht Club closure The Tern Grille and more recently the second floor of the Ocean Pines Country Club has been quietly filling a void created by the closure of the Yacht Club immediately after the New Year’s Eve party. The Country Club’s second floor, including a small bar, a small kitchen, and seating scattered throughout, is more of a bistro or lounge than a full-service restaurant. In recent months, it’s been the venue for occasional meetings of the board of directors and advisory committees, along with card games and a small troupe of tap dancers./Page 8

Board toughens stance against delinquent owners Property owners who owe the Ocean Pines Association $5,000 or more in annual dues, fees, interest or other charges may soon be sued by the OPA in small claims court and read about it in the news. The board of directors during a Jan. 23 meeting voted unanimously to initiate a process whereby the OPA will take legal action against property owners who owe the OPA a significant amount of money and make sure everyone in the community knows who those debtors are. Page 18

Demographics could have impact on safety in Pines While Ocean Pines remains as Worcester County’s safest community with respect to property and violent crime, demographic changes in nearby Selbyville, De., and Salisbury pose risks, Ocean Pines Chief of Police Dave Massey told members of the Ocean Pines Association’s Budget and Finance Advisory Committee in early January. Demographic changes in Ocean Pines itself also poses risks, Massey said, citing a growing number of homes that are rented out rather than used as second homes by non-resident owners, even pointing out the presence of Section 8 subsidized housing in a community that is perceived to be affluent and stable./Page 25

THE OCEAN PINES JOURNAL OF NEWS & COMMENTARY COVER STORY

Sole sourcing of contracts expedites pool, drainage fixes Segment of Yacht Club pool project given to Harkins non-competitively

Beauchamp Road improvements address flooding for Section 3 residents

By TOM STAUSS Publisher on’t worry; it’s only money. And the Ocean Pines Association apparently has enough of it to handle unexpected, unbudgeted big-ticket capital projects without wiping out its well-stocked reserve funds. A few years ago it was a $500,000 repair to the Swim and Racquet Club pool decking. Last year and this year it was $850,000 or so for new greens on the Ocean Pines golf course. More recently, it’s somewhere close to $800,000 for a new Yacht Club pool, new concrete decking, and a new elevated pump room. Add to that the planned new Yacht Club – another $4.3 million— and pretty soon you’re talking real money. Some critics call all of this spending an uncontrolled binge, while others call it taking care of aging infrastructure when the unexpected happens. In the case of the Yacht Club pool, it’s community leaders wanting to do whatever it takes to ensure that a key Ocean Pines amenity is back into service for at least part of this coming summer, if not by the traditional Memorial Day weekend launch. The new Yacht Club itself was planned, budgeted and ratified by property owners in a referendum. Ordinarily, OPA management will seek competitive bids for big ticket capital items, or even smaller expenditures such as new vehicles, but in the case of one segment of the Yacht Club pool project, OPA General Manager Bob Thompson deviated from that practice and had that choice affirmed by the board of directors in a special meeting Jan. 24. Not seeking competitive bids for a large project ordinarily is frowned upon at all levels of government. The practice is called sole-sourcing, and two OPA directors, Marty Clarke and Dave Stevens, voiced objections to it in a special meeting To Page 20

By ROTA L. KNOTT Contributing Writer fter years of complaining by residents and finger-pointing by officials, drainage problems in Section 3 of Ocean Pines are finally going to be addressed. The project should be completed by the end of February, weather permitting. Worcester County has reached an agreement with developer Lou Meltzer for the installation of a drainage pipe extending from Beauchamp Road to a pond in his development, River Run. The Worcester County Commissioners on Feb. 5 waived the bidding process and awarded a $38,126 contact for the drainage work. Public Works Director John Tustin said the county has been working with Meltzer, owner of River Run Development Corp., to allow the county to install 156 lineal feet of 24-inch piping from the Beauchamp Road right-of-way into a pond on the River Run golf course. With the design documents complete and an easement for the improvements signed off on by Meltzer, for $1 in consideration by the county, work on the project is now ready to proceed. In anticipation of receiving approval, Tustin had already solicited prices from local contractors for the project. Because only two contractors actually submitted prices and only one of them, Bunting and Murray, submitted a complete bid with a cost of $38,126, Tustin recommended waiving the formal bidding process and awarding a contract for the project to that company. “I believe it would be in the best interest of the county to award Bunting and Murray the contract as they have the manpower and equipment to complete the project in a timely manner as required by the easement agreement,” Tustin said. The easement agreement mandates that the work be completed during the months of December, January To Page 18

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February-Early March 2013 Ocean Pines PROGRESS

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 by ΣMAINSTREET CONSULTING©, 11021 Nichola Published

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MAINSTREET CONSULTING© LPL Independent Investor May 2011

Managing Cash Flow in Retirement: Careful Budgeting Is St



 by ΣMAINSTREET CONSULTING©, When Published 11021retirement Nicholas Lane # 5, Ocean Pines, Maryland 21811 410-600 planning goes into reverse, shifting from accum Securities Offered through LPL Financial, LLC Member FINRA/SIPC flow becomes critical. © Copyright 2010 MainStreet Wealth Management, LLC All rights Reserved Securities Offered through LPL Financial, LLC Member FINRA/SIPC

LPL Independent Investor May 2011

Women, Wealth ultimate goal for most retirees is making sure their assets las andThe Legacy managing cash flow isPlanning more critical than ever. A typical America

hether nurturing theyears values of children, fulfilling charitable goals, or making more after retirement. investment decisions that affect their own as well as their beneficiaries' financial security, women play a central role in establishing and preserving family wealth. Women needWhile to be many involved, informed, and comfortable with their role as variables come into play depending on your income Managing Cash Flow in Retirement: Careful Budgeting Is Still the Key guardians of family wealth. Activemoves participation in help wealth management can strengthen planning that can retirees live within their means and women's commitment to protect and grow their assets with the goal of leaving a legacy and expenses. their community, and beyond. assets to living off investment and other in When retirement planning for goes intochildren, reverse,their shifting from accumulating Best Practices in Legacy Planning flow becomes critical. The following strategies may Tools forhelp theassure Task the smooth transfer of both your measurable wealth and your values surrounding wealth to the next generation. If you are retired or about to retire, you will need to gather and o Education leads to confidence. The ultimate goal for most retirees is making suresecurity assets last as managing long as they live. And because oftoincreasing Attaining financial for you and your heirs typically requires acceptThe lo oftheir monitoring and your cash flow in you retirement. p responsibility theAmanagement of significant investment Whether you are cash checks flow is more critical thanfor ever. typical American electing toasretire inassets. his or her mid-60s may expe financial situation, as well any significant changes you expect At the Dec. 20 holiday luncheon, Nancy Welsh, president of the Pine’eer Craftmanaging Club, presented years afterNeighretirement.single, married, or a surviving widow, it is in your best interest to receive as much educatotaling $3,500 to organizations of Ocean Pines. Recipients accepting the checksmore were Jim Hamlin, tion as possible about wealth planning, investments, successorship, and related matters. borhood Watch, $600; Steve Rosen, Ocean Pines Volunteer Fire Department, $1,000; Lou Etta McClaflin, Even if you are not directly  responsible for making important financialwhich decisions, it is a sn An up-to-date net-worth statement, provides vital havedepending knowledgeon in your theseincome areas inlevel, orderlifestyle to communicate effectively with profesWhile many variables intotoplay and health considerations, there are Worcester County Veterans Memorial at Ocean Pines, $100; Debbie Donahue, Ocean Pines Rec and Parks, come sional advisors with these duties. planning moves $400. that can help retirees livecharged within their means and make appropriate adjustments in response to chan $1,100; Joshua Vickers, Public Works, $300; and Lt. Greg Schoepf, Ocean Pines Police Department,  qualified A monthly or annual budget, with itemized breakdowns Professionals offer objective, services. andAugust expenses. These donations were the result of profits from the Pine’eer Craft Club’s annual craft festival, Relying on professional advice as opposed to family and friends is extremely imporNovember holiday festival and profits from sales in the Pine’eer Craft and Gift Shop. Pictured (left to right) tant when making decisions affecting the accumulation, preservation, and distribution If you haven’t retired yet, it is a good idea to prepare a projected of wealth. What should you expect from a qualified professional? A good wealth advisor are Jim Hamlin, Steve Rosen, Lou Etta McClaflin, Debbie Donahue, Nancy Welsh, Joshuafor Vickers, and Lt. Tools the Task account for all expenses, including those that occur infrequently, -or a team with other professionals, such as attorneys and accountants -- should offer Greg Schoepf. If you are retired or about to retire, you needinThey tomost gather andofbe organize keyininformation before youon cana tackle thebo guidance and will services areas wealth management, including estate planning, should reflected your monthly budget prorated retirement planning, needs assessment, and college planning. Oncomplete a more perof monitoring and managing your cash flow in insurance retirement. The purpose is to give you a clear and picture o budget, youwork may want with to consult a financial advisor, a book on th a wealthchanges advisor should to:provide this information: financial situation, as well sonal as anynote, significant you expect. closely Two sourcesyou will • Identify areas requiring special assistance, such as creating trusts. • Minimize taxes and planning costs. Analyzing this information will reveal any major problems that y • Develop and implement a personalized management plan.  An up-to-date net-worth statement, which provides aorsnapshot of your assets, debt andwith cashcurrent reserves. emergency anwealth income shortfall compared or proje • Review your plan periodically and suggest changes when needed. example, youlegacy may beplanning. able to free up cash by reducing debt or eli Philanthropy is integral to family  A monthly or annual Wealth budget,holders with itemized breakdowns of your-- income and expenses. have a greater opportunity if not responsibility -- to make charitable giving an integral part of the legacy planning process. Families that are charitably Regular Monitoring may have clear goals in mind, but they may not know where to begin. In order to If you haven’t retired yet, itinclined is a good idea to prepare a projected budget of your retirement income andEven expenses. B and projections always subject to change. with re choose the best strategy,Plans you should work with aare trusted advisor to evaluate a number of account for all expenses, including those occur infrequently, such as insurance college tuition andnumerou membe factors, such as that tax management objectives, types of it assets tobills, beyou gifted, and your specific living costs in retirement, is likely will encounter intent. budget Then choose from among a range charitable givingcreating vehicles,your suchnet-worth as They should be reflected instrategic your monthly on a prorated basis. If youofneed assistance your income and expenses will detect changes that you can addre donor-advised funds, family foundations, gift annuities, and charitable remainder trusts/ budget, you may want to consult a financial advisor, a book on the subject or resources that are available online. charitable lead trusts. road. Experts often recommend a monthly review of your budget Children should learnsituation about the of wealth. andresponsibilities goals. While you can keep track of your situation w Wealth a gift that opens doorsthat of opportunity not only forsuch you, but also for yourcash chil- reserv Analyzing this information will revealis any major problems you need to address, as insufficient dren, their children, and generations to come. Yet wealth can be a weighty responsibility emergency or an income shortfall compared with current or projected expenses. It may also point out areas for impr that takes time to manage, maintain, and preserve. If you are a parent, you are no doubt example, you may be able concerned to free up about cash by reducing debt or eliminating nonessential expenses. the effects of wealth on your children's values and how the "money" lessons you pass on to them will resonate as they mature to adulthood. Family values should be held in the same high regard as family wealth. News Regular Monitoring Family values -- those traits, behavioral patterns, beliefs, goals, and morals that are Plans and projections are always to change. Even group with reasonable aboutas investment returns, inf shared subject by members of a family -- define a assumptions family's character much as dollar measure family's wealth. By holding shared in high and setting living costs in retirement, itsigns is likely you awill encounter numerous changes tovalues your cash flowregard over time. Frequent m of commitment to financial responsibility, philanthropy, and volunteerism your income and expenses an willexample detect changes that you can address in a timely fashion to prevent significant proble for the younger generation, you will enrich your family's legacy for generations to come. road. Experts often recommend a monthly review of your budget, as well as a comprehensive annual review of you A Woman's Worth of the family legacy, women are in unique and influential position. situation and goals. While youAs canstewards keep track of your situation with paper anda pen, specialized software may make They are holders of great wealth as well as keepers of the family's moral and philanthropic vision. There are many financial, accounting, legal, and business tools to assist women in implementing a plan of action. Contact your financial advisor for guidance in mapping out a legacy planning strategy unique to your situation.

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4 Ocean Pines PROGRESS

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February-Early March 2013 Ocean Pines PROGRESS

OCEAN PINES

OCEAN PINES BRIEFS Thompson pursuing bids for major Ocean Parkway bridge repairs

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Progress that he’s not certain that the Clubhouse Drive will have to be closed completely during its replacement, or whether it can be replaced in two phases, allowing one lane of traffic to be open, as sometimes occurs in bridge reconstruction. “That will have to be determined,” he said. Previously, Thompson has said, if the bridge on Clubhouse Drive has to be closed completely for replacement, an option could be to build a new road between the 18th and 10th fairways on the Ocean Pines golf course from Ocean Parkway, to provide access to the Country Club and homes in the area whose access would be cut off with a bridge closure. Another option, which the general manager has only indirectly cited in public comments, would be to use a paved, one-lane road that links the golf course water pump house behind the ninth green with the street that runs parallel to the Borderlinks Condominiums that line the ninth and 18th fairways. If that one-lane service road that runs between two Borderlinks buildings is used to provide access to the Country Club, it would almost certainly result in the temporary closure of the ninth hole for golf, an option Thompson is not too keen on pursuing. He said that he’s been in touch with the Robert Trent Jones foundation to determine whether it or anyone associated with the legendary golf course designer would object to a road bisecting the tenth and 18th fairway, and he said the answer came back that there would be no objections. Whether that would be true for

Ocean Pines core group of golfers, however, might be a different story. Thompson’s road proposal initially was linked with an idea to convert the par four tenth hole to a shorter par three and to shift the 18th green to where the practice putting green is now. In addition, he proposed subdividing a portion of the tenth hole and converting it into several canalfront residential building lots, an idea not well received by property owners with homes on the other side of the canal that runs along the tenth fairway. The board of directors has never taken up for discussion or made any decision on Thompson’s proposals, but at some point the directors may be forced to address it, in one way or another.

Bulkhead replacement to begin new cycle

It’s been more than 30 years since the Ocean Pines Association embarked on a multi-decade program of replacing its original bulkheading, and that program is now complete, Public Works Director Eddie Wells said during a departmental budget review session with the Budget and Finance Advisory Committee Jan. 14. Wells, who was given accolades by committee members for the services his department provides property owners, told them that it’s now time to go back and look at bulkheads that were replaced back in 1980 “to see how they’re holding up.” Fischer Marine, the OPA’s bulkhead replacement contractor for many years, will help the staff in that review, he said. Bulkheads normally have a lifespan of about 20 years, but Wells said the hope is that Ocean Pines’ bulkheads will

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last more than that, and in some cases they already have. Ocean Pines’ bulkheads were originally of various materials, aluminum, concrete and wood, and one of the objectives of the replacement program was to replace them all with wood treated to withstand deterioration in a marine environment. Wells said there is talk that the state might require some sort of composite material that is more expensive for new bulkhead installations and said his department will be keeping abreast of new regulations. Most canal-front bulkheading in Ocean Pines is maintained by the OPA, paid for by the differential paid by waterfront owners in their annual lot assessments over the base assessment. Common-area bulkheading is paid for through a portion of the base lot assessment.

Thompson excludes bus from recreation budget

Though requested by Parks and Recreation Director Sonya Bounds and a capital expenditure that General Manager Bob Thompson has supported previously, a 12-person passenger bus for trips that otherwise have to be cancelled for insufficient interest failed to make the proposed 2013-14 capital budget proposed by staff. It’s just as well, perhaps, because members of the Budget and Finance Committee during a budget review meeting Jan. 14 said they thought the expenditure was unjustified. It would take action by the OPA board of directors to include the bus in final budget approval Feb. 23.

Security cameras nixed for Community Center

Outside security cameras were on Recreation Director Sonya Bounds’ wish list for the 2013-14 OPA budget, but General Manager Bob Thompson was less enthused, and he didn’t include them in his proposed capital expenditure list. During a Jan. 14 budget review session with the budget committee, Thompson said the proximity of the community center to the police department was a factor in his decision and “we haven’t had any incidents” that justify the expense. The proposed cameras have been briefly discussed in board of director meetings on the budget, with no indication that a board majority would support adding them to the budget next year.

Yacht Club pool lacked insurance, GM says

General Manager Bob Thomson recently confirmed what some suspected but didn’t know for sure: The Ocean

cean Pines Association General Manager Bob Thompson is working on an RFP (request for proposals) for major maintenance work on the Ocean Parkway bridge between Clubhouse Drive and the entrances to Harbor Village and Borderlinks, at a cost that’s been estimated at $136,000 but which could come in more or less, depending on bid submissions. Thompson told the OPA board of directors at its Jan. 23 monthly meeting that newly hired facilities manager Jerry Aveta has been working on bridge issues as one of his first tasks since joining the OPA. He has been reviewing inspection reports on the condition of Ocean Pines’ four bridges, recently completed by the county roads department. The repairs on the Ocean Parkway bridge are costly because the work includes relocating utilities. Under an agreement with the county, the OPA is responsible for all bridge maintenance costs. Thompson said minor repairs, such as replacing North Gate globe lights and signage, can be accomplished by the OPA Public Works department. Thompson said design work is proceeding on the possible replacement, in two or three years, of the bridge on Clubhouse Drive. The cost of bridge replacement under the agreement is split with the county, with the OPA’s share 20 percent, Thompson said. OPA Director Marty Clarke told the Progress he’s read the latest inspection report and based on that, he believes the bridge needs to be replaced sooner than two to three years, a conclusion that Thompson and Aveta have not reached by reading the same report. The general manager later told the

6 Ocean Pines PROGRESS

February-Early March 2013

OCEAN PINES BRIEFS From Page 5 Pines Association lacks hazard insurance, flood coverage in particular, for its swimming pools, which is why property owners, not an insurance company, are picking up the tab for a new swimming pool at the Yacht Club. The old pool, not in the best of condition in recent years, was damaged and essentially declared not-worth-theexpense-of-fixing following Hurricane Sandy. While promptly filing a claim after the hurricane struck, Thompson told the board of directors in January that a technicality in federal flood insurance regulations make obtaining flood coverage for pools as part of the national Flood Insurance Program impossible. Although insurance companies don’t offer flood insurance outside the federal program, Thompson told directors that he would check to see if some sort of rider could be attached to the OPA’s existing hazard policies.

GM defends focus on winter banquets

Assuming the new Yacht Club is completed and open for business late this year, General Manager Bob Thompson and Yacht Club manager Dave McLaughlin have been planning for a scaled back winter operation that al-

ready has riled up some critics. The business plan has been to close the club during the January through March/April period, except for special events open to the membership or private banquets. But some budget committee members and some members of the board of directors say it should be open for general dining next winter. The critics of the more conservative approach say the new building will attract a lot of people who want to check it out and that the OPA may be missing out by not being open during that period. Director Dave Stevens expressed that point of view during discussions of the proposed 2013-14 Yacht Club budget. On the other side of the debate is Director Marty Clarke, who has taken the position that the Yacht Club should be completely closed right after Labor Day and not reopened until Memorial Day. He said there isn’t enough banquet business to justify being open other than the peak summer season. Thompson has said that banquets are generally more profitable than ala carte dining and that the second floor of the new Yacht Club is designed to serve as a catering facility. The board will have to make some assumptions about winter operations at the new facility before it approves the Yacht Club budget for next year at the board’s regular monthly meeting Feb. 23.

OCEAN PINES Ipads for OPA directors not in proposed budget

While he says there could be advantages for OPA directors if they were given Ipads or other tablet computers for routine use, such as elimination of the thick budget book provided to them as part of the annual budget review process, General Manager Bob Thompson said he did not include them in his draft budget for 2013-14. So directors will be dealing with reams of paper for the foreseeable future in conducting its business. What Thompson didn’t say is that there’s a learning curve with these devices, and some directors have had difficulties over the years with mastering the fine art of e-mail and e-mail attachments, among other mysteries associated with basic computer literacy. There are more pressing tech issues for the OPA than computer tablets, Thompson told members of the budget committee, such as the fact computers in the administration building and recreation department, ensconced in the Community Center, don’t communicate well with one another. Software incompatibility is the main reason for that, he said. The finance department has been looking at server upgrades and server redundancy as a way of eliminating outdated methodology. He has included in his draft budget a full-time information technology specialist, which may or not be funded in the final 2013-14 budget scheduled for approval Feb. 23.

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Budget committee member Gene Ringsdorf has long been a proponent of imposing fees on those who use the White Horse Park boat ramp, intended more as a way of monitoring what goes on at the site, and who uses it, than as a revenue measure. He raised the possibility again during the committee’s budget review session with OPA General Manager Bob Thompson, who admitted that he had “completely forgotten about” the idea when drafting his proposed budget for 2013-14. The idea is also being considered by the OPA board of directors during its budget review process. “We had looked at it,” Thompson told Ringsdorf. The general manager said the fees might be $25 or $30 for residents, and $50 for a non-residents, should he recommend them to the board for adoption, something that he did not do during budget review sessions in January. Ringsdorf said the those paying the fees could be given stickers that would be affixed to boat trailers, with Ocean Pines police officers tasked with enforcement by periodically checking the trailers left on site. Thompson said that there would a “challenge” attempting to enforce access to the ramp with an access gate. He also noted that the ramp is listed in county literature as a ramp open without charge to the public. The fate of the Ringsdorf proposal

lies with the board of directors. He said that attempts to sell his idea to previous boards never received a formal response.

Road resurfacing complete, no new funding next year

Although the OPA board of directors could always decide differently, General Manager Bob Thompson is proposing to put the OPA’s road resurfacing on a temporary hiatus in 2013-14, including no expenditures from the roads reserve in his draft budget. The general manager, during the board’s Jan. 23 monthly meeting, said this year’s program addressed the most critical resurfacing needs, with Cape Town Road, Sandyhook Road, White Horse Drive, Pinehurst Road and Beaconhill Road among those recently resurfaced. He said all the roads would be surveyed again next year to determine those most in need of resurfacing the following year, a one-year hiatus that would also allow the roads reserve to be replenished with local casino impact funds. Thompson said his intent is to move from a ten-year resurfacing program to 15 years, or even longer, depending on the actual condition of Ocean Pines’ roads. He noted that the state’s maintenance program calls for resurfacing of many of its roads on a 20-year cycle. Marty Clarke has voiced concern with the proposed change in roads resurfacing policy, which Thompson will implement unless directed otherwise. Clarke also is proposing to reallocate roads depreciation expense from the replacement reserve to the roads reserve, as a way of addressing the lack of passthrough roads funding related to the state gasoline tax, which in recent years has been diverted for other purposes. The shift in funds from one reserve to the other would be about $380,000 per year, he said.

Golf sprinkler equipment approved by OPA board

After telling directors that green replacement and drainage improvements were more or less on schedule, General Manager Bob Thompson updated them on several other golf-related items during the board’s Jan. 23 meeting. He said that conversion of electronic equipment in the golf pro shop that regulates the golf course sprinklers is being done for less than the $35,000 budgeted this year. The low bid for converting from wide-band to narrow-band signals came in at $21,427, and a decision was made to retain existing computers used to communicate with the sprinklers, Thompson said. Had the computer links been replaced, the total bid would have come in at $32,800, he said. The board unanimously approved the $21,427 expenditure. Thompson told the board that batteries in the golf cart fleet are now three or four years old, their typical life span, and that Casper Golf executives are working on a proposal to deal with that issue.

February-Early March 2013 Ocean Pines PROGRESS

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8 Ocean Pines PROGRESS

February-Early March 2013

OCEAN PINES

Casper Golf fills void by Yacht Club’s winter closure By TOM STAUSS Publisher he Tern Grille and more recently the second floor of the Ocean Pines Country Club has been quietly filling a void created by the closure of the Yacht Club immediately after the New Year’s Eve party. The Country Club’s second floor, including a small bar, a small kitchen, and seating scattered throughout, is more of a bistro or lounge than a full-service restaurant. In recent months, it’s been the venue for occasional meetings of the board of directors and advisory committees, along with card games and a small troupe of tap dancers. Under the management of Billy Casper Golf, in January it began offering a Friday night happy hour from 4-7 p.m. and a limited meal menu, highlighted by Charles the Chef ’s signature fried chicken and chili, and a few other items. The Country Club’s second floor also is open for special events, such as a Super Bowl buffet held on Feb. 3 and, in January, a 50’s-60s dance party. The next special event is scheduled for Sunday, Feb. 23 -- a dance featuring DJ Norm, from 7 to 11 p.m. The Tern Grille downstairs is open for breakfast and lunch on a Thursday through Sunday schedule during the winter. A February Country Club calendar posted on the OPA Web site shows the grill closed Monday through Wednesday. It may be advisable to reserve and pay for the Feb. 23 dance in advance, for a modest charge of $10. At the door, the cost will be $13. In a recent Web site posting, BCG manager John Malinowski said one recent happy hour was oversubscribed, with more people showing up than the staff could easily accommodate. What started out as a modest soft-opening launch of a happy hour with 20 or so people showing up had grown to 120 by month’s end, he said. It might even be said that the Country Club is catching on, in a subdued,

modest sort of way. While the Country Club for many years has been an under-utilized, under-appreciated amenity catering to golfers, the closure of the Yacht Club in early January may have changed that calculus somewhat going forward. While OPA General Manager Bob Thompson intends to reopen the Yacht Club in March for a St. Patrick’s Day event, and then on a limited basis in April, that is subject to change. Whether or not the old Yacht Club remains closed as construction begins on a new facility would directly impact the Country Club.

Some members of the OPA board of directors are indicating that they still believe the Yacht Club should be permanently closed and demolished, but Thompson has been consistent in his preference to reopen it in the spring and keep it open through Labor Day weekend. The board in late January voted to direct Thompson to come back with a financial analysis of the impact on the total cost of the Yacht Club construction project and the 2013-14 OPA budget should the existing facility “be closed and demolished at the onset of work” on the new building.

He could produce such an analysis as soon as the board’s regular monthly meeting in late February, if not before. He told the Progress following the board vote that he would be surprised if that analysis would result in any change in his support to keep the existing building open over the summer months. Meanwhile, a Progress analysis of food and beverage operations at the Country Club under BCG management, somewhat hampered by the way the company presents its numbers, indicates that through December of this year, these operations have yielded a To Page 10

Tern Grille operations through Dec. 31, Dec. 201231, 2014 Golf Food and Beverage Operations through REVENUES Food Beverage Gross Revenues

Dec. Actual Dec. Budget Difference YTD Actual YTD Budget Difference YTD 2011 10,828 1,843 8,985 91,578 105,903 -14,325 109,118 4,494 689 3,805 55,008 66,907 -11,899 55,771 15,322 2,532 12,790 146,586 172,810 -26,224 164,889

Cost of Sales Food Beverage Total

4,386 1,195 5,581

571 193 764

3815 1802 5617

37,451 19,799 57,250

32,830 18,734 51,564

4,621 1,065 5,686

47,408 22,327 69,735

Net Revenues

9,741

1,768

7,173

89,336

121,246

-20,558

95,164

EXPENSES Labor Payroll taxes* Health benefits** Other Total Expenses

6,348 574 621 1402 8,945

4,334 567 569 368 5,838

2014 7 52 1,034 3107

60,127 6,718 5,039 16,062 87,946

54,420 7,055 4,557 15,600 81,632

5,707 -337 482 462 6,314

63,335 6,449 4,391 16,102 90,277

NET OPERATIONS

796

-4,070

4,866

1,390

39,614

-38,244

4,887

* Rough estimate, 16.19% of total golf payroll taxes, per December, 2012, combined golf/food and beverage financial statement ** Rough estimate, 16.19% of total golf health benefits, per December, 2012 combined golf/food and baverage financial statment Percentage determined by dividing golf food and beverage costs, $6,348, by total golf labor costs, $39,191 (16.19%)

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By TOM STAUSS Publisher hile Ocean Pines Association General Manager Bob Thompson has long been a proponent of keeping the old Yacht Club open this summer while construction of a new facility is under way nearby, some OPA board members have been equally consistent in expressing skepticism that such a project scope is practical. Former OPA President Bill Rakow, who is assisting Thompson in project oversight along with Ted Moroney – the two comprise Thompson’s braintrust on the new Yacht Club – told board members at their Jan. 23 monthly meeting that he is now a believer in the proposal to keep the old building open this summer. He said he had started out as a skep-

Board wants Thompson to revisit decision to keep Yacht Club open this summer Directors ask general manager to estimate financial impact on new building’s project cost and 2013-24 operational budget if old facility is demolished ‘at onset of work’ on the project site tic but is now convinced that Harkins Construction, the Salisbury-based builder that was awarded the construction contract for $4.3 million, will be able to build around the existing building over the summer months. It would be demolished shortly after Labor Day.

Rakow acknowledged that the decision as to whether or not to keep the old building open was a “political” one outside his purview as an informal advisor to Thompson on the Yacht Club project’s oversight. Political or not, it’s a decision that

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the board of directors seems to want to make. One day after the Jan. 23 meeting, the directors passed a two-part motion drafted by Director Dan Stachurski. The second part of the motion dealt with the Yacht Club construction timeline. “The General Manager is directed to estimate the impact on both the total cost of the Yacht Club project and on the 2013-14 budget if the existing Yacht Club is closed and demolished at the onset of work on the site,” the motion read. “If, in the considered opinion of the Board, the impact is favorable, the project plan, cost, and the budget will be

10 Ocean Pines PROGRESS

Tern Grille From Page 8 small surplus for the fiscal year to date. The month of December itself was profitable, by an amount less than $1,000. Given typical annual operating deficits at the Yacht Club, any food and beverage operation in Ocean Pines operated by the OPA that isn’t losing money in the winter season is noteworthy. The analysis is made more difficult because payroll taxes and health benefits for food and beverage employees are not broken out separately in the monthly golf financial recap released by OPA Controller Art Carmine. The Progress made some rough estimates based on the percentage of total labor costs in the BCG operation represented by labor costs associated with the Terns Grill and upstairs lounge. The percentage used is 16.19 percent, seemingly exact but still just an educated guess. According to the Progress analysis, which is based mostly on Carmine’s numbers, Country Club food and beverage gross revenues for December were $15,322, compared to the budgeted $2,532, a $12,790 positive variance. The increase is attributable to BCG’s quiet launch of Friday night happy hours. After subtraction of food and beverage costs, net revenues for the month were $9,741, ahead of budget by $7,173. Not surprisingly, labor costs were over budget by about $2,000 to accommodate the expanded schedule. Total estimated expenses were $8,945, including labor, payroll taxes, health benefits, and other non-itemized costs totaling $8,945. Year-to-date performance also is slightly in the black. The $1,390 cumulative surplus relative to budget isn’t particularly impressive relative to budget and actually is less than the $4,887 cumulative surplus estimated for December of 2011. But when January numbers are released in mid-February, it would not be surprising to see a spike in Country Club food and beverage revenues reflecting the increase in numbers taking advantage of the Friday night happy hours and limited dining, along with special events. Those weren’t on anyone’s radar when the 2012-13 golf budget was drafted and approved.

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February-Early March 2013 Ocean Pines PROGRESS

From Page 10 adjusted accordingly.” The first part of the motion concerned a $630,000 sole-source contract awarded to Harkins for raising the Yacht Club pool pumphouse and replacing the current wooden deck with concrete decking. The new pool is being handled separately, in a competitive bid process. [See article elsewhere in this edition of the Progress for details about the pool contracts.] The second part of Stachurski’s motion puts in Thompson’s court the task of coming up with cost estimates for a result that he personally opposes, but he told the Progress after the meeting that he will comply with the directive from the board. He said that after he presents the board with the requested financial data, he expects and believes that the board will concur with the decision to delay demolition of the existing building until after Labor Day. He said he would have the requested information to board members before their scheduled Feb. 23 monthly meeting. In comments supporting his motion, Stachurski said it was his “belief, in

closing the entire site, demolishing the existing Yacht Club building and pool at the outset, and undertaking the project in an orderly, straightforward fashion will provide cost savings from Harkins and may well have a beneficial effect on our overall financial picture for the coming fiscal year.” Stachurski said food and beverage operations could be temporarily relocated to the Country Club this summer. One potential difficulty with the scenario of demolishing the Yacht Club this summer is how it would affect food and beverage service traditionally available to pool users from a poolside tiki bar. Hot meals are prepared in the Yacht Club kitchen and transported to the tiki bar. Thompson told the Progress that shuttling food to the Yacht Club pool from the Country Club would not be the best solution. Stachurski’s two-part motion passed in a 5-2 vote, with Directors Marty Stevens and Marty Clarke in opposition. Their focus was less on the second part and much more on the first. Both of those directors said they were opposed to a sole source contract and the board funding an unbudgeted capital project.

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12 Ocean Pines PROGRESS

February-Early March 2013

By TOM STAUSS Publisher n perhaps the most controversial and far-reaching of any of its recommendations to the board of directors in the 2013-14 budget review process, the Ocean Pines Association’s Budget and Finance Advisory Committee is raising the possibility that, sometime in the next three to five years, the Ocean Pines community should be given the opportunity to decide whether the OPA should continue to operate a golf course. That decision should ultimately be made by the community in a referendum, most committee members say, should the golf course continue to rack up significant operating losses each year despite the OPA’s best efforts to reduce deficits and close in on break-even results or even profitability. The recommendation, discussed at length during the committee’s review of the draft budget in early January, failed to gain any support or even comments of interest in budget review meetings held by the board of directors later in the month. Other suggestions by the committee were routinely cited by the directors during their review. Director Marty Clarke told the Progress that he believes any recommendation that puts off a decision on the golf course to a three-to-five-year timeframe is destined to go nowhere.

Budget committee proposes referendum on whether OPA should remain in golf business Suggests three to five-year timeframe for community-wide vote “It’s too far in the future,” he said. “We’re facing a $500,000 deficit this year, and who knows how much next year. Putting off a decision that long means millions of dollars in operating losses and capital expenditures.” Clarke said any decision about the golf course should be made sooner rather than later, but he added that he is not in favor of any referendum that could result in the closure of the golf course and its conversion into a park or open space. Instead, Clarke said, the OPA should immediately begin prospecting for individuals or companies willing to take the course over for a minimal annual rent, eliminating the huge operating subsidies and capital expenditures that he said routinely cost property owners a million dollars per year or more. He said he believes that a core group of golf members in Ocean Pines would fight hard against the lease option, but he said the time is fast approaching when a shrinking number of property

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owners will be able to force the majority to continue to subsidize their pastime. He said members continue to control the best early morning tee times, and that the elderly membership base is not being replaced with younger members. “This really can’t continue,” he said. OPA Director Dan Stachurski told the Progress recently that he does not favor a referendum to decide the fate of the golf course, but said he is open to considering Clarke’s lease option idea if all else fails. OPA President Tom Terry said he doesn’t forsee any scenario in which the OPA isn’t in the golf business, expressing skepticism that there would be much interest in a lease option by individuals or companies. He said the committee’s referendum suggestion would be considered by the board before the budget review process is completed. The budget committee is in partial agreement with Clarke, a former committee member before he won election to

OCEAN PINES the board this past August. Like Clarke, its members say the OPA should consider getting out of the golf business, with one option being the lease option that Clarke says the OPA should be pursuing right now. Committee member Gene Ringsdorf, who has recommended the referendum approach for years, said during committee discussion that leasing out the course is only one possible solution. But if that fails to materialize, he said a last-resort option could be to close the course, creating a park in its place. The committee is recommending that the board set a deadline of from three to five years for golf operations to break even, after which time property owners would be promised a referendum on a simple question of whether the OPA should remain in the golf business. Ringsdorf said he hopes with a mostly new committee membership and a board that wants to use its committees more effectively, he and the committee will at least receive a response to the referendum proposal before a new budget is approved. OPA General Manager Bob Thompson recently told the Progress that he does not support any option that would result in the OPA getting out of the golf business, leasing the course to private entrepreneurs or individuals, or closing it down and converting it to a park.

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14 Ocean Pines PROGRESS

February-Early March 2013

By TOM STAUSS Publisher uch to the dismay of Ocean Pines Association director Dave Stevens, OPA General Manager Bob Thompson’s draft budget for 2013-14 does not include any new money to continue drainage improvements to the Ocean Pines golf course after this year’s improvements to the 11th and 12th holes are complete. Whether to continue the project next year, or at least to add money to the golf drainage reserve established to finance the multi-year improvements, is one of the issues that OPA directors have been considering as part of their budget review, a process that began in early January. So far, Stevens is the only director to speak out forcefully on behalf of continuing golf drainage improvements and making sure the funding is there to pay for it. “Where are we going to get the money to do it. That’s the crux of it,” he said, during the board’s Jan. 28 budget review meeting. Thompson opted not to add money to the drainage reserve or to plan for any additional drainage work in the fiscal year beginning May 1, partly for financial reasons but also because he wants to combat perceptions that the course is in poor condition and is in a state of con-

Golf drainage project on hold again after this year’s major expenditures Director Dave Stevens wants board to continue golf course improvements and find a funding source to finance it stant repair. The proposed golf budget for next year is predicated on all 18 holes being available for play all year long, with new greens available and improved drainage on the two holes, 11 and 12, that were generally thought to be most prone to flooding. Thompson told the directors and members of the OPA Budget and Finance Committee early in the budget review process that package play will return to the Ocean Pines course when promoters and Billy Casper Golf, the contract managers of the course, can credibly say the course is in good condition and that golfers will have a good experience playing it. Greens replacement on the front nine effectively killed outside play in the spring of last year. Beginning in late fall, the back nine was effectively closed to accommodate greens replacement. All 18 holes should be open for play by early spring, Thompson said, making optimistic projections for lucrative outside play achievable.

The general manager said that after a year or two of no substantial work on the course, it may be possible to resume golf drainage improvements, but he made no promises. Once work on the 11th and 12th holes is complete, roughly half of the course will have been rebuilt. Holes without drainage improvements include eight and nine on the front nine and holes ten and 13 through 18 on the back nine. Stevens cited the ninth hole as one in which the fairway is in poor condition. Thompson told the Progress in a later conversation that he believes Casper Golf will be doing everything it can do in the coming months to make the fairways as playable as possible, comparable in quality to any course in the greater Ocean City area. Thompson has said that he believes golfers tend to look mostly at the condition of greens in judging a course’s condition, a claim that Stevens said is only partially true. The OPA director, who is in his sixth and final year as a board member, told Thompson that some of

the fairways are in “horrible condition” and need immediate fixing, though he stopped short of recommending a closure of the course for one year to complete the drainage for the remaining nine holes as one project. That would require a referendum, since the cost of completing the drainage improvements in one year would probably exceed $3 million. Instead, Stevens said the OPA should resume the prior practice of doing one hole at a time in the off-season, with the par-three 19th hole usable as a substitute for whatever hole is undergoing reconstruction. Stevens said as far as he knows there’ve been no push-back or complaints from golfers who dislike using the replacement hole. During board discussion, his colleagues generally declined to engage Stevens on the merits of funding continuation of golf drainage. With respect to the golf capital budget, directors Dan Stachurski and Terri Mohr expressed concern that existing equipment used on the golf course was damaging the course, leaving tire tracks that crews often failed to fill in a timely fashion. The proposed golf capital project includes equipment that is designed to be easier on the course and seems likely to be funded in the 2013-14 budget on track to be approved by the board in late February.

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February-Early March 2013 Ocean Pines PROGRESS

OPA beats December budget by $18,000 Yacht Club misses target by $14,577, in red for the year by $77,252, but closure in January should diminish losses during January through April period By TOM STAUSS Publisher he Ocean Pines Association produced a positive operating variance to budget in December of last year in the amount of $17,865, with the Yacht Club the only department performing significantly worse relative to budget. The Yacht Club operating deficit for the month was $25,861, compared to its budgeted loss of $11,284, for a $14,284 negative variance. Golf generated a small positive variance to budget of $2,905, while still managing to lose $45,195 for the month. Aquatics performed close to budgetary expectations, losing $31,728 for

the month compared to the budgeted $30,306, for a $1,422 negative variance. A decision by OPA General Manager Bob Thompson to close the Yacht Club immediately after the New Year’s Eve party should help to reduce deficits there for the remainder of the fiscal year. Through December, the amenity is $77,252 in the red for the year and $115,677 behind budget. January financial results are normally released in mid-February. For December, the OPA was in the red in the amount of $156,655, compared to the budgeted loss of $174,520, resulting in the $17,865 positive variance. Cumulatively for the fiscal year, the OPA is in the black by a healthy $1,936,720, but

OPA Net Financial Operations through Dec. 31, 2012

the budget had forecast a $2,243,530 surplus through December. The OPA’s negative variance to budget for the year is $306,809 through December. OPA financial statements for December, released by OPA Controller Art Carmine in mid-January, showed one of the best months operationally for the OPA relative to budget this fiscal year. The $17,865 positive variance was produced by revenues under budget by $23,264 and expenses under budget by $41,129, with no new capital expenditures reported. Including new capital expenditures, which are funded out of current year assessments as opposed to reserves, the negative operating fund variance is

$340,106. Carmine’s report shows revenues are under budget by $488,079, total expenses are under budget by $181,270, and new capital is over budget by $33,297. At the Yacht Club, both banquets and regular food and beverage business were well off budget projections for December, reversing progress on the banquet side during November, when banquet revenues and net operations were close to budget. Cumulatively, total Yacht Club revenues through December have come in at $1,092,893, behind budget by slightly more than $231,000. Total revenues for the year are lagging behind the same time last year by about $125,000. The December numbers suggest that golf operations remain as the most worrisome amenity department in Ocean Pines, even though, for the month, revenues significantly exceeded budget forecasts. Total revenues reached $45,698, compared to the budgeted $29,854, a $15,853 positive variance. Driving that outcome were cart fees and food and beverage revenues at the Terns Grill that did much better than had been budgeted for the month. December’s actual golf loss of $45,195 was an improvement over the $55,640 loss in November. Through December, golf and its related food and beverage operations are $236,269 in the red for the year and $322,329 behind budget. Golf losses continue on a pace that could produce an actual loss for the fiscal year somewhere in the neighborhood of $500,000. Of the three major amenity operations, Aquatics was the second best performing major amenity behind golf as measured by operating losses for December. Aquatics had slipped into a slight cumulative deficit for the fiscal year as of November – a minus $2,170 – but that has grown to a $33,898 deficit after December. Even so, total revenues for the month were only off budget by $904, with swim classes the primary reason, behind budget by $4,368. Member dues were a bright spot, with $3,570 recorded compared to the budgeted zero. Aquatics expenses closely tracked the budgeted forecast, with larger than expected wages and benefits offset by utility savings and cost controls in services and supplies. Aquatics operations through December were doing better than they had cumulatively through December of 2011, when the deficit stood at $44,592. Status of reserves – A reserve summary released as part of the December financials shows that the OPA’s total reserve balance through Dec. 31 stood at $6,397,755, a $600,000 drop from November’s $6,991,574, mostly attributable to outlays from the roads reserve for roads resurfacing and from the bulkhead and waterways reserve for bulkhead replacement. The balance in the roads reserve dropped from $411,039 at the end of November to $14,095 at the end of

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16 Ocean Pines PROGRESS

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OPA finances From Page 15 December. The bulkhead and waterways reserve dropped from $799,998 to $681,147. The major maintenance and replacement reserve is the most flush with a $5,579,803, a decline from November’s $5,645,698 and October’s $5,692,366 balance. Of the $5,579,803 balance in the replacement reserve, $1,233,062 comes from the five-year funding plan stream of revenue with another $4,346,741 attributable to historical depreciation expense and prior year allocations to this reserve from assessment revenues. The approved $4.3 million expenditure for a new Yacht Club will take a substantial bite out of the major maintenance and replacement reserve whenever it is spent. The intent when the current year’s budget was approved last February was to spread the construction cost over at least two fiscal years. Each year, the OPA collects between $3 million and $4 million in assessment dollars that are allocated to various reserves. What is depleted in the form of capital expenditures is replenished by this infusion of new assessment dollars. Casino revenues – The OPA continues to reap local impact funds for casino operations at Ocean Downs and elsewhere in the state. Through November, the OPA had collected $435,562 in casino funds, up from October’s $420,685, according to the OPA’s November balance sheet. The December balance sheet shows that number reduced to $49,562, but $400,000 of casino money booked as a liability in the balance sheet (arcane accounting procedure) had already been transferred to the roads reserve, for a total collected through December of $449,562. The pattern indicates a slowdown in the casino impact funds flowing to the OPA. The board of directors last year decided to use casino funds for road improvements, beginning in the current fiscal year.

OCEAN PINES By TOM STAUSS Publisher hile golf, the Yacht Club food and beverage, and aquatics operations are often under scrutiny because of perennial operating losses, the Ocean Pines Association’s Department of Parks and Recreation is receiving more attention this year during the 2013-14 budget review process because its budgeted deficit is $478,000. Because the department is funded mostly out of the lot assessment, as opposed to amenity or program fees, it typically has been exempt from the budgetary microscope and newspaper headlines. That has changed this year, with the Budget and Finance Advisory Committee taking the unprecedented step of “rejecting” the department’s proposed budget. While the committee is commending department director Sonya Bounds for “doing exactly what she thinks the association wants in an amenity,” committee

February-Early March 2013 Ocean Pines PROGRESS

Committee ‘rejects’ proposed Rec Department budget Board consensus emerging on asking staff to solicit sponsorships for events such as Fourth of July fireworks members contend the department lacks “strategic direction” with respect to programs that lose money. In a formal document listing concerns with the draft budget, the committee said the department lacks a formal business plan, as had been requested of it, and that labor costs are not allocated to particular programs, making it difficult to assess how successful individual programs and activities are and, as a result, understating their cost. The committee’s memo to the board equates the $478,000 budgeted deficit to $57 per Ocean Pines property.

Suggestions for reducing the deficit include obtaining sponsors for valuable community programs, such as the Fourth of July fireworks, and selling food, beer and wine at concerts to generate revenue. The committee said that costs of signs and lighting for the South Side ball field should be offset by sponsors, and that a new shuttle bus should not be included in the department’s capital budget. It isn’t. General Manager Bob Thompson told committee members and later the board of directors during budget review sessions in January that

Budget committee opposing assessment, payroll increases

insurance premiums or retirement plan contributions, are uncontrollable. The OPA shops its health insurance plan every year and avoided premium increases that could have been even higher, Thompson said. He also has said that his proposed budget decreases the number of fulltime equivalent employees by 2.5 over authorized numbers in the current fiscal year. The general manager has not been supportive of efforts to ask employees to share in the cost of health premiums, suggesting that it’s an attractive feature of employment with the OPA that offsets the fact that, relative to other local governmental entities, Ocean Pines’ total compensation package tends to be on the low side.

Thompson told committee and board members that the percentage increase over this year’s revised projections are misleading, because the comparison is against salary and payroll cost totals that reflect board-authorized new positions that were not filled for the entire year in the current fiscal year. There were three such partial-year positions, Thompson said, including the newly hired facilities coordinator. Comparing payroll only, Thompson said his proposed budget calls for a 5.4 percent increase over this year’s projected actual expense and only 1.7 percent more than the current year’s approved budget. So far, during budget review sessions held in January, Thompson has not re-

By TOM STAUSS Publisher he Budget and Finance Advisory Committee is opposing General Manager Bob Thompson’s proposed $10 increase in the lot assessment on the operations side of the draft Ocean Pines Association budget for 2013-14, as well as wage and payroll cost increases that are part of the draft spending plan. Thompson has waged a low key but determined defense of his proposed increase, which strictly speaking does not conform to budget guidance given to him last fall by the board of directors. The board had instructed Thompson to do everything possible to hold the line on increased assessments related to operations, something Thompson was unable or unwilling to do. According to the budget committee, citing details from the draft budget, salary and related costs would increase $445,000 in next year’s budget compared to this year’s costs. That $445,000 increase is attributable to $225,000 more in salary and wages, including overtime, a 5.4 per cent increase, and $220,000 more in payroll costs, such as health insurance and retirement contributions, of 16.6 percent. “Payroll costs soared over 16 percent and must be controlled,” the committee said in a Jan. 17 memo to the board of directors. “Health care costs are out of control, and we collectively call for a non-employee task force to review and recommend options prior to the budget approval session.” The board’s budget guidance called for salary merit increases with a cap of three percent, with no recommendation included on related payroll expenses such as health insurance, retirement plan contributions or Social Security (FICA) taxes. In budget review sessions with the budget committee and board of directors, Thompson said that to some extent cost increases, such those related to health

the shuttle bus proposal had already been omitted from the proposed capital spending list. But Thompson and members of the board have generally commented favorably on the committee’s proposal to solicit more commercial sponsorships for departmental events. Thompson asked for specific direction from the board regarding sponsorship solicitation, and he’s likely to receive it. Some directors voiced concern about how certain kinds of business would be undesirable candidates for sponsorships, and Thompson noted that the department already has a written policy about that and adheres to it. With respect to the proposed five percent increases in most amenity fees, particularly golf, swimming and tennis memberships, the committee took a skeptical stance generally. Raising fees generally reduce membership totals, committee members say, and the amenities have already been losing members in recent years because of economic conditions and other factors. Thompson is defending the amenity fee increases, citing the fact that they haven’t been raised in five years. Those that have been increased more recently, such as Beach Club parking and marina boat slip rental fees, are excluded from his rate increase proposal, he said. During budget review sessions in January, directors said little about proposed membership increases, perhaps indicating that they will be included when the budget is approved Feb. 23. The committee also is taking the position that the proposed budget for next year includes too little funding for promotion, citing aquatics and the Yacht Club in particular. The committee seemed particularly impressed with the Aquatics Department’s business and marketing plan.

18 Ocean Pines PROGRESS

February-Early March 2013

Board toughens stance against delinquent owners By ROTA L. KNOTT Contributing Writer roperty owners who owe the Ocean Pines Association $5,000 or more in annual dues, fees, interest or other charges may soon be sued by the OPA in small claims court and read about it in the news. The board of directors during a Jan. 23 meeting voted unanimously to initiate a process whereby the OPA will take legal action against property owners who owe the OPA a significant amount of money and make sure everyone in the community knows who those debtors are. Director Marty Clarke’s motion said that the board of directors instructed the general manager to publish the names of association members who have failed to pay charges levied by the association in excess of $5,000 and initiate legal action against those members for all money due and reasonable attorney fees. In his motion, Clarke says that the OPA’s declaration of restrictions, articles of reinstatement and board resolution F4 actually require that such action be taken. “We are charged by our documents... to do this. I don’t know why we’re not doing it,” he said. According to Clarke, there are three property owners who owe the OPA more than $10,000 each. If they file for bankruptcy, the OPA will get nothing. But having a lawsuit on file will have more weight with the courts than filing a lien on the property, he said. “What we’re doing, filing liens and whistling past the graveyard, ain’t cutting it. We have the absolute right to file a lawsuit,” Clarke said. He argued that all businesses and service professionals like dentists and doctors will take people to court if they don’t pay their bills, and the OPA should do so, too. He said there would be no cost to the OPA to pursue litigation against proper-

Beauchamp Road From Page 1 and February. That means there are only a few weeks left to get it done. The commissioners agreed with Tustin’s recommendation and voted unanimously to waive the bid requirements and award the contract so the drainage work can get under way. The drainage work is a solution devised by County Commissioner Jim Bunting, whose Northern district includes the area of Ocean Pines affected by Beauchamp Road and Section 3 drainage woes. His solution is a much simpler, and substantially less expensive, than some of the other solutions that have been studied in recent years. In a related matter, the commissioners approved a revised utility easement for River Run. During the course of the drainage project investigations, the developer requested an amendment to the previous sewer agreement to be more in line with

Suits in small claims court, publishing of names authorized in unanimous vote on motion by Director Marty Clarke ty owners who owe them any amount of money. “It’s not an expense even if you have to have an attorney sign off on it. All of that just piles onto the bill. It’s no cost to us,” he said. Director Terri Mohr questioned Clarke regarding the purpose of publishing the names of those who owe money to the OPA. “We’re charged to do it,” he said. She responded, “No, we can make a choice.” Clarke then read aloud a portion of the articles of reinstatement that says the board is charged to “levy an annual charge upon the members of the association; to publish the names of who shall fail to pay charges made by the association; to sue to collect any such charges...” Director Dave Stevens said he partially agreed with the motion because “about a year ago I brought it to the board’s attention that we were not doing everything I thought we could have been doing to collect our back assessments.” He said that included “taking people to court.” Stevens said about that same time OPA General Manager Bob Thompson indicated that he would look into doing just that -- taking property owners to court to try to recover money owed -- but nothing ever happened. His qualm with the motion was that Clarke set the amount of money too high at $5,000; he said he doesn’t think it needs to be that large an amount of money in order to take the debtors to court. “I think you can go after people who owe us ten bucks,” he said, but he recognized that “there’s a certain sequence of steps that happen before you can get to that point, no matter what.” his current vision for the community, Bob Mitchell, county director of environmental programs, said. The document outlines the water and wastewater capacity allocations for the community and its amenities. He said the developer no longer plans to build a larger clubhouse so that will free up some capacity that had been reserved for that project. “Due to the economic climate of the past few years and the resultant business impacts this development has experienced, the developer desires to keep the existing community facilities as they are and utilize any excess sanitary capacity in other areas in the community, Mitchell said. New uses would need to conform to River Run’s residential planned community plan, he said. The amended agreement, which revises a 2008 document, reallocates 12 equivalent dwelling units of capacity that was originally designated for the golf course and clubhouse to uses within the RPC.

Stevens said filing in small claims court would not preclude the OPA from taking other actions to address delinquent accounts, including foreclosing against property owners who owe back assessments. “They both could be done,” he said. “The rationale for going after people in small claims court is that we’re bringing it to a head faster. It’s moving forward quickly, and that really is the key thing. That’s the reason I wouldn’t wait until they owe us $5,000 or whatever.” People do not want to have to go to court, so they are more likely to pay up or at least contact the OPA to try to work out a payment plan if they think they are about to be sued, Stevens said. As for the cost to the OPA of filing small claims, Stevens agreed that it would be nominal and would be added onto the fees on delinquent accounts. OPA President Tom Terry said that two years ago he was adamantly opposed to publishing the names of property owners who owe the association, but he has since changed his mind. He said he now thinks that doing so for anyone who owes a significant sum, and has not established a payment plan, will help the OPA recover lost revenue. Terry said he doesn’t know what the impact of going to small claims court would be on the association. If someone really doesn’t have the money to pay, then the only other option is for the OPA to place a lien on their property, he said, “Whether you win or not, if they don’t have the money to pay it, you have expended the money for the legal fees and you’re not going to get it back,” he said. “If somebody’s playing a game, has the money and just not paying our dues, then absolutely we have to find a way to address that. But he suggested “at least an assessment step” in Clarke’s motion so the OPA can determine if “there is any real chance of us ever getting the money.” As for publishing the names of those with delinquent accounts, Stevens said it is something of a moot point because it is already public record, and when the OPA files suit, even in small claims court, their names will also be on the record for anyone to see. Clarke agreed, saying they are already public record, but taking them to court “might just shake ‘em up.” Director Sharyn O’Hare said she knows people who haven’t paid their association fees “just for spite and they could have,” but also said she knows people who have lost their jobs and are struggling and really just don’t have the money to pay the OPA. She said they should be given notice of the OPA’s intent to publish their names and file suit so they have an opportunity to make remittance before action is taken. Director Ray Unger, who offered a

second to the motion, said those with such large accumulated debt to the OPA have already been notified about it repeatedly. “But you’re changing the rules a little bit,” Mohr said. Clarke responded, “No, we’re following the rules. We’re not changing the rules. We’re following the rules.” Stevens agreed that the motion does not change the rules. “We have a perfect right, anybody does, to sue for the money that they are owed. We don’t have to pick up the phone and say I’m going to sue you or anything like that,” he said, adding that people who owe that much money have gotten letter after letter from the OPA already. “They’ve had more than adequate notice over more than several years that they owe us this much money. This doesn’t happen overnight,” Director Dan Stachurski said. At a rate of $800 to $900 per year in annual assessments, property owners would have had to not pay up for at least five years to accumulate $5,000 in delinquencies to the OPA. “We should be getting much more aggressive particularly about the large offenders, and these are. This targets that exactly,” he said. Stachurski said Clarke’s motion takes “very brisk action against the worst offenders, and he said he agrees with it. Collections were worse this year than last year and have been trending down, he said, adding that the OPA has not been getting more aggressive in its efforts to collect on delinquent accounts. “So this is a good one. This is going to send a signal to people that it’s no longer a joke not to pay your dues in Ocean Pines,” Stachurski said. The board ultimately approved Clarke’s motion, with Thompson to provide a report on the status of delinquent accounts to directors by March 1. That report will include information on the small claims court filing process.

Budget committee From Page 17 ceived any heavy push-back from most directors on his projected payroll and related cost estimates, with the fairly consistent exception of Director Marty Clarke, who has said that Thompson should consider staff reductions in order to keep payroll costs in line. Other directors seemed more inclined to try to increase revenues as an alternative to staffing cuts. All directors have expressed support for trying to coax more grant funding from the Worcester County Commissioners, and in late January they agreed informally to increase the police department budget revenue estimate by $100,000 in anticipation of more funding by the commissioners. The county approves its budget in June, well after the OPA fiscal year is under way.

A February-Early March 2013 Ocean Pines PROGRESS

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20 Ocean Pines PROGRESS February-Early March 2013 Yacht Club pool bids

Sports Core pool resurfacing added to capital budget

By TOM STAUSS Publisher ot included in the initial draft capital projects budget for 201314, the long-delayed and much anticipated resurfacing of the Sports Core indoor pool has made it into a revised version of the proposed budget and, assuming it survives final budget approval by the board of directors in February, stands a good chance of taking place this summer. The pool resurfacing project has been included in the approved capital budget in prior years but was omitted from next year’s capital budget without any pro-

test from aquatics advocates in Ocean Pines, probably with the understanding that capital spending for aquatics this calendar year is already substantial, with the pending reconstruction of the Yacht Club pool, along with new concrete decking and the raising up of the flood-prone pool pump house. The Yacht Club pool project with all its permutations probably will cost in the $800,000 to million range, while the Sports Core pool resurfacing is far more modestly priced, $60,000, which includes replacement of failed skimmers, eight in all, and coping tiles that would ring the perimeter of the pool. OPA General Manager Bob Thompson included Sports Core resurfacing as part of a revised schedule of proposed capital projects he and Controller Art Carmine assembled at board request. The project, to be funded out of the

OPA’s major maintenance and replacement reserve, factors into a revised reserve summary projected for the coming fiscal year that is reviewed and approved by the board. The plaster surface at the Sports Core pool is badly worn in places, in some instances down to the concrete. The skimmers have not functioned properly in years. Aquatics Committee chair Ginny Reister has said that years ago they were improperly set, causing them to fail at their primary function of suctioning debris and other contaminants from the pool. Thompson told directors during a budget review meeting Jan. 29 that he is in the process of accumulating proposals for the Sports Core resurfacing project, having previously drafted an RFP (request for proposals) for that purpose.

Thompson. “Given the fact that the Yacht Club must now include a pool in order to put that campus into full operating condition, and given the fact that it is not a good idea to have more than one general contractor in charge of the design and execution of the project in order to ensure the best possible return on our considerable investment,” Stachurski in his motion urged the board to accept the general manager’s proposal for sole sourcing pool-related work, but not the new pool construction, to Harkins. That segment of the project has been put out to competitive bidding, with bids to be opened in early February, and then reviewed by Thompson and his staff. It’s possible that Harkins will win that bid as well, though it is likely the contractor would sub-contract out actual pool construction, as the company did when it won the Swim and Racquet Club pool contract several years ago. Under Stachurski’s motion, overall

supervision of the Yacht Club project, encompassing the new building, new pool, new pool decking, and elevating the pump house, will be under Harkins’ control as general contractor. “The general manager is directed to complete the obtaining of competitive bids on the pool and pump system from (at least) three competent sources, recommend his supplier selection to the board for approval, and then assign the selected supplier as a subcontractor so that Harkins is the sole responsible contractor for the entire project,” the motion said. Thompson told the board that with the successful passage of the motion, he would no doubt have Harkins involved in the decision on which subcontractor to recommend for the pool portion of the project. Stevens and Clarke expressed concerns about the motion during the discussion, although at one point Clarke said “why not let Harkins do it” all, by

which he meant the pool, too. But he then said the pool was another unbudgeted expenditure and that he consistently opposes them. Stevens, as he had done the previous day, said the OPA was under no obligation to replace the pool by this summer, and he suggested that a delay would avoid a pattern of the board approving unbudgeted items, such as the Java Bay coffeehouse improvements and golf course greens replacement. Director Sharyn O’Hare responded that the board has a responsibility to the OPA membership, and that means replacing a pool that was damaged irrevocably by Hurricane Sandy last year, as quickly as possible. It was a position that four of her colleagues – OPA President Tom Terry, Stachurski, Ray Unger and Terri Mohr – embraced. It was revealed during board discussion that, in addition to raising up the pool pump room from its present footprint, so it will be level with the adjacent bathhouse, Thompson is proposing a modest improvement on the marina side of the existing pump room to benefit boaters. Access would be from the lower level of the marina decking. The addition would be a small bathroom with showers, and the directors generally seemed to think it was a good idea, or at least raised no objections to it. The purpose is to allow boaters so inclined to clean up before entering the Yacht Club for a drink or meal. During the Jan. 23 meeting, Thompson told the directors that elevating the pump room would essentially create one large building including both the bathhouse and pump room. The plan is to make its exterior walls and roof match that of the new Yacht Club, he said. Thompson later told the Progress that he would direct the Public Works Department to make improvements in the interior of the bathhouse as well, before the new pool is open. “It wouldn’t be part of the Harkins contract,” he said.

Advisory committee researching replacement for commercial chlorine as a way of reducing costs and skin-and-eye irritation

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From Page 1 Jan. 24 at the Country Club, originally scheduled for a 2013-14 budget review. The issue was thoroughly debated a day earlier, during a budget review session, with Stevens in particular urging the board to follow regular order in bidding out big-ticket projects, even if it meant that the Yacht Club pool would not be available for use this summer. For the other five directors, the decision to sole source $623,760 in pool-related improvements to Harkins Construction of Salisbury, the same contractor that will be building the new Yacht Club, was not particularly controversial. Director Dan Stachurski made the motion to do it and it passed, 5-2, with Clarke and Stevens in opposition. A second part of the motion pertained to the issue of whether the Yacht Club should be demolished in the initial phase of work on a new facility, or after Labor Day, which would allow the old Yacht Club to remain open this summer. The motion’s second part directed Thompson to produce the numbers needed for the board to make that decision. [See article elsewhere in this edition of the Progress for details.] Stachurski essentially bought into Thompson’s rationale for awarding the sole source contract to Harkins. Not doing it would, according to Thompson, add up to three months of time it could take to have the new pool up and running. Part of that time would be eaten up by preparing bid specs and formally soliciting bids. If a company other than Harkins would have been awarded the project, new permitting requirements could have delayed the project even further, and it would have left the greater Yacht Club construction site – Thompson calls it a campus – with two general contractors trying to coordinate their activities, such as placement of utilities. It was, in short, a logistical nightmare waiting to happen, according to

OCEAN PINES

February-Early March 2013 Ocean Pines PROGRESS

Sports Core pool From Page 20 Although included in prior year capital budgets, Thompson never has gone so far as to seek bids for the work, an indication that the project could happen this summer, assuming it is approved by the board. The project would likely be scheduled for August, when the Sports Core pool is normally closed anyway for a few days for its twice-yearly dumping and acid washing. Scheduling the work in late summer gives swimmers options to use the OPA’s four outdoor pools. An August timeframe also accommodates the summer guard staff, many of whom are leaving for college in August. During board discussion, director Marty Clarke questioned the cost of the proposed resurfacing, indicating that through his own research he had determined that the cost is closer to $15,000 or $20,000. Thompson said replacing skimmers and pool coping adds substantially to the cost. In a related development that has budgetary implications, the Aquatics Advisory Committee has launched a research project into the possibility of replacing traditional chlorination of Ocean Pines’ pools with salt-generated chlorine that would be produced through electrolysis. Salt-generated chlorination is being used in several pools, both indoor and outdoor in Ocean City and elsewhere in the region, as a lower cost alternative to diluted chlorine purchased from pool supply companies. The committee is planning to visit pools where a pure form of chlorine is produced with equipment housed in pool pump rooms. The committee will be looking into how effective the home-brewed chlorine is relative to traditional supplies, potential cost savings that might result from purchasing salt rather than diluted chlorine, how the equipment integrates with the existing pumping and chlorination systems, and whether claims by proponents that salt-generated chlorine dramatically reduces skin and eye irritation are valid. Also needing confirmation is the modest cost of salt-generating chlorinators, which committee members have been told range from $1,000 to $1,500, depending on the size of the pool. Apparently, these devices can be sized to fit the volume of water in any pool of whatever size, but that is something else that the committee has yet to verify. Reister, the committee chair, has been working with OPA Aquatics Director Tom Perry in the effort to obtain information about the devices. Committee member Kathy Grimes told committee members during their Jan. 9 monthly meeting that state regulators have already approved these devices for use. She said that the pool management industry is moving toward salt generators as an alternative to traditional chlorination. Salt generators are sized for the size of the pool (in gallons) and also for the maximum use.

Garden Club installation

The Ocean Pines Garden Club hosted its installation luncheon Jan. 10 at the Ocean Pines Country Club. The program schedule for 2013 was presented and new officers were installed during a candle lighting ceremony that detailed the duties of each position. Pictured from left to right are Barbara Ferger,president; Daryl Carpenter, corresponding secretary; Gail Jankowski, co-vice president; Anita Roberts, co-Vice President. Sharon Puser, recording secretary, and Carolyn Henglein, treasurer, were not present and will be sworn in at a later date.The OPGC holds its general meetings on the second Thursday of each month at 10 a.m. at the Ocean Pines Community Center. New members are welcome.

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February-Early March 2013

By TOM STAUSS Publisher t’s almost axiomatic: Any government or homeowner association that raises taxes or fees on its constituents or members, even for a specific purpose and for a determined period of time, is loath to reduce the taxes or fees or return them to their previous level prior to their imposition. The axiom appears to be borne out in the case of the Ocean Pines Association’s five-year funding plan, $30 per year increases in lot assessments imposed four years ago to raise funds for a list of potential big-ticket capital projects that coincidentally were never formally adopted by the board of directors in that first year, or any year since. The five-year plan is likely to be funded in the budget for the 2013-14 fiscal year, scheduled to be approved in late February by the OPA board of directors. Assessment notices that will be mailed to property owners soon after the budget is approved will reflect the fifth year of the five-year funding plan. Of the $43 proposed increase in the assessment, $26 is earmarked for what is now called the capital assets replacement reserve and another $4 is earmarked for the operational fund recovery reserve. If any property owner was under the impression that the $150 in assessment

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GM tells property owners that five-year funding plan won’t end after fifth year increases attributable to the five-year funding plan will in any meaningful sense end at the end of the 2013-14 fiscal year, they were set straight by OPA General Manager Bob Thompson during a town meeting on the proposed budget Feb. 2. During the meeting, Thompson told the handful of members present that while he anticipates that the more or less automatic $30 increases in the assessment will end after the fifth year of the funding, the $1.1 million that will be brought into association reserve coffers each year as a result of the plan once it is fully implemented will continue in year six and indefinitely after that. What that means in a practical sense is that he will not be recommending a $150 decrease in the assessment a year from now when the 2014-15 budget is under review. Most members of the board of directors were present at the town meeting, and none rose to refute Thompson’s pronouncement.

Indeed, his comments were hardly anything new. Four years ago, when the five-year funding plan was introduced, it was anticipated that the funds raised through the plan would continue to accumulate after five years. Thompson’s announcement simply confirmed what the plan’s architects intended four years ago. Not all directors favor the more or less automatic $30 increase in the assessment that has occurred under the plan. Thompson acknowledged that one director, Marty Clarke, has never interpreted the plan as calling for annual assessment increases. Instead, Clarke has said the plan simply allocates $30 from every lot assessment collected to reserves, and could involve reducing expenses on the operational side of the budget to avoid any assessment increase. Thompson offered little that had been previously reported on his proposed budget for next year. Key elements include no new capital

OCEAN PINES

items funded out of the current assessment; a five percent increase in most amenity membership fees, excluding marina boat slip fees and Beach Club parking; a $30 increase in the assessment attributable to the five-year funding plan, with another $10 attributable to operational increases and $3 for a self-financing of golf drainage improvements, to be amortized over 25 years; and payroll expenses that exceeded this year’s budget by 1.7 percent and this year’s actual projected payroll by 5.4 percent. He attributes the operational increases to the fact that several key positions were not filled for 12 months in the current fiscal year, including the recently hired facilities manager, as well as not easily controlled increases in health insurance and retirement costs. He said that his budget projects that amenity surpluses will reduce the lot assessment by $19 next year, something that hasn’t occurred in recent years because of amenity budgets that have not been met, such as golf in the current fiscal year that is expected to lose about $500,000 this year. Thompson said his proposed budget calls for $3.9 million in reserve funding for the fiscal year. He also highlighted issues that the board of directors is considering as part

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February-Early March 2013 Ocean Pines PROGRESS

Proposed changes modernize, reorganize, clean up OPA charter

cluding an announcement in the winter issue of the Ocean Pines quarterly print newsletter. The Web site notice simply states that “members of the Ocean Pines Association are hereby notified of the intent to amend and restate the association charter.” A draft of the proposed restatement has been prepared by the by-laws and resolutions advisory committee and is currently under review by legal counsel and the board of directors. It is posted on the OPA’s Web site, along with the existing charter and a comparison of the two documents that outlines the recommended changes. Stevens said there will have to be a

meeting on the charter amendment but that could just be a short special meeting attached to a regular board meeting. The approval of charter amendments requires an approval of at least two-thirds of the entire board. The association members do does not have a vote in the approval process. The draft moves the topic of police and fire protection to a separate paragraph and language in the current charter that says those services exist for the “… protection for the residents of the subdivision” has been changed to “provide police and fire protection for persons and property within the subdivision.” The document also includes a reference to cooperating with county

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and state police and fire authorities. Instead of listing all potential annual charges that the OPA may levy on property owners, the charter amendment refers to declarations of restrictions as the source documents for annual charges. The inclusion of “…any other document…” is in recognition that two other recorded documents exist that modify a declaration of restrictions -- a consent order for Section 14C and a master deed for the Borderlinks. The use of the term “voting members” has been eliminated in the draft charter. Member eligibility to vote is covered in a separate section that states that the board of directors can suspend the voting rights, and right to use the parks and other recreational facilities and amenities, of any member who owes the association money or has continuing vi-

By ROTA L. KNOTT Contributing Writer series of changes to the Ocean Pines Association’s charter that are currently under consideration by the board of directors are largely housekeeping in nature and are designed to clean up and reorganize the governing document. Director Dave Stevens presented an update on the proposed charter amendment to the board during a Jan. 23 meeting. Stevens said the current charter requirements call for having an announcement of proposed changes sent to each member of the OPA. But the OPA is taking a no-cost way of doing so by simply posting it on its Web site and in-

Funding plan From Page 23 of this year’s budget process. As an alternative to self-financing drainage work over 25 years, he said the board could decide to finance it instead out of the drainage reserve, which could require a $27 assessment increase as opposed to the $3 Thompson proposed in his draft budget based on an earlier board vote. The board in a late January budget session informally agreed to instruct Thompson to add an additional $100,000 in county funding in the budget, which if it survives the final week or two of budget reviews could result in a $12 reduction in the assessment. The directors have also said that Thompson may have been too conservative in estimating revenues from marina boat slips. “The board thinks I’m sandbagging (this account),” Thompson said. An adjustment in this account could result in an assessment decrease of $4. The board is also considering a proposal by Director Marty Clarke to allocate road depreciation funds to the roads reserve, as opposed to the capital assets replacement reserve where they’re currently parked. Inexplicably, Thompson said this shift if approved would result in a $43 assessment increase. Some board members apparently are under the impression that the association has not previously allocated roads depreciation expense to the replacement reserve, and that as a result to begin allocating it to the roads reserve would require an assessment increase. Clarke told the Progress following the meeting that no increase in the assessment is required because in fact more than $300,000 per year is being collected in roads depreciation. “It’s just a matter of shifting it out of the replacement reserve into the roads reserve,” Clarke said. “That has no effect on the assessment.”

24 Ocean Pines PROGRESS

February-Early March 2013

Casper Golf, in contract year, has short window to reach $150,000 deficit target

By TOM STAUSS Publisher losing in on the end of its threeyear contract to manage the Ocean Pines golf course for the Ocean Pines Association, Billy Casper Golf is faced what on the face of it seems like a herculean challenge: Reduce the current fiscal yearâ&#x20AC;&#x2122;s projected record-breaking operating deficit of $500,000 to a mere $150,000 loss. That $150,000 deficit is what appeared in OPA General Manager Bob Thompsonâ&#x20AC;&#x2122;s draft budget made public in early January, and it remained intact through a series of budget review sessions with the budget and finance advisory committee and board of directors in January. But that projected deficit met with some skepticism from some of those whose job it is to scrutinize the budget. OPA Director Dan Stachurski spoke for the skeptics when, during the boardâ&#x20AC;&#x2122;s Jan. 29 review session, he said heâ&#x20AC;&#x2122;d rather see a realistic $300,000 deficit projection over a $150,000 loss projection that BCG canâ&#x20AC;&#x2122;t achieve. Director Dave Stevens also declared his skepticism about the projection and membership growth estimate embedded in it. With the support of other directors, Stachurski pressed OPA General Manager Bob Thompson to ask BCG to provide a more detailed monthly breakdown of income and expenses to show it would be possible to achieve a $350,000 net turn-around in operations in one year. BCGâ&#x20AC;&#x2122;s Ocean Pines golf director John Malinowski outlined in more general terms how the targeted deficit would be achievable in a presentation to the budget and finance committee in early January. Essentially, BCGâ&#x20AC;&#x2122;s plan calls for robust sales in the spring and fall shoulder months in which substantial pack-

Pressureâ&#x20AC;&#x2122;s on for golf course manager to produce substantial turn-around in operations age play is directed to Ocean Pines from local golf promoters. A key to making that work is a golf course that has been significantly improved over this past fall and winter, which Malinowski predicted would also bring back members who, because the course was in less than ideal condition for the past two years, left Ocean Pines for greener pastures, or more specifically greener greens and greener fairways at other area courses. By early spring, the Ocean Pines course greens will have been completely rebuilt and two holes with significant drainage issues, 11 and 12, will have been essentially rebuilt with new drainage infrastructure. Able to more credibly promote the Ocean Pines course as a Robert Trent Jones layout worthy of the name, Malinowksi told budget committee members, and OPA board members in attendance, that his company would wage an advertising campaign under the slogan â&#x20AC;&#x153;Rediscover Ocean Pinesâ&#x20AC;? this spring. Stachurski said to bring about a $350,000 shift in the bottom line, BCG would need to bring in about $500,000 more in revenue from all sources, including new memberships and a substantial increase in outside play. Not persuaded that BCG will be able to achieve that goal based on the companyâ&#x20AC;&#x2122;s presentation to the budget and finance committee, Stachurski asked

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Thompson to produce a monthly breakdown forecasting revenue and expenses for the golf course beginning with the new fiscal year. Thompson said that BCG has such a monthly forecast and that he would make it available to the board. The budget committee in its memo of recommendations to the board said that â&#x20AC;&#x153;revenue estimates (by BCG) seem to be reasonable given their performance before the greensâ&#x20AC;&#x2122; problemsâ&#x20AC;? surfaced two summers ago. The committee made no similar assertion about the forecasted $150,000 and said it â&#x20AC;&#x153;was opposed to budgeting deficits.â&#x20AC;? The committee also said the golf capital requests â&#x20AC;&#x201C; new equipment such as mowers and the like â&#x20AC;&#x201C; â&#x20AC;&#x153;are not justified with any significant rationalization.â&#x20AC;? The committee said it opposed large capital expenditures for operations with â&#x20AC;&#x153;marginal performanceâ&#x20AC;?. The committee then offered a controversial suggestion, a proposal for a community referendum to decide the fate of the golf course should the amenity fail to break even within three to five years. [See story elsewhere in this edition of the Progress for details.] OPA President Tom Terry seemed to side more with the budget committee in its view that BCGâ&#x20AC;&#x2122;s revenue target is achievable. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m very comfortableâ&#x20AC;? with it, he

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OCEAN PINES said, citing the budget committeeâ&#x20AC;&#x2122;s endorsement, adding that it would take â&#x20AC;&#x153;a phenomenal effortâ&#x20AC;? to turn the bottom line number around. Stachurski said heâ&#x20AC;&#x2122;s â&#x20AC;&#x153;looking for a miracleâ&#x20AC;? and repeated that he wanted to see a monthly breakdown to show how a $150,000 deficit could be achieved. Stevens said that more than â&#x20AC;&#x153;big jumpsâ&#x20AC;? in the spring and fall months would be needed to make up the projected $150,000 loss. â&#x20AC;&#x153;There would also have to be huge jumps in the summer,â&#x20AC;? he said. As for projected membership growth, Stevens said he didnâ&#x20AC;&#x2122;t think the assumptions in the proposed budget were realistic. The directors made references to the fact that this is the third and final year under the current contract. No one made any explicit reference to whether they were or were not inclined to renew it, but the general tenor of the discussion seemed to suggest that BCG executives are well aware that the firmâ&#x20AC;&#x2122;s future in Ocean Pines is probably dependent on the company making its numbers beginning with the new fiscal year May 1.

Charter change

From Page 23 olations of the restrictive covenants on their property. The current charter allows notice of the annual association meeting to be published in a newspaper in lieu of the other listed methods of delivery. Newspaper notice has been deleted from the draft document paragraph 4 notice delivery options. Delivery options included in the revised charter are â&#x20AC;&#x153;personally, by mail, or by electronic transmission such as eâ&#x20AC;?mail.â&#x20AC;? Another new provision removes any distinction between when notice is sent to members. Also, it makes clear that a separate notice is not sent to all owners of property held in New language is also included for the purpose of limiting and regulating the powers of the association and of the directors. It states that â&#x20AC;&#x153;The directors of the association shall exercise their powers and duties in good faith and with a view to the interest of the association. The validity of a contract or other transaction between the association and any of the directors of the association or between the association and any other corporation, firm or other entity in which any association director is a director or has a material financial interest shall be determined under the provisions of the Maryland Code. It also says that additional rules may be established governing transactions between the association and directors, officers, employees or members. The draft also makes some housekeeping changes like deleting paragraphs that are relevant to the articles of restatement not an amendment of the charter and a section that identifies the 1968 association incorporators. Several paragraphs have minor wording changes. Some provisions have been moved in order to group common topics together.

February-Early March 2013 Ocean Pines PROGRESS

WORCESTER COUNTY

Police Department Calls for Service: 10 Year Linear Trend Line

National Crime Index‐(Higher is Safer)

CFS

Linear (CFS)

80 70

10703

9376

9399

2004

2005

11342 10138

10478

10589

10452

2009

2010

2011

11136

50 40

6295 27

30 18

20 10

Selbyville

Salisbury

5 Pocomoke

Berlin

Snow Hill

Ocean Pines 2003

Source: www.neighborhoodscout.com

2006

2007

2008

2012

OCEAN PINES POLICE DEPARTMENT

Changing demographics pose risk to Pines’ low crime rate, chief says By TOM STAUSS Publisher hile Ocean Pines remains as Worcester County’s safest community with respect to property and violent crime, demographic changes in nearby Selbyville, De., and Salisbury pose risks, Ocean Pines Chief of Police Dave Massey told members of the Ocean Pines Association’s Budget and Finance Advisory Committee in early January. Demographic changes in Ocean Pines itself also poses risks, Massey said, citing a growing number of homes that are rented out rather than used as second homes by non-resident owners, even pointing out the presence of Section 8 subsidized housing in a community that is perceived to be affluent and stable with a large number of homes occupied by property owners year-round. “The economic downturn has been a factor,” he said. “More people who used to use their second homes as weekend

get-aways are now renting them out.” While Massey stopped well short of declaring that long-term renters are greater crime risks than property owners, he advised residents against apathy and the notion “that it can’t happen here” because, over the years, violent and property crime in Ocean Pines has tended to be low. He presented PowerPoint charts that show Ocean Pines in a positive light compared to other area communities. Using statistics figures that have not yet been compiled and “tweaked” by the Federal Bureau of Investigation, Massey said that Ocean Pines residents have a .95 chance out of 1,000 to be victimized by violent crime, compared to Berlin’s 1.34 chances, Snow Hill’s 6.18, Selbyville’s 8.21, Pocomoke’s 10.98 and Salisbury’s 12.76. The national median is 3.9 chances per 1,000. Property crimes, which tend to be more prevalent, also are less in Ocean

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Pines than elsewhere locally, Massey said. Chances of becoming a victim of property crime in Ocean Pines is 13.29 chances out of 1,000, compared to Snow Hill’s 23.76, Berlin’s 35.63, Pocomoke’s 49.88, Salisbury’s 66.56 and Selbyville’s 79.84. The national median is 29.1. Massey cited neighborhoodscout.com as the source for his statistics. As reported in the January/Early February 2013 edition of the Progress, FBI statistics for 2011 indicated that Berlin actually had fewer violent crimes than Ocean Pines, with four violent crimes relative to Ocean Pines’ five. The population in Ocean Pines is greater than Berlin’s, however, 11,821 to 4,528, which means that the actual crime rate in Ocean Pines relative to population is less than Berlin’s. The chief said that the rise of crime and gang activity in Wicomico County, and rising spill-over from Selbyville across the state line, constitute a grow-

ing threat to Ocean Pines. He attributed Selbyville’s growing crime problem to the fact that its county, Sussex, does not have a strong sheriff’s office with a crime-fighting component. Selbyville and other Sussex communities have a significant immigrant population that works in the county’s poultry processing plants. Emphasising the positive, Massey said that Ocean Pines remains a safe community to live in because, with a significant year-round population, his officers “get to know the players” in ways that transient communities, such as Ocean City, can’t easily replicate. Then again, the economy has resulted in more rental properties, including some with Section 8 tenants “with less than stellar backgrounds,” he told the committee. In discussing highlights from the proposed police department budget for Fiscal Year 2014, Massey said for fiscal reasons “we’ve not added” an animal control officer.

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26 Ocean Pines PROGRESS

OCEAN PINES

February-Early March 2013

OPA board grapples with policy issues as budget process nears conclusion By TOM STAUSS Publisher s the board of directors continue their marathon sessions to arrive at an Ocean Pines Association budget for 2013-14, board members are grappling with quite a few policy issues that could affect the spending plan for next year and what level of assessments and amenity fees are needed to support OPA operations and to keep OPA reserve funds flush. OPA President Tom Terry is in charge of the process of keeping tabs on the various issues that have cropped up during board discussion, and he, as he has in the two previous years he’s served as OPA president, maintains a white board listing of them, perched on an easel on the second floor of the Country Club where the directors have been holding their budget review sessions throughout January. Another review session is scheduled for Tuesday, Feb. 12, at 5 p.m., this time shifted to the board room in the administration building in White Horse Park, when the board should be ready to make some decisions relative to these policy issues. Throughout their January sessions, the directors have gone through each tab in their budget books in some detail, framing issues that could be resolved during the Feb. 12 meeting. Terry told the Progress after a town meeting on the proposed budget Feb.

2 that there may be other issues, not brought during the January review sessions, to be discussed and resolved by the board prior to a scheduled board vote on the budget at the Feb. 23 regular monthly board meeting. It’s one of a few Saturday meetings on the board calendar, scheduled for 9 a.m. in the Community Center’s Assateague Room. Terry said he wants to thoroughly review and discuss all of the Budget and Finance Advisory Committee’s recommendations for the budget, including its most controversial one, a proposal to plan for a community referendum to decide the fate of the Ocean Pines golf course should this amenity continue to rack up operating deficits. That one did not make the white board during the January budget sessions, but Terry said he was not at all reluctant to raise it as part of this year’s budget process. The issues on the white board through the end of January include: • whether $384,000 in roads depreciation money currently parked in the replacement reserve should be shifted into the roads reserve. That’s an idea proposed by Director Marty Clarke, apparently prompting some of the directors to conclude that it would increase the assessment by $27, an impression also left by one of the slides in OPA General Manager Bob Thompson’s PowerPoint presentation during the Feb. 2 town

meeting. Clarke said shifting the funds would provide an additional source of funding to keep Ocean Pines roads in good condition, to supplement casino revenues, but that doing so should not affect the lot assessment. At least one director had been laboring under the impression that the OPA has not been allocating dollars attributable to roads depreciation at all, and that doing so would require an assessment increase. • whether the OPA should increase the police budget by $100,000 or more to reflect additional revenue the board hopes to collect from Worcester County officials after an energetic lobbying effort. • whether batting cages should be inserted back into the capital budget; consensus during board discussion seemed to indicate that they would be funded. • whether the perennial favorite, paving the Beach Club parking lot to squeeze out a few more parking spaces, should be deleted from the capital budget. Comments from board members seemed to indicate that, once again, parking lot repaving won’t survive the budget process. • whether hazard insurance for Ocean Pines’ swimming pools, currently not covered, can be obtained as a rider to existing policies or purchased separately. Thompson was asked to look into the matter. • whether the Yacht Club should be

demolished early on in the new Yacht Club construction project or whether demolition should occur as one of the last phases, which would allow the existing building to reopen in the spring and remain open through Labor Day. Thompson was asked to come back to the board with numbers showing potential savings in construction costs, if any, from immediate demolition, and how demolition would affect the proposed Yacht Club budget for 2013-14. • whether the police department budget should be cut. Clarke informed his colleagues that the proposed budget is $258,538 more than the department’s five-year average, equivalent to $30.66 per Ocean Pines property. • whether the OPA will move toward asking individual employees to share in the cost of their health insurance premiums -- additional family members now require cost-sharing -- and how that might affect the proposed budget. Discussion of this topic during the January review sessions suggests that there isn’t a board majority that would favor this change in time to affect the 2013-14 budget. • whether $320,000 costing $27 in higher lot assessments should be set aside in the golf drainage reserve to pay for drainage work currently under way on holes 12 and 13 and Hingham Lane. Previously, the board had decided to self-finance this work over 25 years,

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WORCESTER COUNTY Policy issues From Page 26 costing $3 per year in assessment dollars. Thompson’s draft budget had included this $3 as part of his proposed $43 assessment increase. A related issue is whether additional revenues should be earmarked to the drainage reserve next year, as a way of offsetting what otherwise would be a projected deficit of $616,340 in that reserve on April 30, 2014. • whether marina boat slip revenues should be adjusted upward to reflect a more optimistic outlook on gasoline sales. Thompson had lowered expectations because of construction of the new Yacht Club this summer, which might convince some boaters that the marina itself will be closed. It won’t be, and some board members during discussion said that gasoline purchases might even increase over last summer because boaters will want to see the new building under construction. • whether the $150,000 loss in projected losses in golf operations is realistic and whether it should be adjusted in the budget. Although directors expressed doubts during discussion that the number is realistic, given this year’s projected $500,000 operating loss, the consensus seemed to be that it’s a target that Billy Casper Golf executives have said is achievable and therefore should remain in the budget as is. • whether the Parks and Recreation Department should be encouraged to solicit commercial sponsorships for events, such as the Fourth of July fireworks, as a way of offsetting substantial annual deficits. • whether an electronic sign or signs should be funded and installed at one or more of the major access roads into Ocean Pines. While Director Dave Stevens remains opposed, Directors Marty Clarke and Sharyn O’Hare spoke up in favor of them.

February-Early March 2013 Ocean Pines PROGRESS

AROUND THE COUNTY County begins levying fees for GIS map

Anyone who wants copies of the full layers of Worcester County’s Geographic Information System maps, which include features such as wetlands and topography, will now have to pay $250 per layer to get them. As part of their approval of a new series of GIS policies and procedures, the Worcester County Commissioners on Feb. 5 agreed to a fee structure for providing the maps to the public. Topping those fees is a $250 charge per full map layer. “Over the years our GIS program has really expanded quite a bit. It’s something we use every day,” said Ed Tudor, county director of the department of development review and permitting, which includes the GIS office. He said his department along with other like water and wastewater, public works and roads use GIS maps on a daily basis. But, the public routinely requests copies of the maps too. Tudor said the county has no policy for processing such requests. He said the state law requires the county to make available a lot of its GIS information but it can charge a fee for doing so. “We have a considerable investment in all of the technology and staff time.” Tudor told the commissioners. Commissioner Jim Bunting said $250 per layer is too high of a fee. That will add up quickly if a person needs several layers of GIS data. Bunting argued that it would be “costly” for anyone who wants to develop land in the county. Commissioner Louise Gulyas, who made a motion to approve the fee structure, said “that’s the cost of doing business.” County Attorney Sonny Bloxom said the county can charge a fee that helps to cover its cost for operating the GIS ser-

vice. “By law we’re not allowed to make a profit on it. We allowed to recoup our costs.” Bunting offered an amendment to Gulyas’ motion to charge a flat fee of $250 for the first GIS data layer and $100 every layer thereafter. Commissioner Virgil Shockley offered a second to the amendment but it failed to garner majority support. The original motion ultimately passed in a 5-2 vote, with Bunting and Shockley opposed.

Bond agencies reaffirm county’s fiscal health

Worcester County received exceptional credit ratings from the three major bond rating agencies last month. In December, the Worcester County Commissioners and staff delivered formal presentations to representatives of the three bond rating agencies as part of a bond sale to reduce existing debt and refund a pension obligation for its correctional officers to the state of Maryland with a reduced interest rate. The rating agencies assigned and reaffirmed the county’s Aa2 and AA ratings, which are high quality, low credit risk investment grade ratings. All three agencies citied the county’s financial flexibility and conservative fiscal attitude combined with the maintenance of solid reserves and manageable debt in their decisions. Worcester County received better than anticipated interest rates on the two 2013 refunding bonds, which were sold via separate competitive bids on Jan. 15. “These excellent interest rates exemplify the hard work our professional staff has displayed and the remarkable management of Worcester County,” Worcester County Commissioner President Bud Church said.

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State to study installing light at routes 113, 12

The State Highway Administration will once again study the traffic patterns and volume at the intersection of routes 113 and 12 in Snow Hill to determine if they warrant the installation of a traffic signal at that location. “Safety is a top priority of the Maryland Department of Transportation and State Highway Administration,” Darrell Mobley, acting secretary of transportation, said in response to a letter from the Worcester County Commissioners. He said he consulted with Donnie Drewer, SHA district engineer, regarding the community support for a traffic signal in lieu of the proposed J-turns for that intersection. He acknowledged that the intersection has unique issues involving access by farm vehicles and tractor trailers. Mobley said SHA officials visited the intersection last month to observe traffic operations. Based on those field observations they will re-evaluate the situation.

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28 Ocean Pines PROGRESS

February-Early March 2013

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February-Early March 2013 Ocean Pines PROGRESS

CAPTAIN’S COVE

Captain’s Cove drops prices, adds incentives for buyers of association-owned lots By TOM STAUSS Publisher

n order to spur sales and increase the number of lots that produce assessment revenue, the Captain’s Cove property owners’ association has decided to drop prices on standard lots it owns in Sections 1 through 11 to $5,000. The lots, about 60 that have been available for purchase, previously were listed for sale in the range of $7,500 to $10,000. All of the lots are accessible by paved road but may or may not have percolation tests on file, so buyers will need to inform themselves on whether the lots are suitable for septic systems or whether they could be served by public water and wastewater treatment services. These are the lots that were listed with Coldwell Banker agent Cindy Welsh for sale last year. “The lots have not been selling because of price points, so we decided to reduce the cost,” Cove association Tim Hearn told the Progress in late January. In a related action, the Cove board of directors earlier in the month approved a swap-and-incentive program for owners of lots in the undeveloped and unbuildable Sections 14-18 to acquire lots

in Sections 1-11. Under the approved program, owners can swap their Section 14-18 lots for association-owned lots in Sections 1-11, at a cost of $4,000, reflecting a $1,000 authorized discount. “To acquire a lot in sections that are generally buildable, a buyer just has to bring $4,000 to the settlement table,” Hearn said. Stitcher’s contract – In January action that was not particularly surprising given management changes made by the newly elected and organized board of directors last fall, the directors decided that Cove general manager Lance Stitcher’s employment contract with the Cove association will not be renewed. Stitcher, who was named general manager of the association following the death of long-time general manager Bob Wilkinson, may be retained in a consulting capacity, Hearn said, when the current contract expires at the end of March. Prior to taking over as general manager, Stitcher had served as facilities manager and golf pro with the Cove. Stitcher’s role and responsibilities were changed with the hiring last fall of Rob Giard as the new director of maintenance, roads and security, areas that previously had fallen under Stitcher’s

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operations, including the board and association departments and annual meetings. Also included in the job description is assistance to community committees and Environmental Control Committee processes, Hearn said. The position calls for a salary of from $30,000 to $45,000. New club facilities – The Cove administrative building located on Captain’s Corridor adjacent to the golf course-outdoor pool-snack bar complex will be converted for use by the Cove’s clubs as an alternative to the Marina Club, which often has scheduling conflicts, Hearn said. The building will be offered free of charge to clubs and organizations as a result of board action at its January meeting. Association personnel are being relocated to open up the building, which has ample parking and is convenient for residents. Just in time – New trucks and ploughs arrived just in time for the six-inch snowfall that hit the Cove in mid-January, Hearn said. “Cove crews were able to clear the roads in a timely way,” he said, praising Giard and his department for a job well done. Casper budget – The board approved the golf, food and beverage, pool and related operations budget for the 2013 calendar year presented by Billy Casper Golf representatives during the directors’ January meeting. The approved budget substantially reduces Cove operational deficits “by bringing us in line with industry standards,” Hearn said. Overall projected savings are about $350,000. By way of comparison, the $250,000 loss in golf operations during 2012 is forecast to be reduced to $200,000 this year, while food and beverage operations, which lost $100,000 last year, is projected to swing to a $100,000 surplus. These two departments alone would produce a $250,000 savings, with some increase in projected revenues but most of the savings the result of better cost controls, he said. “They don’t have to pull a rabbit out of the hat to make these numbers,” Hearn said, “just perform in accordance with industry standards.”

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purview. Instead of the 60 employees he previously had supervised, that number dropped to 12, Hearn said. “He was very understanding,” the association president said, adding that with his many years of service to the Cove, Stitcher retains a lot of institutional knowledge that “could be useful to us in a consulting capacity.” Waterfront charges suspended – In response to recent restatements on the Cove balance sheet of the waterfront reserve fund, the Cove board has determined that the amount of money in the fund, about $250,000, is large enough to justify suspending the collection of waterfront charges from 460 waterfront owners in the Cove with the April billing. The suspension will extend into 2014, as well, Hearn said. He said current plans are for roughly $40,000 to $50,000 in canal dredging this year, with the quarter of a million dollar balance more than sufficient to cover the cost. The waterfront fund was one of those that Hearn and his newly elected board colleagues discovered, through the Cove’s new accounting firm, had been improperly used for purposes not related to dredging. Once general fund money was shifted back into the waterfront reserve, it became clear that the association was actually collecting more in assessments from waterfront owners than was necessary. “With the adjustments on our balance sheet, all of our reserve funds are now healthy,” Hearn said. Communications coordinator – Also at the January board meeting, the directors approved the creation of a new position, communications director. The successful applicant will be given communication, marketing and administrative tasks with the association, focusing on interaction with the membership, Hearn said. The coordinator will work with the board to develop, edit and manage all Cove POA communications, including electronic distribution of community materials, newsletters, Web sites, and social media. The coordinator will also provide support for the association’s core

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February-Early March 2013

OCEAN PINES

COMMENTARY

Are OPA reserves under-funded? Projected April 2014 fund balances suggest otherwise By TOM STAUSS Publisher

here doesn’t seem to be an exact science or any conventional wisdom on how much in reserves a respectable homeowners association should hold, but there seems little doubt that, even with its recent and anticipated spending on big-ticket capital projects, the Ocean Pines Association’s reserve position is actually quite healthy. With even more financial health on the way: All this negativity about the OPA’s financial condition – bad-mouthing, handwringing and penny-pinching at budget time – so misses the big picture. What property owners may not know without perusing the fine print on the projected reserve summary that will be approved as part of the budget in late February is that, on April 30, 2014, total OPA reserves are projected to stand at $2.97 million. The capital assets replacement reserve will hold $2.36 million, even after the OPA will have fully paid for a new Yacht Club at $4.3 million, golf course greens replacement at $900,000 or so, and a new Yacht Club pool, pool decking and pump house for somewhere close to $1 million. And then, in the first month of the new fiscal year beginning May 1, 2014, absent extraordinary events or uninsured natural catastrophe, the OPA’s reserve funds will receive another sub-

stantial infusion, about $3.9 million, in the form of new contributions from assessments. That will boost total reserves to just shy of $7 million. The capital assets replacement reserve, previously known as the major maintenance and replacement reserve, will stand at roughly $5 million, assuming that the projected 2013-14 cash flow of $2.7 million into this reserve is replicated in the following year. Tell anyone, even OPA board members, that the OPA’s reserves will be that flush in a little more than 14 months, after all these major capital projects have been fully paid for, and you may receive a blank stare of incredulity, even a protest. When Director Sharyn O’Hare was informed of some of these facts after a Feb. 2 town meeting on the proposed 2013-14 budget, she said she “disagreed” and rather abruptly cut off the discussion before it could dive even further into the financial weeds. During January budget review sessions, she on several occasions mentioned that the new Yacht Club won’t be paid for until 2017 or 2018, and that clearly is how she understands the Yacht Club financing scheme. That may come as a surprise to Harkins Construction, who no doubt will want a check for $4.3 million, less initial outlays for services already provided and the inevitable change orders, on completion of the Yacht Club project later this year.

Contractors, just like Realtors who sell property on commission, want to get paid as soon as possible after work is completed. Harkins won’t be waiting patiently until sometime in 2017 0r 2018 for a check in the mail. Thompson, during the Feb. 2 town meeting on the budget, described the reserves as under-funded, and he seemed reasonably sincere when making that statement. Wherefore the disconnect between the projected reserve balance at the end of the 2013-14 fiscal year and O’Hare and Thompson’s apparent understanding of where things stand? Part of it may lie in the two separate funding streams that comprise the capital assets replacement reserve. One is labeled “historical,” tied to funded depreciation of capital assets over the years, including the current fiscal year; in a sense calling it “historical” is a misnomer, since current year assessment dollars flow into that funding stream, as much as did dollars from, say, 1986. The other component is labeled the “five-year plan,” sometimes called the five-year funding plan, which refers to the $30 from each lot assessment per year targeted for major asset replacement and deficit offsets beginning four years ago. Fiscal 2013-14 is supposed to be the last year of the so-called five-year plan, but even that’s not quite accurate. After five-years, absent action from the

Projected OPA reserve summary for April 30, 2013, and April 30, 2014

board, this funding stream will live on, probably forever, in the $150 (5x$30) that’s baked into the lot assessment, which in 2013-14 will exceed $900 per year. In relative terms, the capital assets replacement reserve obtains roughly one and half times more from the “historical” funding stream than the five-year funding plan -- $1,598,733 vs. $1,097,980 – in the projected 2013-14 budget. And this is where it gets interesting. Look closely at the five-year component in the replacement reserve at the end of this fiscal year. It’s a negative $420,916. Look closely at the historical column in the replacement reserve. The cumulative total for it at the end of the 2014 fiscal year is $5,237,857, while the fiveyear plan column is shown as a negative $2,878,445. The two numbers combined produce a positive number for the replacement reserve of $2,359,412. Two lines up, there’s a capital additions entry – an outlay of $846,300 from the historical column and a negative $3,534,300 from the five-year plan column. The latter represents a $3.5 million check that the OPA will write to Harkins for the balance owed on the new Yacht Club project. A reasonable person might ask how, given the five-year funding plan’s negative balance of $420,916 on April 30 of this year, together with a proposed $1.1 million infusion of new five-year funding in the new fiscal year, funds are available from the five-year-funding column to write a check to Harkins for $3.5 million. The short answer is: Funds aren’t available from that particular funding stream. As Thompson said during the run-up to the Yacht Club referendum last summer, funds attributable to the five-year-funding plan won’t be sufficient to cover the cost of the new Yacht Club until 2017 or so. That’s why the five-year-plan component shows a $2,878,455 negative at the end of FY 2014. But the check will be written regardless. From where? From that big pot of cash where all of the OPA reserve funds are pooled. Or as OPA Director Dan Stachurski likes to say, reserve funds are “fungible.” While the historical component of the replacement reserve is showing a fat surplus next April, and the five-yearfunding component is a negative, it’s the totality of the replacement reserve that’s instructive. At $2.36 million projected for April 30 next year, and a surge to $5 million on May 30 of next year (the first month of the 2015 fiscal year), claims that the replacement reserve is underfunded are not supported by the numbers. When Thompson talks about how the OPA reserves are underfunded, he is choosing to look at the reserves selectively, focusing in on the negative number in the five-year-plan compo-

30 Ocean Pines PROGRESS

WORCESTER COUNTY

OPINION February-Early March 2013

Ocean Pines PROGRESS

OPA assessments: How about a pause that refreshes?

he proposed $43 increase in the lot assessment for next year may or may not survive board action later this month. Many of the handful of Ocean Pines Association members who attended General Manager Bob Thompson’s town meeting on the budget in late January registered their opposition, an altogether predictable reaction from seniors who’ve seen their retirement savings and revenues eroded by a wobbly economy, price inflation in a host of goods and services, and governments not averse to raising taxes. Why the OPA would be immune from these same sorts of pressures, or why the OPA should be the one expected to compensate for increased costs imposed by the economic forces that buffet some OPA members, is not immediately clear. Perhaps because it is the “government” that is closest to those affected, with easy access to those who will decide whether and by how much the assessment will increase. That said, parsing the proposed increase yields the inescapable conclusion that should the directors really want to eliminate or reduce the proposed increase, it really wouldn’t be all that difficult to do so. Another conclusion is that as onerous as some property owners believe it to be, the assessment increase really could be much, much worse. Yes, indeed, the OPA budget is a document that on occasion yields contradictions. On the operational side of the equation, the part that is for the most part directly controllable by the general manager, the proposed 2013-14 budget is calling for a modest $10 assessment increase, yielding roughly $85,000 in new revenue for the OPA, and roughly five percent increases in most amenity membership dues. But consider that the operational budget envisions about $450,000 give or take in increased salary expense, not even close to being covered by the higher assessments. Consider also that the budget for the most part is predicting stable memberships – golf is the exception, with budgeted increases reflecting the end of disruption on the course and better conditions – when the history of Ocean Pines suggests that higher amenity fees reduce memberships. Had Thompson budgeted the historical pattern, amenity budgets would show greater losses produced by declining membership despite higher fees. This in turn would require greater subsidies, i.e., larger assessments, than that currently anticipated. True, the board could direct Thompson to slice staff positions. Much of the budgeted increase in payroll expense reflects certain costs that the HOA can’t do much about: higher insurance premiums, increases in FICA matching and other retirement costs, for instance, that are controllable mainly by riffing the

delaying it a year, would not fundamentally change the OPA’s financial condition. If they wanted to, the directors An excursion through the curious cul-de-sacs An excursion through theby-ways curious and by-ways and cul-de-sacs could actually reduce next year’s budget of Worcester County’s County’s most densely community. of Worcester mostpopulated densely populated community. by $3, not a lot, to be sure, or they could By TOM STAUSS/ just hold the line with no adverse effect. By TOM Publisher STAUSS/Publisher Call it a pause that refreshes. Once a people who staff the OPA. While some ed back the following year. Or, the board true racking and stacking of future projdirectors might sincerely advance the could decide to spread out the last $30 in ects takes place, the contributions to proposition that the OPA is overstaffed, increases over two years, $15 per year, OPA reserve funds through lot assessprevious boards have approved the cre- reducing this year’s increase in the as- ments can be adjusted accordingly. ation of new positions and the current sessment to $12 ($15-$3). level of staffing, from the police departDespite claims to the contrary, OPA ment to the recreation department, to reserve funds are not undercapitalized, the new facilities manager (hired) and unless $3 million in total reserves and a human resources director (not yet $2.4 million in capital assets replace- From Page 30 OPINION hired). ment reserves projected for April of nent while failing to give the “historical” During extensive budget review 2014 constitutes underfunding. The $2.4 component its due, as if funds “parked” meetings in January, there were sever- million number is what remains in the there are somehow untouchable and al suggestions for tweaking Thompson’s replacement reserve even after the new usable only for new police cars, bridges The Ocean Pines journal of and and such. draft budget that could offset the pro- Yacht Club, theProgress, Yacht aClub pool news and commentary, is published Not so. Once collected, those funds posed $10 increase in the assessment golf course green replacement will have monthly throughout the year. It is are available for pretty much anything related to operations. By asking the fully paid for. Yes, paid despite the An fully excursion through curious and cul-de-sacs An for, excursion through theby-ways curious by-ways and cul-d that falls under the “replacement” circulated in the Ocean Pines, Berlin, West county commissioners for an additional claims that Yacht Club won’t be fully of Worcester County’s County’s most densely populated community. of Worcester most densely populated comm rubric and, with a board super majority OceanforCity, Snow Hill, $100,000 in grants and budgeting for it, paid until 2017 orOcean 2018. City and By Cove, TOM Publisher By5-year-plan TOM Publisher STAUSS/ of five votes, items outside replacement Va.STAUSS/ the assessment could be reduced $12, Capain’s Granted , the component Letters other editorial submissions: according to Thompson. Being a little of the and replacement reserve will show parameters. Over the next ten years, absent viadeficit email only. notof the more aggressive on estimating marina aPlease $2.9submit million at We the do end intervening action by future boards, accept faxes or submissions require gasoline surpluses would yield another 2013-14 fiscal year, butthat that’s just firoughly $25 million will be collected for retyping. Letters should be original and $4 per property in savings, for a total nancial kabuki. That deficit is offset by to the Progress. phone of $16 off the proposed assessment in- aexclusive $5.2 million surplusInclude in the funding replacement purposes. Even Ocean Pines might have some crease. steam labeled “historical” in the replacedifficulty in spending that much money. Of course, budget discussions have ment reserve. It’s the total that matters, yielded ways to increase spending and not the individual funding streams. 127 Nottingham Lane, the assessment, as well, but these need Then in May of 2014, in a new fiscal not be adopted. The board previously year, theOcean reservePines, totalsMD will jump again had agreed to self-finance golf drainage by $3 million, or so, with about $2.5 milimprovements over 25 years, which is lion PUBLISHER/EDITOR added to the replacement reserve, if PUBLISHER/EDITOR reflected in $3 of the proposed $43 in- the fifth year of Stauss the funding plan is imTom Tom Stauss crease next year. Paying the in-house posed.tstauss1@mchsi.com The Ocean Pines Progress, a journal of tstauss1@mchsi.com “loan” all at once could result in a $27 Capping the funding plan at $120 of 410-641-6029 news and commentary, is published 410-641-6029 impact on the assessment, according to the assessment, as opposed to $150, will Advertising monthly throughout the year. It is Thompson, which is reason enough for knock downAdvertising those numbers by a relacirculated in Ocean Pines, Berlin, West keeping with the 25-year in-house amor- tively modest amount. Ocean City, Snow Hill, Ocean City and ART DIRECTOR tization. A majority of directors have already ARTRota DIRECTOR Capain’s Cove,Va. Knott The result of these tweaks would voted to proceed with the fifth year of Letters and other editorial submissions: Hugh Dougherty result in a $3 net reduction in the as- the so-called funding plan, and it’s unrePlease submit via email only. We do not CONTRIBUTING sessment attributable to operations and alistic to expect that a majority of them accept faxes or submissions that require drainage, rather than Thompson’s pro- will vote toWRITERS cap it after four years, so CONTRIBUTING WRITER retyping. Letters should be original and posed $10 increase. invested areRota theyKnott in the idea of having Knott exclusive to the Progress. Include phone The remaining $30 in the proposed enough cash in reserve to pay for anticiGinny Reister Inkwellmedia@comcast.net assessment hike for next year is related pated big ticket projects within the next 443-880-1348 to the fifth year of the OPA’s five-year ten years or so, even though no one realfunding plan, which would be fully fund- ly knows what those projects will be and 127 Nottingham Lane, ed at $150 of the assessment or respon- how much they will cost. Ocean Pines, MD sible for bringing in $1.1 million into It’s not the concept of saving for the OPA reserve coffers, specifically the big future that’s wrong, but just how it is PUBLISHER/EDITOR PUBLISHER/EDITOR ticket capital assessment replacement being executed; details do matter. Until Tom reserve. such time as a detailed future projects TomStauss Stauss tstauss1@mchsi.com Should OPA policy-makers decide not plan is assembled and actually voted on tstauss1@mchsi.com 410-641-6029 to follow through with the fifth year of by the board, after considerable commu410-641-6029 the five-year funding program, the im- nity input and discussion, the directors Advertising Advertising pact on the OPA’s reserve funds would be are unnecessarily extracting assessment modest, about $250,000 in foregone rev- dollars from property owners blindly, in ART DIRECTOR enue ($30 x 8446). Capped at $120,000, a vacuum of information, predicated ARTRota DIRECTOR Knott this earmarked funding stream would on an outdated spending plan that is Hugh Dougherty still yield about $850,000 per year, give almost three years old and including CONTRIBUTING or take. items such as bridge replacement (mostWRITERSWRITER CONTRIBUTING If a detailed plans of future spending ly to be paid for by the county) and a Rota Knott Knott on big-ticket projects due in June pro- new Country Club that can and should Ginny Reister duce irrefutable evidence that the fifth be modestly scaled. Inkwellmedia@comcast.net and final year of assessment increases Scrapping the proposed $30 increase 443-880-1348 is needed, then it could always be add- related to the five-year funding plan, or

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